The Concept of Strategy

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All slides courtesy of:©2012 Robert M. Grant & Judith Jordanwww.foundationsofstrategy.com

Common elements in successful strategies

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Mission statements(aka Long Term Goals)

“I will build a motor car for the great multitude . . . It will be so low in price that no man making good wages will be unable to own one and to enjoy with his family the blessing of hours of pleasure in God’s great open spaces . . . When I’m through, everyone will be able to afford one and everyone will have one.”

To organize the world’s information and make it universally accessible and useful

To create a better everyday life for the many people. We make this possible by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.

To refresh the world... To inspire moments of optimism and happiness... To create value and make a difference.

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Layers of the business environment

The Organisation

From environmental analysis to industry analysis

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The Five Forces Framework

The basic framework: strategy as a link between the firm and its environment

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Resources of a Business?

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The links among resources, capabilities and competitive advantage

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Appraising resourcesRESOURCE CHARACTERISTICS INDICATORS

Tangible Resources

Financial Borrowing capacityInternal funds generation

Debt/Equity ratioCredit ratingNet cash flow

Physical Plant and equipment:Size, location, technology flexibility.Land and buildingsRaw materials

Market value of fixed assets.Scale of plantsAlternative uses for fixed assets

Intangible Resources

Technology Patent, copyrights, know-how, R&D facilitiesTechnical and scientific employees

Number of patents ownedRoyalty income R&D expenditureR&D staff

Reputation Brands, customer loyalty, company reputation (with suppliers, customers, government)

Brand equityCustomer retentionSupplier loyalty

Human Resources Training, experience,adaptability, commitment and loyalty of employees

Employee qualifications,Pay rates, turnover

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The world’s most valuable brands, 2012

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11Source: Interbrand

Porter’s value chain

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Putting resource and capability analysis to work: a practical guide

Step 1: Identify the key resources and capabilities

Step 2: Appraising resources and capabilities― Assessing importance― Assessing relative strength

Step 3: Developing strategy implications― Exploiting key strengths― Managing key weaknesses― What about superfluous strengths?

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KEY CONCEPT

Summary: a framework for analysing resources and capabilities

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