Introduction to Strategy

by Lenox et al.

  • Strategy is a pattern of decisions in a company that reveal its objectives, purpose, goals, policies…and defines the range of activities that they will pursue to drive value for its shareholders, employees, and customers
    • Strategy is hard to define because it is complex…
  • To assess a firm’s business strategy you have to have a clear picture of what makes the firm unique and differentiated
  • Variety of external forces influence a firm’s strategy:
    • competition
    • technology
    • the economy
    • etc
  • Strategy is integrative; brings finance, marketing, accounting, ops, and hr together
  • Also integrative in the sense that you are driving value for multiple parties: shareholders, customers, employees, suppliers, etc
  • Tradeoffs are critical: companies juggle short-term and long-term investments
  • Analytical frameworks and tools can help create comprehensive understanding of business context and are key to strategy
  • Fundamental Principle of Competition:
    • If everyone can do it, then it’s hard to capture value from it
    • Must consider second order effects
    • A successful strategy requires some barrier to competition that prevents other firms from imitating the strategy
  • Strategic analysis includes:
    • Identifying a companies current positioning and its strengths and weaknesses
    • Consideration of pros/cons of small set of strategic actions to improve position
    • Advancement of recommendations based on analysis
  • Strategy is not merely operational effectiveness; it’s dynamic and involves both content and action…also includes tactical responses to external factors

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