Introduction to Business Strategy

Dr. Elena Dalpiaz

Welcome

Agenda

1. Ingredients for prolonged success

2. What business strategy is and other questions
3. Money vs. other purposes in business

1)
Ingredients for prolonged success

What Do They Have in Common?

Closer Look at One Example

http://www.youtube.com/watch?v=lh0fxaR_qrc

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Exceptionally Talented As Singer & Songwriter?

Voice?
Lyrics?

Beauty?

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Dancing?

How?
1. Goal commitment and work ethic
2. Understanding evolution of society and multiple
market segments

Not just sex sells

Continuous renewal

3. Marketing
4. Alliances and good teams
Boyfriends/Husbands/Cool producers
Good dancers & vocalists
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Examples of Success in Different Arenas

Entertainment

Manufacturing business

Sport management
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Prolonged Success Depends On

NOT (necessarily) on overwhelmingly superior resources!
Madonna: vitality, intelligence, imagination, but no
outstanding talent as vocalist and songwriter
James Dyson: depended on his wife teachers salary for
years when developing prototypes
Alex Ferguson: built MU team with comparatively modest
expenditure on star players (e.g. since 2000 tiny
expenditure relative to Chelsea, Real Madrid, Milan)
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Prolonged Success Depends On (Cont.)

Luck?

Lucky breaks at critical junctures (e.g. meeting with the

right persons)

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Ingredients For Prolonged Success: 1

Madonna:
Goal driven/Work alcoholic
James Dyson: persisted for more than 5 years
developing his cleaner (>5,000 prototypes)
Alex Ferguson: life dominated by football

GOALS THAT ARE SIMPLE, CONSISTENT, AND LONG TERM

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Ingredients For Prolonged Success: 2

Madonna: understanding basis of popular appeal; name
as brand; live-shows; transformation
James Dyson: manufacturing in Malaysia to remain
competitive
Alex Ferguson: worldwide search for talents; teams and
tactics variation in different competitions

2
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PROFOUND UNDERSTANDING OF COMPETITIVE ENVIRONMENT

Ingredients For Prolonged Success: 3

Madonna: position as performance artist, entertainer
James Dyson: patent protection and patent battle with
Hoover
Alex Ferguson: masterful appraisal of talents

3
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OBJECTIVE APPRAISAL OF RESOURCES

Ingredients For Prolonged Success: 4

Madonna: large team of qualified designers, musicians,
vocalists, choreographers
James Dyson: R&D team
Alex Ferguson: team of psychologists, medical doctors,
nutritionists, talent scouts

4
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EFFECTIVE IMPLEMENTATION TO MARSHAL

RESOURCES AND PROTECT AGAINST WEAKNESSES

Prolonged Success

4
Effective implementation

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1
Simple
consistent,
long-term
goals
www.imperial.ac.uk/business-school

2
Profound
understanding
of competitive
environment

3
Objective
appraisal of
resources

Self-Reflection

To what extent does your career strategy fit with your long
term goals, the characteristics of the external
environment, and your own strength and weaknesses?

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Crucial For Business

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ITV & Friends Reunited

In 2005, ITV paid 170 million for acquiring Friends
Reunited, a five-year-old internet social network which
puts former school friends in touch with each other.
http://www.youtube.com/watch?v=hYYuo6rVa7U
In 2009, ITV sold Friends Reunited for 25 million
LOSS: 145 million!!!

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Why?
ITV did not have the appropriate resources and
capabilities and structures to manage this new business:
TV business is push-driven customers are more passive;
Internet social networks are pull-driven customers are very
demanding and knowledgeable, and create the content.

The buyer
http://www.youtube.com/watch?v=UK7-V7abx-c
Experience in internet-based business
Clear synergies with existing businesses
Easier to integrate in existing organization

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2
3

2)
What is Strategy?

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What do you think

strategy means?

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Strategy is the
great work of
organization. In
situations of life or
death, it is the Tao
of survival or
extinction. Its
study cannot be
neglected

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www.imperial.ac.uk/business-school

Lost Boy: Injuns! Lets

go get em!
John Darling: Hold on a
minute. First we must
have a strategy
Lost Boy: Uhh? What is
a strategy?
John Darling: Its, er...its
a plan of attack
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Is Strategy Different from....?

