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1. Understand why every company needs a sound strategy to compete successfully, manage the conduct of its business, and strengthen its prospects for long-term success.
2. Develop an awareness of the four most dependable strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage.
3. Understand that a companys strategy tends to evolve over time because of changing circumstances and ongoing management efforts to improve the companys strategy.
4. Learn why it is important for a company to have a viable business model that outlines the companys customer value proposition and its profit formula.
5. Learn the three tests of a winning strategy.
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Business environment and industry conditions Firms financial and competitive capabilities Creating a vision for the firms future direction
How to outcompete rivals. How to respond to economic and market conditions and growth opportunities. How to manage functional pieces of the business.
How to improve the firms financial and market performance.
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WHY DO STRATEGY ?
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1.1
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Convenience and expansion of dining opportunities Ongoing restaurant reinvestment and international expansion
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Follow-up
Which of McDonalds Plan-to-Win strategy initiatives are associated with meeting customer needs more effectively?
Which initiatives are focused on more efficiently delivering products and services?
Which initiatives will likely result in the most enduring competitive advantage? Which of the initiatives will competitors likely attempt to overcome first?
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Meeting customer needs more effectively, with products or services that customers value more highly, or more efficiently, at lower cost.
Giving buyers lasting reasons to prefer a firms products or services over those of its competitors.
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Low-cost provider
Differentiation on features
Best-cost provider
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Develop valuable expertise and competitive capabilities over the long-term that rivals cannot readily copy, match or best. Put the constant quest for sustainable competitive advantage at center stage in crafting your strategy.
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Changing market conditions Advancing technology Fresh moves of competitors Shifting buyer needs Emerging market opportunities New ideas for improving the strategy
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The Evolving Nature of a Firms Strategy Realized (current) strategy is a blend of:
Proactive (deliberate) strategy elements that include both continued and new initiatives.
Reactive (emergent) strategy elements that are required due to unanticipated competitive developments and fresh market conditions.
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1.2
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Realized Strategy
Competitive Initiatives Business Approaches
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Business Model
Value Proposition
Profit Formula
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By providing customers with value. The firms customer value proposition By generating revenues sufficient to cover costs and produce attractive profits. The firms profit formula
It takes a proven business modelone that yields appealing profitabilityto demonstrate viability of a firms strategy.
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Satisfying buyer wants and needs at a price customers will consider a good value. The greater the value provided (V) and the lower the price (P), the more attractive the value proposition is to customers.
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Creating a cost structure that allows for acceptable profits, given that pricing is tied to the customer value proposition.
Cthe firms costs The lower the costs (C) for a given customer value proposition (VP), the greater the ability of the business model to be a moneymaker.
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Winning Strategy
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The Fit Test Does it exhibit dynamic fit with the external and internal aspects of the firms overall situation? The Competitive Advantage Test Can it help the firm achieve a significant and sustainable competitive advantage? The Performance Test Can it produce good performance as measured by the firms profitability, financial and competitive strengths, and market standing?
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Follow-up
Does Sirus XMs strategy pass the three tests of a winning strategy? Does the strategy of over-the-air broadcasters pass the same tests? What internal and external factors will create difficulties for either competitor in changing its strategy or business model?
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Strategy provides:
A prescription for doing business. A road map to competitive advantage. A game plan for pleasing customers. A formula for attaining long-term standout marketplace performance.
THINKING STRATEGICALLY
Googles web browser-based Chrome operating system and its online applications suite are now challenging Microsofts long-term dominance of those marketplace sectors.
What should be Microsofts first response to this competitive challenge? How will Microsofts response to this competitors actions affect its business model?
Which competitors strategy will likely be the eventual winner in the marketplace?
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What must managers do, and do well, to make a firm a winner in the marketplace?
Good strategic thinking and good management of the strategy-making, strategy-executing process.
First-rate capabilities and skills in crafting and executing strategy are essential to managing successfully.