Understanding Strategy in a Global Economy: Insights from AT&T in China

1. Stanford GSBSloan ProgramStramgt 258: Strategic ManagementStrategy and Organization in the Global Economy Introduction AT&T in China John Roberts

2. What is Strategy? • How we will control our destiny • How we will win John Roberts

3. What is Strategy? • Choice involving tradeoffs • Not operational excellence • A framework for decisions and actions • Not tactics • A mechanism for coordinating and motivating John Roberts

4. Strategic Thinking versus Strategic Planning • The responsibility of general managers versus staff • On-going versus episodic • Long-term but adaptive versus annual and fixed • Embodied in decisions and actions rather than binders on shelves • Business-relevant versus … John Roberts

5. Strategizing • Understand basis for current performance • Evaluate environment, current position, organizational capabilities and resources • Develop alternatives • Evaluate • Consider fit, reactions • Choose, communicate and implement • Re-evaluate and adapt John Roberts

6. Determinants of Performance Environment Strategy Performance Organization John Roberts

7. Environment • Suppliers • Customers • Technology • Competitors, potential entrants and substitutes • Complementors • Legal, regulatory, social forces John Roberts

8. Organization • The means by which the organization actually gets things done • Elements • People • Architecture • Routines and processes • Culture John Roberts

9. Elements of Strategy • Goal • Scope • Competitive advantage • Logic John Roberts

10. Strategic Goal • What we are trying to accomplish • What it means to win • Implies measures to tell how we are doing John Roberts

11. Strategic Scope • What • Where • When • How • For whom • Places limits on what we will do • Indicating what not to do is crucial! John Roberts

12. Competitive Advantage • Why others will deal with us at terms that let us meet our goal • Often, why customers will choose our products at prices that are profitable • Typically, better cost or differentiation • Not price! • Differentiation • Better perceived quality or better adapted to particular segment’s tastes John Roberts

13. Cost/Perceived Quality Higher Perceived Quality Frontier of achievable choices Lower Cost John Roberts

14. Cost/Perceived Quality Higher Perceived Quality Strategic Choice Operational Improvements Lower Cost John Roberts

15. Sources of Competitive Advantage • Position • Monopoly, reputation, brand, economies of scale, network effects and installed base, channel position, … • Capabilities • Things you can do especially well • Nokia design, Toyota manufacturing • Not (usually) resources John Roberts

16. Logic • Why it will work • Why competitive advantage is real and how it will be realized • How internal organization will support • How fits with external environment John Roberts

17. Three Foci of S258 S258 adopts the perspective of the general manager Environment Performance Organization Strategy John Roberts

18. Cost-Quality Trade-off Plane P.I.E. and 5(+)Forces Globalization of Economies, Industries, Markets, and Non-Market Environment (P)ARC: People/Architecture/ Routines/Culture Cooperation-Initiative trade- off plane VSR Model of Organizational Learning Explorer vs. Exploiter Multinational Design: Global/International/Multi- Local Role of Corporate Three Foci of S258 Environment Strategy as Goals Competitive Adv Scope Logic Performance BU vs. Corporate Capability vs. Position Global vs. Local Organization Strategy John Roberts