ARE YOU SUR E YOU HAVE A

STRATEGY?

• OBJECTIVE OF STRATEGY

• WHAT ACTUALLY CONSTITUTES A

STRATEGY

• INTEGRATION OF FUNCTIONAL
VALUES
 W H Y IS IT IM PORTA N T TO D EFIN E STR ATEG Y ?

STRATEGY HAS BECOME A CATCHALL TERM USED TO

MEAN WHATEVER ONE WANTS IT TO MEAN

Fragmentation of Strategy: a common problem in business is; where different aspects of a company's
operations are labeled as strategies, such as "service strategy," "joint venture strategy," or "branding
strategy."

When executives call everything strategy, and end up

with a collection of strategies, they create confusion and
undermine their own credibility
 DEFINING STRATEGY
The word "strategy" finds its roots in the Greek term "strategos," meaning "the art of the general."

• What distinguishes a general from a field commander? A general

manages multiple units, fronts, and battles over time.
• A general's challenge lies in orchestration and
comprehensiveness; they strategize for the whole, not isolated
battles.

Orchestration: ability to coordinate and synchronize multiple elements

of the plan.

Comprehensiveness: capacity to consider and address all relevant

factors, contingencies, and potential challenges. A comprehensive
strategy takes into account not only the immediate objectives but also
the long-term consequences and implications of actions.
 STRATEGY :A CENTRAL, INTEGRATED, EXTERNALLY ORIENTED
CONCEPT OF HOW THE BUSINESS WILL ACHIEVE ITS OBJECTIVE.

1. Central: means that the strategy is the core or pivotal element of the business's operations. It's the focal point around
which all other activities revolve. It guides the organization's decisions and actions.

2. Integrated: "Integrated" suggests that the strategy is not developed in isolation. Instead, it's harmoniously combined
with various aspects of the business.

3. Externally Oriented: An externally oriented strategy means that the business considers external factors, like market
conditions, customer needs, competitive landscape, and regulatory environment, when crafting its strategy. It's about
adapting to the external environment rather than solely relying on internal capabilities.

4. Concept of How the Business Will Achieve Its Objectives: This refers to the plan or blueprint that outlines how the
business intends to reach its goals and objectives. It's a high-level approach that lays out the path the company will
follow to be successful.
 Objective of strategy
."The objective of a strategy is to introduce imperfections in the market, and strategy helps define the boundaries of a business."

"Strategy is not about increasing operational efficiency using the same method; it is about outperforming competitors by utilizing a
different approach or method, thereby raising the maximum attainable goal for the same objective."
 ARENAS
"What business will we be in?"

Specificity is Key: Being

• Where will we be active?
• Which product categories?
• Which market segments?
• Which geographic areas?
• Which core technologies?
• Which value-creation stages?
specific in defining strategic
arenas is vital. It helps in
avoiding vague, generic
statements and provides clarity
to the organization.
Internal Development:

Description: Creating new products or services within the organization using its resources and expertise.
Advantage: Control over development, potential for unique offerings.
Disadvantage: Time-consuming, resource-intensive, and high R&D risks.

Joint Ventures:
Description: Collaborative partnerships between companies to achieve common goals.
Advantage: Access to expertise, shared costs, and the ability to expand with reduced financial burden.
Disadvantage: Requires effective collaboration, potential for conflicts, and clear agreements.

Licensing/Franchising:
Description: Granting others the right to use intellectual property or methods for fees or royalties.
Advantage: Generates revenue without major investment, expands brand reach.
Disadvantage: Requires brand protection, potential legal complexities, and reliance on franchisees/licensees' performance.

Acquisitions:
Description: Buying existing businesses to gain their assets, market share, or capabilities.
Advantage: Rapid market entry, access to established customers, elimination of competitors.
Disadvantage: High acquisition costs, integration challenges, cultural differences, and overpaying risks.
 Factors Influencing Staging Decisions:

• Resource Constraints: Funding and staffing limitations often necessitate a phased approach to strategy implementation.

• Urgency: Some elements of a strategy may have brief windows of opportunity, requiring immediate and aggressive action.

• Credibility: Achieving credibility in specific areas, such as arenas, differentiators, or vehicles, can attract necessary resources
and stakeholders for other strategic components.

