Business Intelligence in Competitive Strategy
Strategic Intelligence
• Mehmet T. Oguz
• DM Review Online, August 1, 2002
Lost Boy: "Injuns! Let’s go get ‘em!"
John Darling: "Hold on a minute. First we must have a strategy."
Lost Boy: "Uhh? What’s a strategy?"
John Darling: "It’s er …It’s a plan of attack."
Walt Disney’s Peter Pan
It is clear that the fundamental goal of the firm is to earn a return on investment on its capital that exceeds the cost of its capital. There are two basic ways a firm can accomplish this core goal:
1. Exist in an industry where the economic conditions are favorable, where the rate of return is above the competitive level.
2. Defeat the competition and earn a return greater than the industry average.
These two points define corporate strategy vs. business strategy. Corporate strategy decisions include mergers and acquisitions, new ventures, allocation of corporate resources, etc. Business strategy is concerned with how the firm competes within a particular industry. In other words, it is what defines the competitive advantage a firm must attain in order to win or to survive in an industry. Therefore, business strategy is also referred to as competitive strategy. The definition of corporate and business strategy is not a separation but rather a hierarchy. If a firm is successful in executing its business strategy, it will be successful in the overall corporate strategy. In this hierarchy, the next level is functional strategy, which identifies functional decisions for R&D, personnel, finance, production, and sales and marketing. As the firm gets larger, the distinction between functional and business strategy grows. For small, entrepreneurial businesses, the two are virtually the same.
...