2015 Cengage Learning MGMT7 2015 Cengage Learning 61 specify the components of sustainable competitive advantage and explain why its important 62 describe the steps involved in the strategymaking process ID: 712616
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Chapter 6Organizational Strategy
© 2015 Cengage Learning
MGMT7Slide2
© 2015 Cengage Learning
6-1 specify the components of sustainable competitive advantage and explain why it’s important
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describe the steps involved in the strategy-making process
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explain the different kinds of corporate-level strategies
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describe the different kinds of industry-level strategies
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explain the components and kinds of firm-level strategiesSlide3
Competitive Advantage
Resources assets, capabilities, processes, employee time, information, and knowledge that an organization controls.Competitive advantageproviding greater value for customers than competitors canSustainable competitive advantage
when other companies cannot duplicate the value a firm is providing to customers
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Sustainable Competitive Advantage
Resources must be…ValuableRareImperfectly imitableNonsubstitutable
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Three Steps of the Strategy-Making Process
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Assess
Difficult because there is a lot of uncertainty in business.Also, top managers are often slow to recognize the need for strategic change. competitive inertia
Managers must be aware of strategic dissonance.
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Situational Analysis
StrengthsWeaknessesOpportunitiesThreats
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Internal AnalysisDistinctive competence
something that a company can make, do, or perform better than competitorsCore capabilities less visible, internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs
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Looking Outside
Environmental scanningStrategic groupgroup of companies within an industry that top managers choose to compare, evaluate, and benchmark strategic threats and opportunities
Core firms
central companies in a strategic group
Secondary firms
firms that use strategies related to but somewhat different from those of core firms
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Choosing Strategic Alternatives
Risk-avoiding strategyRisk-seeking strategy© 2015 Cengage Learning
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Strategic Reference Points
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Corporate Level Strategy
“What business or businesses are we in or should we be in?”© 2015
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Portfolio Strategy
A corporate-level strategy that minimizes risk by diversifying investment among various businesses or product lines.Companies can grow through:acquisitions
unrelated diversification
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Boston Consulting Group Matrix
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U-Shaped Relationship between Diversification and Risk
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Grand Strategies
Broad strategic plans used to help an organization achieve its strategic goalsGrowth strategyStability strategy
Retrenchment strategy
make significant cuts
recovery
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Industry-Level Strategies
“How should we compete in this industry?”©
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Porter’s Five Industry Forces
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Positioning Strategies
Cost leadershipDifferentiationFocus© 2015
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Adaptive Strategies
DefendersProspectorsAnalyzersReactors
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Firm-Level Strategies
“How should we compete against a particular firm?”©
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Direct Competition
The rivalry between two companies offering similar products or services that acknowledge each other as rivals and take offensive and defensive positions as they act and react to each other’s strategic actions.Market commonality
Resource similarity
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A Framework of Direct Competition
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Strategic Moves of Direct Competition
Attacka competitive move designed to reduce a rival’s market share or profitsResponse
a countermove, prompted by a rival’s attack, designed to defend or improve a company’s market share or profit
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Theo Chocolate
1. Evaluate Theo’s new strategy in light of the company’s strengths, weaknesses, opportunities, and threats. 2. Using the BCG Matrix, explain Theo’s decision to offer a classic line of chocolate bars after having limited success with Fantasy Flavor chocolates. 3. Which of the three competitive strategies—differentiation, cost leadership, or focus—do you think is right for Theo Chocolate? Explain.
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2015
Cengage Learning