LECTURE #1 Greenwald Strategy Class
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These notes may be used to supplement your readings in
Competition Demystified. If you look at many strategy and consulting books, your brain will turn to goo. Try to understand the concepts behind the jargon.
: The real distinction which will apply in this class is: When you talk aboutstrategy, introducing the new product, going into a new business, it is the nature of thosedecisions that the outcome depends on the reaction of
to your decisions.
(Think of chess)
. It is the function of the external economic environment.Then you consider the consequences of those decisions, you are going to be looking
When you think of tactical decisions like cost reduction, the outcome is in the control of thecompany itself
it is inwardly focused.This is a course in external plans. Formulating or analyzing strategy often gets applied in thecontext of a business plan.Price, entry, competitive response, margin
a lot of assumptions in the outside world are inthose numbers.No one ever sees a
of the Investingworld?Five Forces from M. Porter--it is not clear--you want to start with one
(Barriers to Entry).
Whenwe look at external competitive interactions, they are dynamic and complicated. We have toanalyze simply. There is no best solution, no formula. You need to analyze each segment of abusiness and think strategically.Develop a sensible approach. What are the elements of a sensible approach?1. First, given the nature and complexity of these problems, you will get no place unlessyou
Start with 1 premise. Go from simple to complicated one step at a time.2. Second, there is no unique in-depth approach. Look at the problem (elephant) from a
variety of different perspectives
of which only some are presented in these cases.3. Third, you want a
first. Know whether other alternatives arestupid.You are going to start with an idea of what is going on, ask yourself first, how do I measure andknow if that is, in fact, true of the particular, real world situation you find yourself, Then you aregoing to look at broader, qualitative implication, and then you are going to compare that to theavailable historical data.The sad thing about life is
all you have is
data. You have to base your decision onhistorical information. Once you compare your original conjectures, suitably refined, so that they