What Is A Strategy and Why Does It Matter - v2

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What is strategy and why does it matter?

What is strategy?
“Strategy is a framework which guides

those choices that determine the nature
and direction of an organization.”
B. Tregoe & John W. Zimmerman

“Top Management Strategy”
What is strategy?
“Strategy is the creation of a unique and

valuable position, involving a different
set of activities.”
Michael Porter
“What is Strategy?”
Harvard Business Review
What is strategy?
“In terms of the three key players (competitors,

customers, company) strategy is defined as
the way in which a corporation endeavours to
differentiate itself positively from its
competitors, using its relative corporate
strengths to better satisfy customer needs.”
-Kenichi Ohmae
“The Mind of the Strategist”
What is strategy?
“Four dimensions define a business strategy:

the product-market investment strategy, the
customer value proposition, assets and
competencies, and functional strategies and
programs. The first specifies where to
compete, and the remaining three indicate
how to compete to win.”
David Aaker
“Strategic Market Management”
What are the dimensions of a business
strategy?
• There are four dimensions to a business strategy
– The product-market investment strategy
– The customer value proposition
– Your assets and competencies
– Your functional strategy
• The first one specifies what market you are

competing in, the others indicate how you intend
to win
You should always know where and
how you are competing
Where to Compete
The product-market investment decision
Your strategy
Your strategy
How to Compete
Value Assets & Function Area
Proposition Competencies Strategies
You should always know where and
how you are competing
The Product-Market Investment What is your customer value
Strategy – which are you in? proposition?
• Invest to grow • Value?
• Invest to maintain • Choice?
• Milk the business • Quality?
• Divest • Innovation?
• Service?
What are your assets? What are your functional strategies

• Assets are resources that you • Manufacturing?
can deploy to achieve your • Distribution?
strategy (capital, human, • Communication?
technological, etc.)
• Customer and quality?
What are your competencies?
• Brand?
• What do you do exceptionally
• IT?
well?
What is the starting point for a strategy?
Mission What is the purpose of the organisation? It
statement must be in line with its values and stakeholder
expectations
Vision / What is the desired future state of the
intent organisation? What is the aspiration?
Goal / What are the aims of the organisations and
objectives how will they be measured?
Capabilities What are the resources, activities or processes
that will deliver a competitive advantage?
Critical What are the product / service features that are
Success valued by customers and so require the
Factors organisation to excel?
It is important to link your strategy to
your value chain
Support Activities
Firm Infrastructure
Human Resources
Technology Development
Procurement
Inbound Outbound Marketing

Operations Service
Logistics Logistics and sales
Primary Activities
What is good value?
“Price is what you pay,

value is what you get!”
Warren Buffett
What is value to the consumer?
• Value is defined, not by what the organisation does but by

the customers
• The customer is only concerned with the outcome, not with
who does what
• How do you differentiate yourself from your competitors?
Value to consumer
Consumer Surplus
Price to consumer
Profit
Cost to produce
Aligning your price / value combination
to your strategy is key
How do you create a strategy?
When the strategy journey is complete,
you should know your SWOT
Strengths Weaknesses
• What are your strengths? • What are you not-so-good at?
• How are you better than your • What are your competitors better at?
Internal competitors? • What internal factors are hindering
• Why do customers prefer you? you?
• What is unique about you?
Opportunities Threats
• What are the opportunities you • What obstacles do you face?
are trying to take advantage of? • What is the competition doing that
External • What are the trends in your you're not?
industry? • What challenges can be turned into
• What is happening in the opportunities?
economy? With your
customers?
There are four ways to strategically
develop
Existing Products New Products
Existing Protect / build Product development

Markets • Consolidate position • With existing capabilities
• Increase market • With new capabilities
penetration
New Market development Diversification

Markets • New segments • With existing capabilities
• New geographies • With new capabilities
• New uses
There are three ways to sustain
competitive advantage
Price based strategies
• Reduced Margin
• Price war
• Reduce costs
• Focus on specific segments
Differentiation
• Create something that is
difficult to imitate
Sustainable • Reinvest profits
competitive • Imperfect mobility
advantage
Lock-in
• Achieve market dominance
• First mover advantage
• Reinforcement
What is strategy and why does it
matter?
• Strategy is concerned with the long term direction
of an organisation
• Strategy is concerned with the scope of an
organisations activities
• Strategy is about trying to achieve a competitive
advantage over the competition
• Strategy is about identifying the strategic fit
between an organisation, its capabilities and its
environment
Johnston, Scholes and Whittington

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KlassKidShoes.

What is strategy and why does it matter?

“Strategy is a framework which guides

B. Tregoe & John W. Zimmerman

“Strategy is the creation of a unique and

“In terms of the three key players (competitors,

“Four dimensions define a business strategy:

• The first one specifies what market you are

What are your assets? What are your functional strategies

Inbound Outbound Marketing

“Price is what you pay,

• Value is defined, not by what the organisation does but by

Existing Protect / build Product development

New Market development Diversification

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