Strategy - competitors.,:Newventures ..Ch

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Strategy  is a set of goal-directed actions a firm takes to gain and sustain superior performance  relative  to competitors.5 To achieve superior performance, companies compete for resources: New ventures  compete for financial and human capital. Existing companies compete for profitable growth. Charities  compete for donations, and universities compete for the best students and professors. Sports teams  compete for championships, while celebrities compete for media attention. As highlighted in the  ChapterCase, Twitter is competing for more users against other social media such as SnapChat,  Facebook and its messaging service WhatsApp, and others. In any competitive situation, therefore,  good strategy  enables a firm to achieve superior performance. This leads to the question: What is a  good strategy? good strategy  consists of three elements:6 1 . A diagnosis of the competitive challenge. This element is accomplished through analysis of the firm’s external and internal environments (Part 1 of the AFI framework). 2 . A guiding policy to address the competitive challenge. This element is accomplished through strategy formulation , resulting in the firm’s corporate, business, and functional strategies (Part 2 of the AFI framework). 3 . A set of coherent actions to implement the firm’s guiding policy. This element is accomplished through strategy implementation (Part 3 of the AFI framework). Let’s revisit ChapterCase 1 to see whether Twitter is pursuing a good strategy. A quick rereading  indicates that Twitter appears to be underperforming, and thus its strategy does not seem to be a good  one. Let’s take a closer look at the three elements of a good strategy to see how Twitter’s CEO could turn a bad strategy into a winning one.7 THE COMPETITIVE CHALLENGE.    A good strategy needs to start with a clear and critical diagnosis of the competitive  challenge.ChapterCase 1 indicates that the biggest competitive challenge for Twitter is to grow its user  base to become more valuable for online advertisers. With some 300 million active users compared to  Facebook’s roughly 1.5 billion monthly users, Twitter is viewed by advertisers as a niche application.  Companies direct the bulk of their digital ad dollars to Facebook and Google rather than Twitter.  Moreover, Twitter suffers in comparison to Facebook for reasons other than sheer scale. Facebook allows advertisers to target their online ads much more precisely based on a host of demographic data that the  social network collects and infers about each user, including birth year, university affiliation, network of  friends, interests, and so on.
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