Chapter 7 Reading.docx - Chapter 7 Reading Strategic Management Competitive advantage Competitive advantage is the ability to do something so well that

Chapter 7 Reading.docx - Chapter 7 Reading Strategic...

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Chapter 7 Reading Strategic Management Competitive advantage Competitive advantage is the ability to do something so well that one outperforms competitors Typical sources of Competitive advantage are: cost and quality (emphasis on efficiency and product), knowledge and speed (emphasis on innovation), barriers to entry (emphasis on creating a strong market), financial resources (emphasis on investment), and technology Sustainable competitive advantage is the ability to outperform rivals in ways that are difficult or costly to imitate Strategy and Strategic Intent A strategy is the main thing to achieve the competitive advantage A strategy is a comprehensive plan guiding resource allocation to achieve long term goals Best guess on what should be done for success in the future Strategic intent focuses and applied organizational energies on a unifying goal – example is coca colas strategy of “putting a coke at within arms reach of every consumer” Long term aspect is being overlooked in strategy making Levels of Strategy Corporate level strategy sets long term direction for the total enterprise. What industries and markets the business should compete in. How a large company intends to compete with other companies? Business level strategy identifies how a division or strategic business unit will compete in its product or serve domain. How to compete for customers. Functional strategy guides activities within one specific area of operations. Focuses on specific areas, like marketing, finance or HR. How can they best utilize resources? Strategic Management Process Strategic management is the process of formulating and implementing strategies to accomplish long term goals and to sustain their competitive advantage Process: strategic analysis, strategy formation, strategy implementation Strategic analysis – assess the organization, environment, competition, and its current strategies, find mission and stakeholders, the values and objective of the company, analyze strengths and weakness Strategy formulation – develop a revised strategy with the goal of sustainable comp. advantage Strategy Implementation – using resources to put the strategies into action and evaluating the results Essentials of Strategic Analysis Analysis of mission, Values, and Objective Mission is a statement that expresses the reason for existing in society
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Mission and stakeholders o Mission should represent the strategy or underlying business model o What are we moving to? What is our dream?
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