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Week 1 - The Role of Strategy
January 14, 2020 12:03 PM
Exam: Sunday March 15 - 100 questions - Chapter 1-4 & 7
Attendance: 8% (Week 1 - Week 10)
Participation: 5% (notes on name care)
Individual Contribution to group presentation: 5% (on corporate social responsibility e.g.
Tesla, F21, Toms... Must have 3 minutes of presentation time e/a)
Academic Integrity Quiz: 2% on D2L
Class Breakdown (Typically)
• Approx. 1 hour lecture
• Approx. 1 hour in-class case work
• 30 minutes on presentation + Discussion
What's a "Strategy"
• Plan of action to reach a goal - forces you to think about the end point
• Competitive strategy - shorter time frame (18 months to two years)
• Corporate strategy (4-5 years)
• Define your goal in some sense
○ Goal should be achievable based on the resources that you have.
• A company's strategy is its Plan of Action to reach its goal within a timeframe
• Measure of a good strategy? Outperforming its competitors and achieving superior
profitability
• Who would you compare yourself to?
• Companies within the same industry
• Invisible competition
• Whoever is a credible threat
• Required to respond to The Fundamental Interconnectedness of the world??????
• US Government Shutdown - partial (adage.com/article/media/watch-colbert
• Interconnectedness of Strategy
• Apple- business vs. Corporate strategy
○ Macro economic impacts
○ Maturing industries
○ Growth markets
○ Competitive forces
• In all their markets - political factors, social factors, demographics...
• CES - industry change, maintaining competitive advantage, strategic decisions
• Apple revenue streams
○ E.g. iMac, iPhone, iPad, Apple watch, Apple tv.
○ How are they all connected?
○ How does drop in sales in iPhones in China affect Apple tv. In Canada?
• Thinking Strategically...
• Just for Fun: how would you breakup with your gf/bf?
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○ How should you do it? Quickly as possible, in person, rip off the band-aid
○ How does risk affect your choice?
• Strategy and Competition linked
• Strategy implies competing differently from rivals
○ Keep track of trends (kind of reacting)
○ Innovate constantly
○ Knowledge about consumers
• Open Source Innovation
○ Idea is put out there and people can contribute
○ Organization has access/controls
• Success comes from doing:
○ What they do, but better (Walmart)
○ What they don't do (cirque de Soleil)
○ What they can't do (Apple)
○ Things vertically integrated (Amazon)
• Can only bring them down if they do unethical stuff
A FIRM'S STRATEGY EVOLVES OVER TIME
• What's happening in the industry
• Technology changes
• Knowledge base of the company has to keep increasing
• Good intranet system - write down what you know
• Managers modify strategy in response to:
• Advancing technology
• Competitors moves
• Shifting buyer needs
• Emerging market opportunities
• New ideas for improving strategy
• Employees (network)
○ Where did you get information from, does it make sense, is it credible?
○ Show you care - employee satisfaction
EVOLVING NATURE OF A FIRM'S STRATEGY
• Realized (current) strategy is a blend of:
• Proactive (deliberate) strategy elements
• Reactive (emergent) strategy elements
• Relationship between a Business Model and Strategy
• Business model is a depiction of what you want to do, strategy gives you ideas
• How the business will make money:
○ By providing customers with value (Benefits > Price)
• The firm's customer value proposition
• Gap in market --> want to satisfy this gap
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• Elements of a successful strategy
• Grant et al. Pg 23 (get from book!!)
Describing Strategy
• The mission statement is the basic statement of organizational purpose; it addresses
"Why we exist."
• A statement of principles or values outlines "What we believe in and how we will
behave"
• The vision statement projects "What we want to be"
• The strategy "how we will be successful"
E.g. Princess Margaret Hospital:
• Vision (Conquer Cancer in our lifetime) --> focus & determination, within my
lifetime, brings hope, ambitious, brings everyone together, whos lifetime?? Not
measurable...
• Mission (to raise and steward funds to deliver breakthrough research, exemplary
teaching, and compassionate care at TPM, one of the top 5 cancer research centres
in the world) --> doesn't speak to someone at all, they put everything in there and
hope something would stick
• It should be "Be the Hospital of choice for compassionate care, breakthrough
research, and exemplary teaching"
Strategy "In the face" quote in book pg. 6
• Goal of Strategy
• Profits = metrics for strategy
• Each aspect of strategy will have cost or financial benefit
• But spending decisions are not strategies, nor are financial targets or financial goals
• Where is it investing its money?
• What is the company developing?
○ Other ways to measure strategy
• Market Share
• Customer Satisfaction
• New demographics
• New products
• New geographical locations
• Growth shouldn't be linear
• Not adapting from mistakes
• Not sustainable
• If they're really trying something new --> it will not constantly
increase. There will be ups and downs. They're hiding
information.
• New idea - Corporate Social Responsibility
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• Corporations have an obligation to society on a continuous basis
• Companies accepting responsibilities that extend beyond the immediate interest of
shareholders:
○ Ethical reasons
○ Reasons of self interest
○ Sustainability of the ecosystem
○ Reputation with consumers and third parties
○ License to operate (firms need the approval and support of the constituencies
on which they depend) -> legitimacy
Ex. Madonna
• Madonna has stayed on top for 3 decades
• Reason for survival for so long?
○ Keeps reinventing herself
○ Not only reacting to the change, but creates the change.
The Road Ahead
• Strategy - how to create change + respond to change
Homework
• Read Netflix Case before coming to class (only on the external environment)
Exercise: Who Killed the Duchess?
• There's a duke and duchess
• The duke is gonna fight a far with the king
• The dutchess should not leave the castle or she dies, she left the castle to meeet her love,
she left
• She has to cross the bridge
• The boatman says $500 to cross
• She asks her lover to give her $500
• She goes to her bffs house, give me $500 otherwise the madman will kill me? She
says nooo
• Life is lost
• Who's responsible for the duchess death
○ It's her fault because she didn't have to cross the bridge, no-one told her to
leave.
○ It's her own choice so she has to face the consequences
• You cant blame others for your misfortunes
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