STRUCTURALIST APPROACH
Structure 1. Analyze Industry/Environmental Conditions 2. Asses Strengths and Weakness of others
Conduct 1. Create distinctive strategic position to outperform their rivals 2. Differentiate using premium price or low costs
Performance Align Value Chain
WHEN DOES STRUCTURALIST APPROACH WORKS
Environmental Forces are favorable
Resources and capabilities are strong to carve a competitive position works even for unattractive industry position Firms defending current strategic positions and reluctance to strategic shift Fails when existing players are well entrenched and incompetent resources and capabilities
RECONSTRUCTIONIST THEORY
Endogenous Growth human capital, innovation, and knowledge are significant contributors to economic growth Strategy can shape structure
RECONSTRUCTIONIST THEORY-ARCHITECTURE
Deliver high and sustainable performance How to? Align Organizational activities with this strategy
Choose the Right Strategy
Analyze Challenges faced by Organization
FACTORS FOR RIGHT STRATEGIC APPROACH
3 Factor s
Resources and Capabilitie s
RECONSTRUCTIONIST THEORY-WHO AND WHY
Innovative Bent of Mind Grab Future Opportunities Situations in which Structuralist Approach fails
3 STRATEGY PROPOSITIONS
3 Propositions
Profit Proposition
Attracts Buyers
Helps company make money
Employees to execute the strategy
STRATEGY AND ITS FAILURE
Inputs: Cost of production People/ Employees
Complete Strategic alignment of all 3 propositions.
Outputs: Value for the Buyer Revenue for itself
l. Execution failure II. Formulation failure
REVISITING ALIGNMENT FOR 2 APPROACHES
Propositions aligned around differentiation or cost
Structural Approach
Propositions aligned around differentiation and cost
Reconstructionst Approach
DUBAI: IMPLEMENTATION OF BLUE OCEAN STRATEGY ALIGNMENT
Value Proposition
Differentiation
1. 100% foreign ownership 2. Free repatriation of capital and profits 3. Quick and easy registration and licensing process 4. World Class logistics services
Low Cost
1. No import or re-export duties 2. Zero corporate tax rate for first 15-50 years of operations 3. World class free zones with unbeatable incentives for investors
DUBAI: IMPLEMENTATION OF BLUE OCEAN STRATEGY ALIGNMENT
Profit Proposition
Differentiation
1. Govt. to make profit from housing needs of foreign employees 2. Profit from high volume of business travellers and cargo flowing in 3. DP World operates in 50ports in 31 countries
Low Cost
1. Govt. invests in infrastructure that supports investors activitiestransport, tourism, aviation etc. 2. Restrict citizenship to foreign nationals 3. Almost no cost to maintain federal govt.
DUBAI: IMPLEMENTATION OF BLUE OCEAN STRATEGY ALIGNMENT
People Proposition
Differentiation
1. Citizens have access to social security system govt. job and state assistance 2. Preserve Dubais culture and heritage 3. Allow foreigners to own properties outright 4. Multicultural environment
Low Cost
1. Zero income tax for expatriates 2. Housing at cheap rates 3. Real estate at cheap rates
SUCCESSFUL ALIGNMENT
Value Proposition
Red Nose Day Even smallest donation is recognized Make a difference with low cost
Profit Proposition
Network, Studios and Stars donate services Red Nose Night doesnt cost a penny No ad costs Makes grants to other charities
People Proposition
Motivated staff members Public, corporate sponsors and celebrities Make the world a better place while having fun
EXAMPLE: FAILURE TO IMPLEMENT BLUE OCEAN STRATEGY
Value Proposition
Simple and easy software to index, search and share music files
Profit Propositio n
People Proposition
Fights Record Labels Loses people proposition
ITUNES SUCCESS: CORRECT STRATEGY ALIGNMENT
Value Proposition
Simple and easy software to index, search and share music files
Profit Proposition
Individual song 99cents Album $9.99
People Proposition
Support from BMG, EMI, Sony, UMG, WB Pay 65cents for every song downloaded
CONCLUSION
Strategic Alignment is equally important as Innovation A good trade-off between the two strategies and its correct alignment should be done to deal with diverse and changing structural and business conditions