Download - Chapter 5
![Page 1: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/1.jpg)
Summary Slide
• Chapter 5• Situational Analysis • Situational Analysis • Situational Analysis • Situational Analysis • TOWS Matrix• Resource-Based Approach • Business Strategies
![Page 2: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/2.jpg)
Summary Slide (cont.)
• Porter’s Competitive Strategies • Porter’s Competitive Strategies • Porter’s Competitive Strategies • Porter’s Generic Competitive Strategies• Porter’s Competitive Strategies • Porter’s Competitive Strategies • Porter’s Competitive Strategies • Porter’s Competitive Strategies
![Page 3: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/3.jpg)
Summary Slide (cont.)
• Porter’s Competitive Strategies • Competitive Strategy • Competitive Strategy • Dimensions of Quality • Competitive Strategy • Competitive Strategy • Competitive Tactics • Competitive Tactics
![Page 4: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/4.jpg)
Summary Slide (cont.)
• Competitive Tactics
• Competitive Tactics
• Cooperative Strategies
• Cooperative Strategies
• Cooperative Strategies
![Page 5: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/5.jpg)
Chapter 5Strategy Formulation: Situation Analysis and Business Strategy
![Page 6: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/6.jpg)
Situational Analysis
Strategy formulation:– Strategic planning or long-range
planning• Develops mission, objectives, strategies
and policies
![Page 7: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/7.jpg)
Situational Analysis
Situational Analysis:– Process of finding a strategic fit
between external opportunities and internal strengths while working around external threats and internal weaknesses.
![Page 8: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/8.jpg)
51 2 3 4
Strategic Factor Analysis Summary (SFAS)
Strategic Factors
(Select the most important opportunities/threats from EFAS, Table 3.4 and the most important strengths and weaknesses from IFAS, Table 4.2)
Total Score
Weight RatingWeighted Score Comments
SH
OR
T
INT
ER
ME
DIA
TE
LO
NG
Duration 6
![Page 9: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/9.jpg)
Strategic Factors
(Select the most important opportunities/threats from EFAS, Table 3.4 and the most important strengths and weaknesses from IFAS, Table 4.2)
S1 Quality Maytag culture (S)
S3 Hoover’s international orientation (S)
W3 Financial position (W)
W4 Global positioning (W)
O1 Economic integration of
European Community (O)
O2 Demographics favor quality (O)
O5 Trend to super stores (O + T)
T3 Whirlpool and Electrolux (T)
T5 Japanese appliance companies (T)
Total Score
Weight RatingWeighted Score Comments
1.00
SH
OR
T
INT
ER
ME
DIA
TE
LO
NG
Duration
3.05
.10
.10
.10
.15
.10
.10
.10
.15
.10
Quality key to success
Name recognition
High debt
Only in N.A., U.K., and Australia
Acquisition of Hoover
Maytag quality
Weak in this channel
Dominate industry
Asian presence
5
3
2
2
4
5
2
3
2
.50
.30
.20
.30
.40
.50
.20
.45
.20
Strategic Factor Analysis Summary (SFAS): Maytag as Example
X
X
X
X
X
X
X
X
X
![Page 10: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/10.jpg)
Situational Analysis
Niche:– A need in the marketplace that is currently
unsatisfied.
Goal for the Corporation– Find a propitious niche
• An extremely favorable niche
– Strategic window• Unique market opportunity available for a limited
time
![Page 11: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/11.jpg)
Situational Analysis
SWOT analysis:– Internal
• Strengths• Weaknesses
– External• Opportunities• Threats
![Page 12: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/12.jpg)
TOWS Matrix
![Page 13: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/13.jpg)
Resource-Based Approach
Resource:
An asset, competency, process, skill, or knowledge controlled by the corporation.
![Page 14: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/14.jpg)
Business Strategies
Business Strategy:
Focuses on improving the competitive position of a company’s or business unit’s products or services within the specific industry or market segment that the firm serves.
![Page 15: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/15.jpg)
Porter’s Competitive Strategies
Competitive Strategy:–Low cost?
–Differentiation?
–Compete head to head in large market?
–Focus on niche?
