Chapter 6 strategy

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Chapter 6 strategy Powered By Docstoc
					Prof. Asad Hassan Butt
 strategy
    An action managers take to attain a goal of an
     organization.

    For example:
        Wal Mart’s low cost strategy
   competitive advantage
       Advantage obtained when a firm outperforms its rivals. (e.g.
        Dell low cost structure)
   Distinctive competency
       A unique strength that rivals lack (Dell online selling globally)
   Sustainable competitive advantage
       A distinctive competency that rivals cannot easily match or
        imitate. (e.g. Dell’s supply chain management)
   barrier to imitation
       Factors that make it difficult for a firm to imitate the
        competitive position of a rival. (e.g. Microsoft Office)
   legacy constraints
       Prior investments in a particular way of doing business that are
        difficult to change and limit a firm’s ability to imitate a
        successful rival. (e.g. If HP wants to shift from retail selling to
        direct selling would be difficult)
                                        (followed by a diagram)
   business-level strategy
       Strategy concerned with deciding how a firm should
        compete in the industries in which it has elected to
        participate.
   low-cost strategy
       Focusing managerial energy and attention on doing
        everything possible to lower the costs of the
        organization.
   economies of scale
       Cost advantages derived from a large sales volume.
   Differentiation strategy
       Increasing the value of a product offering in the eyes
        of consumers.
 primary    activities
    Activities having to do with the design, creation,
     and delivery of the product; its marketing; and
     its support and after-sale service.
 support    activities
    Activities that provide inputs that allow the
     primary activities to occur.
 vertical      integration
     Moving upstream into businesses that supply
      inputs to a firm’s core business or downstream
      into businesses that use the outputs of the firm’s
      core business.
     For example:
         Dell Upstream: Manufacturing its own microchips.
         Apple downstream: Developing its retail stores
   diversification
     Entry into new business areas.
   Related diversification
     Diversification into a business related to the existing business
      activities of an enterprise by distinct similarities in one or
      more activities in the value chain. E.g. Microsoft XBOX
   Unrelated diversification
     Diversification into a business not related to the existing
      business activities of an enterprise by distinct similarities in
      one or more activities in the value chain. E.g. GE into network
      broadcasting.
   economies of scope
     Cost reductions associated with sharing resources across
      businesses. E.g. Procter & Gamble