STRATEGY IS WINNING DELIVERING: (1) SUPERIOR (2) SUSTAINABLE (3) PERFORMANCE (4) RELATIVE TO RIVALS (5) IN THE SAME INDUSTRY

STRATEGY STACK DR. MARK FRUIN BUSINESS 290/291

STRATEGY STACK GLOBAL STRATEGY as world economic system CORPORATE STRATEGY (multibusiness firms) GLOBAL STRATEGY (as part of corporate strategy) INDUSTRY/LINE OF BUSINESS STRATEGY (competitive advantage) PRODUCT/PLATFORM/SEGMENT STRATEGY FUNCTIONAL STRATEGY ORGANIZATIONAL SUBUNIT STRATEGY INDIVIDUAL UNIT-LEVEL STRATEGY

SETTING STRATEGY VISION, MISSION & GOAL STATEMENTS (depend on external & internal analyses, SWOT) ROLE OF STRATEGIC INTENT SETTING STRETCH GOALS  PRECISE & MEASURABLE  ADDRESS IMPORTANT ISSUES  CHALLENGING & REALISTIC  SPECIFIED TIME PERIODS  LINKED TO PERFORMANCE EVALUATIONS

STRATEGIC ANALYSIS EXPLAIN WHY A FIRM OR GROUP OF FIRMS MAKES ABOVE AVERAGE RETURNS (more than long-run ave costs or industry ave costs) THREE POSSIBLE EXPLANATIONS  SOMETHING TO DO WITH INDUSTRY IN WHICH THEY OPERATE; external, Porter 5 Forces analysis  SOMETHING SPECIFIC TO DO WITH THE FIRM; internal, Resource-based View (RBV) analysis  SOMETHING TO DO WITH (ART OF) CORPORATE GOVERNANCE; superior management of stakeholders

THEORIES & TYPES OF FIRMS THEORIES  NEO-CLASSICAL  AGENCY/NEXUS OF CONTRACTS  TRANSACTION COST ECONOMICS  EVOLUTIONARY  RESOURCE-BASED VIEW TYPES  SHAREHOLDER (PROPERTY) RIGHTS  SOCIAL (NATIONAL) WELFARE  EMPLOYEE WELFARE

WHAT IS A FIRM? VIEW OF THE FIRM UNDERPINS VIEW OF STRATEGY (Anglo-American 19th & 20th view) A FIRM IS A KIND OF ORGANIZATION HOW MANY DIFFERENT KINDS OF ORGANIZATIONS ARE THERE?  MARKETS  HIERARCHIES (FIRMS & BUREAUCRACIES  BUSINESS GROUPS & INTERFIRM NETWORKS? WHAT MAKES FOR A VIABLE ORG?