mo sbpunit 5-06 internal with gl notes

8/8/2019 Mo Sbpunit 5-06 Internal With GL Notes

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SCA Quotes

the first man gets the oyster, the second man

gets the shell Andrew Carnegie

all men see the tactics whereby I conquer,

but what none can see is the strategy out of

which great victory is evolvedSun-Tzu, Chinese military strategist


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What is Your Strategy?

Identify competitive approach Low-cost leadership Differentiation Focus on a particular market niche

Determine competitive scope Stages of industrys production/distribution chain Geographic coverage

Customer base Identify functional strategies Examine recent strategic moves


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Developing The Marketing Strategy

TargetMarketSelectio

n

& TAP

MarketShare

Method OfEntry

GapAnalysis

Level OfInvolvemen

t

MarketSegmentatio

n

MarketAttractivenes

s

ConsumerBehavior

MarketResearch

TheMarketingObjective

The MarketStrategy

FinanceObjective and

Strategy

Human resourceobjective and

strategy

OperationsObjective and

Strategy

Organizational Implications

Product Concept Profile


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Internal Scanning

Organizational AnalysisChapter 4

Prepared by: Geoff Linton

Fall 06


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5.0 Resource-Based Approach

Identify strengths and weaknesses Internal strategic factors:Critical strengths and weaknesses that are

likely to determine if the firm will be able totake advantage of opportunities while

avoiding threats. Build on strengths which are also sustainable

competitive advantages

Correct glaring weaknesses


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5.0 Sample - Rollerblade

Strengths Industry leader

Innovative in productsand design Strong brand

awareness Strong position in

sporting goods Strong position in

specialty outlets

Weaknesses Premium priced

position puts off thevalue consciousconsumer

Limited distribution inmass merchandising

outlets


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5.1 Resource-Based Approach

Organizational Resource (tangible or intangible) An asset, competency, process, skill, or knowledge controlled by

the organization.

Capability ability to exploit resourcesNote: Resources have little strategic value unless you have the capability

to exploit them!

Core competency an organizational resource whichcrosses functional boundaries, done exceedingly well

Distinctive competency superior to competition Often intangible are harder to copy, more unique


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5.1 Core Competencies

Explicit competencies: Knowledge/skills/behaviours that can be easily articulated

and communicated Example:

Tacit competencies: K/S/B that is not easily communicated because it is deeply

rooted in employee experience or in a corporations culture. Example:


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Competitive Advantage

Competitive advantageexists when a firmsstrategy gives it an edge inDefending against competitive forces andSecuring customers

Convince customers firms product / service

offers superior valueOffer buyers a good product at a lower priceUse differentiation to provide a better product

buyers think is worth a premium price

Key to Gaining a Competitive Advantage

GL


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Sustainable Competitive

Advantage sustainable over time

build loyalty

true differentiation hard to imitate

use barriers to entry


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5.3 Building Blocks of SCA

Identify strengths and weaknesses Analyze strengths to identify core competencies

Analyze core competencies to identify distinctivecompetencies

Assess distinctive competencies using VRIO

questions to determine those which could be the

basis for a strategy From those selected, identify SCA


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4-13

Reported SCAs

High Tech Service Other TotalReputation for quality 26 50 29 105

Customer service/product support 23 40 15 78

Name recognition/high profile 8 42 21 71

Retain good management and engineering staff 17 43 5 65

Low cost production 17 15 21 53

Financial resources 11 26 14 51

Customer orientation/feedback/market research 13 26 9 48

Product line breadth 11 23 13 47

Technical superiority 30 7 9 46

Installed base of satisfied customers 19 22 4 45Segmentation/focus 7 22 16 45

Product characteristics/differentiation 12 15 10 37

Continuing product innovation 12 17 6 35

Market share 12 14 9 35

Size/location of distribution 10 11 13 34

Dow price/high value offering 6 20 6 32

Knowledge of business 2 25 4 31

Pioneer/early entrant into industry 11 11 6 28

Efficient, flexible production adaptable to customers 4 17 4 25

Effective sales force 10 9 4 23Overall marketing skills 7 9 7 23

Shared vision/culture 5 13 4 22

Strategic goals 6 7 9 22

Powerful, well-known parent 7 7 6 20

Location 0 10 10 20

Effective advertising/image 5 6 6 17

Enterprising/entrepreneurial 3 3 5 11

Good coordination 3 2 5 10

Engineering research and development 8 2 0 10

Short-term planning 2 1 5 8Good distributor relations 2 4 1 7

Other 6 20 5 31

Sustainable Competetive Advantages of 248 Businesses

1. Can you have more

than 1 SCA?

