STRATEGIC THINKING -- Diving Right In

On the heels of Marketing we started Strategic Thinking today. I'm surprised to see how much of it is mathematical in theory although in this course I think we'll be dealing more in general terms than with numbers.

Basically the idea behind strategy is to find a way of using resources and capabilities to provide a firm with a competitive advantage which it can use to outperform competitors in a given industry. These can be due to economies of scale or to innovation, but they provide a firm with a means of acheiving levels of profit above "competitive parity," i.e., "above-average returns."

Companies like Southwest Airlines or Wal-Mart, which dominate the field they're in for various reasons, have certain competitive advantages which allow them to profit even in the face of competition with other firms.

Strategy, then is the way, is a method in which these firms use their advantages to maximize value for stakeholders, who are not only shareholders but also people who have a vested interest in the firm: the employees, the communities, the buyers and suppliers affiliated with the company and so on.