Strategy

Horizon 1 Innovations

are about the product or service, this class is not focused on this type of innovation. Spending a lot of time focusing on product, rather create a competitive advantage by changing business model.

Horizon 2

business model focused innovations. Doesn't focus on the product. New users and uses.

Slide 13: Strategy vs Activities

Strategy is defnined by a unique set of activities different than their competition. Require trade-offs due to inconsistencies with image or reputation. Activities effect one another - the better "fit" the better they support the strategy.

Slide 15: Industry structure

tells us what to actually expect in regards to performance. Performance is measured by profitability and ROA (easiest measure to use). Porter's 5 forces model - industry view.

Slide 53: A New Partnering Model

think industry network and your desired position within the network.

Where can products be innovated?

- Core: the actual product hardware. - Coating: exterior. - Packaging: how it looks on a shelf or how customers purchase it. - Merchandising: where it can be purchased. What kind of storefronts? If innovation is centered around the product, these are examples of innovations tied to product - horizon 1. Changes to the product or service within the idea of existing users or existing uses.

Slide 13: What are activities

Activities: tasks, systems or process a firm deliberately chooses to satisfies its strategic position.

Slide 33: Key pieces of a statement of strategic intent

Answers 3 questions: 1. What is your product or service? 2. Who are you customers? 3. What is the value you create?

Slide 30: Better Strategy Better Margin - grid positions

Any of the positions on the grid can create a strategic advantage and can result in the firm being the leader in that industry. Cost leadership: lower costs, but price doesn't go down as much as how much we've reduced costs. Differentiation: increase in costs due to added value, increase price more than costs based on the willingness to pay of customers.

Slide 38: Meyer Business Model Framework - Business Model

Business Model: Revenue model (how money comes into the business). Operating Model: production model, R&D Model, Service Model, Channel Model (costs associated with business model)

Slide 37: Building Blocks of a Business Model - Key questions

Business model has to answer three key questions: 1. Who is the customer? 2. How does the business make money? 3. What does the customer value? The underlying economic logic that explains how we can deliver value to the customer at an appropriate cost.

Slide 27: Narrow vs Broad Segment - Customer Focus

Can include a wide range of customers this can include anywhere from children to teens to adults or elderly. It can also look at different customers based on industry (financial services industry customers) Channel: online, retail, direct sales. Geographic scope: local, regional, national. Product assortment: one, few, or many products.

Slide 48: Segmenting Markets By Occasion

Commodity: high volume level. Personalized: uses along events and other types of opportunities. Map these across different measures (Gen y, Gen Z, Gen X) Expanding product category outside of initial segment.

Slide 4: Corporate Strategy vs. Competitive Strategy

Competitive Strategy: how are we going to compete? How are we going to position the firm, value proposition, target segments? FOCUS ON THIS ONE. Corporate Strategy: where will we compete? Which industry or industries will we compete in? Larger firms and conglomerates.

Slide 19: Generic Strategies components

Cost leadership: sum of all activities done at lower cost than competition and that's how they create an advantage Differentiation: how a firm increases willingness to pay by creating more value for the consumer. Stuck in the middle: firms that fail to choose a particular strategy get stuck in the middle and underperform.

Slide 14: Intro

Does an entrepreneur actually need a strategy?

Slide 27: Narrow vs Broad Segment - Corporate Scope

Ex. Yum brands which has multiple businesses in their portfolio in different components or segments (pizza, chicken sandwich, Mexican options). Most new ventures don't due this - pure play or diversified. Pure play: quick service, single brand. Diversified: multiple brands.

Slide 3:

George Steiner: basic directional decisions. Implemented in companies purpose or mission statements, helps provide direction for the firm on the decisions that they might be making.

Slide 1: What is strategy? Henry Mesberg

Henry Mensberg: plan of action. Emerges overtime. Start with an initial position and it evolves and emerges differently as we get external influences or changes.

Slide 27: Narrow vs Broad Segment

How many customer segments are served? Also captures market saturation (penetration of Tier 1, Tier 2, and Tier 3 customers) within an industry (i.e number of product lines)

Slide 5/6/7: Thought experiment. All of us are in the same industry and we have the same product. Scenario 1: imagine that we are competing in the same market, going after same customers. Same segment. All of our product features are the same as our competition. Our product quality has no difference. Our delivery and service is also the same. How will a customer know what product to select?

If there are no differences between competitors and their products, customers will select the lowest price! Only way to respond is to lower price, resulting in lower profits for the firm. NO DIFFERENCE --> NO PROFITS. Market power has gone to consumers and when power shifts, the one with power gains control and those without it lose profits.

