strategicnew-mgt

8/8/2019 strategicnew-mgt

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StrategicStrategic

ManagementManagement


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Competitive AdvantageCompetitive Advantage

Competitive advantageCompetitive advantage

The ability of a firm to win consistently over theThe ability of a firm to win consistently over the

long term in a competitive situation.long term in a competitive situation.

Competitive advantage is created through theCompetitive advantage is created through theachievement of five qualitiesachievement of five qualities

Non-substitutability

Appropriability

Superiority

Inimitability

Durability


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Five Qualities that Lead toFive Qualities that Lead to


SuperioritySuperiority

Are you significantlyAre you significantly

better than yourbetter than yourcompetitors?competitors?

At what things areAt what things are

you betteryou better??

Superiority


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Inimitability



InimitabilityInimitability Managers must createManagers must create

barriers that make itbarriers that make it

hard for others tohard for others tocopy their superioritycopy their superiorityadvantagesadvantagesCultureCulture

Product designProduct designMarketing strategyMarketing strategyAnd othersAnd others

Superiority


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Durability



Durability (long lasting)Durability (long lasting)

Legally protectedLegally protected

PatentsPatents

CopyrightsCopyrights

Brand namesBrand names

Well-establishedWell-established

Brand imageBrand imageReputation for qualityReputation for quality

Superiority

Inimitability


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Non-substitutabilityNon-substitutability

Can the customers needCan the customers needthat you fulfill can bethat you fulfill can be

met by alternativemet by alternativemeans?means?Encyclopedias vs.Encyclopedias vs.

information availability oninformation availability onthe Internetthe Internet

Movie theaterMovie theaterentertainment vs. concertentertainment vs. concertband entertainmentband entertainment

Superiority

Inimitability

Durability



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AppropriabilityAppropriability Can you actually captureCan you actually capture

the profits that can bethe profits that can be

made in the business?made in the business? Supernormal returnsSupernormal returns

Profits that are above theProfits that are above theaverage for a comparableaverage for a comparable

set of firmsset of firmsPrimarily a function ofPrimarily a function of

greater than average greater than average cost price marginscost price margins

Superiority

Inimitability

Durability


Appropriability


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Strategic Management Process:Strategic Management Process:

Setting DirectionSetting Direction

Strategic management process is aStrategic management process is aplanning process in which managersplanning process in which managers

1.1.Set the organization's general directionSet the organization's general direction

and objectivesand objectives2.2.Formulate a specific strategyFormulate a specific strategy

3.3.Plan and carry out the strategysPlan and carry out the strategysimplementationimplementation

4.4.Monitor results and make necessaryMonitor results and make necessaryadjustmentsadjustments


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StrategicStrategic

ManagementManagement

ProcessProcess

Determine

strategic intent

Define

organizational mission

Analyze environment

Set objectives

Determine

requirements

Assess

resources

Develop action plans

Implement plans

Monitor outcomes

Strategic

Planning Feedback

Adapted from Exhibit 6.1: Strategic Management Process


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Strategic intent:Strategic intent: what thewhat theorganization ultimately wants to beorganization ultimately wants to be

and doand do General identity, direction, and level ofGeneral identity, direction, and level of

aspirations of the organizationaspirations of the organization

A key objective is to inspireA key objective is to inspire

Should paint a general picture ofShould paint a general picture ofaspiration and engender a strongaspiration and engender a strongemotional response in just a few wordsemotional response in just a few words

Strategic Intent


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MissionMission statement articulates thestatement articulates thefundamental purpose of the organizationfundamental purpose of the organization

Company philosophyCompany philosophy Company identity, or self-conceptCompany identity, or self-concept

Principal products or servicesPrincipal products or services

Customers and marketsCustomers and markets

Geographic focusGeographic focus Obligations to shareholdersObligations to shareholders

Commitment to employeesCommitment to employees

Mission


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Strategic objectivesStrategic objectives translate thetranslate the

strategic intent and mission of the firmstrategic intent and mission of the firminto concrete and measurable goalsinto concrete and measurable goals

Facilitates a firm's ability toFacilitates a firm's ability to Allocate resources appropriatelyAllocate resources appropriately

Reach a shared understanding of prioritiesReach a shared understanding of priorities Delegate responsibilitiesDelegate responsibilities

Hold people accountable for resultsHold people accountable for results

Strategic Objectives


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Strategic objectivesStrategic objectives address manyaddress manyissues, such asissues, such as

Revenue growth

Profitability

Customer satisfaction

Market share Financial returns (e.g.,return on equity, returnon assets)

Technological leadership

Cash flow

Operating efficiency

(e.g., costs per unit,expense peremployee)

Strategic Objectives


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Formulating a StrategyFormulating a Strategy

Competitive strategyCompetitive strategy: determining: determining

how the company is going tohow the company is going to

compete and achieve its strategiccompete and achieve its strategic

objectives, mission, and ultimateobjectives, mission, and ultimatestrategic intentstrategic intent

Generic strategiesGeneric strategies

Techniques and toolsTechniques and tools


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Formulating a StrategyFormulating a Strategy

Generic strategiesGeneric strategies

Cost leadershipCost leadership

DifferentiationDifferentiation

ScopeScope


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St

ra

te

gy

St

ra

te

gy

Scope

General Focused

Differentiation

Cost

Leadership

Generic Strategies and ScopeGeneric Strategies and Scope

General player whose product or

service features command

premium prices and whose costs

are at the industry average.

