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WHAT IS STRATEGY?
THE SET OF ACTIONS THAT FIRMS TAKE TO DELIVER SUPERIOR PERFORMANCE TO
HAVE COMPETITIVE ADVANTAGE.
WHAT IS STRATEGY?
AS PER MICHAEL PORTER, HARVARD PROFESSOR, COMPETITIVE STRATEGY IS
• “A BROAD FORMULA FOR HOW A BUSINESS IS GOING TO COMPETE,
• WHAT ITS GOALS SHOULD BE, AND
• WHAT POLICIES WILL BE NEEDED TO CARRY OUT THOSE GOALS.”
REACTIVE, RESPONSES TO
UNANTICIPATED
DEVELOPMENTS AND FRESH
MARKET CONDITIONS.
REALIZED BUSINESS
STRATEGY MODEL
Competitive Value
Initiatives
$$$? Proposition
Business Profit
Approaches Formula
CONTINUE…
BUSINESS MODEL:
• MANAGEMENT’S BLUEPRINT FOR DELIVERING A VALUABLE PRODUCT OR SERVICE TO
CUSTOMERS
• GENERATE REVENUES SUFFICIENT TO COVER COSTS AND YIELD AN ATTRACTIVE PROFIT.
2. PROFIT FORMULA: DESCRIBES THE COMPANY’S APPROACH TO DETERMINING A COST STRUCTURE THAT
WILL ALLOW FOR ACCEPTABLE PROFITS, GIVEN THE PRICING TIED TO ITS CUSTOMER VALUE PROPOSITION.
CONTINUE…
CONTINUE…..
THE FIT TEST : HOW WELL DOES THE STRATEGY FIT THE COMPANY ’ S SITUATION?
• WELL MATCHED TO INDUSTRY AND COMPETITIVE CONDITIONS
• COMPANY’S BEST MARKET OPPORTUNITIES AND OTHER BUSINESS ENVIRONMENTS IN WHICH COMPANY
OPERATES.
• IT EXHIBITS INTERNAL FIT AND COMPATIBLE WITH COMPANY’S ABILITY TO EXECUTE THE STRATEGY IN COMPETENT
MANNER.
• EXHIBITS DYNAMIC FIT – EVOLVE OVER TIME IN A MANNER THAT MAINTAIN EFFECTIVE ALIGNMENT WITH
COMPANY’S SITUATION CONTINUE….
CONTINUE….
PES Strategic Management – Chapter 1 25
IS OUR STRATEGY A WINNING STRATEGY? CONTINUED…