The role of Strategy and what makes a Strategy successful

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MBA in a Box: Business Lessons from a CEO

A Complete MBA Training: Business Strategy, Management, Marketing, Accounting, Decision Making & Negotiation

11:28:33 of on-demand video • Updated November 2019

  • Receive an 'MBA in a Box' certificate of completion
  • Acquire the same business acumen as MBA graduates
  • How to start a company from scratch
  • Understand how a business functions and what makes a company successful
  • Get promoted and be ready for a managerial role
  • Transition into a career requiring solid business knowledge
  • Be able to perform an industry analysis
  • Understand what the critical success factors in an industry are
  • Carry out SWOT analysis
  • Use Michael Porter's Five Forces model
  • Apply Game theory in real-life business situations
  • Understand what a competitive advantage is and how to acquire it
  • Be able to choose one of the three core strategies: Cost leadership, DIfferentiation, and Niche
  • Apply best practices when managing people
  • Understand how to recruit, select, onboard, develop, and motivate employees
  • Carry out effective marketing research
  • Perform market segmentation
  • Select the right target client group
  • Set up the 4 Ps of Marketing in a coherent way
  • Calculate Customer-Lifetime-Value
  • Understand financials
  • Be able to read and prepare the three financial statements - P&L, Balance Sheet, and Cash Flow
  • Perform financial statement analysis
  • Calculate cash flows
  • Become a master negotiator
  • Enlarge the pie for all negotiating parties
  • Have experience and be aware of different negotiating tactics
  • Expand the pie for all negotiating parties
English [Auto] A simple definition of the term strategy indicates these are ways companies achieve their goals. The word had been originally used in the military and more recently adapted for business. It descends from the Greek expression strategic to meaning generalship or commanding an army both armies and companies need strategies to use their resources in the most effective way and to establish a favorable position over the past five decades. The business environment has changed dramatically and continues to evolve at a really fast pace. It is also less predictable than ever before which makes analytical reasoning and strategic positioning even more important today. Most strategies applied by companies that are successful have four elements in common. One they are based on goals that are simple consistent and long term to the goals the company wants to achieve have been formulated after a deep analysis of the competitive environment. Three they objectively consider a company's resources and exploit them in an effective manner. And finally the people responsible for achieving these goals are strong willed and have solid decision making capabilities. Michael Porter the American professor at Harvard Business School who has influenced the business world more than any other academic and revolutionized the concept of strategy says Strategy is about making choices it's about deliberately choosing to be different. That's quite straightforward isn't it. And yet so difficult to achieve. Thousands of companies compete for a place under the sun but only few come up with original ideas and are different. Zahra the worlds largest clothing retailer is a typical example of how different strategies can lead to success. Founded in 1975 in Spain the successful retailer now runs over six thousand five hundred stores in 88 countries. Its founder and CEO Ortega is the third richest man in the world according to Forbes. So what makes the company's strategy so successful. Zara changed the fashion industry by breaking up the bi annual cycle of Fashion Designers need only three weeks to have an item in stores starting from concept to reaching the store shelves while other fashion retailers prepare their collections six months in advance. Zahra lock's approximately 50 percent of its stock by the start of the season. In this way if a new fashion trend appears the company can immediately react and quickly produce what customers really want and look for. If there is no demand for a certain item Zahra can simply discontinue production. Low levels of stock and a frequently updated offering reduce the company's risk. This makes customers want to visit Zara shops frequently given that the collections are changed relatively quickly. Another key element in the company's strategy is the Zoara produces its clothing mainly in Spain and in Europe where we can find the larger portion of its retail stores. This enables shorter lead times and faster replenishing of stock with turnaround as short as two weeks. Higher production costs are offset by the reduced amount of money the company spends on advertising. This is a strategy model that is original hadn't been implemented before and a true success story. Things aren't always as rosy though. Sometimes companies make wrong strategic choices and struggle to adapt to a changing environment. Kodak is a well-known example of a company that could not adapt to the changing business circumstances in the late 19th century. The American company invented the roll film which easily replaced the old photographic plates. The company was perceived as an emblem of industrial innovation in the US. Kodak was a leader in a market it had pioneered. Sounds great right. For many years Kodak dominated the photography market and was the leading company in the industry. However about 20 years ago film photography started to decline and Kodak made a losing bet. The company did not capture the potential of digital photography on time and instead focused on investing capital in new technologies for taking pictures with mobile phones. This did not work for them because it meant running away from their niche and missing a fantastic opportunity. In retrospect we can definitely say Kodak did not invest in developing digital cameras as much as it should have. But other companies did. Japanese companies such as canon renowned for their market innovations quickly embraced digital photography. Kodak failed to recognize that competitive environment was changing and underestimated the importance of digital photography. Such strategic mistakes are more than costly. The company filed for bankruptcy in 2012. The two stories we saw here are good examples of the importance of strategy and it's no coincidence this strategy module is the first one in this course. These are some of the most critical decisions a company must make. They are as important as having the right direction is for a ship in the ocean. If you don't sail in the right direction you probably will not get where you want to be. It's the same with companies excellent strategic decisions get you where you want to be.