Management 495

Front 1

Managers face 3 central questions...

Back 1

1. What is the company's present situation?
2. What should the company's future direction be and what performance targets should be set?
3. What is our plan for running the company and producing good results

Front 2

Strategy

Back 2

defined by specific marketing positions, competitive moves and business approaches

Front 3

Sustainable Competitive Advantage

Back 3

When an attractive # of buyers are drawn to purchase products/services rather than those of other competitors for an extended period of time

- basis for such purchases are durable despite the efforts of competitors to overcome or otherwise erode the appeal of the product offering

Front 4

The Pattern of Actions and Business Approaches that Define a Company's Strategy

Back 4

Actions to...
-diversify revenue and earnings by entering into new business
-strengthen competitive capabilities and correct weaknesses
-R&D, production, sales and marketing, finance, other key activities
- strengthen competitiveness via strategic alliances and partnerships
- gain sales and market share via lower prices, more performance features, more appealing design, better quality, consumer service, product selection
- respond to change in market and competitive conditions
- enter new geographic or product markets
- capture emerging market opportunities and defent against threats

Front 5

Proactive Initiatives

Back 5

New initiatives plus ongoing strategy elements from prior periods

Front 6

Reactive Strategy

Back 6

Adaptive reactions to changing circumstances

Front 7

Strategy & Ethics

Back 7

Ethical if...
- Does not entail actions and behaviors that are illegal or cross the line
- Includes the interest of all shareholders

Front 8

Business Model

Back 8

Sets forth how its strategy and operating approaches will create value for customers while at the same time generating amply revenues to cover cost and realize a profit

Front 9

Crucial elements of the Business Model

Back 9

- Customer value proposition
- Profit Proposition

Front 10

What Makes a Strategy a Winner?

Back 10

- How well does the strategy fit the company's situation?
- Is the strategy helping the company achieve sustainable competitive advantage?
- Is the strategy resulting in better company performance?

Front 11

Strategy Making Process

Back 11

1. Developing a strategic vision, mission, and core values
2. Setting objectives
3. Crafting a strategy to achieve the objectives and company vision
4. Implementing and executing a strategy
5. Monitoring developments, evaluate performance, and initiate corrective adjustments

-- revise as needed throughout the process --

Front 12

Strategic Vision

Back 12

Describes the route a company intends to take in developing and strengthening its business in the future

Front 13

Vision Statement

Back 13

Convey a company's long term direction, distinctive and specific to the organization

Front 14

Why a Sound, Well-Communicated Strategic Vision Matters

Back 14

- Crystallizes senior executives' own views about long term direction
- Reduces the risk of rudderless decision making
- Tool for winning the support of organizational members
- Beacton for lower-level managers in making decisions
- Helps to prepare for the future

Front 15

Mission Statement

Back 15

Describes the companys current position and purpose, identifies company's products/services, customers

-- gives company identity--

Front 16

Core Values

Back 16

beliefs, traits, and behavior norms that company personnel are expected to display in conducting the company's business and pursuing its strategic vision and mission

Front 17

Objectives

Back 17

Organizations performance targets, the results and outcomes management wants to achieve
- Measurements of performance and progress
- Quantifiable/measureable, deadlines
- Set targets high enough to stretch the company

Front 18

Strategic Intent

Back 18

Relentless pursuit of an ambitious strategic objective, concentrated force of resources and actions on an objective the company wishes to achieve

Front 19

Strategic Vision + Objectives + Strategy =

Back 19

Strategic Plan

Front 20

Macroenvironment

Back 20

- General economic conditions and global factors
- Technological and environmental factors
- Societal values and lifestyles
- Population demographics
- Political, regulatory, and legal factors

Front 21

Competitive Forces- Key Questions

Back 21

- What kinds of competitive forces are industry members facing? How strong is each one?
- What forces are driving change and what impact with these changes have on competitive intensity and profitability?
- What market positions do rivals occupy? Who is strongly positioned and who is not?
- What strategic moves are rivals likely to make next?
- What are the key success factors?
- Is the industry outlook conducive to good profitability?

Front 22

Rivalry Amongst Competitors Stronger When...

Back 22

- Competitive sellers are actively trying to improve market/business standing
- Buyer demand is growing slowly
- Buyer demand falls off and sellers have excess inventory
- Number of rivals increases and are roughly the same size
- High costs in switching
- Products of rival sellers are commodities or weakly differentiated
- Aggressive movements by rivals
- Outsiders have recently acquired weaker plauers
- One or two rivals have strong strategies and others struggle

Front 23

Entry Threats are Stronger When...

Back 23

- Pool of candidates is large with resources that would make them market contenders
- Low entry barriers
- When existing industry members are looking to expand their market reach by entering into new segments or geographic areas
- Newcomes can expect to earn attractive profits
- Buyer demand is growing rapidly
- Industry members are unwilling or unable to strongly contest entry

Front 24

Substitute Products Threat Stronger When...

