Chapter 1 The concept of strategy By: Krista Andreassen Benji Padilla John Thrash Andrew Harrison

Lady Gaga Case Became a multi-faceted superstar by creating a persona that’s ‘larger than life’ and transcends pop music. Established a business model that ‘recognizes the realities of the post-digital world of entertainment’ Followed the idea, “first create market presence, then monetize that presence” Puts emphasis on building a relationship with her fans Fans look at her fashion and look as more of a social statement of non-conformity rather than just fashion alone. Her first 3 albums sold for a total of 26 million copies Debut tour grossed $227.4 Million (most for any debut artist) 5 Grammys 13 VMA’s

How Amazon competed against other online bookstores? Customer Experience Augmented service Frugality Growth strategy

The role of strategy in success Goals are consistent, simple, and long term Understanding the competitive environment Objective appraisal of resources Effective implementation

Brief history of Strategy Military and business strategy share common concepts

The Evolution of Business Strategy 1970s- 80s Today 1950s Companies growing in size, corporate planning Shift from planning to strategy- strategic management Disruptive technologies create less on plans, creating more options for the future!

Strategy Today What is strategy? Strategy is the means by which individuals or organizations achieve their objectives. As the business environment has become more unstable and unpredictable, strategy has become less concerned with detailed plans and more about the quest for success. The quest for success is fulfilled with proper direction.

Corporate V. Business Strategy Corporate Strategy: defines the scope of the firm in terms of the industries and markets in which it competes. EX: decisions including vertical integration, new ventures, investments and diversification Business Strategy: is concerned with how the firm competes within a particular industry or market - - Competitive strategy: is the area of strategy where it must establish a competitive advantage over its rivals EXAMPLE: Lady Gaga branched from recorded music to live concerts and interactive games which is an example of her corporate level strategy. Her social media interactions and how she presents herself is an example of business strategy. Corporate Strategy: defines the scope of the firm in terms of the industries and markets in which it competes Business Strategy: is concerned with how the firm competes within a particular industry or market

How do we Describe a firm’s strategy? Competing in the present can be defined as strategy Positioning Preparing for the future can be defined as strategy Direction

How do we identify a firm’s strategy? Strategy is located in three places: in the heads of the Chief Executive, senior managers, and other members of the organization. The firm’s strategy is influenced: from their mission statement, principles, values, and vision statement To further identify a firm's strategy: we would need multiple sources of information to cross reference such as financial statements to see where they’re investing their money, what new products are being released, and other sources of intel such as their technology usage and advancements.

How is strategy made? Realized strategy Emergent Strategy Conceived by top management team Intended Strategy Realized strategy Actual Strategy Interpret intended strategy and adapt to changing external circumstances Emergent Strategy Combines strategic planning of design and emergence Planned Emergence Intended Strategy: is strategy conceived of by the top management team Realized Strategy: the actual strategy that is implemented Emergent Strategy: the decisions that emerge from the complex processes in which individual managers interpret the intended strategy and adapt to changing external circumstances Planned Emergence: combines the strategic planning of design and emergence +

What role does strategy perform? Decision support, a coordinating device, a target, and as animation and orientation Decisions can be simplified communicate a firm's ideology set target goals to hit and strategies made into visuals to help work stay on an accurate path.

Strategy: In whose interest? Shareholders VS Stakeholders Organizations are created to accomplish goals. Organizations are made up of different individuals and groups which can all have different goals that can conflict with one another. Organizations need to be able to manage and prioritize the needs and goals of all stakeholders and shareholders alike. Organizations need to be able to identify what group each stakeholder is apart of so they can satisfy each stakeholder group as effectively as possible.

The Kraft takeover of Cadbury Cadbury was a family owned organization that was founded in 1824 and had stayed in the Cadbury family until Kraft tried to buy it in 2010. Stakeholders got worried that the takeover would mean that Cadbury would lose its broad view of their purpose and would just care about maximizing profits. It is important for organizations to find a middle ground when deciding how to approach keeping stakeholders and shareholders satisfied for long term benefit of the organization.

Profit and Purpose The world's most successful companies in terms of profits and shareholder value tend to be those that are motivated by factors other than profit. Some organizations can lose sight of their purpose by just worrying about the keeping their profits above the competition which can be very destructive to the companies longevity and they can lose sight on why they are in business in the first place.

Corporate social responsibility CSR is about running an organization in a responsible, professional, and a sustainable way to benefit society as a whole. Competition: Interest of stakeholder and shareholders converges around the same goal when it is survival. Few companies have the luxury of pursuing goals other than profit maximization. Simplicity: in the stakeholder approach there are multiple goals and it is all about making trade-offs with the different groups

Not-for-profit organizations Not for profit operate very similarly to a for profit firm if they are in a competitive market. Resource allocation is very important on the distribution side and the allocation side for all Not-for-profit organizations. Competing for funding is one of the key areas for not-for-profit organizations.

Tough Mudder Case Tough Mudder is a ‘Mud Run’ Company that was opened in 2010 by College buddies Will Dean & Guy Livingston After attending a mud run while enrolled in college, Dean & Livingston launched a run of their own Tough Mudder aimed to take control of the endurance sport market by separating themselves from the competition. To do so, Tough Mudder made a point to claim the title of “toughest race on the planet” while reaching a wide-ranging pool of customers.

Tough Mudder Case To obtain the target market they had planned for, Tough Mudder took a number of steps to reposition itself in the market; The race is no longer timed Made collaborative ‘No man left behind’ mindset, regardless of finishing time Corporate Clientele (corporate team building retreats) Strategic Partnerships (Wounded Warriors Project) Management Ideals Focuses on two factors; Strategy & Culture Building an identity Hiring to right people

Tough Mudder Case Tough Mudder beat out the competition in the endurance sport market with three important factors; Strategic Market Positioning Effective Brand Building Focusing on the Customer Experience

Understand the basic approach to strategy. Class Takeaways Strategy is a prerequisite to success, for both individuals and organizations. Understand the basic approach to strategy. Obtain a good understanding of CSR, and understand that profits are not the only reason for a socially responsible organization’s existence.