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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
Factors

Resources
and
Capabilities
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

Employees to
Helps company execute the
Attracts Buyers
make money strategy
STRATEGY AND ITS FAILURE

Inputs:
Cost of production Complete Strategic Outputs:
People/ alignment of all 3 Value for the Buyer
Employees propositions. Revenue for itself

l. Execution failure
II. Formulation failure
REVISITING ALIGNMENT FOR 2 APPROACHES

Structural Approach

Reconstructionst Approach
Propositions Propositions aligned
aligned around around differentiation
differentiation or and cost
cost
DUBAI: IMPLEMENTATION OF BLUE OCEAN
STRATEGY ALIGNMENT

Value Proposition

Differentiation Low Cost


1. 100% foreign ownership
1. No import or re-export duties
2. Free repatriation of capital and
2. Zero corporate tax rate for first 15-50
profits
years of operations
3. Quick and easy registration and
3. World class free zones with unbeatable
licensing process
incentives for investors
4. World Class logistics services
DUBAI: IMPLEMENTATION OF BLUE OCEAN
STRATEGY ALIGNMENT

Profit Proposition

Low Cost
Differentiation 1. Govt. invests in infrastructure that
1. Govt. to make profit from housing supports investors activities-
needs of foreign employees transport, tourism, aviation etc.
2. Profit from high volume of business 2. Restrict citizenship to foreign
travellers and cargo flowing in nationals
3. DP World operates in 50ports in 31 3. Almost no cost to maintain federal
countries govt.
DUBAI: IMPLEMENTATION OF BLUE OCEAN
STRATEGY ALIGNMENT

People Proposition

Differentiation
1. Citizens have access to social
security system govt. job and state
assistance
Low Cost
1. Zero income tax for expatriates
2. Preserve Dubais culture and
2. Housing at cheap rates
heritage
3. Real estate at cheap rates
3. Allow foreigners to own properties
outright
4. Multicultural environment
SUCCESSFUL ALIGNMENT

Value Proposition Profit Proposition


Network, Studios and People Proposition
Red Nose Day
Stars donate services Motivated staff members
Even smallest
Red Nose Night Public, corporate
donation is
doesnt cost a penny sponsors and celebrities
recognized
No ad costs Make the world a better
Make a difference
Makes grants to other place while having fun
with low cost
charities
EXAMPLE: FAILURE TO IMPLEMENT BLUE OCEAN
STRATEGY

Value Proposition Profit People


Proposition Proposition
Simple and easy software to Fights Record Labels
index, search and share Loses people proposition
music files ?
ITUNES SUCCESS: CORRECT STRATEGY ALIGNMENT

Value Profit People


Proposition Proposition Proposition
Support from BMG, EMI,
Sony, UMG, WB
Simple and easy
Individual song Pay 65cents for every
software to index,
99cents song downloaded
search and share
Album $9.99
music files
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