STRATEGY

What Strategy Is
and Why Is It
Important?
BUSINESS

Prepared by: Ms. Vivillou Angelica Batulan

 Topics
STRATEGY

 What Strategy Is: Gaining & Sustaining Competitive

Advantage
 Formulating Strategy Across Levels: Corporate, Business,
and Functional managers
BUSINESS

 Business Models: Putting Strategy Into Action

 Learning Objectives
• Define competitive advantage, sustainable competitive
STRATEGY

advantage, competitive disadvantage, and competitive parity.

• Define strategy and explain its role in a fir’s quest for
competitive advantage.
• Explain the role of firm effects and industry effects in
BUSINESS

determining performance.
• Describe the role of corporate, business and functional
managers in strategy formulation and implementation.
• Outline how business models put strategy into action.
STRATEGY

What Strategy Is:

Gaining &
Sustaining
BUSINESS

Competitive
Advantage
STRATEGY

Strategic
Management
an integrative management
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field that combines analysis,

formulation, and
implementation in the quest
for competitive advantage.
STRATEGY

COMPETITIVE ADVANTAGE COMPETITIVE DISADVANTAGE

BUSINESS

superior performance relative to underperformance relative to

other competitors in the same other competitors in the same
industry or the industry average. industry or the industry average.
STRATEGY

SUSTAINABLE COMPETITIVE
ADVANTAGE COMPETITIVE PARITY
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outperforming competitors in the when two or more firms perform

same industry or the industry at the same level.
average over a prolonged period
of time.
STRATEGY

Strategy
the goal-directed actions a
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firm intends to take in its

quest to gain and sustain
competitive advantage.
STRATEGY

cooperation by
competitors to
achieve a
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strategic
objective.
 INDUSTRY EFFECTS VS. FIRMS EFFECTS
STRATEGY
BUSINESS IN DETERMINING PERFORMANCE

FIRM EFFECTS INDUSTRY EFFECTS

the result of managers’ actions to the results attributed to the

influence firm performance. choice of industry in which to
compete.
 • Is the quest to gain and sustain
What Strategy is competitive advantage.
Not • It is about being different from your
STRATEGY

rivals.
It is not best-in-class
• It is about creating value while
containing cost.
practices such as just-
in-time inventory, • It is about deciding what to do, and
what not to do.
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enterprise resource
planning and Six Sigma. • It combines a set of activities to stake
out a unique position.
• It requires long-term commitments
that are often easily reversible.
STRATEGY

Formulating
Strategy Across
Levels: Corporate,
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Business, and
Functional
Managers
STRATEGY
Formulating Strategy Across Levels

Corporate strategy Strategic business unit (SBU)

• involves decisions made at • a stand-alone division of a
the highest level of the larger conglomerate, with its
firm about where to own profit-and-loss
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compete. responsibility.
 Headquarters
Corporate Strategy
Where to compete?
STRATEGY

SBU 1 SBU 2 SBU 3

Business Strategy Business Strategy Business Strategy
How to compete? How to compete? How to compete?
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Business Function 1 Business Function 2 Business Function 3

Functional Strategy Functional Strategy Functional Strategy
How to implement How to implement How to implement
business strategy? business strategy? business strategy?
 Business Models: Putting Strategy Into
Action
STRATEGY

BUSINESS MODEL
• Organizational plan
that details the firm’s
BUSINESS

competitive tactics
and initiatives; in
short, it is how the
firm intends to make
money.
BUSINESS STRATEGY