Summary Strategy and Entrepreneurship (Bridging program / Master of business administration)

Strategy and entrepreneurship
Chapter 1: The definition and importance of strategy

Core concept:
 Strategy is about competing differently from rivals. It’s about doing what competitors are not
currently doing or doing what they can’t do at all.
 A company’s strategy is the set of actions that its managers take to outperform the
company’s competitors and achieve superior profitability.
 How well a company performs is directly attributable to its strategy and the proficiency with
which the strategy is executed.


What do we mean by strategy?
1. Context: What is our present situation?
 Business environment and industry conditions
 Firm’s financial and competitive capabilities


1. Content: Where do we want to go from here?
 Creating a vision for the firm’s future direction


1. Process: How are we going to get there?
 Crafting an action plan for heading the firm in the intended direction, staking out a market
position, attracting customers, achieving the targeted financial and market performance, and
getting the firm where it wants to go.  This is the strategy.


What is strategy about?
Strategy is all about How:
 How to attract and please customers.
 How to compete against rivals.
 How to position the firm in the marketplace to capitalize on opportunities for growth.
 How to respond to changing economic and market conditions.
 How to manage each functional piece of the business.
 How to achieve the firm’s performance targets.
What is strategy not about?
 Strategy is NOT about being the best, the biggest or the first  This is volatile, can be copied
and is unclear

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,  Growth strategy: Being bigger is not always better. It’s about being different. Don’t try for the
sake of just growing or other non-relevant goals like prestige, ego, money. Growing should
create value for your customers, employees, product and everybody/everything involved in
your business.




Identifying a firm’s strategy – pattern




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, The quest for competi ti ve advantage


Competitive Advantage
 A firm achieves a competitive advantage when it provides buyers with superior value
compared to rival sellers or offers the same value at a lower cost to the firm.
 Requires meeting customer needs either more effectively (with products or services that
customers value more highly) or more efficiently (by providing products or services at lower
cost).


Sustainable Competitive Advantage
 The firm achieves a sustainable competitive advantage if its advantage persists despite the
best efforts of competitors to match or surpass its advantage.
 Requires giving buyers lasting reasons to prefer a firm’s products or services over those of its
competitors.


Effi ciency versus eff ecti veness


Difference between operational excellence and strategy:
Both are essential, but the agendas are different.
 The operational agenda means continuous improvement and efforts; flexibility; there are no
tradeoffs.
 The strategic agenda is the right place to define a unique position, where tradeoffs need to
be made.


The difference: Efficiency means doing things right and effectiveness means doing the right
things.


 Strategy is more about effectiveness. Efficient is something that is expected from any company
regardless of what your strategy might be. It’s not a choice. Effectiveness however is all about making
the right decisions and choices.




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, Why does an organizati on’s strategy evolve over ti me?


Managers modify strategy in response to:
 Changing market conditions
 Advancing technology
 Fresh moves of competitors
 Shifting buyer needs
 Emerging market opportunities
 New ideas for improving the strategy


Strategic management principle:
 Changing circumstances and ongoing management efforts to improve the strategy causse a
company’s strategy to evolve over time—a condition that makes the task of crafting strategy
a work in progress, not a one-time event.
 A company’s strategy is shaped partly by management analysis and choice and partly by the
necessity of adapting and learning by doing.


Realized (current) strategy is a blend of:
Proactive (deliberate) strategy: Elements that include both continued and new initiatives.
Reactive (emergent) strategy: Elements that are required due to unanticipated competitive
developments and fresh market conditions.




The relationship between an organization’s strategy and its business model


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