Ch 6-8 Resource Analysis & Strategy PDF

Ch 6- Resource Analysis 2 Types of Resources: Ordinary- customary resources of any business to compete in its industry (T, I) Extraordinary- confer superior and sustainable position. Companies should seek to develop Categories of resources: Knowledge Social Human Fin...

Ch 6- Resource Analysis 2 Types of Resources: Ordinary- customary resources of any business to compete in its industry (T, I) Extraordinary- confer superior and sustainable position. Companies should seek to develop Categories of resources: Knowledge Social Human Financial Organizational Technology Physical Extraordinary Resources: Resources are the foundation of Capabilities: Capabilities- sets of integrated activities, skills, routines who rely on coordinated resources. Ch 8- Adapting Strategy to Industry Life Cycles Industry life cycle stages-characteristics of industry: Introduction-innovative new companies Growth-increased demand, standardization Maturity-slowing demand, commoditization Decline-substitutes abound, new price/value relations appear elsewhere Renewal-discovery of new customers, new segments Reasons for industry evolution: Opportunity recognition New knowledge about value creation Changes in demand (and supply) Consolidated Industries Scale, standardization, and low cost strategies prevail Focused differentiation is attractive; barriers exist, antitrust exist, large firms blind and lack financial resources. Fragmented Industries: Exist due to low entry barriers or value is locally-based, less effective consolidation Effective approaches; unbundle value chain, combine operations Organizational life cycle stages: Conception-innovation, finance, strategy Commercialization-production, hiring, organization of functions Growth-scaling up, marketing, culture, pace of change, chaos Maturity-profitability, internal controls First mover strategy: First movers are not always “winners” Two types of advantages; Timing and size Disadvantages-uncertainties First growth: Challenges-work overload, lack of organization, erosion of culture Solutions-strategic focus, mission, vision, flexible re-organization Renewal at the Maturity stage Opportunity recognition capabilities  Platform innovation Option investments in innovation Culture and incentive Strategic responses in crisis: Ch 10-Corporate Strategy Domain of corporate strategy: Deciding which industries to enter and exit Defining a strategic business unit Establish business unit investment priorities Effecting resources and management transfers Structuring the corporation Motives for diversification: 1. Growth Better external opportunities Acquire new capabilities Response to intensifying competition Avoid decline and takeover Benefits to managers and employees Managerial capitalism 2. Market power Gains in pricing authority Increases in bargaining power Forbearance – keep competitors at bay 3. Market entry Overcoming barriers to entry Avoiding internal development costs  Increasing speed to market Reduce opportunity cost – imitating others 4. Risk spreading Reduce variability in performance Shareholder benefit Types of diversification: Rationale supporting diversification: Related – depends on synergies between value chains -Market fit -Operational fit -Management fit Unrelated – depends on financial market imperfections Acquisition performance depends on: Selecting attractive industries Acquisition premiums Strategic rationale Loss of focus of acquiring company Parenting advantage present Accelerating growth of acquired company  Due diligence Post-acquisition integration efforts Capturing estimated synergies Portfolio management: GE Business Development Matrix BCG Growth Share Matrix Restructuring – downscoping to achieve more strategic focus Divestiture -Spin off business into independent company -Sell business Ch 12- Competitive Dynamics Predictions about competition based on….: 1. Type of industry environment Benign environment -Demand exceeds supply, high profit margins, low competitive intensity -Strategic approach: Differentiation often effective Hostile environment -Revenue growth slow or flat, cost containment prevalent, high competitive intensity, rapid obsolescence of products / service -Strategic approach: reduce costs; new product / service development; speed 2. Industry trajectories Strategy maps – estimating future company paths Technological developments Evolution of customer preferences 3. Companies Types of companies -Prospector – innovators, leaders of change, concerned with customers -Defender – intensely defend existing positions -Analyzer – unpredictable, sometimes Prospector sometimes Defender -Reactor – waits and reacts Competitor characteristics -Company strategy – vision, mission, value chain, strategy -Management – previous patterns of behavior -Financial resources and strengths Competitive intelligence -Media, analysts’ reports, supplier research, conferences, executive speeches  4. Scenario analysis Generate hypothetical dramatic industry shifts Examine how companies may respond Competitive response: Tactical Having to do with short term competitive moves and countermoves Range from most passive to most aggressive Strategic Having to do with longer term direction, investments, and performance Cooperation: Rationale for cooperation -When competition is unusually destructive - Hedge against uncertainty -Strengthen competitive position -Enter new markets -Access complementary resources -Learn new capabilities  Informal – tacit signaling -Price leadership -Tit for tat actions Formal - structural choices for cooperation -Non-equity – contractual relationship with partner -Equity – equity investment in partner -Joint venture – create a 3rd organization Types of cooperation -Vertical – upstream with suppliers or downstream with customers -Horizontal – across similar functions of partners Cooperation process - Define the goals -Conduct due diligence on partners -Establish proper governance structure -Manage the cooperation – new methods, trust, reporting Ch 13- Strategy and Structure Structural facets of organizations: Specialization -Increases as firms grow -Creates efficiency Centralization -Arises when Specialization occurs -Central control and coordination becomes critical Formalization -Rules and procedures necessary to provide guidance Structure creates challenges: Communication, Coordination, Control Five coordinating mechanisms – range from self-direction to totally-provided direction: Mutual adjustment Standardization of -Work processes -Work skills -Work output  Direct supervision Structure supports strategy: Determine business strategy approach Identify type of coordination needed Structure design allows for that coordination Organization structure types: Simple structure Functional structure M-Form (Multidivisional structure) -Business unit organization -Geographic region organization Matrix structure Adhocracy (Holacracy)