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Unformatted text preview: BMGT301 Chapter 2 CHAPTER 2: STRATEGY AND TECHNOLOGY: CONCEPTS AND FRAMEWORKS FOR UNDERSTANDING WHAT SEPARATES WINNERS FROM LOSERS INTRODUCTION The Danger of Relying on Technology Firms strive for sustainable competitive advantage: financial performance that consistently outperforms their industry peers o Truly sustainable advantage could seem impossible because the world is so dynamic with new competitors and new products o Competition is toughest when technology is involved because it is easy to copy and cut costs, prices, and increase features Operational effectiveness: refers to performing the same tasks better than rivals perform them o Danger is sameness o Usually not sufficient enough to yield sustainable dominance over the competition Efforts can be easily matched when firms invest in techniques to improve quality, lower cost, and generate design-efficient customer experiences Fast follower problem: exists when savvy rivals watch a pioneers efforts, learn from their successes and missteps, then enter the market quickly with a comparable or superior product at a lower cost o When technology can be matched so quickly, it is rarely a source of competitive advantage Strategic positioning: refers to performing different activities from those of rivals, or the same activities in a different way o Technology itself is easy to replicate, but more importantly the technology is essential to creating approaches to business that are different from those of rivals and can be quite difficult for others to copy Different if Good: FreshDirect Redefines the NYC Grocery Landscape FreshDirect focused on the 2 most pressing problem for NY shoppers: o 1. Selection is limited o 2. Prices are high Solution: use technology to craft an ultra-efficient model that makes an end-run around stores Nest day deliveries are from a vast warehouse located in the lower-rent industrial area of Queens. Because the warehouse is so large, the firm can offer a fresh goods selection thats over 5 times larger than local supermarkets Area shoppers (dont have cars or want to avoid traffic) were quick to embrace the model Model crushes costs and workers shifts are highly efficient labor costs are 60% lower Higher inventory turns means the firm is selling product faster, so it collects money quicker than its rivals do, and those goods are fresher since theyve been in stock for less time Artificial intelligence software and 7 miles of fiber-optic cables linking sensors and systems supports the entire process Buys directly from suppliers, eliminating middlemen No slotting fees FRESHEST PRODUCTS OFFERED AT PRICES THAT UNDERCUT THE COMPETITION BY 35% Tech-enabled strategic positioning is what delivers success o Traditional grocers cant fully copy the firms delivery business because this would leave them straddling two market (low-margin storefront and high-margin delivery_, unable to gain optimal benefits from either...
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This note was uploaded on 11/10/2010 for the course BMGT 301 taught by Professor Wang during the Spring '08 term at Maryland.
- Spring '08