Session 1: Everything you Need to Know about Strategy, Missions, Visions and Values!

Strategic Management

• examines how actions and events involving top executives, firms, and industries influence a firm’s success or failure

• involves the utilization or planned allocation of resources to implement major initiatives taken by executives on behalf of stakeholders to improve performance of firms in an environment

• part art and science: tools and creativity

Strategy

• involves many different processes and activities within an organization

• involves goals and objectives that an organization needs to achieve to be successful in the marketplace

• it is a higher level, broad goal, without a lot of specifics. It is long term and provides the direction that an organization wants to move toward to be successful

• New or revised strategies may be developed as a result of changes in the business environment

• firms revise/create new strats by assessing and reacting to external and competitive forces int he market and to maximize organizational performance

• by identifying their resources and capabilities, firms attempt to deploy these thru strategies that will give them a competitive advantage, so consumers will buy their product or service instead of a competitors

Winning a battle w/o fighting is the best way to win

even if ppl are competing on price, apple has a higher price, but has unique features. Creating its own unique market

• ex: elephants for cathrage against rome; hannibal

• ex. torjan horse

Hannibal and Strategy

• employed strategic resources

• took a diff path

• element of surprise

Strategic Management is the overall process used by strategists to engage in (3 things)

1) analysis 2) formulation 3) implementation (AFI Framework) of major goals and objectives in order to achieve competitive advantage

Strategy (a more formal def) (its one of the misused terms in business)

• goal-directed actions a firm takes to gain (and sustain) competitive adv over their rivals

• purpose to start a business isnt to make a profit, profit is the result of a well done strategy. the purpose is to achieve a competitive adv

Competitive Advantage

• firms ability to generate above average returns relative to that firm’s competitors

• not the same as profit, its broader in context; Just bc a firm is profitable doesnt mean that they have competitive adv

• What exactly gives Firm A competitive adv over Firm B?

• Competitive Disadvantage: undderperforms (below avg returns)

Sustainable Competitive Advantage

• outperform its competitors or the industry avg over a prolonged period

Competitive Parity

generating avg returns

goal is to move from comp parity to sustainable comp adv

Strategy is NOT

• growth strat, marketing strat, hr strat, to make as much money as possible

• not just steps that you want to take

• not zero sum game

• requires trade offs for strategic positioning

Strat is the quest to gain and sustain competitive adv over rivals

Its abt being diff from your rivals, creating value while containing cost, decideing what to do and what not to do, it combines a set of activities to stake out a unique position, it requires long term commitments that are often not easily reversible

A-F-I Strategy Framework Diagram

• helps explain and may help us predict differences in firm performance

• when a firm generates below average returns (relative to their competitors), they have a competitive advantage

• Analysis: diagnosis of competitive challenge

• Formulation: guiding policy to address the competitive challenge

• Implementation: a set of coherent actions to implement the firms guiding policy

Strategic Positioning

• unique position within an industry that allows the firm to provide value to customers, while controlling costs

• reqs firms to combine key activities: preforming fiff activities and performing the same activities differently than rivals

Mission, Visions and Values

• first step in gaining and sustaining a comp adv

• effective strategic leaders are able to convince employees to embrace lofty ambitions and move the organization forward

• poor strategic leaders struggle to rally their people and channel their collective energy in a positive direction

Vision Statements

• what do we want to accomplish ultimately

• vision inspires the people in the org

• describes the hopes for what the org can become in the future

• Visions highlight the values and aspirations that are the heart of the org

• captures org aspiration, identifies long term objective, should be forward looking and inspiring

• important bc of strategic intent: outlines a firms streatch goal: staking out a desired leadership position in the long term that far exceeds a companys current situation

Mission Statements

• how do we want to accomplish our goals

• grounded in the past and present

• outlines the reasons for the orgs existence and explains what rile it plays in society

• captures the orgs identity and helps to answer “who are we”

• explains to key stakeholders why they should support the org

• describes what an org actually does; defines how the vision is accomplished

Connections btwn Orgs and their key stakeholders

• orgs need support from their key stakeholders (employees, owners, suppliers, and customers

• mission statements explains to stakeholders why they support the org by making it clear what important role/purpose the org plays in society

• mission statements are short and concise. easier to remember. helps w employee engagement and satisfaction

Values

• what commitments do we make and what gaurdrails do we put in place to act both legally and ethically as we pursue our vision and mission

• core values: small set of guiding principles that are identified as crucial to a firms well being; fundamental beliefs abt whats important and what is and isnt appropriate in conducting company activities

• companies communicate core values to employees and hold them accoutable for putting them into

• principles that guide behaviors, understand comp culture, deal w complexity and conflict, provides employees w moral compass

• originate from founders