Example: Sony

Niche player with average costs

but commanding premium prices

that focuses on the high end and

customers in a general or specificgeography.

Example: Morgan Motors

General player whose product or

service features command industry

average prices but whose costs are

significantly below the industry

average.

Example: Wal-mart

Niche player with average prices

and below-average costs that

focuses on a segment of

customers or a specific

geography.

Example: Columbia Sports

Adapted from Exhibit 6.3: Generic Strategies and Scope


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Formulating a StrategyFormulating a Strategy Internal and external analysisInternal and external analysis Tools and conceptsTools and concepts

Environmental analysisEnvironmental analysis Value propositionValue proposition

Organizational analysisOrganizational analysis Value chainValue chain Five primary activitiesFive primary activities Four support activitiesFour support activities


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Re

lia

bi

lit

y

Re

lia

bi

lit

y

High

Low

Low High

Price

Value Proposition for Three CarValue Proposition for Three Car

CompaniesCompanies

Equal

value lineCompany A

Company B

Company C

Best ValueBest Value

Adapted from Exhibit 6.4: Value Proposition for Three Companies


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The Value ChainThe Value Chain

Primary ActivitiesPrimary Activities

Supp

ort

Activities

Firm infrastructure (e.g., Finance, Planning)

Human resource management

Technology development

Procurement

Inbound

logistics

Operations Outbound

logistics

Marketing

and sales

After-sale

service

Adapted from Exhibit 6.5: The Value Chain


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Formulating a StrategyFormulating a Strategy Leveraging the value chainLeveraging the value chain

Determine where in your value chain youDetermine where in your value chain youhave the potential to add the greatesthave the potential to add the greatest

valuevalue Segment business activities, see theSegment business activities, see theimportant linkages and makeimportant linkages and makeadjustmentsadjustments

Resource-based approachResource-based approach Recognize and exploit internal strengthsRecognize and exploit internal strengths

of the companyof the company


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Formulating a StrategyFormulating a Strategy Core competenciesCore competencies

Are interrelated sets of activities that deliverAre interrelated sets of activities that deliver

competitive advantages in the short-term andcompetitive advantages in the short-term and

long-termlong-term Provide access to a wide variety of marketsProvide access to a wide variety of markets

Significantly contribute to perceived customerSignificantly contribute to perceived customer

benefits of the end products or servicesbenefits of the end products or services

Are difficult for competitors to imitateAre difficult for competitors to imitate


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Birth Growth Maturity Decline

High

LowTime

Integrating Internal and ExternalIntegrating Internal and External

AnalysesAnalysesProduct Life Cycle

Adapted from Exhibit 6.6: Product Life Cycle


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AnalysesAnalysesProduct Life Cycle

Adapted from Exhibit 6.7: International Product Life Cycles

High

Low

Time

Sales


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BCG

Matrix

High

LowRelative Market Share

Ma

rket

Attractivenes

s

High


AnalysesAnalysesPortfolio Analysis

Adapted from Exhibit 6.8: BCG Matrix


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BCG

Matrix

High

LowRelative Market Share

Ma

rket

Attractivenes

s

High


AnalysesAnalysesPortfolio Analysis

Adapted from Exhibit 6.9: International Matrix

Our Ability To Compete


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Porters Five Forces:Porters Five Forces:

RivalryRivalry

Threat of SubstituteThreat of Substitute

Buyer PowerBuyer PowerSupplier PowerSupplier Power

Threat of EntryThreat of Entry


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AnalysesAnalyses Internal environmentInternal environment

StrengthsStrengths

WeaknessesWeaknesses

ToolsToolsCore competenciesCore competencies

frameworkframeworkResource analysisResource analysis

frameworkframeworkValue chain frameworkValue chain framework

SWOT Analysis

Internal Environment

SWSW


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AnalysesAnalyses External environmentExternal environment

OpportunitiesOpportunities

ThreatsThreats

ToolsToolsProduct life cycleProduct life cycle

analysisanalysis

Portfolio analysisPortfolio analysisFive forces frameworkFive forces framework

SWOT Analysis

External Environment

OTOTSWSW


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2. Structure

Basic grouping of reporting relationships andactivities

Linking of separate organizational entities


Strategy ImplementationStrategy Implementation

Seven SsSeven Ss

1. Strategy

Plan or course of action Allocation of firms resources to

reach goals

Strategy

Structure

Adapted from Exhibit 6.10: Seven S Model


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Strategy ImplementationStrategy ImplementationStrategy

Shared

values

Structure

Systems

4. Systems Formal processes and procedures

Management control systems

Performance measurement and reward systems

Planning and budgeting systems

The ways people relate to them

Seven Ss

3. Shared Values

Significant meanings or guidingconcepts



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Shared

values

Structure

Systems

Skills

Style

6. Style

Leadership style of management Operating style of the organization

Reflection of the norms people act upon

Seven SsSeven Ss

5. Skills

Organizational competencies Other capabilities residing in the

organization



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Shared

values

Structure

Systems

Skills

Style

Staff

Seven Ss

7. Staff

Recruitment Selection

Development

Socialization

Advancement of people in theorganization


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