The Concept and the

Importance of Strategy

Strategy: Business and Military

The term strategy derives from the Greek

word strategia, meaning generalship
Its words from stratos, meaning army, and
ag, to lead
Business and military share common
concepts of strategy
The overall plan for deploying resources
to establish a favorable position
However, both have different purposes
Military: the objective of war is (usually)
to defeat the enemy
Business: seeking coexistence rather than
the destruction of competitors
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Strategic Thinking
Whats a companys present
situation?
Where does the company need to
go from here?
How should the company get
there?
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A Logic Sequence of Thinking

Strategically and What Will
Managers to Do

Whats the
companys
present
situation?
To evaluate
internal and
external
environment of
the company
industry
conditions and its
resources
strength and

Where does
the
company
need to go
from here
(present)?

To push managers
making choices
about the direction
in which the
company is headedmarket, customers,
and products

How should
the
company
get there?

To challenge
manager to
craft and
execute
strategy
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A companys answer to how

will we get there? is its
strategy

A Company s Strategy
How to achieve the intended direction
(vision and goals/objectives)

The strategy contains as follows

Managerial commitment on resources to realize

the strategy
Competitive moves which aims to establish
favorable positions in the market (competition )

Business approaches which suit resources

strength and capabilities
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Without a strategy the

organization is like a
ship without a rudder.
(Joel Ross and Michael Kami)

Strategy means making

clear-cut choices about
how to compete.
(Jack Welch
Former CEO, General Electric)

Choosing Strategies for

Companies
With the similar intended
directions, companies would have
different strategies to achieve it,
because:
individual strategies have to fit with
the companys situation: resource
strengths and capabilities
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Choosing Strategies for

Companies

Television (broadcasting) Industry

Airlines Services

Garuda, AirAsia, Mandala, Sriwijaya, Batavia

Retail Industry

TV One, Metro TV, RCTI, GlobalTV, SCTV,

TVRI

Carrefour, Alfa Mart, Mirota Kampus, Circle

K, Indomaret;

Telecommunication Industry

Telkomsel, XL, Esia

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Choosing Strategies for

Companies

Airlines Services Market

Purposes: to fly passenger; to attract
Different way to
Garuda, AirAsia, Mandala, Sriwijaya,
Batavia

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Choosing Strategies for

Companies

Retail Industry

Carrefour, Alfa Mart, Mirota Kampus,

Circle K, Indomaret

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Sustainable strategy required

to create competitive
advantage is based on the
following criteria:
Having been hard to be copy
Relying on distinctive resources

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Strategy to Generates Competitive

Advantage

Strive to be the industrys low-cost provider

AirAsia

Outcompete rivals on a key differentiating feature

Mercedes-Benz Engineering design and
performance

Focus on a narrow market niche

Starbucks premium coffees and coffee drinks

Relying on resource strengths not easily imitated

Sony innovative electronic products

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Since the dynamic nature of

competition, strategies could be
changed to respond with it

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Strategies to Evolve: Proactive

and Reactive

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Why Do Strategies Evolve?

A companys strategy is a work in progress and

dynamic because of competition

Changes may be necessary to react to

Technological breakthroughs: e-businesses

Fresh moves of competitors: local players (electronic
product-competitive prices)
Evolving customer preferences- healthy and saving
energy product

Emerging market opportunities: the rising

opportunities in Asia markets
New ideas to improve strategy: innovative product in
IT

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What Is a Business
Model?
A business model addresses
How do we make money in this
business?

Simply, how does a company obtain profit

in pursuing the committed strategies?

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Business Model and Strategy: its

Relationship
In connection with both, when a
company needs to pursue strategies
for gaining the favorable position in
the market, the company still has to
produces revenue sufficient to cover
costs and profits and help the
company achieving the strategic
objectives

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BS-MMFEBUGM2010

Strategy and Business

Model
Dell Computer
Low cost leadership strategy and direct
selling approach to achieve cost savings
(supported IT)
AirAsia
Low cost carried and no baggage service and
other flight services
HP
Low price strategy by selling printers at a low
(virtually break-even) prices, but charging
higher prices on the repeat purchases of
printing supplies, especially ink cartridges

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The Importance of Crafting and

Executing Strategy

Crafting and Executing Strategy are

inseparable managerial tasks to ensure that the
company run on the intended direction;
Crafting strategy means that the company
develop the committed action matching the
competition
Executing strategy means that the company is
capable to run the planned actions
Both actions are required to achieve the
intended direction (survival and favorable
position in the market)
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Crafting and Executing

Strategy
Crafting
Strategy

To develop the
planned actions
in connection
with the
intended
direction

Executing
Strategy

To build a capable
organization and
to run the planned
actions

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The Intended
Direction
(Objectives)

The strategy has to result the

improving performance
In terms of profitability and
financial performance
In terms of market standing
and competitive strength

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BS-MMFEBUGM2010

Strategy on Reflection
What is strategy?
Do we really need strategy?
What for is strategy pursued?

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