Amity School of Business

Business Strategy
STRA 303
Introduction to Strategy and
Strategic Management
Course Instructor: Prof. Ruchi Khandelwal
1
 Amity School of Business

What is Strategy?

Two fundamental Good and Bad answers

questions in any effective answers • Deploying
business: • Successful inconsistent or
• Where should strategies ill-conceived
we compete? • Outperforming strategies
• How should we competition • Destroying
compete? over long run value 2
 Amity School of Business

Purpose of Strategy

Understanding of the
business landscape,
forces that shape Choice of a position
competition, To create a
on this landscape ---
dynamics among competitive
shapes the business
players and the advantage that
model and the
drivers of industry generates superior,
underlying set of
evolution --- deciding sustainable financial
activities that sustain
where the firm returns.
it
chooses to engage
with competition.

3
 Amity School of Business

What do we mean by Strategy?

Strategy consists of choices.
It is an integrated set of choices that positions the
business in its industry so as to generate superior
financial returns over the long run.

The right set of choices is not easy or obvious

Made amid uncertainty.
Must be executed using finite resources.
4

What do we mean by Strategy?
Strategy can fail-
• If firm chooses difficult place on
landscape and is not able to
adapt to, change its
environment.
• If choices are not fully integrated
and so intended business model
and positioning do not fully align
Amity School of Business
Successful strategy requires
consistency.
• With the realities of the
external environment
• With internal activities
• With long term dynamics in
the industry and the
organization
5
 Amity School of Business

What do we mean by Strategy?

Compete
successfully
Attract and
Conduct
please
operations
customers

Achieve
Company’s strategy targeted levels
Grow the (Competitive moves
and business
of
business
approaches) organizational
performance

6
 Amity School of Business

How Strategy evolved?

• Derived from the Greek word, ‘strategos’,
referring to military command.
• In late 18th and early 19th century military
theorist Carl von Clausewitz distinguished
between tactics such as campaigns on the
battlefield and the discipline of strategy.
• Strategy demanded a broad perspective;
tactics were merely means to an end.

7
 Amity School of Business

How Strategy evolved?

• The academic foundations of business strategy developed in
parallel to the changes in the industrial economy.
• The earliest business schools were instrumental in
emphasizing the importance of fitting a firm’s strategy with its
environment.
• In the 1960s, the common approach was the SWOT
framework, which matched a company’s “strengths” and
“weaknesses” with its “opportunities” and “threats.”
• Subsequent work focused on defining a firm’s distinctive
competencies and the logic for translating a SWOT analysis
into a credible strategy.
• Even as the concepts of business strategy evolved, the
underlying premise of strategy remained unchanged.
8
 Amity School of Business

How Strategy evolved?

• Strategy in this original sense should be interpreted as
competitive strategy.
• Every business must operate in an environment marked by
competition, structural forces, and uncertainty.
• Every business must make choices that fit together in a
holistic, consistent way in order to succeed in that
environment. Those choices are the essence of strategy.
• Deploying robust technology, building a thriving culture, and
introducing innovations are all important, but they must not
be mistaken for strategy. Cutting costs and boosting
productivity are also important and may make an organization
more effective, but again, they are tactics—not strategy itself.
9
 Amity School of Business

Characteristics of Strategy
Long-term
direction of an
organization
Values &
Competitive
expectations of
advantage
Stakeholders:

Building on Scope of
Characteristics of
resources & Organization’s
Strategy
competencies activities

Gaining
Strategy
advantage
development
over
by ‘stretch’
Strategic fit with competitors
the business
environment
 Amity School of Business

The leading edge of strategy: fit or stretch

ASPECT OF STRATEGY ENVIRONMENT-LED ‘FIT’ RESOURCE-LED
‘STRETCH’
Underlying basis of Strategic fit between Leverage of resources to
strategy market opportunities and improve value for money
organization’s resources
Competitive advantage ‘Correct’ positioning Differentiation based on
through… Differentiation directed competences suited to or
by market need creating market need

How small players Find and defend a niche Change the ‘rules of the
survive… game’
Risk-reduction through… Portfolio of Portfolio of competences
products/businesses
Corporate centre invests Strategies of business Core competences
in… units or subsidiaries

11
 Amity School of Business

Linking Strategy and Strategic

Management
• Strategy is the direction and scope of an
organization over the long term, which
achieves advantage for the organization
through its configuration of resources within a
changing environment and to fulfill
stakeholder expectations.
• Strategic Management includes understanding
the strategic position of an organization,
strategic choices for the future and turning
strategy into action. 12
 Amity School of Business

Strategic Management
• Strategic Management is defined as the set of
decisions and actions that result in the
formulation and implementation of plan,
designed to achieve a company’s objectives.
• It includes-
– Environmental Scanning (both external and
internal)
– Strategy Formulation
– Strategy Implementation, and
– Evaluation and Control.
13
 Amity School of Business

Basic Model of Strategic

Management

Environmental Strategy Strategy Evaluation and

Scanning Formulation Implementation Control

14
 Amity School of Business

Strategy and Competitive Advantage

A company achieves sustainable competitive

advantage when an attractive number of
buyers prefer its offerings over those of
competitors and when the basis of this
preference is durable.

15
 Amity School of Business

Strategy and Competitive Advantage

Striving to be
industry’s low cost
provider thereby Outcompeting rivals
aiming for a cost- based on
based competitive differentiation.
advantage over
rivals.

Developing
Focusing on a
expertise and
narrow market
resource strengths
niche and wining a
that give company
competitive edge by
the capabilities that
being better than
rivals cannot easily
rivals.
imitate.

16
 Amity School of Business

Thank You

17