Chapter 2: Understanding Strategies

Chapter 2: Understanding Strategies

1. Direction in which an organization plans to move.

   • For attaining its goals.

2. Developed by matching a firm core competencies with industry opportunities.

3. Found at two levels

   • Corporate-Level Strategy
     • What kind of businesses should the firm be in?
       • Single Industry Firm
         • Competes in only 1 industry
       • Related Diversified Firm
         • Sharing of core competencies across businesses
         • Firms that operate in a number of industries.
       • Unrelated Diversified Firm
         • Totally autonomous businesses
           • In very different markets
     • Core competency
       • Intellectual asset in which a firm excels.
   • Business Unit- Level Strategy
     • How to create and maintain competitive advantage in each of the industries?
       • Business Unit Mission
         • Build
         • Hold
         • Harvest
         • Divest
       • Competitive Advantage.
         • Low Cost.
         • Differentiation.
     • Tools
       • Portfolio Matrices.
         • Business Unit´s mission.
         • "Market attractiveness" and "market share".
         • Models
           • Boston Consulting Group (BCG).
             • Question mark.
             • Star.
             • Cash Cow.
             • Dog.
           • The General Electric Company / McKinsey & Company.
       • Industry Structure Analysis.
         • For opportunities and threats in the external marketplace.
         • Porter´s Five Forces Model
           • Rivalry among competitors.
           • Power of customers.
           • Power of suppliers.
           • Threat from substitutes.
           • New Entrants.
       • Value Chain Analysis.
         • Value creating activities to produce a product.
         • From raw materials to post delivery support.
         • Where in the company´s operations customer value can be enhanced or costs lowered.
         • Develops competitive advantage
           • Low cost
           • Differentiation
           • Cost-cum-differentiation

4. Supported by control systems.