Strategy and

The Quest for Competitive Advantage

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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WHAT IS STRATEGY ABOUT?

Strategy is all about How:

How to outcompete rivals.

How to respond to economic and market

conditions and growth opportunities.

How to manage functional pieces of the

business.

How to improve the firms financial and

market performance.

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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WHAT DO WE MEAN BY STRATEGY ?

What is our present situation?

Business environment and industry conditions

Firms financial and competitive capabilities

Where do we want to go from here?

Creating a vision for the firms future direction

How are we going to get there?

Crafting an action plan that will get us there

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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Strategy
An integrated set of choices that
position a firm, in an industry, to
earn superior returns over the long
run

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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WHY DO STRATEGY ?
A firm does strategy:

To improve its financial performance.

To strengthen its competitive position.

To gain a sustainable competitive.

advantage over its market rivals.

A creative, distinctive strategy:

Can yield above-average profits.

Makes competition difficult for rivals.

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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STRATEGY AND COMPETITORS

Strategy is about competing differently
from rivals

Doing what they dont do or doing it better!

Doing what they cant do!

Doing that which sets the firm apart and

attracts customers.

Doing what we should or should not do to

produce a competitive edge.

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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Key initiatives of the Plan-to-Win strategy:

Improved restaurant operations
Affordable pricing
Wide menu variety and beverage choices
Convenience and expansion of dining opportunities
Ongoing restaurant reinvestment and international
expansion

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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Follow-up

Which of McDonalds Plan-to-Win strategy

initiatives are associated with meeting
customer needs more effectively?
Which initiatives are focused on more
efficiently delivering products and services?
Which initiatives will likely result in the most
enduring competitive advantage?

Which of the initiatives will competitors likely

attempt to overcome first?

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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The Quest for Competitive Advantage

Competitive Advantage

Meeting customer needs more effectively,

with products or services that customers
value more highly, or more efficiently, at
lower cost.

Sustainable Competitive Advantage

Giving buyers lasting reasons to prefer a

firms products or services over those of its
competitors.

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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Why a Firms Strategy Evolves over Time

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

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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1.2

A Companys Strategy Is a Blend of Proactive Initiatives

and Reactive Adjustments

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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IS OUR STRATEGY A WINNER?

The Strategic
Fit Test

The Competitive
Advantage Test

Winning
Strategy

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

The Performance
Test

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