Welcome to Foundations of Business Strategy module one. An Introduction to Strategic Analysis. In this module we will define strategy. We will discuss strategic analysis. We will introduce the concept of a strategist challenge. We will spend some time talking about competitive markets. And introduce the idea of the fundamental principle of business strategy. And then at the end we'll discuss two perspectives in strategy. On the source of economic grants. Let me begin with a story of a company many of you are probably familiar with Apple computer. Apple started in the late 1970s, as an entrant into the personal computer industry to wild success early on. But then competitive entry occurred. IBM and in particular there partners Windows from Microsoft and Intel with the micro processor company had an alternative product that eventually became dominant standard in the personal computer industry. And for nearly two decades, Apple languished as an also ran in the industry, commanding by 2002, no more than 3% of the personal computer market. And by 2002, some were even talking about the demise of Apple. Michael Dell famously saying, just put them out of their misery. And then something happened. The iPod, and then over the course of the next ten years, a succession of amazing new products, the iPhone, the iPad, iTunes, changed radically the fortunes of Apple, and now they are one of the most respected and highly valued companies in the world. What happened? Was there a conscious change in strategy here? Was this just an emergent phenomenon that happened in the company? These are the types of questions we are going to ask as we consider business strategy. Now business strategy is a term that is bantered about in the popular press. You see it in the Wall Street Journal. You'll see it on CNBC. But what exactly does it mean. I like to joke there are as many definitions for strategy as there are strategy professors. So here is one definition from Kenneth Andrews a famous strategist who had a book in 1971, called The Concept of Corporate Strategy and it does a nice job summarizing. This idea of business strategy. So he says, strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organization it intends to be, and the nature of the economic and noneconomic contribution it intends to make to its shareholders, employees, customers, and communities. So let me highlight some of the pieces of this definition here. First, objectives, purposes, and goals. Defines the mission of the organization here. Part of strategy is understanding what is the objective of the organization. Polices and plans for achieving those goals. What is the way in which they're going to deliver on this mission? The range of business the company is to pursue, how do we define the scope of the organization. What are the businesses and markets that it decides to plan? Is it a global company or is it a more local company? And then finally, what is the contribution it tends to make, both economic and non economic? How does it create value and for whom does it create value for? So, let me suggest the following simple strategy scheme up to help us map out what an organizations strategy might be. We start with this idea of the strategic mission. A firm's value, it's purpose, what's the scope of its operations. How do we define the business? And how do we express its aspirations? Strategic plan. So the strategic plan is the way in which it achieves its strategic mission. How does the firm position itself in its markets? How does it leverage its internal resources and capabilities? To accomplish its strategic mission. Last but not least, strategic action. This is where the rubber really hits the road. What are the action a firm takes along with their plan to achieve their mission. This could include things like a merger and acquisition, perhaps innovating a new product line, or developing a robust supply chain. Once again, together these strategic actions help define what the strategy of the organization is.
