>>Sun Tzu's classic book on military strategy, "The Art of War" provides a valuable lesson
in regard to business strategy today. Sun Tzu writes: "If you know the enemy and know
yourself, you need not fear the result of a hundred battles. If you know yourself but
not the enemy, for every victory gained you will also suffer defeat. If you know neither
the enemy nor yourself, you will succumb in every battle."
This basic strategic idea was echoed decades later when Bruce Pandolfini, the famed chess
master, was interviewed by Fast Company magazine. In that interview he noted that he considered
the two most important forms of intelligence to be, "The ability to read other people,
and the ability to understand oneself." Pandolfini argued that those two kinds of intelligence
will help individuals succeed in both chess and life. I'm sure Sun Tzu would agree.
And this idea of knowing yourself and knowing your enemy is very applicable to understanding
business strategy. For example, we'll explore a number of frameworks to analyze firms and
their competitive environment in this class. One of the simplest frameworks, SWOT analysis,
is nearly a direct application of Sun Tzu's wisdom. SWOT analysis encourages firms to
examine elements internal to the firm, their strengths and weaknesses, in the context of
the opportunities and threats that are external to the firm and part of their competitive
environment.
We'll also explore PESTLE analysis -- a tool for examining different factors and trends
in the external environment. Exploring political, economic, social, technological, environmental,
and legal factors helps strategists to keep their eye on a broad array of trends and challenges
in society that impact industries and business. For example, the increase in college students
as part of generation Y (a social trend that could be tracked though demographic data)
has encouraged stores such as Target to establish entire lines that cater to dorm room apparel
and decoration. So the point of PESTLE analysis is to be aware of general trends in the environment
that might have implications for specific firms.
Porter's Five Forces is a framework developed to help managers understand why some industries
tend to be more profitable than others. Research in strategic management has consistently found
that the industry where the firm operates is the single most important factor in determining
the performance of a particular firm. For example, why do firms in energy tend to thrive
while members of the airline industry often struggle? This framework will aid in understanding
why some industries outperform others, and that knowledge is a critical part of understanding
strategic management.
We will also explore elements that differentiate some firms from others. For example, we will
explore generic business strategies, the recipes used by firms relevant to their competitive
scope and focus on either cost or differentiation. Understanding business-level strategy helps
a firm better know themselves, and that knowing impacts the decisions managers make in the
strategic operations of the firm.
We'll also explore the importance of unique firm resources, and you will learn tools that
help organizations examine their unique resources and add value to what they do when compared
to competitors. For example, digesting the material on the value chain framework will
help you understand how companies in Oklahoma City such as Kitchen 324 have developed unique
donuts such as their Jonut that are so compelling that folks like myself will regularly make
the trip to get one of their gourmet donut-inspired creations.
The strategies of many firms emerge over time. For example, the longest operating business
in Oklahoma is Eischen's Bar, a restaurant known for their fried chicken. They began
as a territorial saloon created by Ed Eischen in 1896. Some businesses have seen ever more
dramatic changes over time. ESPN was once an outlet that focused on regional teams in
the state of Connecticut. Avon was inspired by a gimmick of aspiring writer David McConnell,
who gave out perfume with the books he sold. So managers should always be on the lookout
for new opportunities that might change the course of their firm, and by knowing themselves
and their competitors they can leverage the advice of Sun Tzu to emerge victorious on
the competitive battlefield. We conclude by discussing how strategy can help you personally
manage your work and career goals. So my hope is that you will be able to follow in the
tradition of Sun Tzu as you work to master knowledge of strategic management.