Summary #1
FOS Chs. 1-3
BOS Chs. 1-3
Group 2: Paul, Cameron, Chase, Sarita, Nathan, Zach
Strategy
• A plan, method, or series of actions designed to achieve
a specific goal or purpose.
• A unifying theme that gives coherence and direction to
the actions and decisions of an individual or an
organization.
• Strategy is NOT a detailed plan or program of instructions
The 4 common Factors of
Strategy
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Goals that are simple, consistent, and long term.
Profound understanding of the competitive environment.
Objective appraisal of resources.
Effective implementation.
Corporate vs. Business Strategy
• Corporate Strategy- defines the scope of the firm in terms of
the industries and markets in which it competes.
• Business Strategy- Is concerned with how the firm competes
within a particular industry or market.
Corporate Social Responsibility
• What are the company’s
obligations interest as a whole?
• Milton Friedman “there is
on and only one social
responsibility of business –
to use its resources and
engage in activities designed
to increase its profits so long
as it stays within the rules of
the game, which is to say,
engages in open and free
competition without
deception or fraud.”
Under Armour
• UA is a market leader, not only in innovation, but in ethical
standards as well. (as stated in the UA “Code”)
• Code was challenged by the Apparel Supply Chain Compliance
Program survey
Chapter 2: Key Points
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PEST Analysis
The Industry Environment
Porter’s Five Forces
PEST Analysis
Political
Economic
Social
Technology
The importance of PEST? Helps
recognize basic factors that can
shape an environment.
The Industry Environment
• Suppliers
• Competitors
• Customers
How do these 3 players effect profit opportunity?
Porter’s Five Forces
Foundation Of Strategy
Ch.1: Matched the firms resources
& capabilities to the opportunities
in the external environment.
Ch.2: Identified profit
opportunities in the external
environment.
Ch.3: Moves the focus of strategy
from the external environment to
the internal environment.
Why the Shift?
• Important: As firms’ industry environments become unstable…
• Resources & Capabilities are a safe bet for formulating strategy.
Instead of focusing on the changing external market.
• Also,
• “Competitive Advantage rather than industry attractiveness is the
primary source of superior profitability”
Resources:
Capabilities
• Organizational Capability- a firm’s capacity to deploy
resources for a desired end result
• Core Competences according to Hamel and Prahalad
include• Make a contribution to ultimate customer value, or to the
efficiency with which that value is delivered
• Provide a basis for entering new markets
• Functional Analysis- identifies organizational capabilities
in relation to each of the principal functional areas of the
firm
• Value Chain Analysis- separates the activities of the firm
into a sequential chain
Guide to putting resource &
capability analysis to work
• Step 1: Identify the key resources and capabilities.
• Step 2: Appraising resources and capabilities.
• Step 3: Developing strategy implications.
BOS: Chapter One
• We looked at the creation of Blue Ocean Industries
• Cirque Du Soleli
• Entering new market space
• Under Armour
• Took a look back on the history of Blue Ocean Strategy
• Automobiles, Aviation and Music recording
• The difference between Blue and Red Oceans
• Under Armour created the industry but has quickly turned into a red ocean
BOS: Ch. 1 continued…
• Rising Imperative of Blue Oceans
• Globalization, Brand similarity
• Globalization
• Loss in brand loyalty
• Choosing a product because of price
• Value Innovation
• Answering previously unmet needs
Chapter 2: Blue Ocean Strategy
Strategic Canvas
4 Actions Framework
How Cirque Du Soleil did it
How Under Armour follows it
Strategy Canvas
 To fundamentally shift the strategy canvas of an industry, you
must begin by reorienting your strategic focus from
competitors to alternatives, and from customers to
noncustomers of the industry
 Why is it Important?
 gain insight into how to redefine the problem the industry
focuses on
 How do you do it?
Four Actions
Framework
Four questions to challenge an industry’s strategic logic and business model:
 Which of the factors that the industry takes for granted should be
eliminated?
 Which factors should be reduced well below the industry’s standard?
 Which factors should be raised well above the industry’s standard?
 Which factors should be created that the industry has never offered?
Cirque Du Soleil
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Eliminate: Animals, star performers, and the 3 ring circus feel
Reduce: the overall circus feel; fun and humor, thrill and danger
Raise: Unique Venue
Create: A new form of entertainment by intertwining the circus
and the theater together. A more refined environment.
Under Armour
 Eliminate: Cheap raw materials that most sporting clothing companies
use
 Reduce: Only sell their brands in certain stores. Don’t overstretch
themselves in all markets.
 Raise: Brand Loyalty. UA has a powerful Brand identity. They built team
and athlete endorsements early on to start and maintain their brand
identity.
 Create: Started new kind of athletic apparel. Technology advanced
products to keep sweat away from skin, regulate body temperature,
and perform in any weather condition. Their design and style in their
differing factor.
Six Paths Framework
• Six different means for reconstructing market boundaries.
• Directly associated with reducing search risk.
• Mostly concerned with broadening scope and understanding
of business operations.
Six Paths
• Look across...
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alternative industries
strategic groups
the chain of buyers
complementary product and service offerings
functional or emotional appeal to buyers
time
• What is the commonality?
The Big Picture
• As a developer of strategy, an understanding of just the
industry you are within is not adequate to create
reconstruction opportunities.
• The six paths demand insight in fields outside of your own.
• The paths draw focus to the proper areas, but little more. Is
intuition a necessity?