Kellogg on Strategy
Book

Kellogg on Strategy

Concepts, Tools, and Frameworks for Practitioners

David Dranove and Sonia Marciano
Wiley, 2005
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Editorial Rating

8

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  • Applicable

Recommendation

This concise guide to strategy offers an excellent basic introduction to business strategy. David Dranove and Sonia Marciano not only outline their own benefits-minus-cost ("B - C") approach to strategy; they also usefully summarize the essentials of other widely accepted approaches, most notably that of Harvard Business School professor Michael E. Porter. They write lucidly, avoid academic jargon and stay focused on the essentials without burdening the reader with unnecessary detail. They illustrate their discussion with examples drawn from actual business successes and failures, and two case studies, one from the airline industry and the other from the health-care industry. getAbstract recommends this book to beginning managers looking for a strategy primer. Experienced strategists can turn to it for a refresher course in fundamental business truths.

Summary

Mind Your "PQs"

Winning firms pursue a variety of strategies, so blindly imitating another organization's successful strategy without careful analysis is a mistake. Many firms have failed because they adopted strategies that did not match their capabilities or resources. What's more, a strategy that is right for one time period may be wrong for another. The correct strategy always depends on time and circumstances. Test all strategies against the following two "principal questions," or "PQs":

  1. "Does the firm possess advantages that will translate into profits?" - What differentiates your business from your competitors? Low cost? High quality? Quick turnaround?
  2. "Does the firm's business environment permit these advantages to turn into profits?" - Your product may be inexpensive and of excellent quality, yet you may still have difficulty making a profit. Competition, industry structure, consumer preferences, technology and other environmental factors affect your ability to profit.

Good strategy depends on understanding the facts, the most important of which is "economic profit." This is your firm's net operating profit after...

About the Authors

David Dranove is a professor at the Kellogg Graduate School of Management. Sonia Marciano teaches at Harvard Business School.

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