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 What would be
your strategic
decision about
Carnaval de
Barranquilla next
year? Think as a
strategist
Explain your
answer
What did you learn from
the homework?
 Choosing the Strategy

● In arriving at choices among all the “hows” and

combining them into a coherent strategy for
the company to pursue, management is
saying:,
○ “Among all the many different ways
of competing we could have chosen,
we have decided to employ this
combination of competitive and
operating approaches to move the
firm in the intended direction,
strengthen its market position and
competitiveness, and boost
performance.” 1–6
The Hows That Define a Firm’s Strategy
How to respond to
How to attract, please,
changing economic
and retain customers
and market conditions
A coherent
combination of
actions and How to manage the
How to compete
against rivals
approaches functional pieces
about how to of the business
run the
company
How to capitalize on How to achieve the firm’s
growth opportunities performance targets

1–7
“Strategy, at its heart, is about choice”
(Sull et al, 2018)
What is Strategy?

Michael Porter (1947)

Harvard Business School

Failure to distinguish between

Operational Effectiveness and
Strategy
Failure to distinguish between Operational Effectiveness and Strategy
Operational
Effectiveness

Productivity,
Quality & Speed
Failure to distinguish between Operational Effectiveness and Strategy
Operational
Effectiveness

Productivity,
Quality & Speed

?
 Operational Strategy
Effectiveness

Productivity,
Quality & Be different
Speed
 Operational
Effectiveness
Strategy

Performing similar Performing different

activities better activities in a
different way

The worst error in strategy is to compete with rivals on the same dimensions
 Choosing and Performing certain
executing certain activities more
activities efficiently than all
others
ACTIVITIES are
the Basic Unit of

COMPETITIVE
ADVANTAGE
Do you have any questions until
this moment?
Operational efficiency necessary for
profitability

BUT
Operational efficiency necessary for
profitability

BUT

NOT SUFFICIENT
Operational efficiency necessary for
profitability

BUT

NOT SUFFICIENT
Rapid
diffusion of
best practice
 Operational efficiency necessary for
profitability

BUT

NOT SUFFICIENT
Rapid
Competitive diffusion of
convergence best practice
Really no one has survived in the
long term based on operational
efficiency?
Strategy is the creation of
a unique and valuable
position
Strategy is the creation of
a unique and valuable
position

involving a different set of

activities
trade-offs
Its competitive advantage
comes from the way its
activities fit and reinforce
each other.

Michael Porter
 STRATEGIC FIT

First-order/ Second-order Third-order

Simple consistency: consistency:
consistency:
between activities Activities are Optimization of
and strategy reinforcing effort

Competitive Advantage
Class Activity

Please solve in groups the jigsaw puzzles and analyze the strategic
fit of the companies, after that, summarize the strategy of the
organization:
https://www.bookwidgets.com/play/GBBNVGU?teacher_id=66560
16207839232
https://www.bookwidgets.com/play/SBBW2ST?teacher_id=665601
6207839232
Example of Strategic Fit
Example of Strategic Fit
Strategy: Static Vs. Dynamic
https://www.dinero.com/empresas/articulo/ikea-llega-a-colombia-tras-compra-de-calima-por-parte-de-mallpla
za/295076
https://www.youtube.com/watch?v=slNK
zCovPqg

We can also learn from failures stories!

...And What is not strategy?
What kind of organizations need a strategy?
● Every organization needs a
strategy : an established
business, an emerging
entrepreneurial venture, or a
nonprofit organization
● A strategy sets the direction of
the enterprise, informs priorities,
helps guide the multiple
decisions that an organization
makes every day
 Different Contexts for Strategy (1)

Small Business Single market. Limited product/service range. Competitive

strategy. Strategic capability. Restricted funds.

Multinational Diverse products/markets/businesses. Structure/control/

Corporation Competitive strategy. Portfolio management. Resource
coordination.

Manufacturing/ Manufacturing – physical product often augmented with service,

Service brand image for competitive advantage. Services – no physical
Organisations product, competitive advantage based on intangibles
Different Contexts for Strategy (2)

Public Sector Ideology. Direct/indirect external influence (e.g.

government). Competition for resource inputs. Best value
in outputs. Interagency cooperation

Voluntary Diverse sources of funds. Values and ideology. Lobbying.

and Stakeholder management.
Not-for-Profit
The Role of Leaders in Strategy

• Drive operational improvement but clearly

distinguish it from strategy
• Lead the process of choosing the company’s
unique position
– The CEO is the chief strategist
– The choice of strategy cannot be entirely
democratic
• Communicate the strategy relentlessly to all
parties
– Assure the moral purpose of strategy
• Maintain discipline around the strategy
The Role of Leaders in Strategy
• Decide which industry changes,
technologies, and customer needs to
respond to, and how the response can be
tailored to the company’s strategy
• Measure progress against the strategy
using tailored metrics that capture
the implications of the strategy
• Sell the company’s strategy and how to
evaluate progress against the
strategy to the financial markets
• Commitment to strategy is tested every
day
Strategy—Distinguishing Between What Is Legal
and What Is Ethical
• A strategy cannot be considered
ethical just because it involves
actions that are legal.
• A strategy must entail actions
that can pass moral scrutiny in
the sense of not being morally
objectionable, deceitful, unfair or
harmful to others, disreputable,
or unreasonably damaging to the
environment.
Pretend your
friend was absent
from class today…
Write what you would say if you had to
explain the lesson to your friend.