PART 1 Concepts and Techniques for Crafting and Executing Strategy 1
Section A: Introduction and Overview
1 What Is Strategy and Why Is It Important? 2
WHAT DO WE MEAN BY STRATEGY? 3
Strategy Is about Competing Differently 4
Strategy and the Quest for Competitive Advantage 4
Why a Company’s Strategy Evolves over Time 8
A Company’s Strategy Is Partly Proactive and Partly Reactive 8
A COMPANY’S STRATEGY AND ITS BUSINESS MODEL 9
WHAT MAKES A STRATEGY A WINNER? 12
WHY CRAFTING AND EXECUTING STRATEGY ARE IMPORTANT TASKS 13
Good Strategy + Good Strategy Execution = Good Management 13
THE ROAD AHEAD 14
ILLUSTRATION CAPSULES
11 Starbucks’s Strategy in the Coffeehouse Market 6
12 Pandora, SiriusXM, and Over-the-Air Broadcast Radio: Three Contrasting Business Models 11
2 Charting a Company’s Direction: Its Vision, Mission, Objectives, and Strategy 18
WHAT DOES THE STRATEGY-MAKING, STRATEGY-EXECUTING PROCESS ENTAIL? 19
STAGE 1: DEVELOPING A STRATEGIC VISION, MISSION STATEMENT, AND SET OF CORE VALUES 20
Developing a Strategic Vision 21
Communicating the Strategic Vision 21
Developing a Company Mission Statement 24
Linking the Vision and Mission with Company Values 25
STAGE 2: SETTING OBJECTIVES 26
The Imperative of Setting Stretch Objectives 26
What Kinds of Objectives to Set 28
The Need for a Balanced Approach to Objective Setting 28
Setting Objectives for Every Organizational Level 30
STAGE 3: CRAFTING A STRATEGY 31
Strategy Making Involves Managers at All Organizational Levels 31
A Company’s Strategy-Making Hierarchy 32
Uniting the Strategy-Making Hierarchy 35
A Strategic Vision + Mission + Objectives + Strategy =A Strategic Plan 35
STAGE 4: EXECUTING THE STRATEGY 36
STAGE 5: EVALUATING PERFORMANCE AND INITIATING CORRECTIVE ADJUSTMENTS 37
CORPORATE GOVERNANCE: THE ROLE OF THE BOARD OF DIRECTORS IN THE STRATEGY-CRAFTING, STRATEGY-EXECUTING PROCESS 37
ILLUSTRATION CAPSULES
21 Examples of Strategic Visions―How Well Do They Measure Up? 23
22 Patagonia, Inc: A Values-Driven Company 27
23 Examples of Company Objectives 30
24 Corporate Governance Failures at Volkswagen 40
Section B: Core Concepts and Analytical Tools
3 Evaluating a Company’s External Environment 46
THE STRATEGICALLY RELEVANT FACTORS IN THE COMPANY’S MACRO-ENVIRONMENT 47
ASSESSING THE COMPANY’S INDUSTRY AND COMPETITIVE ENVIRONMENT 49
THE FIVE FORCES FRAMEWORK 50
Competitive Pressures Created by the Rivalry among Competing Sellers 52
The Choice of Competitive Weapons 54
Competitive Pressures Associated with the Threat of New Entrants 54
Competitive Pressures from the Sellers of Substitute Products 58
Competitive Pressures Stemming from Supplier Bargaining Power 60
Competitive Pressures Stemming from Buyer Bargaining Power and Price Sensitivity 62
Is the Collective Strength of the Five Competitive Forces Conducive to Good Profitability? 65
Matching Company Strategy to Competitive Conditions 65
COMPLEMENTORS AND THE VALUE NET 66
INDUSTRY DYNAMICS AND THE FORCES DRIVING CHANGE 67
Identifying the Forces Driving Industry Change 67
Assessing the Impact of the Forces Driving Industry Change 70
Adjusting the Strategy to Prepare for the Impacts ofDriving Forces 70
STRATEGIC GROUP ANALYSIS 71
Using Strategic Group Maps to Assess the Market Positions of Key Competitors 71
The Value of Strategic Group Maps 73
COMPETITOR ANALYSIS 74
KEY SUCCESS FACTORS 75
THE INDUSTRY OUTLOOK FOR PROFITABILITY 76
ILLUSTRATION CAPSULES
31 Comparative Market Positions ofSelected Companies in the Casual Dining Industry: AStrategic Group Map Example 72
4 Evaluating a Company’s Resources, Capabilities, and Competitiveness 82
QUESTION 1: HOW WELL IS THE COMPANY’S PRESENT STRATEGY WORKING? 83
QUESTION 2: WHAT ARE THE COMPANY’S MOST IMPORTANT RESOURCES AND CAPABILITIES, AND WILL THEY GIVE THE COMPANY A LASTING COMPETITIVE ADVANTAGE OVER RIVAL COMPANI
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