This document outlines a course on business strategy and policy. It discusses the course objectives, prerequisites, teaching methods, schedule, readings and evaluation. Strategy is defined as a management action plan for running a business. Strategic management is presented as a process with stages of formulation and implementation. A good strategy contains a diagnosis, guiding policy and coherent set of actions.

1. University of Cagliari, Faculty of Economics, a.a. 2012-13
Business Strategy and Policy
A course within the II level degree on
Managerial Economics
year II, semester I, 6 credits
Lecturer:
Dr Alberto Asquer
aasquer@unica.it
Phone: 070 6753399

2. Business Strategy and Policy
Lecture 1
Strategy and strategic management

3. Plan of this lecture
0. Course outline
- - - - - - - - - - - - - - - - - - - -
1. What is strategy? And why does it matter?
2. The process of strategic management
3. How does a good strategy look like?
- - - - - - - - - - - - -
4. Summary

4. 0. Course outline
Objectives (What shall we achieve out of this course?)
We will be able to analyze and solve complex problems of strategic
management.
We will learn the main schools of thought on business strategy.
We will learn to identify and decompose business strategy issues, and
to search, assess, and select business strategies and policies.
Prerequisites (What do we need to know for attending this course?)
A good understanding of business administration, planning and control,
and managerial economics.
A good knowledge of microeconomics and industrial economics would
be an advantage.

5. 0. Course outline
Teaching Method (How shall we learn?)
Lectures (8) and case studies (10).
Time and place of lessons (When and where?)
Lessons are scheduled:
Wednesday from 15:00 to 17:00, Classroom 7
Thursdays from 15:00 to 17:00, Classroom 7
Office hours (Where can we meet you?)
Office hours are scheduled Wednesdays and Thursdays, 17-18:00, in
office No. 3, Viale Fra Ignazio, 84 (Economics Library)
Or by appointment by email (aasquer@unica.it).

6. 0. Course outline
Contents (What is the course about?)
What is strategy
How do firms position themselves strategically within industries
How do firms develop resources, competences, capabilities
How do firms strategically interact with each other
What is strategic entrepreneurship
Why do firms diversify, and how do they do it
How do firms compete in international markets
Why do firms make partnerships, strategic alliances, mergers and
acquisitions.

7. 0. Course outline
Contents (What is the course about?)
What is strategy
How do firms position themselves strategically within industries
How do firms develop resources, competences, capabilities
How do firms strategically interact with each other
What is strategic entrepreneurship
Why do firms diversify, and how do they do it
How do firms compete in international markets
Why do firms make partnerships, strategic alliances, mergers and
acquisitions.
+ 10 case studies!

8. 0. Course outline
Readings (Where shall we study?)
A. Thompson A., A. J. Strickland, and J. E. Gamble (2010), Crafting
and Executing Strategy: The Quest for Competitive Advantage.
McGraw-Hill (International Edition).
Or, in the Italian version:
A. Thompson A., A. J. Strickland, and J. E. Gamble (2009), Strategia
Aziendale: Formulazione ed Esecuzione. McGraw-Hill.
Handouts and other materials.
Check the web site of the course!
http://www.econoca.it/did_docenti_materia_dett.asp?mat=49&id=1

9. 0. Course outline
Course evaluation (How is the exam conducted?)
Assessment is made on the basis of a written exam on any topic
covered in the course, including case studies.
For students who attend the course, part of the evaluation is based on
participation to lectures – in particular, by presenting a case study
on business strategy.
The presentation of the case study is assigned on a voluntary basis,
within the first two weeks of the course.
The presentation of the case study will account for 30% of the final
marks. Therefore, if the student attends the course and presents the
case study, the written exam will account for 70% of the final
marks.

10. 0. Course outline
General advice (How shall we study in this course?)
First, pay attention to the theories and methods of analysis.
Key concepts should be clearly understood
Argumentation should follow a clear logic and be coherent
Second, pay attention to the case studies.
Case studies are representations of business episodes
They may look unstructured and complex – indeed, they call for efforts to
develop the capacity to look into complexity, frame problems, and identify
solutions

11. 0. Course outline
Examples of exam questions (May we have any?)
Examples of exam questions are posted on the course web site soon.
Exam timetable (When are the exams?)
Exam dates will be posted on the course web site soon.

