generic business level strategy (sbu)
TRANSCRIPT
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 1/19
Competitive advantageCompetitive advantageGeneric business level strategy (SBU)Generic business level strategy (SBU)
The objective is to build COMPETITIVEThe objective is to build COMPETITIVEADVANTAGE PROFILEADVANTAGE PROFILE
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 2/19
Competitive AdvantageCompetitive Advantage
Competitive advantage comes fromCompetitive advantage comes from
performing better than competitors performing better than competitors
Sustainable competitive advantage comes fromSustainable competitive advantage comes from performing better than competitors for a long performing better than competitors for a long
timetime
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 3/19
Competitive advantage & coreCompetitive advantage & core
competencecompetence A competitive advantage is a position of superiority onA competitive advantage is a position of superiority on
the part of the firm in some function /factor/ activity/ inthe part of the firm in some function /factor/ activity/ inrelation to its competition. It is this superiority thatrelation to its competition. It is this superiority thatenables the firm to survive, grow and excel in aenables the firm to survive, grow and excel in a
competitive market.competitive market. The superiority can be in any function such asThe superiority can be in any function such as
manufacturing, marketing, finance, HRM, or amanufacturing, marketing, finance, HRM, or acombination. Intellectual property, knowledge, or anycombination. Intellectual property, knowledge, or anyfactor of production can give a competitive advantage.factor of production can give a competitive advantage.
Thus competitive advantage is a superior positionThus competitive advantage is a superior positionrelative to competition.relative to competition.
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 4/19
Com. Adv ( cont.)Com. Adv ( cont.)
CA is linked to strategy. both goes hand inCA is linked to strategy. both goes hand in
hand. C A is a vital component of strategy.hand. C A is a vital component of strategy.
For the strategy to work the firm should haveFor the strategy to work the firm should have
competitive advantage.competitive advantage.
CA is the back up of strategy. without relevantCA is the back up of strategy. without relevant
CA strategy will not succeed.CA strategy will not succeed.
Strategy can be used to create and excel CA.Strategy can be used to create and excel CA.
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 5/19
Com. Adv.( con )Com. Adv.( con )
Sources of CA :Sources of CA : MARKETINGMARKETING
FINANCEFINANCE
PRODUCTIONPRODUCTION R& DR& D
HR HR
THE CEO & LEADERSHIPTHE CEO & LEADERSHIP
LOCATION & Many more.LOCATION & Many more.
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 6/19
Strategy & Competitive AdvantageStrategy & Competitive Advantage
³ ³
³Successful business strategy is about ³Successful business strategy is about actively shaping actively shaping thethe game you play, not just playing the game you find.´ game you play, not just playing the game you find.´
(Brandenburger & Nalebuff)(Brandenburger & Nalebuff)
³Investing aggressively in creating sustainable competitive³Investing aggressively in creating sustainable competitiveadvantage is a company¶s single most dependable contributer advantage is a company¶s single most dependable contributer to aboveto above--averageaverage profitability profitability.´ .´ (Thompson & Strickland)(Thompson & Strickland)
³The essence of strategy lies in creating tomorrow¶s³The essence of strategy lies in creating tomorrow¶scompetitive advantagescompetitive advantages faster faster than competitorsthan competitorsmimic the ones you possess today.´ mimic the ones you possess today.´ (Hamel &(Hamel &
Prahalad) Prahalad)
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 7/19
CA & StrengthCA & Strength
Strength is different from CA.Strength is different from CA.
All strength are not CA.All strength are not CA.
All CA are strength.All CA are strength. A strength is a CA only if it can affect theA strength is a CA only if it can affect the
competition in an advantageous manner or competition in an advantageous manner or
bring in superiority in the market vis bring in superiority in the market vis-- aa-- visvisthe competitor. Otherwise it will remain asthe competitor. Otherwise it will remain as
astrength.astrength.
