Strategic Management Week 3 Notes
Strategic Management Week 3 Notes STRT 4500
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This 3 page Class Notes was uploaded by Dominique LaSalle on Wednesday September 7, 2016. The Class Notes belongs to STRT 4500 at University of Colorado Colorado Springs taught by Eric M. Olson in Fall 2016. Since its upload, it has received 19 views. For similar materials see Strategic Management in Business at University of Colorado Colorado Springs.
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Date Created: 09/07/16
Strategic Management Week 3 Competitive Strategy - Business units are any group within a firm that has a defined strategy and manager with both sales and profit responsibility. Typically SBU’s sells groups of related products or services - The essence of competitive strategy is determining how the business unit will compete - The taking of offensive or defensive actions to create a defendable position in an industry to cope successfully with competitive forces and thereby - Typologies o Porter’s Generic Strategy Focus is on competitors Low Cost Leader (overall cost leadership) o relatively high market share or, o access to other advantages o bulding volume through wide product line and/or serving many customer segments o large up-front capital o aggressive pricing o initial loses to build market share o Example: Hyundai Differentiation o Defined as something that is viewed as unique industry wide o May preclude high market share o Requires close relationship with key customers o Requires continual investment and R&D service, or other differential advantage o Margins are typically high but must not become so high as to negate the beneficial advantage o Example: Mercedes Benz Focus o Assumes that a narrow market can be more effectively or efficiently served than by bigger competitors o Requirements: identification of market niche not being adequately addressed Directing firm energies on a particular buyer group, product line segment, or geographic niche Meeting buying criteria of niche (either low cost or differentiation) o Examples: Ferrari (differentiated focus) Yugo (low cost focus) o Stuck in the middle Failure to adhere to one of the three strategies Failure to sustain a strategy Erosion of a strategy due to industry revolution o Miles & Snow Focus on internal capabilities with regard to the development of new products or services Four competitive strategies Prospectors Analyzers Defenders Reactors o Hybrid typologies Walker & Ruekert and Slater & Olson combined Porter’s external focus with Miles and Snow’s internal focus: Prospectors (Apple) Analyzers (Microsoft) Low cost defenders (Motel 6) Differentiated defenders (Ritz-Carlton) o Treacy and Wiersema Focus on customers buying patterns rather than competitors or product development Operational excellence Objective: to lead the industry in price and convenience by aggressively seeking ways to reduce costs: o Minimize overhead o Eliminate production steps o Reduce transaction costs o Deliver products at competitive price with minimal inconvenience o Examples: Dell computer and Walmart Customer intimacy Objective: to continually tailor products and services to fit an increasingly fine definition of the customer o Expensive to implement but builds long-term customer loyalty o Focus on customer’s lifetime value o Employees receptive to customer requests o Examples Nordstrom’s Broadmoor Hotel/Resort Product leadership Objective: to strive to produce continuous state-of-the-art products and services o Embrace new ideas that may originate outside of the company o Quickly commercialize new ideas o Aggressively pursue new solutions o Examples: Hewlett Packard 3M Rubbermaid Apple Brand champion Objective: to strive to build brand equity across mass- markets o Heavy promotion of brands to build brand equity o Identify segments with sufficient numbers or profit potential o develop products to reach a wide audience o price premiums based on perceived quality o example: Nike Sustaining the lead Choose a value discipline that capitalizes on the firm’s capabilities and culture while considering
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