undermines tradeoffs Inappropriate cost allocation lead to too many products

Undermines tradeoffs inappropriate cost allocation

This preview shows page 34 - 44 out of 46 pages.

undermines tradeoffs Inappropriate cost allocation lead to too many products, services, or customers Outsourcing makes activities homogenous and less distinctive
Image of page 34
35 Copyright 2005 © Professor Michael E. Porter 20060606 HSM Chicago – 06052006 Final NV.ppt Strategy for What? Defining the Right Business: Geography Global National Local Regional Support Activities Marketing & Sales (e.g. Sales Force, Promotion, Advertising, Proposal Writing, Web site) Inbound Logistics (e.g. Incoming Material Storage, Data Collection, Service, Customer Access) Operations (e.g. Assembly, Component Fabrication, Branch Operations) Outbound Logistics (e.g. Order Processing, Warehousing, Report Preparation) After-Sales Service (e.g. Installation, Customer Support, Complaint Resolution, Repair) M a r g i n Primary Activities Firm Infrastructure (e.g. Financing, Planning, Investor Relations) Procurement (e.g. Components, Machinery, Advertising, Services) Technology Development (e.g. Product Design, Testing, Process Design, Material Research, Market Research) Human Resource Management (e.g. Recruiting, Training, Compensation System) Value What buyers are willing to pay Separate local value chains Integrated global value chain Ability to Leverage Key Activities Across Geography Cross- National A distinct strategy is needed for each relevant geographic market
Image of page 35
36 Copyright 2005 © Professor Michael E. Porter 20060606 HSM Chicago – 06052006 Final NV.ppt Creating a Strategy Leveraging Unique Activities Building off activities with true uniqueness Looking for new activity configurations and combinations Migrate toward the chosen strategic position Focus incremental investments on reinforcing the chosen position Segmenting the Industry Strategically Creatively segmenting product varieties, customer groups, and purchase occasions Harnessing Tradeoffs Finding tradeoffs in the value proposition or in the value chain Capitalizing on Industry Dynamics Identifying strategic positions opened up by industry changes
Image of page 36
37 Copyright 2005 © Professor Michael E. Porter 20060606 HSM Chicago – 06052006 Final NV.ppt
Image of page 37
38 Copyright 2005 © Professor Michael E. Porter 20060606 HSM Chicago – 06052006 Final NV.ppt
Image of page 38
39 Copyright 2005 © Professor Michael E. Porter 20060606 HSM Chicago – 06052006 Final NV.ppt
Image of page 39
40 Copyright 2005 © Professor Michael E. Porter 20060606 HSM Chicago – 06052006 Final NV.ppt
Image of page 40
41 Copyright 2005 © Professor Michael E. Porter 20060606 HSM Chicago – 06052006 Final NV.ppt
Image of page 41
42 Copyright 2005 © Professor Michael E. Porter 20060606 HSM Chicago – 06052006 Final NV.ppt
Image of page 42
43 Copyright 2005 © Professor Michael E. Porter 20060606 HSM Chicago – 06052006 Final NV.ppt Customer Group “Preferred”, lowest risk drivers Set of Activities Direct customer interaction through direct mail, telephone, and the Internet Sophisticated direct mail targeting low risk households 35+ year database and modeling utilities on preferred drivers Complex rating and pricing system Heavy advertising to drive requests for rate quotes (“I’ve got good news.”) Quote rates to only 50% of customers who inquire about coverage
Image of page 43
Image of page 44

You've reached the end of your free preview.

Want to read all 46 pages?

  • Summer '19
  • Professor Michael E. Porter

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes