chapter 6 organizational strategy - 6 ORGANIZATIONAL...

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6. ORGANIZATIONAL STRATEGY Basics of Organizational Strategy 1. Sustainable Competitive Advantage ▲Resources--- the assets, capabilities, processes, information, and knowledge that an organization uses to improve its efficiency and effectiveness, create and sustain competitive advantage, and fulfill a need or solve a problem. ▲Competitive advantage providing greater value than competitors can ▲Sustainable competitive advantage ---a competitive advantage that other companies have tried unsuccessfully to duplicate and have, for the moment stopped trying to duplicate. Sustainable competitive advantage is not the same as a long- term advantage. ▲ Sustainable resources must be valuable, rare, imperfectly imitable and nonsubstituable. ▲ Valuable resource--- a resource that allows companies to improve efficiency and effectiveness. Changes in customer demand and preferences, competitors’ actions, and technology can make once-valuable resources much less valuable. ▲ Rare resources---resources that are not controlled or possessed by many competing firms. ▲ Imperfectly imitable resources--- resources that are impossible or extremely costly or difficult for other firms to duplicate. ▲ Nonsubstitutable resource---a resource that produces value or competitive advantage and has no equivalent substitutes or replacement. 2. Strategy-Making Process 2.1 Assessing the Need for Strategic Change
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▲ The first step to creating a strategy is determining whether it needs to change its strategy to sustain a competitive advantage, especially at successful company. ▲ Competitive inertia—a reluctance to change strategies or competitive practices that have been successful in the past. ▲ Strategic dissonance—a discrepancy between a company’s intended strategy and the strategic actions managers take when implementing that strategy. Strategic dissonance can also mean that the intended strategy is out of date and needs to be changed. 2.2 Situational Analysis ▲ Situational analysis—also called SWOT analysis for strengths and weaknesses in organization’s internal environment and opportunities and threats in organization’s external environment. ▲ Distinctive competence—what a company can make, do, or perform better than its competitors. Distinctive competence is tangible. ▲ Core capabilities—the internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned outputs. Core capabilities are less visible. Distinctive competencies cannot be sustained for long without superior core capabilities. ▲ Strategic group—a group of companies within an industry that top managers choose to compare, evaluate and benchmark . ( , NW F , N ) strategic threats and opportunities. Typically, managers include a company as part of their strategic group if they compete directly with it for customers or if ti uses strategies similar to theirs.
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