Chapter 6 Organizational Strategy I Sustainable Competitive Advantage a Resources are the assets capabilities processes employee time information knowledge that an organization controls that they use to improve effectivness efficency and to create a maintainable sustainable competitive advantage i Maintanable Sustainable Competitve Advantage advantage that other companies have tried to duplicate and for the moment stopped trying to duplicate a competitive 3 2 Rare Resources 1 Valuable Resources resource staht are not controlled or resources that allow organizations to improve efficency and effectiveness possessed by many competitng firms Imperfectly Imitable Respurces impossible or extremely costly or difficult for other firms to duplicate competitive advantage and have no equivalent subsitutes or replacements resources that produce value or resources that are 4 Nonsubsituable Resource b Strategy Making Processes i Asses need for strategic change 1 Competitive Inertia competitive practices that have been successful in the past a reluctancy to xhabge strategies or a BAD 2 Strategic Dissonance strategy and the actions the managers take discrepencey between a companies ii Situational Analysys 1 SWOT a Distincitve Competance what a company can make do or perform better than its competitors process that determines how effectively inputs can be turned into outputs the internal decision making b Core Capabilities iii Choosing Strategic Alternatives 1 Risk Avoiding aims to protect compeditive strategy 2 Risk Seeking aims to extend ir create a sustainable competitive advantage II Corporate Level Strategirs What business are we or should we be in a Portfolio Strategy diversifying investments amoung variouses businesses or product lines is a corporate level strategy that minimizes risk by i Product line 1 Dogs Low Market Share Low Growth 2 Question Mark Low Market Share High Growth 3 Cash Cow High Market Sahre Low Growth 4 Stars High Market Share High Growth ii Related Diversification similar products manufacturing marketing technology or cultures b Grand Strategies strategic goals and guide managers to achieve these goals broad corporate level strategic plan used to achieve creating or acquiring companies that share ii Stability Strategy i Growth Strrategy focuses on increasing profits revenues market share or number of places in which the company does business improving the wat in which the company sells the same products and services to the same customers very poor company performance by shrinking the size and scope of the businesses a strategy that focuses on turning around iii Retrenchment Strategy How should we compete in this industry III Industry Level Strategies a 5 Industry Forces a measure of the barriers of entry 1 Character of Rivalry 2 Threat of New Entrants a measure of the internsity of 3 Threat of Subsitute Products and Services i 5 Industry Forces competition behavior between companies in an industry into an industry customer can find subsitutes from a competitor measure of influence that suppliers of parts materials and services to a firm in an industry have on the prices of these inputs customers have on a firms price 4 Barganing power of suppliers 5 Barganing Power of Buyers a measure of influence that how easy a 1 Cost Leadership producing a product or service of ii Positioning Strategies acceptable quality at consistently lower production costs than competitors can so it can offer it at the lowest price in the industry 2 Differentiation sufficiently different from competitors offerings so consumers are willing to pay a premium price for it produce a specialized product for a very specific target market using differentiation or cost leadership to providing a product or service that is 3 Focus Strategy iii Adaptive Strategies best suited for the external environment 1 Defenders seek moderate steady growth by offering a limited range of products ans services to a well defined set of customers seek fast growth by searching for new market 2 Prospectors opportunities encouraging risk taking and being the first to bring innovative new products to the market blend of prospectors and defenders do not follow a consistent strategy BAD 3 Analyzers 4 Reactors IV Firm Level Strategies How should we react against a particular firm i Market Commonality a Direct Competition overlapping products services or customers in multiple markets the extent to which a competitor has similar amounts and kinds of resources the degree to which 2 companies have ii Resource Similarity 1 see exhibit 6 7
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