What is strategy

CHAPTER 1

Crafting & Executing Strategy 18th Edition

113

WHAT IS STRATEGY AND WHY IS IT IMPORTANT?
CHAPTER SUMMARY
Chapter 1 explores the concepts surrounding organizational strategy. It begins with an explanation of the term strategy and offers a basis for how to identify a company’s particular strategy. Next, it explores the importance of striving for competitive advantage in the marketplace and examines the role strategy plays in achieving this advantage. The chapter then explores the idea that strategy is partly proactive and partly reactive. Next, a discussion on strategy and ethics is given. This is followed by a close look at the relationship between a company’s strategy and its business model. The chapter proceeds forward with a look at what makes strategy a winner and then presents reasons for why crafting and executing strategy are important. The chapter concludes with thoughts on the equation: good strategy + good strategy execution = good management.

1

LECTURE OUTLINE
I. Introduction Managers at all companies face three central questions in thinking strategically about their company’s present circumstances and prospects: What’s the company’s present situation? Where does the company need to go from here? How should it get there? “What’s the company’s present situation?” prompts managers to evaluate industry conditions and competitive pressures, the company’s current performance and market standing, its resource strength and capabilities and its competitive weaknesses. “Where does the company need to go from here?” pushes managers to make choices about the direction the company should be headed—what new or different customer groups and customer needs it should endeavor to satisfy, what market positions it needs to be staking out, what changes in its business makeup are needed. “How should it get there?” challenges managers to craft and execute a strategy—a full-blown action plan— capable of moving the company in the intended direction,