Summary of Foundations of Strategies By: Laura Carr, Ike Huestis, Brad Klingberg, Treanne Turner

The Role of Strategy in Success Goals that are simple, consistent, and long term Profound understanding of the competitive environment Objective appraisal of resources Effective implementation

PEST Analysis An environmental scanning framework Provides a simple yet systematic approach to identifying those factors that are likely to shape the competitive conditions within an industry

PEST Analysis Political Economic Licenses Standardization Restrictions on usage The level of economic activity The rapid take-up of mobile technologies in developing economies

PEST analysis Social Technological Health scares Changes in fashion Improvements

Porter’s Five Forces of Competition Framework

Porter’s Five Forces of Competition Framework 3 sources of “horizontal” competition Competition from substitutes Competition from entrants Competition from established rivals 2 sources of “vertical” competition The power of suppliers The power of buyers

Point 3: Putting resources and capability analysis to work Step 1- Identify the key resources and capabilities Step 2- Appraising resources and capabilities Resources and capabilities are most important in conferring sustainable advantage Strength and weaknesses as compared to companies Step 3- Developing strategy implications Determine key strengths and weakness

Step 1 Key capabilities Key Resources Tangible: 511 stores in 44 states Intangible: Reputation, relationships with brands Ex: UnderArmour and Nike Key Resources Golf pros Trainers Fisherman Footwear specialist

Step 2

Step 3 Not enough distributors to keep up with all 511 stores Plan to build a new 600,000 sq ft distribution center Allow up to 250 more stores

Point 4 Sustaining Competitive Advantage Identify Incentive Diagnosis What companies pose a threat Incentive What product can be imitated Diagnosis Putting the product out Resource acquisition Have resources and capabilities to imitate the strategy of the company

Dicks Sporting goods Golf Headquarters Academy Gander Mountain Golf Galaxy (First and Only Interactive golf store) On site PGA pros, technicians Academy More Clothes, Footwear and Workout gear Have footwear specialists and trainers on site Gander Mountain Provided more fishing, hunting and outdoor equipment Have expert fisherman and hunters on site Archery experts on staff

Ch. 5 Business Strategies in Different Industry and Sectoral Contexts Summary Classifying industries according to their stage of development can in itself be an insight exercise because: It acts as a shortcut in strategy analysis It encourages comparison with other industries It directs attention to the forces of change and direction of industry evolution

Ch 5. Learning Objectives Recognize the different stages of industry development Identify the key success factors associated with industries at different stages Recognize challenges in strategic decision making Be able to use stakeholder analysis Be able to use scenarios to explore industry and organizational futures

How Dick’s Sporting Engages in Strategy Analysis Five Forces Model Sporting Goods Retail Industry Rivalry Among Existing Firms High Threat of New Entrants Moderate Threat of Substitute Products Bargaining Power of Buyers Bargaining Power of Suppliers

Ch. 6 Technology-based Industries and the Management of Innovation Summary Despite turbulence and uncertainty, there are analytical principles that can guide us toward strategies that can improve odds such as: Evaluating an innovation’s potential to generate profit Assessing the relative merits of licensing, alliances, joint ventures and internal development as alternative strategies for exploiting an innovation Identifying the factors that determine the comparative advantages of being a leader or a follower in innovation

Ch 6. Learning Objectives Analyze how technology affects industry structure and competition Identify the factors that determine the returns to innovation Formulate strategies for exploiting innovation and managing technology Design the organizational conditions needed to implement such strategies successfully

How Dick’s Sporting Goods Manages Innovation "DICK'S Sporting Goods innovates by separating itself from the pack. DICK'S associates do not talk about accomplishing a task; they discuss it briefly and almost immediately begin to execute. DICK'S is always one (or several) steps ahead of the competition. While others are refining their process for step 8, DICK'S has jumped to step 10 and is in the process of creating step 11. Open communication and high intellectual horsepower across departments creates an atmosphere that fosters this rapid innovation cycle." Director of Merchandising, Marketing & Management Systems

The Cooperation Problem The Agency Problem: When a contracted agent’s goals may not be inline with the principal’s goals. Classic Example: Manager’s worried only about their own careers. Shareholder’s concerned with creating wealth

How it Relates to Dick’s Dick’s Sporting Goods hires professional golfers to work in their store. One of their primary job responsibilities include selling merchandise to customers. Professional golfers usually love their sport, and may not want to sell gear to customers that don’t need it.

How Dick’s Solve the Problem Performance Incentives Like most sales positions, part of their pay comes from commission. Other forms of incentives can include bonuses for managers or stock options for executives, as the better their company does the more their stocks are worth.

Diversification The expansion of an existing firm into another product line or field of operation. Can be related (Concentric) or unrelated (Conglomerate). Can be vertical or horizontal diversification.

How it Relates to Dick’s Dick’s Sporting Goods main focus is selling sports equipment. However, the company also sells other concentric merchandise, such as outdoor equipment. This reduces risk. Also, selling merchandise for many different sports reduces risk. Lockouts Seasonal sports