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CHAPTER 1: STRATEGY, BUSINESSMODELS, AND COMPETATIVEADVANTAGE

LO1 – Understand why every company needsa distinctive strategy to completesuccessfully, manage its business operations,and strengthen its prospects for long – termsuccess

FRA!"OR#$ %mportance of &trategy

LO'$ Learning why it is important for acompany to have a viable business modelthat outlines the company(s customer valueproposition and its pro)t formula

FRA!"OR#$ *usiness odel + -. /.F

⇒ harity + -. / 0.F

⇒ &cam + 0-. /.F

LO – 2evelop an awareness of the )ve mostdependable strategic approaches for settinga company apart from rivals and winning asustainable competitive advantage3

FRA!"OR#$ Five 456 7eneric&trategies13 Low – ost .rovider

8 cost based advantage8 cost is lower than competitors

'3 *road 2i9erentiation8 di9erentiate products and servicefrom rivals through changes in

attributes :features

3 Focused Low – ost &trategy8 niche mar;et focuscost is lower than competitors

<3 Focused 2i9erentiated &trategy8 focused on narrowing buyers and outcompeting rivals by o9ering nichemembers customi=ed attributes thatmeets their taste and re>uirements

53 *est ost .rovider

8 gives customer more value for themoney by satisfying buyerse?pectation on ;ey >ualities :features : performance : serviceattribute

LO< – Understand that a company(s strategytends to evolve over time because ofchanging circumstances and ongoingmanagement e9orts to improve thecompany(s strategy3

FRA!"OR#$ !?ternal !nvironment4acro !nvironment6⇒ A company(s macroenvironment

encompasses all of the relevantfactors ma;ing up the broadenvironmental conte?t in which acompany operates3

⇒  @he components of a company(s

macroenvironment are the maor

e?ternal and uncontrollable factorsthat a9ect its operations, decision8ma;ing, performance and strategies3

⇒  @he relevance of the macro8

environmental factors can beevaluated using the .!&@!L analysis3

LO5 – Learn the three tests of winningstrategy

FRA!"OR#$

⇒ F%@ @est

⇒ &ustainability @est

⇒ .ro)tability @es

CHAPTER 2: CHARTING A COMPANY’SDIRECTION; VISION, MISSION,OBJECTIVES, AND STRATEGY 

LO18 7rasp why it is critical for companymanagers to have a clear strategic vision ofwhere a company needs to head and why3

FRA!"OR#$ ission and -isionission$ B where are we goingC8 convey company purpose in a

language speci)c enough that itgives the company its own identity

-ision$ Bwho are we, what we do, andwhere are weC8 an organi=ations performancetargets – the results managementwants to achieve

LO' – Understand the importance of settingboth strategic and )nancial obectives

FRA!"OR#$ 7oals and Obectives

7oals – Long term obectivesObectives – short term performancetarget3 %t is directional and graphic

.erformance @argets to Obectives

• "hen .3@3 are &AR@

⇒ &peci)c

⇒ easurable

⇒ Attainable

⇒ Result Oriented

⇒  @ime *ound

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 @ypes of Obectives13 Financial – money'3 &trategic – operations3 &ocial – &R<3 !nvironment – stewardship

2ef3 &tewardship – preserveenvironment for future generation

LO – Understand why the strategic

initiatives ta;en at various organi=ationallevels must be tightly coordinated to achievecompanywide performance targets3

FRA!"OR#$LO< – Learn what a company must do toachieve operating e?cellence and to e?ecuteits strategy pro)ciency

FRA!"OR#$ %mplementing &trategy

CHAPTER 3:

LO1 – %dentify factors in a copmany(s broad

macro8environment that may have strategicsigni)cance

FRA!"OR#$ .!&@!L2acro !nvironment .!&@!L2

13 .olitical'3 !conomic3 &ociocultural<3 @echnology53 !nvironmentalD3 Legal : RegulatoryE3 2emographic

