What is strategy?,Whats this?- Tiger dog (half white half brown),阿弥陀佛,What does this mean?,We know what it is, but we dont know what it is called? We know what it is called, but defining what it is is difficult.,The IBM-Lenovo Deal,On Dec 7, 2004, IBMs PC division was sold to Lenovo Group. According to the acquisition agreement signed between Lenovo Group and IBM, Lenovo has paid 1.25 billion US dollars for all the PC business of IBM, including 650 million US dollars in cash and Lenovos shares valued at 600 million US dollars. After the trade, IBM will hold 18.9 percent of Lenovos shares and Lenovo will assume about 500 million US dollars net debt of IBM.,Legend to Invest in Real Estate,Legend, now renamed as Lenovo, Chinas leading personal computer manufacturer, has announced that it intends to invest three billion yuan (about 363 million U.S. dollars) in the burgeoning real estate sector, as part of attempts to readjust its overall business structure. The company will make the investment through its holding company which has started real estate business already in Huizhou and Shenzhen cities, in south Chinas Guangdong Province.,Changhong net drops 24% amid price competition,Sichuan Changhong Electric recorded a net profit of RMB88.5m in 2001. The result represents a decrease of 24% for the Chinese-based appliance manufacturer. Close to 75% of the revenue of Sichuan Changhong Electric is generated by its television sets. An 11% decrease in core revenue to RMB9.5bn was recorded for the year.,Haier excels in all these areas!,As one of Chinas fastest-growing companies, Haier Group is widely regarded as a successful company. Customer service, product quality, operating efficiency, innovation, and speed to market are among the top seven factors for success. Haier CEO Zhang Ruimin and President Yang Mianmian say the firm developed three major strategies over three stages: brand building or recognition strategy, expansion or diversification strategy, and globalization strategy,Adidas China Distribution Center Opens in Suzhou,On Sept 23, 2005, Adidas has opened a distribution center in China in Suzhou ProLogis Logistics Park of the Suzhou Industrial Park, east Chinas Jiangsu Province. The distribution center to be built by Adidas will have a space of 60,000 square meters. When completed, it will serve not only its factory in Suzhou, but also the whole Chinese market.,Levels of Strategy-Making in a Diversified Company,Adidas,Haier Changkong,IBM Lenovo,Corporate Strategy for a Diversified Company,Corporate Strategy,Approach to capital allocation,Narrow or broad-based diversification,Scope of geographic operations,Moves to add new new businesses,Moves to build positions in new industries,Efforts to capture cross-business strategic fits,Moves to divest weak business units,Is diversification related, unrelated or a mix?,Identifying the Components of a Single-Business Companys Strategy,Efforts to build competitive advantage,Planned, proactive moves to outcompete rivals,Responses to changing conditions,Scope of geographic coverage,Collaborative partnerships and strategic alliances,R&D strategy,Supply chain management strategy,Manufacturing strategy,Human resources strategy,Finance strategy,Business Strategy,Marketing strategy,Functional Strategies,Game plan for a strategically-relevant function, activity, or business process Details how key activities will be managed Provide support for business strategy Specify how functional objectives are to be achieved,Chapter 1 Knowledge Objectives,Studying this chapter should provide you with the strategic management knowledge needed to: Define strategic competitiveness competitive advantage, and above-average returns. Describe the 21st-century competitive landscape and explain how globalization and technological changes shape it. Use the industrial organization (I/O) model to explain how firms can earn above-average returns.,Chapter 1 Knowledge Objectives (contd),Studying this chapter should provide you with the strategic management knowledge needed to:,Use the resource-based model to explain how firms can earn above-average returns. Describe strategic intent and strategic mission and discuss their value. Define stakeholders and describe their ability to influence organizations. Describe the work of strategic leaders. Explain the strategic management process.,Definitions,Strategic Competitiveness When a firm successfully formulates and implements a value-creating strategy Sustainable Competitive Advantage When competitors are unable to duplicate a companys value-creating strategy Strategic Management Process The full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns,Definitions (contd),Risk An investors uncertainty about the economic gains or losses that will result from a particular investment Average Returns Returns equal to those an investor expects to earn from other