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Crafting and Executing Startegy (Chapter 1)

Satisfactory Essays
CHAPTER 1

WHAT IS STRATEGY AND
WHY IS IT IMPORTANT?

1. Understand why every company needs a sound strategy to compete successfully, manage the conduct of its business, and strengthen its prospects for long-term success.
2. Develop an awareness of the four most dependable strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage.
3. Understand that a company’s strategy tends to evolve over time because of changing circumstances and ongoing management efforts to improve the company’s strategy.
4. Learn why it is important for a company to have a viable business model that outlines the company’s customer value proposition and its profit formula.
5. Learn the three tests of a winning
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1–20

IS OUR STRATEGY A WINNER?

The Strategic
Fit Test

The Competitive
Advantage Test

Winning
Strategy

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

The Performance
Test

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WHAT MAKES A STRATEGY
A WINNER?
♦ A winning strategy must pass three tests:






The Fit Test
Does it exhibit dynamic fit with the external and internal aspects of the firm’s overall situation?
The Competitive Advantage Test
Can it help the firm achieve a significant and sustainable competitive advantage?
The Performance Test
Can it produce good performance as measured by the firm’s profitability, financial and competitive strengths, and market standing?

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

1–22

WHY CRAFTING AND EXECUTING
STRATEGY ARE IMPORTANT TASKS
♦ Strategy provides:
A prescription for doing business.
● A road map to competitive advantage.
● A game plan for pleasing customers.
● A formula for attaining long-term standout marketplace performance.


Good Strategy + Good Strategy Execution =
Good Management
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

1–23

THINKING STRATEGICALLY
♦ Google’s web browser-based Chrome operating system and its online applications suite are now challenging Microsoft’s long-term dominance of those marketplace sectors.


What should be Microsoft’s first response to this competitive challenge?



How will Microsoft’s response to this
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