2. Which SCAs are

soft?

3. Whos perception is

most important?

GL


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5.3 Evaluating Key Resources

TIROD Framework to identify SCA

Transparency: ability of others to understand your SCA?

Imitability: Is it costly for others to imitate? Rareness/Replicability: Do other competitors possess it? Organization/Transferability: Is the firm organized to exploit

the resource? Can it be transferred across functions? Durability: Is it unlikely to depreciate or become obsolete?

SCAs are the building blocks of strategy!


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5.3 Examples of SCA? (TIROD)

Advertising campaign Product colour

Manufacturing process Distributor network Research and development process

Patents Workforce skills and knowledge


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Name that SCA...

Honda

Air Cda

SouthWest Airlines

Shell

McDonalds

Tim Hortons

3M

Sony

Body Shop

Gap

Walmart

Disney

Linnamar

GL


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Do they have a SCA?

Toyota

Coke

Levis Walmart

Harvard

Microsoft

IBM

Tommy Hilfinger Tragically Hip

Eidelweiss Tavern

GL


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5.3 Resource Sustainability


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5.4 Business Model Strategy Map

Description of how the organization will exploit SCA inorder to compete

Method of making money in current business

environment Who do we serve? What do we provide? How do we make money? How do we differentiate and sustain competitive advantage?

How do we provide our product/service?

(Map takes it one step further links goals to specificinitiatives in 4 Balanced Scorecard categories)


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5.4 Types of Business Models

Customer Solutions IBM (expertise)

Multi Component System Gillette (margins)

Advertising Model Google (volume) Switchboard Model realtors (intermediary)

Efficiency Model Walmart (standardized)

Time Model Sony (first in)E.g. Video - Dell


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Example


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Strategic Practice Exercise

Watch the Dell Video: Does this firm have any core competencies?

Are any of these distinctive competencies? Does the firm have any sustainable competitive

advantages?

What are the most important aspects of its value

chain?What is the likely future of this firm? Will the company

survive industry consolidation?


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Example: Key Value Chain Activities

Parts and components manufacture

Assembly

Wholesale distribution

Retail sales

HOME APPLIANCE INDUSTRY

GL


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Example: Key Value Chain Activities

Processing of basic ingredients

Syrup manufactureBottling and can filling

Wholesale distribution

Retailing

SOFT DRINK INDUSTRY

Kroger

GL


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5.5 Value Chain Analysis


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5.5 Value Chain Analysis

Examine each product lines value chain Core competencies & core deficiencies

Examine the linkages within each product lines value chain

Connections between the way one value activity is performedand the cost of performance of another activity Look for economies of scale Look for experience curve effect

Examine the synergies among the value chains of differentproduct lines or business units

Look for economies of scope Secondary functions may provide opportunities for outsourcing

trick is to determine what is secondary to your business model

See p59 figure 4.2 for a Manufacturer


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5.6 Value Proposition

Why is a customer going to buy from you? Linked to notion ofKey Success Factors (What we need to do

well to get them to buy from us essential components ofoperations like key strategic initiatives in map) Walmart? Winners? Toyota? McDonalds

Value chain should deliver these Key Success Factors provides clarity, focus and priority for your operations


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5.7 Corporate Structure and culture

Should support business model and value proposition notwork against it should be situationally appropriate Bureaucratic emphasis on consistency, minimizing risk, long cycle

times, standardization of process, process emphasis, need

specialization and coordination at managerial level, opportunity forde-skilling Empowered emphasis on quick response, low risk of poor

decisions, need cross functional knowledge, little need forspecialization, coordination at lowest level, focus on intangibles andcompetencies

Boundaryless emphasis on outcomes and objectives,collaboration essential to success, opportunity for outsourcing tosupplier or customer, highly self managed workforce, complex cycleor extremely well defined outcomes


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5.8 Key Strategic Issues

Marketing position and segmentation, mix, life cycle

Finance Leverage, capital budget

R & D Intensity, competence, transfer, mix, discontinuity

Operations Intermittent vs continuous, experience curve, scale and scope, supply chain

HR SMWT, unions, diversity, competencies

IT Internet, extranet, ERP


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Product Place Promotion Price

Quality Channels Advertising List price

Features Coverage Personal selling Discounts

Options Locations Sales promotion Allowances

Style Inventory Publicity Payment periods

Brand name Transport Credit terms

Packaging

Sizes

Services

Warranties

Returns

Source: Philip Kotler, Marketing Management: Analysis, Planning, and Control, 4th ed. (Englewood Cliffs, N.J.: Prentice-

Hall, 1980), p. 89. Copyright 1980. Reprinted by permission of Prentice-Hall, Inc.