LO' – Recogni=e the factors that cause

competition in an industry to be )erce, moreor less, normal or relatively wea;3

FRA!"OR#$ Five 456 ompetitiveForces%ndustry !nvironment 45 Forces ofompetition6

13 *uyer'3 &ubstitute .roducts3 &upplier<3 ew !ntrants53 Rivalry among ompeting &eller

4strongest force6

 @hree 46 .ressures13 *uying .ower

a3 *uyersb3 &uppliers

'3 @hreatsa3 &ubstitutionb3 ew !ntrants

3 Rivalrya3 Rivals

 @hree 46 %ntensities13 "ea;

'3 ild3 &trong

LO – *ecome adept at mapping the mar;etpositions of ;ey groups of industry rivals

FRA!"OR#$ &trategic apping

LO< – Learn how to determine whether anindustry(s outloo; presents a company with

suGciently active opportunities for growthand pro)tability

FRA!"OR#$ #ey &uccess Forces

CHAPTER 4:

LO18 Learn how to assess how well acompany(s strategy is wor;ing3

FRA!"OR#$ Financial Analysis

LO' – Understand why a company(sresources and capabilities are central to itsstrategic approach and how to evaluate theirpotential for giving the company acompetitive edge over rivals

FRA!"OR#$ @angible and %ntangibleResourcesA3 @angible Resources

• .hysical Resources

• Financial Resources

•  @echnological Assets

• Organi=ational Resources

*3 %ntangible Resources

• Human Assets and %ntellectual

apital

• *rand %mage and reputational

assets

• Relationships – alliances or oint

ventures

• ompany ulture – norms of

behavior, ingrained beliefs, andbusiness principles

LO – 7rasp how a company(s valye chainactivities can a9ect the company(s coststructure and customer value proposition

FRA!"OR#$ -alue hain8 a series of activities focused on strategybut not cost based3 .rimary Activities$

a3 &upply hain anagement8 activities that involves thepurchasing of materials fromsupplies

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b3 Operations8 activities that involve theconversion of inputs to outputs3

c3 2istributiond3 &ales and ar;eting

8 activities that brings output4products6 to sources such asoutlets3

e3 &ervice8 activities that support sales andmar;eting

f3 .ro)t argin8 .ro)tability of %ndustrymeasured based on the balancebetween demand and supply

8 .ro)tability of ompanymeasured based on the balancebetween sale and cost of goodssold

& O 2 &I & .

LO< – Learn how to evaluate a company(scompetitive strength relative to ;ey rivals3

FRA!"OR#$

LO5 – Understand how a comprehensiveevaluation of a company(s e?ternal andinternal situation can assist in managers inma;ing critical decisions about their ne?tstrategic moves

FRA!"OR#$

CHAPTER 5: THE FIVE GENERICCOMPETATIVE STRATEGIES

LO1 – Understand what distinguishes each ofthe generic strategies and why some ofthese strategies wor; better in certain ;indsof industries and competitive conditions thanothers3

FRA!"OR#$

LO' – Learn the maor avenues for achievinga competitive advantage based on lower

costsFRA!"OR#$

LO – 7ain a command of the maor avenuesfor doing a competitive advantage based ondi9erentiating a company(s product orservice o9ering from the o9erings of rivals3

FRA!"OR#$

LO< – Recogni=e the re>uired condition fordelivering superior values to customers

through the use of hybrid of low costprovider and di9erentiation strategy3

FRA!"OR#$

CHAPTER : STRENGTHENING ACOMPANY’S COMPETATIVE POSITION:STRATEGIC MOVES, TIMING, AND SCOPEOF OPERATIONS

 LO1 – Learn whether and when to pursue ano9ensive or defensive strategy moves toimprove company(s mar;et position

FRA!"OR#$

LO'8 Recogni=e when being a )rst mover orfast follower of a late mover can lead tocompetitive advantage

FRA!"OR#$

LO – *e aware of the strategic bene)ts andris;s of e?panding a company(s hori=ontalscope through merge and ac>uisitions3