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 8/19
Building CABuilding CA
By strategyBy strategy
By SWOTBy SWOT
By bench markingBy bench marking-- internal, functional, comptt,internal, functional, comptt,
genericgeneric By value chain approach,By value chain approach,
By analysing value chain of self and competitor By analysing value chain of self and competitor
Corporate clout confers comptt advtg on SBUCorporate clout confers comptt advtg on SBUand SBU contribute to comptt advtg atand SBU contribute to comptt advtg atcorporate levelcorporate level
By adopting different strategic routesBy adopting different strategic routes
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 9/19
Strategy & CompetitiveStrategy & Competitive
AdvantageAdvantageCompetitive advantage is what allows a firmCompetitive advantage is what allows a firm
to gain an edge over its rivals in attractingto gain an edge over its rivals in attracting
customers and defending againstcustomers and defending against
competitive forces.competitive forces.
Key challenges of competitive advantage:Key challenges of competitive advantage:
1. build advantage1. build advantage
2. extend advantage2. extend advantage
3. organise for advantage3. organise for advantage
4. sustain and renew advantage4. sustain and renew advantage
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 10/19
Many routes to CompetitiveMany routes to Competitive
AdvantageAdvantage NPD NPD
QualityQuality
Superior customer serviceSuperior customer service
Achieving lower costsAchieving lower costs
Better geographic locationBetter geographic location
Technical expertiseTechnical expertise
Supply chain managementSupply chain management
Brand image / reputationBrand image / reputation
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 11/19
FIGURE 4.3
Generic Building Blocks of Generic Building Blocks of
Competitive AdvantageCompetitive Advantage
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 12/19
ANY COMPITIVEADVANTAGE FINALLYMANIFESTS
AS EITHER
1 A COSTADVANTAGE, or
2 A DIFFERENTIATION ADVANTAGE
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 13/19
FIGURE 4.4
The Impact of Quality on ProfitsThe Impact of Quality on Profits
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 14/19
FIGURE 4.7
Distinctive Competencies, Distinctive Competencies,
R eso
u
rces,and Capabilities
R eso
u
rces,and Capabilities
The roots of competitive advantage:The roots of competitive advantage:
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 15/19
Strategic R esources andStrategic R esources and
CapabilitiesCapabilitiesTangibleTangible
LandLand
BuildingsBuildings PlantPlant
EquipmentEquipment
IntangibleIntangible
Brand namesBrand names
ReputationReputation PatentsPatents
Technological or Technological or
marketing knowmarketing know--
howhow
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 16/19
Distinctive CompetenciesDistinctive Competencies
Skills in effectively coordinating and managingSkills in effectively coordinating and managing
resources for productive use.resources for productive use.
Unique resources and capabilities, or Unique resources and capabilities, or Common resources andCommon resources and
unique capabilities.unique capabilities.
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 17/19
FIGURE 4.8
Strategy and CompetitiveStrategy and Competitive
AdvantageAdvantageThe relationship between strategies andThe relationship between strategies and
resources and capabilities:resources and capabilities:
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 18/19
The Durability of CompetitiveThe Durability of Competitive
AdvantageAdvantageBarriers to imitationBarriers to imitation
Speed of imitation by competitors in reducing advantageSpeed of imitation by competitors in reducing advantage
Imitation by acquiring similar resourcesImitation by acquiring similar resources
Imitation of capabilities (more difficult)Imitation of capabilities (more difficult)
Limits on competitorsLimits on competitors
Prior strategic commitmentsPrior strategic commitments
Absorptive capacity for changeAbsorptive capacity for change
Industry dynamismIndustry dynamism The rapid innovationThe rapid innovation
shortens product life cycles.shortens product life cycles.
8/8/2019 Generic Business Level Strategy (SBU)
http://slidepdf.com/reader/full/generic-business-level-strategy-sbu 19/19
Why Do Companies Fail?Why Do Companies Fail?
What went wrong?What went wrong?
InertiaInertia
Prior strategicPrior strategiccommitmentscommitments
The Icarus paradoxThe Icarus paradox
Avoiding failure andAvoiding failure andsustaining competitivesustaining competitiveadvantage:advantage:
Focus on the buildingFocus on the building
blocks of competitive blocks of competitiveadvantage.advantage.
Institute continuousInstitute continuousimprovement andimprovement andlearning.learning.
Track best industrialTrack best industrial practice and use practice and use benchmarking. benchmarking.
Overcome inertia.Overcome inertia.