![Page 16: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/16.jpg)
Porter’s Competitive Strategies
Generic Competitive Strategies:–Lower cost strategy
• Design, produce, market more efficiently than competitors
–Differentiation strategy• Unique and superior value in terms of
product quality, features, service
![Page 17: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/17.jpg)
Porter’s Competitive Strategies
Competitive Advantage:–Determined by Competitive Scope
• Breadth of the company’s target market
![Page 18: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/18.jpg)
Porter’s Generic Competitive Strategies
![Page 19: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/19.jpg)
Porter’s Competitive Strategies
Cost Leadership:–Low-cost competitive strategy
–Aimed at broad mass market
–Aggressive construction of efficient-scale facilities
–Cost reductions
–Cost minimization
![Page 20: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/20.jpg)
Porter’s Competitive Strategies
Differentiation:–Broad mass market
–Unique product or service
–Charge premiums
–Lower customer sensitivity to price
![Page 21: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/21.jpg)
Porter’s Competitive Strategies
Cost focus:–Low cost competitive strategy
–Focus on particular buyer group or market
–Niche focused
–Seek cost advantage in target market
![Page 22: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/22.jpg)
Porter’s Competitive Strategies
Differentiation focus:–Focus on particular group or
geographic market
–Seek differentiation in targeted market segment
–Serve special needs of narrow target market
![Page 23: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/23.jpg)
Porter’s Competitive Strategies
Stuck in the middle:–No competitive advantage
–Below-average performance
![Page 24: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/24.jpg)
Risks of Generic Competitive Strategies
Risks of Cost Leadership
Cost leadership is not sustained:• Competitors imitate.• Technology changes.• Other bases for cost leadership erode.Proximity in differentiation is lost.Cost focusers achieve even lower cost in segments.
Risks of Differentiation
Differentiation is not sustained:• Competitors imitate.• Bases for differentiation become less important to buyers.Cost proximity is lost.Differentiation focusers achieve even greater differentiation in segments.
Risks of Focus
The focus strategy is imitated:The target segment becomes structurally unattractive:• Structure erodes.• Demand disappears.Broadly targeted competitors overwhelm the segment:• The segment’s differences from other segments narrow.• The advantages of a broad line increase.New focusers subsegment the industry.
![Page 25: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/25.jpg)
Competitive Strategy
Industry Structure:–Fragmented Industry
• Many small and medium-sized local companies compete for small shares of total market– Focus strategies predominate
![Page 26: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/26.jpg)
Competitive Strategy
Industry Structure:–Consolidated industry
• Mature industry dominated by a few large companies– Cost Leadership or Differentiation predominate
![Page 27: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/27.jpg)
Dimensions of Quality
Quality
• Performance• Features• Reliability• Conformance• Durability• Serviceability• Aesthetics• Perceived Quality
Dimensions
![Page 28: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/28.jpg)
Competitive Strategy
Strategic rollup:–Quickly consolidate fragmented
industry
–Money from venture capital
–Entrepreneur acquires hundreds of owner-operated firms
–Creates large firm with economies of scale
![Page 29: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/29.jpg)
Competitive Strategy
Strategic rollup:–Differ from Conventional M&A’s
• Large number of firms• Owner-operated firms• Goal to reinvent entire industry
![Page 30: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/30.jpg)
Competitive Tactics
Tactic:–Specific operating plan detailing how a
strategy is to be implemented in terms of when and where it is to be put into action.• Timing tactics• Market location tactics
![Page 31: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/31.jpg)
Competitive Tactics Timing Tactics:
–First mover (pioneer)• Reputation as industry leader• High profits• Sets standards for subsequent products in
the industry
–Late mover• Able to imitate technological advances
of others– Keeps R&D costs down– Keeps risks down
![Page 32: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/32.jpg)
Competitive Tactics
Market Location Tactics:–Offensive Tactics
• Frontal assault• Flanking maneuver• Bypass attack• Encirclement• Guerrilla warfare
![Page 33: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/33.jpg)
Competitive Tactics
Market Location Tactics:–Defensive Tactics
• Raise structural barriers• Increase expected retaliation• Lower the inducement for attack
![Page 34: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/34.jpg)
Cooperative Strategies
Cooperative Strategies:–Collusion
• Active cooperation of firms to reduce output and raise prices– Explicit– Tacit
![Page 35: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/35.jpg)
Cooperative Strategies
Cooperative Strategies:–Strategic Alliance:
– Partnership of two or more corporations or business units to achieve strategically significant objectives that are mutually beneficial.
![Page 36: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/36.jpg)
Cooperative Strategies
StrategicAlliance
Access to markets
Achieve competitiveadvantage
Obtain technology
Reduce financial risk
Reduce political risk
![Page 37: Chapter 5](https://reader036.vdocuments.site/reader036/viewer/2022081414/54bb60854a7959d8758b45cb/html5/thumbnails/37.jpg)
Continuum of Strategic Alliances
Mutual Service Consortia
Joint Venture Licensing Arrangement
Weak and Distant
Value-Chain Partnership
Strong and Close
Source: Suggested by R. M. Kanter, “Collaborative Advantage: The Art of Alliances,” Harvard Business Review (July-August 1994), pp. 96–108.