Organizational Strategy

Tyler N. Johnson Principles of

Management

Chapter Six

Learning Outcomes

Specify the components of sustainable competitive advantage, and explain why it is important

Describe the steps involved in the strategy-making process

Explain the different kinds of corporate-level strategies

Describe the different kinds of industry-level strategies

Explain the components and kinds of firm-level strategies

Sustainable Competitive Advantage

Resources-the assets, capabilities, processes, employee time, information,

and knowledge that an organization controls

Competitive Advantage-providing greater value for customers than competitors can

Sustainable Competitive Advantage-a competitive advantage that other

companies have tried unsuccessfully to duplicate and have, for the moment,

stopped trying to duplicate

Requirements for Sustainable Competitive Advantage

Sustainable Competitive Advantage

Imperfectly Imitable

Resources

Valuable Resources

Rare Resources

Non-Substitutable

Resources

Strategy Making Process

Choose strategic alternatives

Conduct a situational analysis

Assess need for strategic change

AVOID COMPETETIVE INERTIA LOOK FOR STRATEGIC DISSONANCE

Assessing the Need for Strategic Change

•This is step one of the strategic process

Assessment

•a reluctance to change strategies or competitive practices that have been successful in the past

Avoid competitive inertia •a discrepancy between a

company’s intended strategy and the strategic actions managers take when implementing that strategy

Look for strategic dissonance

Situational Analysis

Situational Analysis

Strategic Groups

Core Firms-central companies in a strategic group

Secondary Firms-firms that follow related, but somewhat different strategies than core firms

Transient Firms-companies whose strategies change from one strategic position to the other

Shadow-Strategy Task Force-seeks out its own company’s weaknesses and determine how other companies could

exploit them

Choosing strategic alternatives

Risk Avoiding Strategy

• Protect an existing competitive advantage

Risk Seeking Strategy

• Extended or create a sustainable competitive advantage

Strategic Reference Points

• Targets used by managers to determine if the firm has developed the core competencies it needs to achieve a sustainable competitive advantage

Strategic Reference Points

Corporate-level strategies

The overall organizational strategy that addresses

the question: What business (es) are we in or

should we be in? Two Distinctly Different

types

Portfolio Strategies Grand Strategies

Portfolio Strategy

Acquisitions, unrelated

diversification, related

diversification, single businesses

BCG Matrix

• Stars

• Question Marks

• Cash Cows

• Dogs

Diversification & Risk

Grand Strategies

Growth Strategy- focuses on increasing profits,

revenues, market share, or number of places

doing business

Stability Strategy- focuses on improving the way in which the

company sells the same products or services to the same customers

Retrenchment Strategy- focuses on turning around very poor company performances by shrinking the

size or scope of the business

Industry-level Strategies

Five Industry Forces

Positioning Strategies

Adaptive Strategies

Five Industry Forces

Positioning Strategies

Cost Leadership

Differentiation

Focus Strategy

Adaptive Strategies

Defenders

• seek moderate growth

• Retain customers

Prospectors

• Seek fast growth

• Emphasize risk taking innovation

Analyzers

• Blend of defender & prospector strategies

• Imitate other’s successes

Reactors

• Use an inconsistent strategy

• Respond to change

Direct Competition

Strategic Moves of Direct Competition A

ttac

k A competitive move designed to reduce a rival’s market share or profits R

esp

on

se

A competitive countermove, prompted by a rival’s attack, to defend or improve a company’s market share or profit

REFERENCES

Williams, Chuck. "Organizational Strategy." Principles of Management. 7th ed. Mason: South-Western, 2014. 451. Print.