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UNIVERSITAS GADJAH MADA

FACULTY OF ECONOMICS AND BUSINESS

STRATEGIC
MANAGEMENT
Concept of Strategy

Strategy: Business and


Military
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
What is present situation?

Where do we need to go
from here?
How should we get there?
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Actions of Thinking Strategically

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 products4

How should
the
company
get there?

To challenge
manager to
craft and
execute
strategy

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
TV One, Metro TV, RCTI, GlobalTV, SCTV, TVRI,
KompasTV

Airlines Services

Garuda, AirAsia, Mandala, Sriwijaya, Citilink

Retail Industry

Carrefour, Alfa Mart, Mirota Kampus, Circle K,


Indomaret;

Telecommunication Industry

Telkomsel, XL, Indosat


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Sustainable strategy is
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

Outcompete rivals on a key differentiating


feature

Mercedes-Benz Engineering design and


performance

Focus on a narrow market niche

AirAsia

Starbucks premium coffees and coffee


drinks

Relying on resource strengths not easily


12
imitated

Since the dynamic nature of


competition, strategies could be
changed to respond with it

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Since the dynamic nature of


competition, strategies could be
changed to respond with it

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A Companys Strategy Is a Blend of


Proactive Initiatives and Reactive
Adjustments

Why Do Strategies Evolve?


work in progress and
dynamic because of competition

A companys strategy is a

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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Business Model

How do we make money in


this business?

Simply, how does a company


obtain profit in pursuing the
committed strategies?
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THE RELATIONSHIP BETWEEN A FIRMS


STRATEGY AND ITS BUSINESS MODEL

Realized
Strategy
Competitiv
e Initiatives
Business
Approaches

$$
$?

Business
Model
Value
Proposition
Profit
Formula

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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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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Strategy on Reflection

What is strategy?
Do we really need strategy?
What for is strategy pursued?

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