Operational effectiveness?
Tactics?

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All men can see

these tactics
whereby I conquer,
but what none can
see is the strategy
out of which victory
is evolved. Sun Tsu

Operational effectiveness: performing similar activities

better than competitors.
Strategy is performing different activities from rivals or
performing similar activities in different ways.
Tactic: is a scheme for a specific action.
Strategy is a theme that guides all actions of the firm by
defining its competitive position
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Imperial College Business School

Definition of Strategy
PLAN: series of actions designed to achieve a specific goal
PATTERN of objectives and goals, i.e. what business the firm
wants to be in
PERSPECTIVE: overarching theme driving every action

Position
Means by which individuals or firms achieve their goals
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Position

POSITION:
1) Competitive arena
Clients
Geographical
markets
Products

2) Activities

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UNIQUE
Unique
configuration of
activities
Different
activities
Similar activities
in different ways

VALUABLE
Profitability
>
Industry
Achieving and
sustaining a
competitive
advantage
(differentiation vs.
cost)

Imperial College Business School

Where?
http://investing.businessweek.com/research/stocks/financi
als/secfilings.asp?ticker=AAPL

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designs, manufactures and

markets mobile communication
and media devices, personal
computers, and portable digital
music players, and sells a variety
of related software

The Company sells to

consumers, small and mid-sized
businesses (SMB), and
education, enterprise and
government customers

sells its products worldwide

Strategy Describes...
Where we compete
Vertical range of activities
Customer segments
Geographical areas

How we compete
Basis of competitive advantage
(differentiation vs. cost)
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committed to bringing the best

user experience to its customers
through its innovative hardware,
software, peripherals, and
services

leverages its unique ability to

design and develop its own
operating systems

to provide its customers new

products and solutions with
superior ease-of-use, seamless
integration, and innovative
design

believes continual investment in

research and development and
marketing and advertising is
critical to the development and
sale of innovative products and
technologies

Strategy Describes...
Where we compete
Vertical range of activities
Customer segments
Geographical areas

How we compete
Basis of competitive advantage
(differentiation vs. cost)
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How is Strategy Made?

Rational deliberation from top management team?
Mintzberg:
Intended
Realized
Emergent

Planned emergence

Environment: stability vs. turbulence affect the balance

Banks in African countries?
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The Roles of Strategy

1. Decision support
Constrains alternatives
Pools and integrates knowledge of different individuals
Facilitates the use of analytic frameworks and techniques
2. Coordinating device
Communicates the identity and goals of organisations
Strategy-making process enhances consensus
3. Target
Motivates and inspires
Big, Hairy, Ambitious Goals

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3)
Money vs. other purposes in business

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In Whose Interest? Shareholders vs. Stakeholders

Different groups have interest in firms performance:

Employees (wages and salaries)

Landlords (rent)
Government (taxes)
Citizens (clean environment)
Customers (safe products)
Lenders (interests)

Owners (profits)
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STAKEHOLDERS

SHAREHOLDERS

What Interests Should Be Prioritized

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The Kraft Takeover of Cadbury

VS.
VIDEO: http://www.youtube.com/watch?v=w9eP5-qkAVc
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There Is More To Business Than Making Money

Purpose is what inspires the great businesses and
endeavors:
I will build a motor car for the great multitudeit will be so
low in price that no man making good wage will be unable to
own one and to enjoy with his family the blessing of hours of
pleasure Henry Ford

Exclusive focus on profitability has negative

consequences:
May blinker managers perception of the real sources of
competitive advantage
Unlikely to inspire employees

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To Sum Up

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Ingredients of prolonged success (three examples)

Importance for business (ITV and Friends Reunited)
Definition of business strategy
What documents you can look at (Apple)
What a firms strategy describes (Apple)
The process of strategy-making
Three main roles for strategy within firms
The trade-off of focusing on shareholders or stakeholders (Kraft vs.
Cadbury)
Successful businesses are motivated by factors other than profit (Cadbury)

BEST OF LUCK
&
THANK YOU!

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www.imperial.ac.uk/business-school

My Contacts
Dr. Elena Dalpiaz
Tanaka Building, Imperial College Business School
E-mail: e.dalpiaz@imperial.ac.uk

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