page 1 competitive strategy. page 2 business-level [competitive] strategy since we’re in the xyz...
TRANSCRIPT
Page 2
Business-level [Competitive] Strategy• Since we’re in the XYZ industry, how do we compete?
Profit = (Price – Cost) x Qty.
• Cost or size advantage• Differentiation or uniqueness advantage
• Marketing advantage• Innovation advantage• Bridge converging industries
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Breadth of Competitive
Scope
Source of Competitive Advantage
BroadTargetMarket
NarrowTargetMarket
Cost
LowCost
Generic Business Level StrategiesGeneric Business Level Strategies
Uniqueness
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Low-Cost Strategy - Operational Advantage
“Dell finds it hilarious that HP and Sony fund researchers to come up with new ideas.” “Steamrollered by Dell” Newsweek, February 21, 2005
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
ou
nd
Log
isti
cs
Op
era
tion
s
Ou
tbou
nd
Log
isti
cs
Mark
eti
ng
&
Sale
s
Serv
ice
MARG
IN
MARGIN
Value Chain and Low Cost Strategy Value Chain and Low Cost Strategy
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Inb
oun
d
Log
isti
cs
Inbound LogisticsInbound Logistics
Highly Efficient Systems to Link Suppliers’ Products with the Firm’s Production Processes
Highly Efficient Systems to Link Suppliers’ Products with the Firm’s Production Processes
Located in Close Proximity with Suppliers
Located in Close Proximity with Suppliers
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
oun
d
Log
isti
cs
Op
erat
ion
s
Ou
tbou
nd
Log
isti
cs
Ser
vice
MARG
IN
MARGIN
Relatively Few Management Layers to Reduce Overhead
Effective Training Programs to Improve Worker Efficiency and Effectiveness
Timing of Asset Purchases
Efficient Plant Scale to Minimize Manufacturing Costs
Selection of Low Cost Transport Carriers
Delivery Schedule that Reduces Costs
Products Priced to Generate Sales Volume
Small, Highly Trained Sales Force
Investments in Technology in order to Reduce Costs Associated with Manufacturing Processes
Frequent Evaluation Processes to Monitor Suppliers’ Performances
Policy Choice of Plant Technology
Organizational Learning
Efficient Order SizesO
per
atio
ns
OperationsOperationsEfficient Plant Scale to Minimize Mfg. Costs
Efficient Plant Scale to Minimize Mfg. Costs
Timing of Asset PurchasesTiming of Asset Purchases
Policy Choice of Plant TechnologyPolicy Choice of Plant Technology
Organizational LearningOrganizational Learning
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Ou
tbou
nd
Log
isti
cs
Mar
ket
ing
& S
ales
Ser
vice
MARG
IN
MARGIN
Selection of Low Cost Transport Carriers
Delivery Schedule that Reduces Costs
National Scale Advertising
Products Priced to Generate Sales Volume
Small, Highly Trained Sales Force
Effective Product Installations to Reduce Frequency and Severity of Recalls
Frequent Evaluation Processes to Monitor Suppliers’ Performances
Efficient Order Sizes
Interrelationships with Sister Units
Ou
tbou
nd
Log
isti
cs
Outbound Logistics
Outbound Logistics
Selection of Low Cost Transport Carriers
Selection of Low Cost Transport Carriers
Delivery Schedule that Reduces Costs
Delivery Schedule that Reduces Costs
Efficient Order SizesEfficient Order Sizes
Interrelationships with Sister Units
Interrelationships with Sister Units
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
oun
d
Log
isti
cs
Op
erat
ion
s
Ou
tbou
nd
Log
isti
cs
Mar
ket
ing
& S
ales
Ser
vice
MARG
IN
MARGIN
Mar
ket
ing
& S
ales
Global Scale AdvertisingGlobal Scale Advertising
Products Priced to Generate Sales Volume
Products Priced to Generate Sales Volume
Small, Highly Trained Sales Force
Small, Highly Trained Sales Force
Marketing & Sales
Marketing & Sales
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
oun
d
Log
isti
cs
Op
erat
ion
s
Ou
tbou
nd
Log
isti
cs
Mar
ket
ing
& S
ales
Ser
vice
MARG
IN
MARGIN
Mar
ket
ing
& S
ales
Global Scale AdvertisingGlobal Scale Advertising
Products Priced to Generate Sales Volume
Products Priced to Generate Sales Volume
Small, Highly Trained Sales Force
Small, Highly Trained Sales Force
Marketing & Sales
Marketing & Sales
Coca-Cola
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
oun
d
Log
isti
csO
per
atio
ns
Ou
tbou
nd
Log
isti
cs
Mar
ket
ing
& S
ales
Ser
vice
MARG
IN
MARGIN
Ser
vice
ServiceServiceEffective Product Installations to Reduce Recalls
