Professional Documents
Culture Documents
Strategic Analysis
Identify Sustainable Competitive Advantage
Strategic Choice
Select Sustainable Competitive Advantage
Craft and Communicate Vision and Mission Develop Action Plans, Programs, and Processes
Develop a Strategic Control System Understand and Critique Current Strategy Generate Feasible Alternative Strategies Evaluate the Strategies Results
Situation Analysis
Assess Industry & Competitive Conditions
1. Industrys dominant economic traits 2. Nature of competition & strength of competitive forces 3. Drivers of industry change 4. Competitive position of rivals 5. Strategic moves of rivals 6. Key success factors 7. Conclusions about industry attractiveness
Identifying strategic groups: Identify principal strategic variables that distinguish firms. Position each firm in relation to these variables. Identify clusters.
2.0
Statoil
Vertical Balance
1.5
INTEGRATED DOMESTIC OIL COMPANIES DIVERSIFIED MAJORS INTEGRATED INTERNATIONAL MAJORS Exxon Shell
1.0
0.5
EN ENI I
BP Mobil
Nippon
Neste
0 0
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80
Geographical Scope
Radically improve the value equation Separate form and function Achieve joy of use Push the bounds of universality Strive for individuality Increase accessibility to your products Rescale the industry Compress the supply chain Drive convergence between industries
What is a competitive advantage? How do you know if you have one (or not)? How can you create one?
COST ADVANTAGE
COMPETITIVE ADVANTAGE DIFFERENTIATION ADVANTAGE
INBOUND LOGISTICS
OPERATIONS
OUTBOUND LOGISTICS
SERVICE
PRIMARY ACTIVITIES
Using the Value Chain to Identify Differentiation Potential on the Supply Side
IS that supports fast response capabilities Training to support customer service excellence Unique product features. Fast new product development
INBOUND LOGISTICS
OPERATIONS
OUTBOUND LOGISTICS
SERVICE
Industry structure matters, but success does not come just from industry attractiveness Value = difference between buyers willingness to pay and sellers opportunity cost Added value = marginal value created by the firm (value that would be lost by its absence) The larger the added value, the larger the potential profit for the seller CA is achieved by driving a wedge between buyer willingness to pay and value added by the firm (scarcity)
Ghemawat & Rivkin, 2006
Catalog activities (along the value chain) Use activities to analyze relative costs and cost drivers Use activities to analyze relative willingness of customers to pay
Who is the real buyer? What do buyers want and what are they willing to pay for? What is the relative success of our firm and competitors in fulfilling customer needs Relate success back to activities are the activities customers need the ones we are good at?
4.
Value Networks
A non-linear model of value creation
Industry-wide
COST
DIFFERENTIATION
COMPETITIVE
SCOPE Single Segment
LEADERSHIP
FOCUS
External sources of change e.g.: Changing customer demand Changing prices Technological change
ECONOMIES OF LEARNING
PRODUCTION TECHNIQUES
PRODUCT DESIGN
INPUT COSTS
CAPACITY UTILIZATION
THE PRODUCT
FORMULATE DIFFERENTIATION STRATEGY Select product positioning in relation to product attributes Select target customer group Ensure customer / product compatibility Evaluate costs and benefits of differentiation
50cc 2-cycle engine Founding of Honda motor company 405cc motor cycle
4 cycle engines
Insight Hybrid
1948 1950
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1960
1965
1970
Provides potential access to a wide variety of markets and products Makes a significant contribution to perceived customer benefits of the end product Is difficult for competitors to imitate
Strategic Intent
Global leadership over a long time horizon An obsession with winning at all levels of the firm A sustained, challenging, focused BHAG Stable over time Attracts personal effort and commitment Guide for resource development and allocation Avoiding recipes for imitation Creating competitive advantages faster than competitors can imitate them, creating new space Layers of competitive advantage Changing the terms of engagement
TANGIBLE INTANGIBLE
Financial Physical Technology Reputation Culture
HUMAN
Specialized skills and knowledge Communication & interactive abilities Motivation
Transferability Replicability
Property rights
APPROPRIABILITY OF RETURNS Relative bargaining power
Embeddedness of resources
Stages in undertaking multiple Scenario Analyses: Identify major forces driving industry change Predict possible impacts of each force on the industry environment Identify interactions between different external forces Among range of outcomes, identify 2-4 most likely/ most interesting scenarios: configurations of change forces and outcomes Consider implications of each scenario for the company Identify key signposts pointing toward the emergence of each scenario Prepare contingency plan