1. Strategy: An Overview 1. The Origins of Strategy
2. Understanding Industry Dynamics and
Competitive Dynamics
3. Creating and Sustaining Competitive Advantage

2. What is strategy?

3. What is strategy?
The term “strategy” Is intended to focus on the interdependence of the adversaries’ decisions and on their expectations about each other’s behavior. (Thomas C. Schelling)
Strategy can be defined as the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out those goals. (Alfred D. Chandler)
Strategy is a firm’s theory for how to earn superior profits (Jay Barney)

4. What is Strategy? Distinguishing strategy from tactics:
Strategy is the overall plan for deploying resources to establish a favorable position.
Tactic is a scheme for a specific maneuvre.
Characteristics of strategic decisions:
Important.
Involve a significant commitment of resources.
Not easily reversible. 6

5. The Rationalist School Versus The Process School
Deliberate choice process Chaotic organizational
Deliberate Strategy
Emergent Strategy
‘ PLANNING`
‘ CRAFTING`
Mintzberg’s critiques of strategic planning:
The fallacy of prediction -- the future is unknown.
The fallacy of detachment -- impossible to divorce formulation from
implementation.
The fallacy of formalization -- formalization inhibits flexibility, spontaneity,
intuition and learning. 8

6. Levels of Strategy and Organization Structure
Corporate
Head Office
Corporate
Strategy
Business
Strategy
Division A
Division B
R & D
R & D
Functional
Strategies
H R HR
Finance
Finance
Production
Production
Marketing/Sales
Marketing/Sales 17

7. Andrews’ Strategy Framework
Environmental Conditions and Trends
Economic
Technical
Physical
Political
Social
Community
Nation
World
Distinctive Competence
Capabilities:
Financial
Managerial
Functional
Organizational
Reputation
History
Consideration of all combinations
Corporate Resources
As extending or constraining opportunity Identification of strengths and weaknesses Programs for increasing capability
Evaluation to determine best match of opportunity and resources
Opportunities and Risks
Identification
Inquiry
Assessment of Risk
Choice of Products and Markets
Economic Strategy
© 1999 Pankaj Ghemawat
Source: Kenneth R. Andrews, The Concept of Corporate Strategy, 1971

8. Ansoff’s Product/Mission Matrix
© 1999 Pankaj Ghemawat
Source: Ansoff

9. Experience Curve for Semiconductor Memories
1976
100
1977 75
1978 50
Price per bit
(millicents)
1979 25
1980 10
1981
1982
1983
1984
0.1
1.0 10
100
Cumulated output
(bits x 1012)
© 1999 Pankaj Ghemawat
Source: Integrated Circuit Engineering Corporation

10. BCG’s Growth-Share Matrix?
High Share
Low Share
High Growth
Slow Growth
“Star”
“Question Mark”
“Cash Cow”
“Dog”
© 1999 Pankaj Ghemawat

11. The Industry Attractiveness-Business Strength Matrix
High
Medium
Low
Investment
and
Growth
Selective
Growth
High
Selectivity
Selective
Growth
Harvest/
Divest
Medium
Selectivity
Harvest/
Divest
Harvest/
Divest
Business Strength
Harvest/
Harvest/
Low
Selectivity
Divest
Divest
© 1999 Pankaj Ghemawat

12. Four Phases of Strategy
Dynamic Analysis
Static Analysis
1. Financial Planning:
Meet Annual Budget
2. Forecast-Based Planning:
Predict the Future
3. Externally Oriented Planning:
Think Strategically
4. Strategic Management:
Create the Future
© 1999 Pankaj Ghemawat
Source: Gluck et al

13. Two Determinants of Profitability
Environmental Attractiveness
Competitive
Position
Advantage
Disadvantage
Low
High
© 1999 Pankaj Ghemawat