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This 7 page Study Guide was uploaded by Tyler Saunders on Wednesday February 4, 2015. The Study Guide belongs to 491 at Washington State University taught by Professor Allison in Fall. Since its upload, it has received 42 views. For similar materials see Management Study Guide in Business, management at Washington State University.
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Date Created: 02/04/15
Chapter One Strategic competitiveness When a company successfully formulates and implements a value creating strategy Returns can be measured in terms of accounting gures Returns in new smaller ventures are measured in rate and amount of growth Average returns are returns investors expect to earn from other investments with a similar amount of risk Hypercompetition term used to capture the realities of the competitive landscape Global economy and rapid technology change are two primary drivers Globalization the increasing economic interdependence among countries and their organizations as re ected in the ow of goods and services nancial capital and knowledge Technology diffusion the rate at which new technologies become available and are used Perpetual innovation a term used to describe how rapidly and consistently new information intensive technologies replace older ones Speed to the market of new technologies can be the primary source of competitive advantage Disruptive technology technologies that destroy the value of existing technology and create new markets Example the lpod and ltunes changing the way we buy and interact with music Strategic exibility a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment Five Factor model suppliers buyers competitive rivalry among rms currently in the industry product substitutes and potential entrants to the industry Uniqueness In terms of resources and capabilities is the basis of the rms strategy and its ability to earn above average returns F Valuable resources are valuable when they allow a rm to take advantage of opportunities or neutralize threats in its external environment Nonsubstitutable having no structural equivalents Organizational culture the complex set of ideologies symbols and core values that are shared throughout the rm and that in uence how the rm conducts business Promoting innovation facilitated by a diverse top management team representing different types of expertise and leveraging relationships with external parties Pro t pool entails the total pro ts earned in an industry at all points along the value chain De ne pools boundries Estimate pools overall size Estimate size of value chain activity in the pool Reconcile the calculations Chapter 2 0 Competitor analysis how companies gather and interpret information about their competitors External environmental analysis understanding general environment 0 Scanning study of all segments in the general environment Identify early signals pf potential changes in general environment 0 Monitoring observe environmental changes to see if an important trend is emerging from among those spotted through scanning o Forecasting determining what might happen 0 Assessing determining the timing and signi cance of the effects of environmental changes and trends that have been identi ed lnformal economy commercial activites that occur at least partly outside a governing body s observations taxations etc lndustry a group of rms producing products that are close substitutes 0 Look at handout Barriers to entry aim is to create barriers to thwart out potential competitiors o Economies of scale incremental ef ciency improvements through experience as a rm grows larger 0 Product differentiation 0 Capital requirements 0 Switching costs one time costs customers incur when they buy from a different supplier 0 Access to Distribution channels 0 Cost disadvantages independent of scale proprietary product technologies favorable raw material access desirable locations 0 Government policy Bargaining power of suppliers suppliers are powerful when o Is dominated by a few large companies and is more concentrated than the industry to which it sells 0 Satisfactory substitute products are not available to industry rms 0 Industry rms are not a signi cant customer for the supplier group Bargaining power of buyers customer are powerful when 0 They purchase a large portion of the industries total output 0 They could switch to another product at little cost 0 Industry products are undifferentiated or standardized Threat of substitute products products from outside a given industry that perform similar or the same functions as a product that the industry produces Intensity of rivalry among competitors Competition parameters 0 Slow industry growth 0 High xed costs or storage costs 0 High exit barriers Specialized assets Fixed cost of exit Emotional barriers 0 Lack of differentiation 0 High strategic stakes 0 Numerous or equally balanced competitors O O O O 0 Competitor analysis focuses on each company in which a rm competes with o What drives its competitors as shown by future objectives 0 What the competitor is doing and can do as revealed by its current strategy 0 What the competitor believes about the industry as shown by their assumptions 0 What the competitors capabilities are as shown by their strengths and weaknesses Competitor intelligence a set of data and information the rm gathers to better understand and anticipate competitors objectives strategies assumptions and capabilities Complementors companies or networks of companies that sell goods or services that are compatible with the focal rms goods or services Chapter 3 Globalization and rapid technology advancements have made it hard for rms to nd a competitive advantage Innovation is the path to secure such advantages Competitive advantage sustainability The rate of core competence obsolescence because of environmental changes Ilhe availability for substitutes of core competencies he imitability of core competencies Global mindset the