EMGT5130_CH4 - EMGT5130 New Business Development CHAPTER 4....

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New Business Development EMGT5130 Young Jeong   CHAPTER 4. Competitive Strategy
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What is a strategy? 1. A plan of actions that a firm will take to achieve its mission and goals. 2. Response to opportunity 3. A plan of implementing a company’s business plan 4. Based on deep knowledge of the opportunity, the industry, and its context 5. Subject to change and reemergence as conditions, alliances, and competition change
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How to set up a strategy? The Management Process for Developing a Strategy 1. Develop the vision, mission statement , and business model . 2. Describe core competencies , customers , and competitive advantage. 3. Describe the industry and context and competitors 4. Determine strengths and weaknesses in the context of the industry and environment. (SWOT) 5. Describe the opportunities and threats for the venture.(SWOT) 6. Identify the key factors for success using the six forces model . 7. Formulate strategic options and select the appropriate strategy . 8. Translate the strategy into action plans with suitable measures and controls. Steps 1 & 2 were discussed in CH 3. We focus on steps 3 - 8
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Figure 4.2 The six Qs for creating a dynamic strategy. Profitability rests on six solid answers to these question Profitability Why are we pursuing this objective? The vision The mission Where will we be active? The customer The market How will we achieve our objective? Innovation Acquisitions When will we act and at what speed? Timing Execution What will differentiate our product? Positioning With whom will we compete and cooperate? Competition Alliances
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Industry definition should be narrow and specific: e.g. Telecommunication industry -> too broad
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Table 4.3 Four stages of an industry life cycle 1. Emergence (E.g.) Artificial organs, Nanotechnology, Genomics 2. Growth (E.g.) Medical technology, S/W, Electronics 3. Maturation (E.g.) Electronic appliances, Automobiles, Movie theater 4. Decline (E.g.) Steel, Roller-skating rinks, Bowling alleys
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Life Cycle Phenomena Emergency Growth Necessary features and performance become clear and a dominant design emerge Maturation Number of competitors stabilizes & profit margins slowly decline as prices becomes the primary competitive weapon Decline Number of firms decline and profit margins erode
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EMGT5130_CH4 - EMGT5130 New Business Development CHAPTER 4....

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