FRA!"OR#$ erge and Ac>uisitions13 erge – two or more companies

merge into a single company3 Oftenta;ing a new name3

'3 Ac>uisition – absorption of onecompanies operation to another3

LO< – Learn the advantages anddisadvantages of e?tending a company(sscope of operations via vertical integration3

FRA!"OR#$ -ertical %ntegration

&trategy⇒ perform value chain activities along

more than one stage of an industriesoverall value chain3

⇒ appeals only if it signi)cantly

strengthens a )rm(s competitiveposition and:or boosts its pro)tability

⇒ become a new entrant

a3 *ac;ward %ntegration8 involves performing industryvalue chain activities closer tosuppliers and other enterpriseinvolved in earlier stage3

b3 Forward %ntegration8 involves performing industryvalue chain activities closer tobuyers

c3 -ertical %ntegration8 e?tends the )rm(s competitiveand operating scope within thesame industry3

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LO5 – Understand the conditions that favorfarming out certain value chain activities tooutside parties3

FRA!"OR#$

LOD – 7ain an understanding of how strategicalliances and collaborative partnerships canbolster a companies collection of resourcesand capabilities3

 FRA!"OR#$

CHAPTER !: STRATEGIES FORCOMPETING IN INTERNATIONALMAR"ETS

LO1 – 2evelop an understanding of theprimary reasons companies choose tocompete in international mar;ets

FRA!"OR#$ "hy ompanies !?pandinto %nternational ar;ets13 access to new mar;et'3 access to lower cost3 access resources and capabilities<3 access to lower cost of funds53 to spread ris; across a wider mar;et

base

LO' – Learn why and how di9ering mar;etconditions across countries inJuence acompany(s strategy choices in internationalmar;ets

FRA!"OR#$ Factors that &hape&trategy hoices in %nternational

ar;ets13 @he degree to which there are

important country – di9erences indemographics, cultural, and mar;etconditions

'3 "hether opportunities e?ist to gain alocation based advantage based onwage rates, wor;er productivity,inJation rates, energy cost, ta? rates,and other factors that impact coststructure3

3 @he ris;s of adverse shifts in currencye?change rates

<3 @he e?tend to which governmentpolicies a9ect the local businessclimate3

LO – 7ain familiarity with the )ve generalmodes of entry into foreign mar;ets

FRA!"OR#$

LO< – Learn the three main options fortailoring a company(s international strategyto cross8country di9erences in mar;etconditions and buyer preferences3

FRA!"OR#$ %nternational &trategy$ @hree .rincipal Options⇒ %t is a strategy for competing in two or

more countries simultaneously13 ultidomestic &trategy$ @hin;

Local, Act Local3

'3 7lobal &trategy$ @hin; 7lobal, Act7lobal

8 are globally standardi=ed in termsof customer preference, buyerpurchasing habits, distributionchannels, or mar;eting methods3

3 @ransnational &trategy$ @hin;7lobal, Act Local38 employs essentially the samestrategic theme in all countrymar;ets, while allowing somecountry to country customi=ation to)t local mar;et conditions3

LO5 – Understand how multinationalcompanies are able to use internationaloperations to improve overallcompetitiveness

FRA!"OR#$ Using %nternationalOperations to %mprove Overallompetitiveness13 an use location to lower cost or help

achieve greater product di9erentiation'3 an use cross8border coordination in

ways that a domestic8only competitorcannot3

LOD – 7ain an understanding of the uni>uecharacteristics of competing in developingcountry mar;ets3

FRA!"OR#$ &trategy Options forompeting in 2eveloping8ountryar;ets3

• .repare to compete on the basis of

low price

• odify aspects of the company(s

business model or strategy toaccommodate local circumstances4but not so much that the company

loses the advantage of global scaleand global branding

•  @ry to change the local mar;et to

better match the way the companydoes business elsewhere

• &tay away from those emerging

mar;ets where it is impractical oruneconomical to modify thecompany(s business model toaccommodate local circumstances3