12. Business strategy and policy
1. What is strategy? And why does it matter?
2. The process of strategic management
3. How does a good strategy look like?
- - - - - - - - - - - - -
4. Summary

13. 1. What is strategy? And does it matter?
Strategy
Broadly stated, it is an action plan that managers follow for running
the business and conducting operations.
As a coherent set of actions, strategy is oriented to achieving
objectives such as: growing the business, attracting and pleasing
customers, competing successfully, conducting operations, and
improving the company's financial and market performance.
Strategy is followed in order to attain
“long-term super-normal profit”.

14. 1. What is strategy? And does it matter?
Example: Starbucks
The management of Starbucks followed a plan:
They expanded the number of stores domestically by targeting
metropolitan areas first, then the city perimeter
They made it a global brand by opening stores abroad
They conceived the store and store ambience as an advertising
device
They gradually broadened in-store product offerings

15. 1. What is strategy? And does it matter?
In part, strategy matters because it relates to
designing a successful business model
A business model is the rationale for why the company's approach to
business and strategy will be a moneymaker.
A business model is
a set of assumed circumstances of the environment
and behaviour of clients, suppliers, competitors, and regulators,
that accounts for the growth of revenues
and the profitability of a business initiative.

16. 1. What is strategy? And does it matter?
Example: the business model of Gillette
Assumption about the environment: many people will likely keep
appreciating shaved men;
Assumption about behaviour of clients: many clients will likely keep
taking care of others' consideration and self-image and keep spending
part of their income on routinely shaving;
The business model is:
sell the razor at an attractively low price,
and then make money on repeat purchase of razor blades.

17. 1. What is strategy? And does it matter?
Note that many competitors may follow the same business model
Gillette launches the
3-blades razor in 1998
Wilkinson Sword launches the
4-blades razor in 2003
Gillette launches the
5-blades razor in 2006

18. 1. What is strategy? And does it matter?
Strategy matters especially because it relates to
outperforming competitors
Firms aim to achieve a sustainable competitive advantage, i.e., an
enduring capacity to attract buyers with respect to competitors
How do firms do it?
By providing goods or services at lower price than competitors
By providing better goods or services – more quality, better
technology, more additional services, more stylish design, faster
delivery, etc.
By focusing on serving the special needs and tastes of buyers in a
market niche
By developing expertise and resources that provide capabilities that

19. 1. What is strategy? And does it matter?
Example: Wal-Mart in the US
1985
1975
1996
The diffusion of Wal-Mart stores
in the US (1975-1996)

20. 1. What is strategy? And does it matter?
Example: Wal-Mart in the US
Compare the network of 'large stores' of Wal-Mart vs. Kmart in the US, in 1996

21. 2. The process of strategic management
Develop a
strategic
vision
Set the
objectives
Craft the
strategy
Implement
and execute
the strategy
Monitor,
evaluate,
and make
corrective
adjustments
Strategy review
Strategic management is a process

22. 2. The process of strategic management
Develop a
strategic
vision
Set the
objectives
Craft the
strategy
Implement
and execute
the strategy
Monitor,
evaluate,
and make
corrective
adjustments
Strategy review
Strategic management is a process
Strategy formulation Strategy implementation

23. 2. The process of strategic management
Develop a
strategic
vision
Set the
objectives
Craft the
strategy
Implement
and execute
the strategy
Monitor,
evaluate,
and make
corrective
adjustments
Strategy review
Strategic management is a process
Often tacit Generally explicit

24. 2. The process of strategic management
Develop a
strategic
vision
Set the
objectives
Craft the
strategy
Implement
and execute
the strategy
Monitor,
evaluate,
and make
corrective
adjustments
Strategy review
Strategic management is a process
Driven by creativity
Driven by review and analysis

25. 3. How does a good strategy look like?
The kernel (essence) of a successful strategy
It should contain:
(1) a diagnosis that defines or explains the nature of the challenge,
(2) a guiding-policy for dealing with the challenge, and
(3) a set of coherent actions that are designed to carry out the guiding
policy.

26. 4. Summary
Strategy is management's action plan for running the business and
conducting operations (but note that there are many definitions of what
“strategy” is).
Strategy is important because it relates to the design of the business
model and to outperforming competitors, i.e., attaining a sustained
competitive advantage.
Strategic management is a process made of different stages.
A good strategy contains a diagnosis of the challenge, a guiding policy,
and a set of coherent actions.