MB 349 Write-up of Chapters 1&2 of Strategy: A View from the Top

Chapter one discusses what business strategy is and what it does. Decisions in strategy include what industries to participate in, the products and services, and the allocation of corporate resources. The primary objective is to gain a competitive advantage that customers respond to, which in turn creates value for shareholders and other stakeholders. History has shown that strategy changes to respond to globalization, technology, and other major forces in the world of business. Currently, human and intellectual capital is highly sought after to create innovation. While tactics focus on doing things better than competitors, strategy involves doing things differently than the competition. Strategy involves long-term vision, yet must be flexible to adapt to changes that constantly surface in the business world.

A strategy is developed by asking the questions “Where are we now?”, “Where do we go?”, and “How do we get there?”.  After a strategy is developed and executed, it must be evaluated to see its performance and any changes that should be made. Future competitiveness is assessed and the shareholder value approach is often the preferred method of evaluation.

Chapter two discusses strategy and performance. Jim Collins has written about the qualities that turn a good company into a great one. Qualities of great companies involve top leadership, nature of the leadership team, and doing one thing better than anyone else.

A study showed that the best companies had superior strategy, execution, culture, and structure. The best companies also excelled at two secondary practices that included talent, innovation, leadership, and mergers and partnerships. Purpose, strategy, and leadership are all interrelated and lead to a second layer that includes structure, systems, people, processes, and culture. All of these factors interplay with one another and ultimately determine a company’s performance.

A board of directors is important for instilling a high performance culture. Priorities of the board include conveying integrity, setting a company culture, strategizing with management, and conveying shareholder expectations to management.

Maintaining value in a product or service is an important concept that I took away from the first chapter. The recent surge in globalization and technology has changed the business landscape and a company must keep up with the times. I agree that human and intellectual capital is critical to the creation and maintenance of value in modern times. In an era where companies are fiercely competitive, the most innovative company has a good chance of being victorious. I remember hearing on an educational television program that in this new century, technology is supposed to increase about a thousand-fold from the 20th century. That number is staggering when considering the leaps in technology that came from the previous century such as the television, internet, and other modern marvels. The competition between companies to gain a competitive advantage is what fuels the technological advancements and talent and innovation are necessary for that to happen.

The 4+2 formula discussed in chapter two incorporates talent and innovation as secondary management practices. The other two are leadership and mergers and partnerships. I feel that if a business specializes in technology, it can’t get away by having only leadership and mergers and partnerships to constitute the +2. A company such as Apple must have talented employees and innovation if it wants to remain atop in terms of providing customer value.

Date Written: 1/21/2009
Reading: Chapter 1 and 2 of Strategy: A View from the Top, Third Edition

About the MB 349 Write-up blog posts: One of my favorite courses from college was Business Strategy, which was a capstone course for all business majors. The class emphasized critical analysis and the refinement of strategic thinking skills for business settings. Write-ups of reading assignments were an important component of the class and in these posts are the ones I wrote, which I hope they can be of value to readers of this blog.

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