Effective Product Installations to Reduce Recalls
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
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d
Log
isti
csO
per
atio
ns
Ou
tbou
nd
Log
isti
cs
Mar
ket
ing
& S
ales
Ser
vice
MARG
IN
MARGIN
Procurement
Systems and Procedures to Find the Lowest Cost Products to Purchase Raw Materials
Systems and Procedures to Find the Lowest Cost Products to Purchase Raw Materials
Frequent Evaluation Processes to Monitor Suppliers’ Performances
Frequent Evaluation Processes to Monitor Suppliers’ Performances
ProcurementProcurement
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
oun
d
Log
isti
cs
Op
erat
ion
s
Ou
tbou
nd
Log
isti
cs
Mar
ket
ing
& S
ales
Ser
vice
MARG
IN
MARGINTechnological Development
Technological DevelopmentTechnological DevelopmentEasy-to-Use Manufacturing Technologies
Easy-to-Use Manufacturing Technologies
Investments in Technology in order to Reduce Costs Associated with Manufacturing Processes
Investments in Technology in order to Reduce Costs Associated with Manufacturing Processes
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
oun
d
Log
isti
cs
Op
erat
ion
s
Ou
tbou
nd
Log
isti
cs
Mar
ket
ing
& S
ales
Ser
vice
MARG
IN
MARGIN
Human Resource Management
Human Resource ManagementHuman Resource ManagementConsistent Policies to Reduce Turnover CostsConsistent Policies to Reduce Turnover Costs
Effective Training Programs to Improve Worker Efficiency and Effectiveness
Effective Training Programs to Improve Worker Efficiency and Effectiveness
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Su
pp
ort
Act
ivit
ies
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
oun
d
Log
isti
cs
Op
erat
ion
s
Ou
tbou
nd
Log
isti
cs
Mar
ket
ing
& S
ales
Ser
vice
MARG
IN
MARGIN
Firm Infrastructure
Firm InfrastructureFirm InfrastructureCost Effective MIS SystemsCost Effective MIS Systems
Relatively Few Management Layers to Reduce Overhead
Relatively Few Management Layers to Reduce Overhead
Simplified Planning Practices to Reduce Planning Costs
Simplified Planning Practices to Reduce Planning Costs
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Breadth of Competitive
Scope
Source of Competitive Advantage
BroadTargetMarket
NarrowTargetMarket
Cost
Generic Business Level StrategiesGeneric Business Level Strategies
Uniqueness
CostLeadership Differentiation
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
ou
nd
Log
isti
cs
Op
era
tion
s
Ou
tbou
nd
Log
isti
cs
Mark
eti
ng
&
Sale
s
Serv
ice
MARG
IN
MARGIN
Value Chain and Differentiation Strategy Value Chain and Differentiation Strategy
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
oun
d
Log
isti
csO
per
atio
ns
Ou
tbou
nd
Log
isti
cs
Ser
vice
MARG
IN
MARGIN
Inb
oun
d
Log
isti
cs
Inbound LogisticsInbound Logistics
Superior handling of incoming raw materials to minimize damage and improve the quality of the final product
Superior handling of incoming raw materials to minimize damage and improve the quality of the final product
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
oun
d
Log
isti
csO
per
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ns
Ou
tbou
nd
Log
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cs
Ser
vice
MARG
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MARGIN
Op
erat
ion
s
OperationsOperations
Rapid responses to customers unique manufacturing specifications
Rapid responses to customers unique manufacturing specifications
Consistent manufacturing of attractive products
Consistent manufacturing of attractive products
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
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Log
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csO
per
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ns
Ou
tbou
nd
Log
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cs
Mar
ket
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& S
ales
Ser
vice
MARG
IN
MARGIN
Ou
tbou
nd
Log
isti
cs
Outbound Logistics
Outbound Logistics
Accurate and responsive order processing procedures
Accurate and responsive order processing procedures
Rapid and timely product deliveries to customers
Rapid and timely product deliveries to customers
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
oun
d
Log
isti
csO
per
atio
ns
Ou
tbou
nd
Log
isti
cs
Mar
ket
ing
& S
ales
Ser
vice
MARG