Back 24

- Readily available
- Attractively Priced
- Comparable or better features
- Low cost in switching
- Buyers grow more comfortable with using substitutes.

Front 25

Bargaining Power of Suppliers Stronger When...

Back 25

- High costs in switching suppliers
- Needed inputs are in short supply
- Supplier has a differentiated input that enhances the quality or performance of the sellers product
- Few suppliers of a particular input
- Some suppliers are a threat to integrate forward into the business of industry members and become perhaps a powerful rival

Front 26

Bargaining Power of Buyers is Stronger When....

Back 26

- Low costs of switching
- Large group and can demand concessions
- Large purchase volume
- Buyer demand is weak or declining
- Only a few buyers
- Quantity and Quality of available information improves
- Buyers have the ability to postpone purchases if they don't like the present offerings
- Some buyers are a threat to integrate backward into the business of sellers and become an important competitor

Front 27

Factors Driving Industry Change

Back 27

- Identify what the driving forces are
- Assess the impact of the driving forces
- Adjust strategy to prepare for the impacts of driving forces

Front 28

Strategic Group

Back 28

Cluster of industry rivals that employ similar competitive approaches, have similar product offers that appeal to similar buyers and thus occupy similar market positions

Front 29

Competitive Intelligence

Back 29

Gathering information about rivals' strategies, financial performance, resource strengths and weaknesses and the actions and plans they ahve been announcing, predicting what they will do next

Front 30

Key Success Factors

Back 30

Strategic elements, product attributes, resource strengths, competitive capabilities, and market achievements with the greatest impact on future competitive success in the marketplace

Front 31

Two Best Indicators that a Company's Strategy is Working

Back 31

1. Whether the company is achieving its stated financial and strategic objectives
2. Whether the company is an above average industry performer

Front 32

Competitive Assets

Back 32

A company's resources and capabilities represent its competitive assets and are big determinants of its competitiveness and ability to succeed in the marketplace

Front 33

Resource

Back 33

Controlled or owned by the firm
- Tangible/Intangible

Front 34

Resource and Capability Analysis

Back 34

Identify the company's resources and capabilities and determine which are the most competitively valuable

Front 35

Capability

Back 35

capability of the firm to perform some activity proficiently

Front 36

Resource Bundle

Back 36

cross-functional capabilities and other complex capabilities involving numerous linked and closely integrated competitive assets

Front 37

4 Tests of a Resources Competitive Power

Back 37

1. Is the resource or capability competitively valuable?
2. Is it something rivals lack?
3. Is the resource hard to copy?
4. Are there food substitutes for the resource?

Front 38

Dynamic Capability

Back 38

Capacity of a company to modify its existing resources and capabilities or create new ones

Front 39

Competence

Back 39

Internal activity an organization performs with proficiency, essential to survival in the industry

Front 40

Core Competence

Back 40

Proficiently performed internal activity that is central to a company's strategy and competitiveness

Front 41

Distinctive Competence

Back 41

Competitively valuable activity that a company performs better than rivals

Front 42

SWOT: Conclusions

Back 42

- Where on the scale from "alarmingly weak" to "exceptionally strong" does the attractiveness of the companys situation rank?
- What are the attractive and unattractive aspects of the companys situation?

Front 43

SWOT: Implications for improving strategy

Back 43

- Use of company strengths and capabilities as cornerstones for strategy
- Pursue those market opportunities best suited to company strengths and capabilities
- Correct weaknesses and deficiencies
- Use company strengths to lessen the impact of important external threats

Front 44

For a company to retain its market share...

Back 44

its costs must be in line with those of close rivals selling similar products

- some new entrants can storm the market with increased quality and the consumer will pay more
- Must remain competitive in terms of customer value proposition

Front 45

Value Chain

Back 45

Indentifies the primary activities that create customer value and the related supporting activities

Front 46

Benchmarking

Back 46

Potent tool for improving a company's own internal actvitities that is based on learning how other compannys perform them and borrowing their "best practices"

Front 47

3 Main Areas in the Companys Value Chain that Managers Can Try to Improve

Back 47

1. Company's own activity segments
2. Suppliers' part of the overall value chain
3. Distribution channel portion of the value chain

Front 48

Translating Company Performance of Value Chain Activities into Competitive Advantage

Back 48

1. Best rivals in performing value chain activities more proficiently, thus creating a differentiation-based competitive advantage
2. Best rivals in performing value chain activities more cheaply, thus achieving a cost-based competitive advantage

Front 49

Competitive Strength Assessment

Back 49

1. Rate firms on each competitive strength measure (Key industry success factors)
2. Assign weights/perceived importance
3. High weighted competitive strength is strong

Front 50

Competitive Strategy

Back 50

Deals exclusively with the specifics of managements game plan for competiting sucessfully
- how it intends to please customers
- offensive and defensive moves to counter rivals
- responses to shifting market conditions
- initiatives to strengthen the companys market position
- Achieve a particular kind of competitive advantage

