Part Two © 2007 John Wiley & Sons Creating, Adapting, and Implementing Strategy Copyright © 2010 John Wiley & Sons, Inc All rights reserved Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc The purchaser may make back-up copies for his/her own use only and not for distribution or resale The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-1 © 2007 John Wiley & Sons Chapter Seven Creating Advantage: Synergy and Commitment vs Opportunism vs Adaptability Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-2 The Sustainable Competitive Advantage The TheWay WayYou YouCompete Compete ••Product Productstrategy strategy ••Positioning Positioningstrategy strategy ••Manufacturing Manufacturingstrategy strategy ••Distribution Distributionstrategy, strategy,etc etc © 2007 John Wiley & Sons Basis Basisof ofCompetition Competition ••Assets Assetsand andcompetencies competencies SCA What WhatYou YouOffer Offer ••Value ValueProposition Proposition Where WhereYou YouCompete Compete ••Product-market Product-marketselection selection ••Competitor Competitorselection selection Chapter - Creating Advantage, Synergy and Strategic Philosophies Figure 7.2 PPT 7-3 SCAs SCAs © 2007 John Wiley & Sons versus versus KSFs KSFs Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-4 © 2007 John Wiley & Sons SCA Study • 248 businesses asked for SCA • Average number of SCAs—4.6 • Top named of 30: Quality reputation—105 Customer service—78 Name visibility—71 Management/staff—65 Low-cost production—53 Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-5 © 2007 John Wiley & Sons Synergy • Two or more businesses in combination will generate: – Increased customer value and thus loyalty and/or sales – Lower operating costs – Reduced investment • Challenge – Finding it – Overcoming organizational issues • Especially when an alliance is involved Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-6 Core Assets & Competencies • Assets & competencies that underlie a large set of businesses © 2007 John Wiley & Sons • A tree metaphor illustration Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-7 Strategic Philosophies • Strategic commitment © 2007 John Wiley & Sons • Strategic opportunism • Strategic adaptability Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-8 Strategic Commitment • Assumes that the current strategy will work into the future • Tunnel vision—avoid distractions © 2007 John Wiley & Sons • Buy-in throughout the organization • Improve the offering, the costs, the customer relationships • Patience Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-9 Strategic Opportunism • Assumes a fast changing market and that it is not possible to predict the future so that the best strategy is to be sensitive to current opportunities and exploit them © 2007 John Wiley & Sons • Short-term oriented • Decentralized, entrepreneurial, risk taking organization Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-10 Strategic Adaptability • Assumes a changing market and that the organization can predict and manage responses to those changes © 2007 John Wiley & Sons • A medium term perspective • Organization is flexible and supports investments behind trends Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-11 © 2007 John Wiley & Sons Vision versus Opportunism Strategic Approach Strategic Risk Strategic Commitment Strategic Stubbornness Strategic Opportunism Strategic Adaptability Chapter - Creating Advantage, Synergy and Strategic Philosophies Strategic Drift Strategic Strategic Drift Blunders— Misreading Trends Figure 7.5 PPT 7-12 Blended Philosophies • Involves all three philosophies • Each is often needed • Starbuck’s © 2007 John Wiley & Sons – Ice Cream – Coffee in United – Kiosks in supermarkets – Instant coffee in supermarkets Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-13 © 2007 John Wiley & Sons Key Learnings • To create an SCA, a strategy needs to be valued by the market and supported by assets and competencies that are not easily copied or neutralized by competitors The most common SCAs are quality reputation, customer support, and brand name • Synergy is often sustainable because it is based on the unique characteristics of an organization • Strategic commitment, involving a stick-to-your-knitting focus on a clearly articulated strategy, is based on an assumption that the business model needs to be refined and improved and not changed Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-14 © 2007 John Wiley & Sons Key Learnings • Strategic opportunism assumes that the environment is so dynamic and uncertain that it is futile to predict the future and invest behind those predictions The more prudent and profitable route is to detect and capture opportunities when they present themselves, with a goal of achieving immediate profits • Strategic adaptability, based on the assumption that is possible to understand, predict, and manage responses to market dynamics that emerge and even create or influence them, is about managing relevance • A blended strategy uses all three over time and over products Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-15 © 2007 John Wiley & Sons Ancillary Slides Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-16 © 2007 John Wiley & Sons “All men can see the tactics whereby I conquer, but what none can see is the strategy out of which great victory is evolved.” -Sun-Tzu Chinese military strategist Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-17 © 2007 John Wiley & Sons “Don’t manage, lead.” -Jack Welch, GE Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-18 © 2007 John Wiley & Sons “Where absolute superiority is not attainable, you must produce a relative one at the decisive point by making skillful use of what you have.” -Karl von Clusewitz, On War, 1832 Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-19 © 2007 John Wiley & Sons “Business more than any other occupation is a continual dealing with the future; it is a continual calculation, an instinctive exercise in foresight.” Chapter - Creating Advantage, Synergy and Strategic Philosophies - Henry R Luce PPT 7-20 © 2007 John Wiley & Sons “The rewards in business go to the man who does something with an idea.” - William Benton Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-21 “No one can possibly achieve any real and lasting success or “get rich” in business by being a conformist.” © 2007 John Wiley & Sons - J Paul Getty Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7-22 ... illustration Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7- 7 Strategic Philosophies • Strategic commitment © 20 07 John Wiley & Sons • Strategic opportunism • Strategic adaptability... trends Chapter - Creating Advantage, Synergy and Strategic Philosophies PPT 7- 11 © 20 07 John Wiley & Sons Vision versus Opportunism Strategic Approach Strategic Risk Strategic Commitment Strategic. .. Stubbornness Strategic Opportunism Strategic Adaptability Chapter - Creating Advantage, Synergy and Strategic Philosophies Strategic Drift Strategic Strategic Drift Blunders— Misreading Trends Figure 7. 5