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