Slide 1: What is strategy? Kenneth Andrews

Kenneth Andrews: pattern of decision making. Revealed over time. Pattern reveals the firm's objectives, purposes, and goals.

Slide 16: Porter's Five Forces

Key forces that represent industry structure: power of suppliers, buyers, threat of substitutes, power of buyers, threat of new entrants, and rivalry among existing competitors. If the forces are high: we would expect lower profitability to be realized by the players in the industry. If the forces are weak: we expect rivals to achieve high profitability. This is done for incumbents: players who are already in the industry not from the view of new entrants.

Slide 19: Generic Strategies Sides

Left side: strategic target determine by broad market (all or most segments) or narrow market (one or few segments/niche players). Strategic advantage: range of willingness to pay from high willingness to pay to low willingness to pay. Use price to determine this. Cost leadership vs. differentiation.

Slide 1: What is strategy? Michael Porter

Michael Porter: Strategy is being different. Strategy is choosing a different set of activities that deliver unique value to clients.

Slide 30: Better Strategy Better Margin - Misconceptions.

Misconception: you have to be a differentiator in order to win. have to be in a broad market and can't be in a narrow market.

Slide 12: who wins the battle between operational effectiveness and strategy?

Operational effectiveness: necessary, but not sufficient for sustaining a long-term competitive advantage. Have to be good at what you do, but this doesn't necessarily mean you can sustain the business. Strategy: must be a cogent configuration of activities, incentives, systems that supports successful positioning and makes the right trade-offs. Firms must have both!

Slide 38: Meyer Business Model Framework - Strategy

Separates strategy from business models. Strategy: industry or segment, target customers, products or services, products or services. Need to be answered first.

Slide 52: A New Pricing Model - Pricing Model Key Drivers

The most popular product option: Ex. bulk packaging, Min 4lbs 4 colors (M&Ms) The grey area represents the typical curve for increasing pricing and resulting demand—diminishing at a specific price point, increasing prices did not result in lower demand.

Slide 30: Better Strategy Better Margin - Strategies are successful...

These strategies are only successful if we've improved profit margin above the average firm in the industry.

Slide 19: Generic Strategies

Want to understand if a firm has a competitive advantage (achieves higher profitability) than the average in the industry. Four general ways that firms can obtain competitive advantage in mature markets with capable competitors.

Slide 35: Sustaining a Unique Position Requires Tradeoffs

a company can't be everything to everyone. Different customers are willing to pay for different attributes. To crate competitive advantages firms must forgo being the best on some activities so that they can excel on those that can help crate a distinct value proposition. What you choose to do is just as important as what you choose not to do.

Slide 31: Strategic Intent (statement of strategy)

a compelling statement about where an organization is going that succinctly conveys a sense of what that organization wants to achieve in the long term. Should drive decision making and an understanding of what the business is from the buyers. Ex: put a coke within arm's reach of every consumer in the world (reaching out to all segments)

Slide 3: What is strategy? Definition.

a strategy is an integrated set of choices (internal choices - configure all a firm's choices to attain a competitive advantage) that positions a firm in an industry (external environment - size up the external environment of a firm in its entirety - competitors, trends, what's going on to impact performance?) so as to generate superior financial returns (need these in order to continue doing all of the highlighted things) over the long-run (competitive dynamics - sustain a firm's competitive advantage over time)

Supporting activities

make the implementation of our core activities and statement of strategic intent or strategy successful. (IKEA ex: items in inventory, long term suppliers, store layout, customer assembly).

Core Activities

primary activities that ensure that the statement of strategic intent is followed. (IKEA Ex: limited customer service, customer self selection, modular furniture design, low mfg cost)

Slide 21: Outperforming Industry Average: Why would we look at profitability?

profitability allows us to compare the strategy of one firm with the other. Unlike market share or total revenue profits allow us to see the impact of strategic decision making and business model on their performance. Exception: if the firm's strategy is focused on growth, then then looking at market share might be more viable than profitability.

Slide 9: Strategy

refers to performing different activities from rials or performing them in a different way. Choose the right configuration of activities, incentives, systems. Make the right trade-offs. Strategy rests on unique activities.

Slide 9: operational effectiveness.

refers to the extent to which a firm performs similar activities better than rivals. My firm does the same activities as all competition, but better. Ex. Walmart excellent in inventory management, Toyota excellent in quality systems.

If you don't have a strategy...

you can't stake out competitive positions and activities that you need to support the potential positions or strategies if you don't have a strategy. It's the pivoting or testing that can inform if we are on the strategy. Need a strategy to start testing business model through key activities and supporting activities.