Marketing Mix Variables


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Introduction Growth* Maturity Decline

Time

Sa

les

*The right end of the Growth

stage is often called

Competitive Turbulence

because of price and

distribution competition that

shakes out the weaker

competitors. For further

information, see C. R.

Wasson, Dynamic Competitive

Strategy and Product Life

Cycles, 3rd ed. (Austin, Tex.:

Austin Press, 1978).

The Product Life Cycle


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What the S-Curves Reveal

Research Effort/Expenditure

In the corporate planning process, it is generally assumedthat incremental progress in technology will occur. But pastdevelopments in a given technology cannot be extrapolatedinto the future, because every technology has its limits. Thekey to competitiveness is to determine when to shift re-sources to a technology with more potential.

MatureTechnology

NewTechnology

Source: P. Pascarella, Are You

Investing in the Wrong Technology?

Industry Week(July 25, 1983), p. 38.

Copyright 1983 Penton/IPC. All rights

reserved. Reprinted by permission.

ProductPerforman

ce

Technological Discontinuity


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Discussion Questions

1. What is the relevance of the resource-based

view of the firm to strategic management in a

global environment?2. How can value-chain analysis help identify a

companys strengths and weaknesses?

3. In what ways can an organizations structure

and culture be internal strengths orweaknesses?


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Discussion Questions

4. What are the advantages and disadvantages ofmanagements using the experience curve todetermine strategy?

5. How might a firms management decidewhether it should continue to invest in currentknown technology or in new, but untestedtechnology? What factors might encourage ordiscourage such a shift?


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Enviro Case

Identifying Industry


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Identifying IndustryKey Success Factors Answers to three questions pinpoint KSFs

On what basis do customers choose betweencompeting brands of sellers?

What resources and competitive capabilities

does a seller need to have to be competitivelysuccessful?

What does it take for sellers to achieve asustainable competitive advantage?

KSFs consist of the3 - 5 really majordeterminants of financial andcompetitive success in an industry


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Table 3.3: Common Types of

Key Success Factors

Distribution-

related

Marketing-related

Skills-related

Organizational

capability

Other types

Technology-related

Manufacturing-related

Scientific research expertise; Product innovation capability; Expertise

in a given technology; Capability to use Internet to conduct variousbusiness activities

Low-cost production efficiency; Quality of manufacture; High use offixed assets; Low-cost plant locations; High labor productivity; Low-cost product design; Flexibility to make a range of products

Strong network of wholesale distributors/dealers; Gaining amplespace on retailer shelves; Having company-owned retail outlets; Low

distribution costs; Fast delivery

Fast, accurate technical assistance; Courteous customer service;Accurate filling of orders; Breadth of product line; Merchandisingskills; Attractive styling; Customer guarantees; Clever advertising

Superior workforce talent; Quality control know-how; Designexpertise; Expertise in a particular technology; Ability to develop

innovative products; Ability to get new products to market quicklySuperior information systems; Ability to respond quickly to shiftingmarket conditions; Superior ability to employ Internet to conductbusiness; More experience & managerial know-how

Favorable image/reputation with buyers; Overall low-cost; Convenientlocations; Pleasant, courteous employees; Access to financial capital;Patent protection

Example: KSFs for Apparel


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Example: KSFs for ApparelManufacturing Industry

Fashion design -- to create

buyer appeal

Low-cost manufacturing efficiency --

to keep selling prices competitive


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Example: KSFs for Beer

Industry Utilization of brewing capacity -- to keep manufacturing

costs low

Strong network of wholesale distributors -- to gainaccess to retail outlets

Clever advertising -- to induce beer drinkers to buy a

particular brand


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Value Chain


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Is this a Good Scorecard?


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