01/08/03John Roberts1 Stanford GSB Sloan Program Stramgt 258: Strategic Management Strategy and Organization in the Global Economy Introduction AT&T in China

01/08/03John Roberts2 What is Strategy? How we will control our destiny How we will win

01/08/03John Roberts3 What is Strategy? Choice involving tradeoffs –Not operational excellence A framework for decisions and actions –Not tactics A mechanism for coordinating and motivating

01/08/03John Roberts4 Strategic Thinking versus Strategic Planning The responsibility of general managers versus staff On-going versus episodic Long-term but adaptive versus annual and fixed Embodied in decisions and actions rather than binders on shelves Business-relevant versus …

01/08/03John Roberts5 Strategizing Understand basis for current performance Evaluate environment, current position, organizational capabilities and resources Develop alternatives Evaluate –Consider fit, reactions Choose, communicate and implement Re-evaluate and adapt

01/08/03John Roberts6 Determinants of Performance Environment Strategy Organization Performance

01/08/03John Roberts7 Environment Suppliers Customers Technology Competitors, potential entrants and substitutes Complementors Legal, regulatory, social forces

01/08/03John Roberts8 Organization The means by which the organization actually gets things done Elements –People –Architecture –Routines and processes –Culture

01/08/03John Roberts9 Elements of Strategy Goal Scope Competitive advantage Logic

01/08/03John Roberts10 Strategic Goal What we are trying to accomplish What it means to win Implies measures to tell how we are doing

01/08/03John Roberts11 Strategic Scope What Where When How For whom Places limits on what we will do –Indicating what not to do is crucial!

01/08/03John Roberts12 Competitive Advantage Why others will deal with us at terms that let us meet our goal –Often, why customers will choose our products at prices that are profitable Typically, better cost or differentiation –Not price! Differentiation –Better perceived quality or better adapted to particular segment’s tastes

01/08/03John Roberts13 Cost/Perceived Quality Lower Cost Higher Perceived Quality Frontier of achievable choices

01/08/03John Roberts14 Cost/Perceived Quality Lower Cost Higher Perceived Quality Operational Improvements Strategic Choice

01/08/03John Roberts15 Sources of Competitive Advantage Position –Monopoly, reputation, brand, economies of scale, network effects and installed base, channel position, … Capabilities –Things you can do especially well –Nokia design, Toyota manufacturing Not (usually) resources

01/08/03John Roberts16 Logic Why it will work Why competitive advantage is real and how it will be realized How internal organization will support How fits with external environment

01/08/03John Roberts17 Three Foci of S258 Performance Environment StrategyOrganization S258 adopts the perspective of the general manager

01/08/03John Roberts18 Three Foci of S258 Performance Environment StrategyOrganization Cost-Quality Trade-off Plane P.I.E. and 5(+)Forces Globalization of Economies, Industries, Markets, and Non-Market Environment Strategy as Goals Competitive Adv Scope Logic BU vs. Corporate Capability vs. Position Global vs. Local (P)ARC: People/Architecture/ Routines/Culture Cooperation-Initiative trade- off plane VSR Model of Organizational Learning Explorer vs. Exploiter Multinational Design: Global/International/Multi- Local Role of Corporate