Bus189 - Final Crib Sheet

Bus189 - Final Crib Sheet - Chapter 4 Building Competitive...

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Chapter 4 – Building Competitive Advantage Through Functional-Level Strategy Functional Level Strategies – strategies used to improve the effectiveness of a company’s operations and thus its ability to achieve superior -efficiency/innovation/quality/customer responsiveness [building blocks] Distinctive Competencies (1) Resources (assets) a. Tangibles b. Intangibles (2) Capabilities (company skills, routines, processes) Value Chain : Functional Strategy - R&D, Production, IM, Customer Relations Secondary Strategy – HR, IT, Finance, Logistics Building Blocks – Efficiency, Innovation, Quality, Customer Responsiveness (1) Efficiency A. Economies of Scale – as I produce more quantities, all of my fixed cost gets covered, so it is less to produce, incremental benefit for next unit. Also, an entry barrier. Unit Cost $ Quantity B. Learning Effect – as you produce more, you become more efficient at it, you drive more and more because you learn. Unit Cost $ The curve will shift down because learning takes place, all the units will benefit because you gain more experience when you make more Quantity C. Experience Curve - EOS + Learning Effect Unit Cost $ Accumulated output D. Manufacturing – Traditional + Flexible i. Traditional Unit Cost $ Product Volume/Variety * Variety = “change over”, costs a lot of money when you increase in variety ii. Flexible Unit Cost $ Product volume/variety Quality – reliability/excellence (1) Six Sigma / Quality Improvement Programs (TQM) o Reduce defects o Reduce waste o Boost productivity (2) Innovation – the single most source of a competitive advantage o Differentiate - through the product/service (Nordstrom) o Lower cost - through process (Wal-Mart) Risky/high failure rate - uncertainty within the market (1) Poor commercialization - the way you take it to market [the market, timing, design, and price has to be right] (2) Positioning Strategy (3) Technical Myopia (4) Slow to market (5) Positioning Strategies Build Competencies in Innovation (1) (2) Project selection and management (3) Cross functional integration (R&D, Production, MS, Customer Relation) (4) Product development teams Page | 1
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(5) Parallel development process (concurrent engineering) (6) Learning from experience (that’s how you build competencies) Customer Responsiveness (1) Focus and Listen to customers (2) Know thy customers (3) Customization (most people like options and choices) (4) Response Time Case Study : Verizon (1) Competency Customer service – ability to track customers [what the customer uses -> bill -> feedback on lower the bill] (capability, needs knowledge-base to create this), technology (asset), network coverage (asset) (2) Quality Clear voice => Excellence Fewer dropped calls => Reliability (2.5) Efficiency Economies of Scale Dollars Cost per Customer # of Retained Customers (3) Mobile Telecom Industry Strategy Map(what customers value)
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Bus189 - Final Crib Sheet - Chapter 4 Building Competitive...

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