Resources and CapabilitiesJanuary 24, 2018Dr. Karen Smith Bogart
Today:•Review•Competitive Advantage •Competing on Resources & Capabilities•Patagonia•Strategy Quiz
Strategy: It’s About Winning•Creates a unique sustainable advantage.•Common Elements of Strategy–Long-term and consistent goals. –Deep understanding of the competitive environment.–Objective assessment of resources and capabilities.–Effective execution to reach the goals.•Strategy Aim: Creating Value•Key questions:–Where to compete? –How to compete?
What is Strategy?: Porter•The choice of which unique activities a firm should pursue•Sustainable advantage requires trade-offs, can’t pursue everything•Operational effectiveness is not strategy. It’s important but not enough….•Advantage requires “fit” among the company activities in the Value Chain … a consistency toward winning objectives.Inbound logisticsOperationsMarketing and SalesServicesOutbound LogisticsCompany infrastructureHuman resource managementTechnology developmentProcurement
Strategic Fundamentals: Collis and Rukstad•Vision Statement: What do we want to be. Aspiration.•Mission Statement: Why we exist. Our Purpose.•Values Statement: What do we believe in, how will we behave•Goals: Objectives•Strategy•Objective – the ends•Scope – the domain of activities•Advantage – the means to obtain the “ends”•Balanced Scorecard: How we will measure•The Strategic Sweet Spot: Where the needs of the customers’ and the resources of the company intersect in a way that rivals can’t compete given the context of the market place
Industry Attractiveness: Porter’s “5” Forces AnalysisSuppliersSuppliersExisting CompetitorsExisting CompetitorsBuyerBuyerNew EntrantsNew EntrantsSubstitutionsSubstitutionsThreat of new entrants•barriers to entry •economies of scale •brand equity Bargaining power of suppliers•supplier switching costs •degree of differentiation of inputs •substitute inputs •supplier concentration to firm concentration ratio •threat of forward integrationBargaining power of customers •buyer concentration to firm concentration ratio •bargaining leverage •buyer volume •buyer price sensitivity Threat of substitute prod•buyer propensity to substitute •relative price performance of sub•buyer switching costs •perceived level of product differeIntensity of competitive rivalry •industry overcapacity•exit barriers•diversity of competitors •informational complexity and asym•brand equitySource: Porter, M. (1980) Competitive Strategy, The Free Press, New York, 1980.
Environmental Impacts: PESTEL (or PEST)AnalysisPoliticalNational/InternationalEconomicSocioculturalTechnologicalEcologicalLegal The IndustryEnvironment•Suppliers•Competitors•CustomersGrant, R. (2005) Contemporary Strategy Analysis. Oxford, UK: John Wiley and Sons. P. 66