-results in higher organizational performance

-coordinates diverse org units helping them focus on goals

-requires managers examine and adapt to changing business environment

-drive managerial decision-making process

The strategic management process

(6 steps)

1.Identify the org current mission, goals and strategies

2-3. SWOT analysis: external/internal threats

4. Formulate strategies

5. Implement strategies

6. Evaluate results

Goals

(2)

measurable performance targets

foundation for further planning

External Analysis: 5 fources

what it defines

what it involves

defines how "profit friendly" the industry is

Intensity of rivalry among current competitors:

buyers, bargaining power of buyers, substitues, threat of substitutes, new entrants, threat of new entrants, suppliers, bargaining power of suppliers

Internal Analysis

(4)

Assessment of the organizations resources and performance capabilities

-Used to identify:

-SW

-Core competencies:exceptioinal organizational capabilities or resources (potential source of competitive advantage)

RBV

Examples of Tangible Assets

(2)

Examples of Intangible Assets

(3)

1.-capital intensive industry

-bigger is better

2. reputation

employee morale

knowledge sharing culture

RBV

Examples of Organizational capabilities

(5)

-customer service

-supply chain management

-negotiation

-physician relatioinship management

-knowledge management

SUSTAINABLE COMPETITIVE ADVANTANGE

The question of value

Increase efficiency (outputs/inputs)

SUSTAINABLE COMPETITIVE ADVANTANGE

The question of value

Increase effectiveness (enable new capability)

SUSTAINABLE COMPETITIVE ADVANTANGE

The question of rareness

SUSTAINABLE COMPETITIVE ADVANTANGE

The question of imitability

ways imitation can be avoided

(5)

-unique historical conditions (Enron)

-causal ambiguity (Apple):

others cannot duplicate SCA bc tehy do not understand why it is successful

-Social Complexity (SW airlines):

-trust, teamwork, informal relationships

SUSTAINABLE COMPETITIVE ADVANTANGE

The question of substitutability

(1+2 examples)

-no equivlent resources exist that can be used to implement the same strategies

-ex.. a superior marketing strategy for a recognized brand name

-a superior technical support group for an intelligent diagnostic software package

SUSTAINABLE COMPETITIVE ADVANTANGE

The question of exploitation

two questions plus one example

-is a firm organized to exploit the full competitive potential of its resouirces and capabilities

-Are systems in place to enable firms to support the execution of a particular strategy? ex. E-toys

TRUE OR FALSE

Sustainable does not mean the advantage will last forever

TRUE OR FALSE

Sustainable means the advantage will last forever

A Gap Analysis or a _______ does what?

(3)

SWOT

Internal: matching firm's resources and capabilities

External: to the competitive environment where it operates

SWOT Analysis

(5)

-A firm shouldnt judge opportunities by pure financial measures

-Competitive advantage often lies in identifying:

-a fit btw firms strengths and upcoming opps

-a weakness that must be dealt w/ to pursue opp

-Use info to evaluate companies: resource centers

SWOT Matrix

SO

WO

ST

WT

1. pursue opps that fit w/ companys strengths

2. overcome weaknesses to pursue opps

3. idenify ways to use strengths to reduce vulnerability to current threats

4. establish a defensive plan to prevent weaknesses from making firm highly susceptible to threats

CORPORATE LEVEL STRATEGIES

GROWTH

Concentration

Focusing on a primary line of business and increasing the # of products offered or markets served.

Ex. Bose Corporation (audio product)

Attempting to gain control of inputs (become a self-supplier)

ex. Accor (Motel 6) also owns travel agency

Attempting to gain control of output through control of the distribution channel or provide customer service activities (eliminating intermediaries).

Ex. Apple through Apple stores they've become their own distributor

Combining operations with another competitor in teh same industry to increase competitive strengths and lower competition among industry rivals.

Ex. Adidas bought Rebock

-Expanding by combining with firms in different but related industries that are "strategic fits"

ex. shared technology, common distribution channels, suppliers, customers 

ex. Phillip Morris

Growing by combining with firms in unrelated industries where higher financial returns are possible.

Ex. Sears and Allstate auto insurance

concentration: 32,000 restaurants in 100 countries

horizontal integration: buying chipotle, boston market,  McCafe)

Nokia reorganized into 4 business units, discontinued production of TV decoder boxes

GM selling Crysler: massive layoffs

THE BCG MATRIX

1. Stars

2. Cash cows

1. High anticipated growth rate; high market share

2. low anticipated growth rate; low market share

1. High anticipated growth rate, low market share

2. Low anticipated growth rate, high market share

Porter's generic strategy

(2)

-you can't be all things to all people

-select strategy that reflects and augments your competitive advantage

ex. Wal-mart, Sify Mall

-maximize economies of scale

-stress decreasing overhead, admin costs

ex. Nordstrom. Ernest Sewn

-New/high quality products

-customers with special sensitivity for product attributes

ex. 2nd hand store, Bookstop

-Market segment focus may be low cost or differentiation

-special financing, inventory, servicing issues

-SWOT

-core competencies

-competitor's weaknesses

-If you don't choose/stuck in middle "ditch dweller"

FUNCTIONAL LEVEL STRATEGY

Think-Pair-Share

FUNCTIONAL LEVEL STRATEGY

HR vs. Manufacturing

1. Differentiation

low cost

2. differentiation

low cost

THE STRATEGY PARADOX

WHat type of companies does the author claim have the most in common with successful companies?

THE STRATEGY PARADOX

What is teh strategy paradox?

that the commitments required to ahcieve breakthrough success make it difficult to adapt when the future turns out differently than expected.

Two tools for implementing approach are requisite uncertainty and strategic flexibility

THE STRATEGY PARADOX

What makes incremental strategic adaption to change problematic for companies?

THE STRATEGY PARADOX

How does J&J 4 step process to creating strategic flexibility compare to the recommendations in the text?

Recommendations: Encourage leadership, keep resources fluid, have the right mindset, monitor and compare results, disclose/share negative information, get new ideas from outside the firm, multiple alternatives, and learn from mistakes.

4-Step process: 1. Anticipate

2. formulate

3. accumulate

4. Operate

The 4-step process prepares the operating divisions b/c functional managers can identify and hedge out operating threats, allowing to better evaluate the commitments the organization already has in place.