Front 51

Low Cost Provider

Back 51

- Lower overall cost than competitors, leading to profitability
- too frill free will sabotage this strategy

Front 52

Low Cost works best when

Back 52

- Price competition is vigorous
- products are essentially identical
- Hard to achieve product differentiation
- product used in the same way
- Low switching costs
- Buyers are large
- Industry newcomers -> introductory prices

Front 53

Broad Differentiation Strategy

Back 53

Successful differentiation allows firms to....
1. command a premium price
2. Increase unit sales
3. Gain buyer loyalty

Front 54

Achieving a sustainable competitive advantage; easy to copy differentiation is not long term

Back 54

- innovation
- emphasizing product attributes that lower buyer's overall costs of using the product
- incorporate features that enhance the buyer in intangible ways
- Incorporating features that raid product performance and deliver added value to the buyer
- Deliver value on the basis of competitencies and competitive capabilities that rivals dont have or can't afford to match

Front 55

Broad Differentiation Strategy works best...

Back 55

- Buyer needs/uses of the product are diverse
- Many ways to differentiate the product in ways customers find valuable
- Few rival firms are following a similar approach
- Technological change is fast paced and competition revolves around rapidly evolving product features

Front 56

Focused (or Market Niche) Strategy

Back 56

Concentrated attention on a narrow piece of the total market
- Focused low-cost strategy
- Focused Differentiating Strategy

Front 57

When is a focused strategy attractive?

Back 57

- Target niche is big enough to be profitable
- Industry leaders do not find their presence to be important
- costly of difficult for multisegment businesses to compete
- Few rivals
- Goodwill and customer loyalty
- Industry has many niches/segments

Front 58

Best Cost Provider

Back 58

- Middle ground between pursuing a low cost advantage and a differentiating advantage, between market as a whole and as a niche

- Lower costs than rivals in incorporating upscale attributes

- Must be significantly better than the low cost provider

Front 59

Best Targets for Competitive Attack

Back 59

- Market leaders that are vulnerable
- Runner-up firms with weaknesses in areas where the challengder is strong
- Struggling enterprises
- Small local and regional firms

Front 60

Blue Ocean Strategy

Back 60

- Seeks to gain dramatic/durable competitive advantage
- Abandon efforts to beat out competitors in existing markets
- Invent a new industry or distinctive market segment that renders existing competitors largely irrelevant and allows a company to create and capture all new demand

Front 61

First Mover Advantages

Back 61

- If the market responds well, pioneer will benefit from a monopoly position
- When it helps build a firms reputation with buyers and creates brand loyalty
- When first mover's customers will thereafter face significant
- enables them to move down the learning curve
- Technological standards set for the industry

Front 62

Disadvantages or Late-Mover Advantages

Back 62

- When pioneering is more costly that accrued benefit
- When the products of an innovator are somewhat primitive
- Rapid market evolution
- Market uncertainties

Front 63

Horizontal Merger and Acquistion

Back 63

- Involves combining the operations of firms within the same general industry, provides an effective means for firms to rapidly increase the scale and horizontal scope of their core business

Front 64

Vertical Integration Strategies

Back 64

- Vertically integrated firm is one that participates in multiple segments or stages of an industry's overall value chain

Front 65

Integating Backwards

Back 65

- Increased competitiveness
- Involved performing indsutry value chain activities performed by a supplier or other enterprises engaged in early stages of the industry value chain

Front 66

Integrading Forward

Back 66

- Performing industry value chain closer to the end user
- enable end users' purchasing experience a differentiation feature

Front 67

Weighing the Pros and Cons of vertical integration

Back 67

- Whether vertical integration can enhance the performance of strategy-critical activities in a way that lowers cost, builds expertise, protects know-how or increases differentiation
- Impact of vertical integration on investment costs, flexibility and response times, and the administrative costs of coordinating operations across more vertical chain activities
- How difficult it will be for the company to aquire the skills/capabilities needed

Front 68

Outsourcing is Advantageous when...

Back 68

- activity can be performed better or more cheaply
- activity is not crucial to the firms ability to achieve sustainable competitive advantage and won't hollow out core competencies
-Streamlines company operations in ways that improve organizational flexibility and speed time to the market
- Reduces company's risk exposure to changing technology/buyer preferences
- Allows a company to assemble diverse kinds of expertise swiftly and efficiently
- allows a company to focus on its core business, leverage its key resources, and do better

Front 69

Strategic Alliance

Back 69

Formal agreement between two or more seperate companies in which they agree to work coorperatively towards some common objective

Front 70

Companies racing for global market leadership...

Back 70

- get into critical country markets quickly
- gain inside knowledge about unfamiliar markets and cultures through local partners
- access valuable skills and competencies concentrated in a particular location

Front 71

Companies racing to stake out a strong position in the industry of the future needs alliances to..

Back 71

- Establish a stronger beachhead
- Master new technologies and build new expertise or competencies
- Open up broader opportunities