ability to analyze understand and manage an internal organization in ways that are not dependant on the assumptions of a single country culture or context Value measure by the products performance characteristics and by its attributes for which customers are willing to pay Business level strategy is only effective when it is grounded in exploiting the rms capabilities and core competencies Managers are effected by uncertainty complexity and intraorganizational con ict Uncertainty arises when new proprietary technologies emerge rapidly changing economic and political trends transformations in societal values and shifts in customer demand General and industry environments as well as the customer s needs 39Complexity interrelationships among conditions shaping rms lntraorganziational con icts exist among managers making decisions as well as among those affected by the decisions Arise when decisions about core competencies must be made whether to develop or nurture Judgment must be made when solving the 3 above problems Capability of making successful decisions when no obviously correct model or rule is available or when relevant data are unreliable or incomplete Tangible resources assets that can be observed or quanti ed Financial rms capability to borrow Organizational formal reporting structure Physical product inventory echnological ability of technology related resources such as copyright Intangible resources assets that are rooted deeply in the rms history accumulate over time and are relatively dif cult for competitors to analyze or imitate IHuman knowledge trust skills Innovation ideas capability to innovate Reputational brand name Most important when trying to establish a competitive advantage o More important in establishing core competencies than that of a tangible resource 0 The more unobservable a resources it the more value it has for a rm 0 Has the ability to be leveraged Capabilities combining intangible and tangible resources to complete organizational tasks distribute service the goods and services the rm provides to customers for the purpose of creating value 0 Foundation for building core competencies o Capabilities are prevalent in every function of the business model 0 Core competencies distinguish a company competitively and re ect its personality 0 Emerge over time through an organizational process of accumulating and learning how to deploy different resources and capabilities 0 Not every capabilities is a core competency but every core competency is a capability For a core competency to be a competitive advantage it must be imitable and nonsubstitutable by its competitors 0 For a capability to be a core competency it must be valuable and unique in the eyes of the customer 0 Length of time a rm can expect to create value by using its core competencies is a function of how quickly competitors can successfully imitate a good service or process Valuable capabilities allow a rm to exploit opportunities or neutralize threats in its external environment 0 Rare capabilities capabilities that few if any competitors posses o Valuable but common capabilities are sources of competitive parity Costly to imitate capabilities other rms cannot easily develop 0 Unique historical conditions as rms evolve they often acquire or develop capabilities that are unique to them 0 Organizational culture may have an imperfectly imitable advantage over rms founded in another historical period 0 Causally ambiguous competitors do not know how the rm uses their capabilities that are core competencies as the foundation for competitive advantage 0 Social complexity implies some or many of the rms capabilities are the product of complex social phenomena Nonsubsstitutable capabilities do not have strategic equivalents o No strategically equivalent valuable resources that are themselves either not rare or imitable Two valuable rm resources can be strategically equivalent when they each can be separately exploited to implement the same strategy 0 Value chain analysis allows rms to understand what parts of the operation create value and those that do not 0 Value chain activities activities or tasks the rm completes in order to produce products and then sell distribute and service those products in what that create value for customers Support functions include the activities or task the rm completes in order to support the work being done to produce sell distribute and service products the rm is producing Finance l Support Functions Human Resources Management lnfgrmation Systems gt Customer Value Supply Chain Opecations Distcibution Marketing Follow up Management Including Services Sales Value chain activities Follow up Services activities taken to increase a products value for customers Survey feedback about customer satisfaction offering technical support after the sale and fully compiling with a products warranty are examples Operations Activities necessary to ef ciently change raw materials into nished products Developing employees work schedules designing production processes and physical layout of the operations facilities determining production capacity needs and selecting and maintaining production equipment are examples Marketing activities taken for the purpose of segmenting target customers on the basis of their unique needs retaining customers and locating additional customers Advertising campaigns developing and managing product brands determining appropriate pricing strategies and training and supporting a sales force are examples Distribution activities relates to getting the nal product to the customer Ef ciently handling customers orders choosing the optimal deliver channel and working with the nance support function to arrange for customers payment for delivered goods are examples Supply chain management activities including sourcing procurement conversion and logistics management that are necessary for a rm to receive raw materials and convert them into nal products
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