• Early Wins: Starting with parts of the strategy that are relatively achievable can build momentum and confidence before tackling
more complex or unfamiliar initiatives.

• Resource Attraction: Prior accomplishments can make it easier to attract resources and support for subsequent strategic moves.
 "Economic logics are not fleeting or transitory, they are rooted in firms'
fundamental and relatively enduring capabilities"

1. Economic Logics: Economic logics refer to the underlying principles, strategies, and business models that drive a firm's profitability.
These are not short-term tactics but rather long-term strategies that guide a company's actions.

2. Not Fleeting or Transitory: This element emphasizes that economic logics are not short-lived or temporary strategies. They are not
based on quick, short-term gains but instead are focused on sustainability and long-term success.

3. Rooted in Firms' Fundamental Capabilities: This highlights the idea that a firm's economic logic is based on its core competencies and
strengths. These capabilities could include technological expertise, a strong brand, operational efficiency, or unique intellectual property.

4. Relatively Enduring: Economic logics are enduring, meaning they are designed to last and adapt to changes in the business
environment over time. They are not easily disrupted or replaced.
 It is only after the specification of all
five strategic elements that the strategist is in the
best position to turn to designing all the other
supporting activities—functional policies, organizational arrangements, operating programs, and
processes—that are needed to reinforce the strategy.
 Analyzing IKEA using diamond framework of strategy.
• Arenas:
⚬ Which product categories? IKEA focuses on inexpensive contemporary furniture and home furnishings.
⚬ Which market segments? IKEA's target market consists of young, white-collar customers.
⚬ Which geographic areas? IKEA has a worldwide presence where socioeconomic and infrastructure conditions support its
concept.
• Vehicles:
⚬ How will we get there? IKEA employs organic expansion through building its own wholly-owned stores for local execution of
its retailing concept.
• Differentiators:
⚬ How will we win? IKEA aims to beat competitors by offering various differentiators, including very reliable quality, low prices,
a fun shopping experience, and instant fulfillment.
• Staging:
⚬ Where will we be active? (and with how much emphasis?) IKEA commits to rapid international expansion, one region at a time.
⚬ What will be our speed and sequence of moves? The strategy involves establishing early footholds in each targeted country,
followed by filling in with more stores.
• Economic Logic:
⚬ How will we obtain our returns? IKEA's economic logic is based on achieving economies of scale through global, regional, and
individual-store scale, as well as efficiencies from replication and standardization.
⚬ How will we get there? IKEA relies on internal development and long-term supplier relationships to obtain returns through
lower costs and price advantages.
 SYNERGY BETWEEN ELEMENTS
• Arenas:
⚬ Alignment: IKEA's focus on inexpensive contemporary furniture and young, white-collar customers aligns perfectly with the company's goal of providing affordable and
stylish products to its target market.
⚬ Synergy: The choice of the target market and product categories ensures that IKEA's offerings resonate with the preferences and affordability of its customers.
• Vehicles:
⚬ Alignment: The use of organic expansion through wholly-owned stores is aligned with IKEA's commitment to maintaining control over local execution and the customer
experience.
⚬ Synergy: Wholly-owned stores are consistent with the need for providing a fun, nonthreatening shopping experience and instant fulfillment, which are key
differentiators. This synergy ensures that the customer experience is consistent across stores.
• Differentiators:
⚬ Alignment: The differentiators, including reliable quality, low prices, a fun shopping experience, and instant fulfillment, are all aligned with IKEA's targeted customer
base and product categories.
⚬ Synergy: These differentiators reinforce each other. Low prices and instant fulfillment, for example, complement the goal of providing a fun and stress-free shopping
experience.
• Staging:
⚬ Alignment: The staged international expansion aligns with the resources available to IKEA and the need to establish a strong foothold in each country.
⚬ Synergy: Early footholds supported by aggressive PR and advertising are essential for creating awareness and claiming the market with a new retailing concept. Later
expansion fills in these early footholds to maximize market penetration.
• Economic Logic:
⚬ Alignment: IKEA's economic logic of achieving scale economies and efficiencies aligns with its commitment to providing low prices to customers.
⚬ Synergy: The reliance on long-term suppliers and standardized product designs contributes to cost advantages. These cost advantages are reinforced by the emphasis on
low prices, creating a cycle that keeps IKEA's offerings affordable.
T HANKYOU