Class 7

Strategy Execution
611407 Strategic Management
King Mongkut’s University of Technology North Bangkok

Dr. Pard Teekasap

 Outline

 Recap of previous classes

 Term project progress report

 Strategy Talk

 Xbox case study

 Lecture on Strategy Execution

 Recap of previous classes

 Step of planning the strategy

 Identify current problems
 Identify goal
 Internal analysis
 External analysis
 Recommend strategies
 Internal analysis

 SWOT

 BCG Matrix

 Product Life Cycle

 Core competency

 Value Chain
 External analysis

 5-Force model

 Industry change evaluation

 Country change evaluation

 Company’s goal

 Vision
 Core values
 Core purpose
 Big, Hairy, Audacious Goal
 Vivid description
 Generic strategy

 Differentiate – Increase the price the customers willing to

buy higher than the additional cost
P > C

 Low cost – Lower the cost more than the reduction in the
price the customers willing to buy
C > P
 How to be differentiated

 Business model innovation – look at untapped customers

 Insufficient wealth
 Insufficient access
 Insufficient skill
 Insufficient time
Every strategy requires resources

 Which resources we have?

 What can we do from the resources?

 What is our goal from the resource we have?

 Which resources we need to obtain more?

 TRADE-OFF

 Strategy need to be hard to copy

 Strategy need trade-off

Term Project Progress Report
Strategy Talk
Xbox case
Q1: How structurally attractive is the videogame console business
in 1999?
 Pricing

 Why does the price of the console is so low? How can

console producers make profit?

 What is the logic of the razor-blades pricing strategy

 Who else use razor-blades pricing strategy?

 Game developers

 Where does game developers fit in the 5-force model?

 Why are complementors so important in the videogame

industry?

 Why can’t console makers provide all the necessary games

themselves?

 What attracts game developers to develop for a particular

console?
 Indirect network effects

 What industries have indirect network effects?

 What industries have direct network effects?

 Indirect network effects suggest that game console needs

to attract lots of game developers to your console in order
to succeed, is it sufficient?
 Game

 In late 1980s – early 1990s, why did Nintendo restrict each

game developer to 5 games a year?

 Playstation don’t limit the number of game for each

developer. Why could they afford to do so without fearing
a market crash like the Atari case?
Q2: How do the five forces and industry attractiveness change
over the course of a console generation?
 Competition

 Winner of every generation has always been different from

the previous round. Why?

 Does it make sense to delay the launch of the new

generation?

 How important is first mover advantage in releasing the

next generation console?
 Q3: What should Xbox do?

2 main options

1. Conventional videogame industry approach: a) self-

supply of consoles; b) consoles priced below cost; c)
Microsoft screens game developers and developers pay
Microsoft a $7 per unit royalty

2. PC model: a) box makers pay Microsoft a licensing fee

for the right to make boxes running on Microsoft gaming
“operating system”; b) consoles priced as the hardware
makers see fit; c) game developers pay no royalties and
no restriction to become a developer
Lecture: Strategy Execution
Lost value in translation
7 Rules to close the Strategy-to-Performance Gap

Rule 1: Keep it simple, make it concrete (Strategic Principle)

Rule 2: Debate assumptions, not forecasts

Rule 3: Use a rigorous framework, speak a common language

7 Rules to close the Strategy-to-Performance Gap

Rule 4: Discuss resource deployments early

Rule 5: Clearly identify priorities

Rule 6: Continuously monitor performance

Rule 7: Reward and develop execution capabilities

 “Who makes decision?”

 Ensure that everyone knows which decisions and actions

they’re responsible for

 Encourage higher-level managers to delegate operational

decisions
 “Where is my information?”

 Make sure that important info about competitive

environment flow quickly to corporate headquarters so the
executive can identify patterns and best practices

 Facilitate information flow across organizational

boundaries

 Help field and line employees understand how their day-

to-day choices affect the company’s profit
Strategy Map
Balance Scorecard