Principles Of Management Chapter 6 PDF

Principles of Management Chapter 6: Organizational Strategy Professor Burnley 1  Competitive Advantage Resources – assets, capabilities, processes, employee time, information, and knowledge that an organization controls. Competitive advantage...

Principles of Management Chapter 6: Organizational Strategy Professor Burnley 1  Competitive Advantage Resources – 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 – when other companies cannot duplicate the value a firm is providing to customers 2 Sustainable Competitive Advantage Resources must be… Valuable Rare Imperfectly imitable Nonsubstitutable 3 Assess Difficult because there is a lot of uncertainty in business. Also, top managers are often slow to recognize the need for strategic change. competitive inertia Managers must be aware of strategic dissonance. 4 Situational (SWOT) Analysis Strengths (Internal) Weaknesses (Internal) Opportunities (External) Threats (External) 5 Internal Analysis Distinctive competence something that a company can make, do, or perform better than competitors Core capabilities less visible, internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs 6 Looking Outside (External Analysis) Environmental scanning Strategic group (competitors) o group of companies within an industry that top managers choose to compare, evaluate, and benchmark strategic threats and opportunities 7  Choosing Strategic Alternatives Risk-avoiding strategy Risk-seeking strategy 8 Corporate Level Strategy “What business or businesses are we in or should we be in?” 9  Portfolio Strategy A corporate-level strategy that minimizes risk by diversifying investment among various businesses or product lines. Companies can grow through: –related diversification (acquisition or internal growth) –unrelated diversification (acquisition or internal growth) 10 11 12 Grand Strategies Broad strategic plans used to help an organization achieve its strategic goals Growth strategy Stability strategy Retrenchment strategy o make significant cuts o recovery 13 Industry-Level Strategies “How should we compete in this industry?” 14 15 Positioning Strategies Cost Differentiati leadership on (low cost) 16 Adaptive Strategies Defender Prospect Analyzer Reactors s ors s 17 Firm-Level Strategies “How should we compete against a particular firm?” 18 Direct Competition The rivalry between two companies offering similar products or services that acknowledge each other as rivals and take offensive and defensive positions as they act and react to each other’s strategic actions. Market commonality Resource similarity 19 20 Strategic Moves of Direct Competition Attack o a competitive move designed to reduce a rival’s market share or profits Response o a countermove, prompted by a rival’s attack, designed to defend or improve a company’s market share or profit 21