IN
MARGIN
Mar
ket
ing
& S
ales
Marketing & Sales
Marketing & Sales
Extensive personal relationships with buyers
Extensive personal relationships with buyers
Strong Coordination among functions in R&D, Marketing and Product Development
Strong Coordination among functions in R&D, Marketing and Product Development
Premium PricingPremium Pricing
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
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d
Log
isti
csO
per
atio
ns
Ou
tbou
nd
Log
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cs
Mar
ket
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& S
ales
Ser
vice
MARG
IN
MARGIN
Ser
vice
ServiceServiceComplete field stocking of replacement parts
Complete field stocking of replacement parts
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
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d
Log
isti
csO
per
atio
ns
Ou
tbou
nd
Log
isti
cs
Mar
ket
ing
& S
ales
Ser
vice
MARG
IN
MARGIN
Ser
vice
ServiceServiceComplete field stocking of replacement parts
Complete field stocking of replacement parts
Caterpillar vs. Komatsu
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
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Log
isti
csO
per
atio
ns
Ou
tbou
nd
Log
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cs
Mar
ket
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& S
ales
Ser
vice
MARG
IN
MARGINTechnological Development
Technological DevelopmentTechnological DevelopmentStrong capability in basic research
Strong capability in basic research
Investments in technol-ogies to produce highly differentiated products
Investments in technol-ogies to produce highly differentiated products
Coordination among R&D, marketing and product development
Coordination among R&D, marketing and product development
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
oun
d
Log
isti
csO
per
atio
ns
Ou
tbou
nd
Log
isti
cs
Mar
ket
ing
& S
ales
Ser
vice
MARG
IN
MARGIN
Su
pp
ort
Act
ivit
ies
Human Resource Management
Human Resource ManagementHuman Resource ManagementCompensation programs which encourage worker creativity and productivity
Compensation programs which encourage worker creativity and productivity
Extensive use of subjective performance measures
Extensive use of subjective performance measures
Superior personnel training
Superior personnel training
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Technological Development
Human Resource Management
Firm Infrastructure
Procurement
Inb
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Log
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csO
per
atio
ns
Ou
tbou
nd
Log
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Mar
ket
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& S
ales
Ser
vice
MARG
IN
MARGIN
Su
pp
ort
Act
ivit
ies
Firm Infrastructure
Firm InfrastructureFirm InfrastructureA companywide cultureemphasizing quality and innovation
A companywide cultureemphasizing quality and innovation
Highly developed Information Systems to better understand customers’ purchasing preferences
Highly developed Information Systems to better understand customers’ purchasing preferences
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Innovation Cycle Time
Slow is good, unless you’re the one driving innovationG
row
th R
ate
Timet1 t2 t3
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Breadth of Competitive
Scope
Source of Competitive Advantage
BroadTargetMarket
NarrowTargetMarket
Cost
Generic Business Level StrategiesGeneric Business Level Strategies
Uniqueness
CostLeadership Differentiation
CostLeadership
FocusedDifferentiation
Page 42
Razors• Design features of razors and shaving performance
– Do they make a difference?– Do they create [real or perceived] value?
• What are relevant “strategic dimensions” of razor industry?– What needs [real or perceived] do these dimensions fulfill?
Strategic Dimension 1
?Str
ate
gic
Dim
ensi
on
2
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Pizza Strategy Canvas
Taste Delivery Am-biance
Drink Menu
Menu Breadth
Service0
1
2
3
4
5
Domino's
Papa John's
Pizza Hut
Joe Bologna's
Mello Mushroom
Pazzo's
Brooklyn
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Women’s Razor Strategy Canvas
Dim 1 Dim 2 Dim 3 Dim 4 Dim 50
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Razor 1 Razor 2
Razor 3 Razor 4
Razor 5