Strategy chapter 4 - Evaluating a company’s resources, capabilities and competitiveness - MM

Illustration capsule 41 the value chain for kp

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ILLUSTRATION CAPSULE 4.1 The Value Chain for KP MacLane, a producer of Polo Shirts 4–56
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STRATEGIC MANAGEMENT PRINCIPLE STRATEGIC MANAGEMENT PRINCIPLE A company’s cost competitiveness depends not only on the costs of internally performed activities (its own value chain) but also on costs in the value chains of its suppliers and distribution channel allies. 4–57
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CORE CONCEPT CORE CONCEPT Benchmarking is a potent tool for improving a company’s own internal activities that is based on learning how other companies perform them and borrowing their 'best practices'. 4–58
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BENCHMARKING AND VALUE CHAIN ACTIVITIES Benchmarking: Involves improving a firm’s internal activities based on learning other companies’ “best practices.” Assesses whether the cost competitiveness and effectiveness of a firm’s value chain activities are in line with its competitors’ activities. Sources of Benchmarking Information: Reports, trade groups, analysts and customers Visits to benchmark companies Data from consulting firms 4–59
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STRATEGIC MANAGEMENT PRINCIPLE STRATEGIC MANAGEMENT PRINCIPLE Benchmarking the costs of company activities against rivals provides hard evidence of whether a company is cost-competitive. 4–60
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ILLUSTRATION CAPSULE 4.2 Benchmarking and Ethical Conduct Avoid discussions or actions that could lead to or imply an interest in restraint of trade, market and/or customer allocation schemes, price fixing, dealing arrangements, bid rigging, or bribery. Don’t discuss costs with competitors if costs are an element of pricing. Refrain from the acquisition of trade secrets from another by any means that could be interpreted as improper, including the breach of any duty to maintain secrecy. Do not disclose or use any trade secret that may have been obtained through improper means or that was disclosed by another in violation of duty to maintain its secrecy or limit its use. Be willing to provide to your benchmarking partner the same type and level of information that you request from that partner. Communicate fully and early in the relationship to clarify expectations, avoid misunderstanding, and establish mutual interest in the benchmarking exchange. Be honest and complete with the information submitted. The use or communication of a benchmarking partner’s name with the data obtained or practices observed requires the prior permission of the benchmarking partner. Honor the wishes of benchmarking partners regarding how the information that is provided will be handled and used. In benchmarking with competitors, establish specific ground rules up-front. For example, “We don’t want to talk about things that will give either of us a competitive advantage, but rather we want to see where we both can mutually improve or gain benefit.” Check with legal counsel if any information- gathering procedure is in doubt. If uncomfortable, do not proceed. Alternatively, negotiate and sign a specific nondisclosure agreement that will satisfy the attorneys representing each partner.
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