Bu481 In class Midterm
Chapter 1- 6,10
Chapter 1
What is Strategy
Strategy: A company’s strategy is a coordinate set of actions that its manager take in order
to outperform the company’s competitors and achieve superior profitability
Three Central Questions of a business:
1. What is our present situation?
2. What should the company’s future direction be and what performance target should
we set?
3. What’s our plan for running the firm and achieving our results
Identifying A firm's strategy:
Achieving competitive advantage requires:
● Meeting customers either more effectively or more efficiently
Achieving sustainable competitive advantage requires:
● Giving buyers lasting reasons to prefer a firm's product or service over its
competitors
, ● Developing expertise and long-term competitively valuable capabilities that cannot be
readily overcome by rivals
5 basic strategies for building competitive advantage:
1. Low cost provider
2. Focused differentiation
3. Focused low cost
4. Broad differentiation
5. Best cost provider
Low cost provider: achieving a cost-based advantage over rivals by driving costs out the
business
Ex. Temu, Amazon
Focused low cost: concentrating on a narrow buyer segment (or niche market) by having
lower cost to serve niche market at a lower price
Broad differentiation: differentiating the firm's product or service from rivals in ways that
appeal to a broad spectrum of buyers
Focused differentiation: concentrating on a narrow buyer segment (or market niche) by
offering buyers customized attributes that meet their specialised needs and tastes better
than rivals products
Best cost provider: giving customers more perceived value for their money by satisfying
their expectations on key quality features, performance, and or service value that match or
exceed their price expectations
Realized strategy:
Proactive (deliberate) strategy: elements that include planned initiatives to improve
the company’s financial performance and secure competitive advantage
Reactive (emergent) strategy: elements that were developed on the fly response to
unexpected circumstances
The customer value proposition:
● Satisfying buyers wants and needs at a price customers will consider good value
A winning strategy must pass 3 tests
1. The fit test
a. Does it fit with the internal and external aspects of the firm
2. The competitive advantage test
a. Is it helping the company achieve sustainable competitive advantage
3. The performance test
a. Is it producing superior performance
,Charting companies direction
Chapter 2
The strategy executing process
Do’s and Don’ts of wording a vision statement
, Stage 2: Setting objectives
Characteristics of well -stated objective:
● Specific
● Measurable
● Challenging
● Deadline
A balanced scoreboard approach:
● Strives to place a balanced emphasis on both financial and strategic
objectives by tracking measures of both financial performance and the
competitive of its market position
4 dimensions of a balanced scorecard:
1. Financial objectives
2. Customers objectives
3. Internal process objectives relating productivity and quality
4. Organizational objectives relating human capital, culture, infrastructure,
innovation
Stage 3: crafting strategy
● Addresses a series of strategic hows
● Requires choosing amongst alternatives
Chief executive officer (CEO):
● Has ultimate responsibility for leading the strategy-making process as the strategic visionary
and chief architect of strategy.
Senior executives:
● Fashion the major strategy components involving their areas of responsibility.
Managers of subsidiaries, divisions, geographic regions, plants, and other operating units (and
key employees with specialized expertise):
● Utilize on-the-scene familiarity with their business units to orchestrate their specific pieces of
the strategy
A firm's strategy making hierarchy
Chapter 1- 6,10
Chapter 1
What is Strategy
Strategy: A company’s strategy is a coordinate set of actions that its manager take in order
to outperform the company’s competitors and achieve superior profitability
Three Central Questions of a business:
1. What is our present situation?
2. What should the company’s future direction be and what performance target should
we set?
3. What’s our plan for running the firm and achieving our results
Identifying A firm's strategy:
Achieving competitive advantage requires:
● Meeting customers either more effectively or more efficiently
Achieving sustainable competitive advantage requires:
● Giving buyers lasting reasons to prefer a firm's product or service over its
competitors
, ● Developing expertise and long-term competitively valuable capabilities that cannot be
readily overcome by rivals
5 basic strategies for building competitive advantage:
1. Low cost provider
2. Focused differentiation
3. Focused low cost
4. Broad differentiation
5. Best cost provider
Low cost provider: achieving a cost-based advantage over rivals by driving costs out the
business
Ex. Temu, Amazon
Focused low cost: concentrating on a narrow buyer segment (or niche market) by having
lower cost to serve niche market at a lower price
Broad differentiation: differentiating the firm's product or service from rivals in ways that
appeal to a broad spectrum of buyers
Focused differentiation: concentrating on a narrow buyer segment (or market niche) by
offering buyers customized attributes that meet their specialised needs and tastes better
than rivals products
Best cost provider: giving customers more perceived value for their money by satisfying
their expectations on key quality features, performance, and or service value that match or
exceed their price expectations
Realized strategy:
Proactive (deliberate) strategy: elements that include planned initiatives to improve
the company’s financial performance and secure competitive advantage
Reactive (emergent) strategy: elements that were developed on the fly response to
unexpected circumstances
The customer value proposition:
● Satisfying buyers wants and needs at a price customers will consider good value
A winning strategy must pass 3 tests
1. The fit test
a. Does it fit with the internal and external aspects of the firm
2. The competitive advantage test
a. Is it helping the company achieve sustainable competitive advantage
3. The performance test
a. Is it producing superior performance
,Charting companies direction
Chapter 2
The strategy executing process
Do’s and Don’ts of wording a vision statement
, Stage 2: Setting objectives
Characteristics of well -stated objective:
● Specific
● Measurable
● Challenging
● Deadline
A balanced scoreboard approach:
● Strives to place a balanced emphasis on both financial and strategic
objectives by tracking measures of both financial performance and the
competitive of its market position
4 dimensions of a balanced scorecard:
1. Financial objectives
2. Customers objectives
3. Internal process objectives relating productivity and quality
4. Organizational objectives relating human capital, culture, infrastructure,
innovation
Stage 3: crafting strategy
● Addresses a series of strategic hows
● Requires choosing amongst alternatives
Chief executive officer (CEO):
● Has ultimate responsibility for leading the strategy-making process as the strategic visionary
and chief architect of strategy.
Senior executives:
● Fashion the major strategy components involving their areas of responsibility.
Managers of subsidiaries, divisions, geographic regions, plants, and other operating units (and
key employees with specialized expertise):
● Utilize on-the-scene familiarity with their business units to orchestrate their specific pieces of
the strategy
A firm's strategy making hierarchy
