STRATEGY: A VIEW FROM THE TOPCHAPTER 5

Group 3Randy GreinertMason MitchellSarah YelvertonAlec Cooper

A COMPANY’S STRATEGIC RESOURCE BASE

Consists of; Physical strengths- Plant, State-of-the-

art manufacturing facilities. Financial strengths-Excellent cash flows, and strong financial track record. Human Resource strengths- Strong

Leadership, motivated employees; could be firms most important resource

A COMPANY’S STRATEGIC RESOURCE BASE

Strategic Organizational Resource strengths-

The Specific competencies, processes, skills, and knowledge under the control of a corporation. They include qualities such as a firm’s manufacturing experience, brand equity, innovativeness, relative cost position, and ability to adapt and learn as circumstances change.

Coors

Since

1873

TO EVALUATE THE RELATIVE WORTH OF A COMPANY'S STRATEGIC RESOURCES, 4 QUESTIONS SHOULD BE ASKED;

1- How valuable is a resource; does it help build and sustain competitive advantage?

2- Is this a unique resource or do other competitors have similar resources?

3- Is the strategic resource easy to imitate?

4- Is the company positioned to exploit the resource?

FINANCIAL RATIO ANALYSIS

Can provide a quick overview of a company's or business units current or past profitability, liquidity, leverage, and activity.

Examples- Return on Assets:

Current Ratio^ Inventory Turnover^

EVA

Economic Value Added: Eva is a value-based financial performance measure that focuses on economic value creation.

COST BENCHMARKING

Useful in assessing a firm’s costs relative to those of competing firms, or for comparing a company’s performance against best-in-class competitors.

FIVE STEP BENCHMARK PROCESS

1) Selecting areas or operations to benchmark

2) identifying best-in-class companies or key competitors

3)Identifying key performances measures and practices

4) Collecting cost and performance data

5) Analyzing and interpreting the results

WHY USE THE BENCHMARK PROCESS? Practical and versatile Allows for direct comparisons of the

efficiencies with which different tasks in the value chain are performing

However, dangerous to use sometimes because focuses on similarities rather than the differences

HUMAN CAPITAL

First and foremost – Companies are run by and for people

Understanding people’s aspirations and concerns and capabilities is key to determine strategic position

SURVEY

Study by Chief Executive shows that more focus is put on attracting, developing, and retaining human capital.

43% of surveyed CEO’s believe that finding and retaining good people is their greatest challenge

84% Believe that people issues are for more important than before

AMERICAN SOCIETY FOR TRAINING AND DEVELOPMENT STUDY

Examined 500 companies that were U.S and publicly traded.

Concluded that top half of firms that spent the most on training had higher stockholder returns than the bottom half did.

Continuous employee development is critical to the growth of human capital

Puts 3% of total expenses into training Six times the proportion of the average company Line and staff managers attend 11 weeks of mandatory training in their first year

MOTOROLA

Execs report that their company receives $33 for every $1 invested in employee education

ORGANIZATIONAL STRATEGIC RESOURCES Include a firm’s knowledge and

intellectual capital base Reputation with customers partners

suppliers and the financial community Specific competencies processes and

skills sets And its corporate culture

COMPETITIVE ADVANTAGE

Knowledge and Intellectual capital are major drivers

Firm’s CA comes from value it delivers to its customers

Created and sustained when a company continues to mobilize new knowledge faster and more efficiently than its competitors

KNOWLEDGE

Become an asset when it is managed and transferred

Explicit knowledge is formal and objective and can be codified and stored in books or archives

Implicit or tacit knowledge is informal and subjective. It is gained through experience and transferred through personal interaction and collaboration

NETSCAPE

$ 4 Billion market capitalization based on its stock price even though company only sold a few million dollars per year

Based price on company’s knowledge base and quality of management

BRANDS ARE STRATEGIC ASSETS

Provide a guarantee of reliability and quality

Build trust and reinforce value Ex: Dell, Amazon, and eBay Assist companies in building and

retaining customer loyalty Help maintain profit margins Create barriers to entry

BUSINESS WEEK/ INTERBRAND

Two Criteria1.) Brands must be global and must be

generating significant earning in the main global markets

2.) There must be sufficient marketing and financial data available to the public for preparing a reasonable evaluation

COMPANIES WITH STRONG BRANDS

- Succeed in growing their brands while pursuing their missions

- Which results in customer loyalty and allows the company to attempt risky expansions

CORE COMPETENCIES

Capabilities that allow a company to build a competitive advantage

Evolve as a company develops its business process and incorporates intellectual assets

Are a set of skills or systems that create a uniquely high value for customers at best-in-class levels

CONT.

Contribute to perceived customer benefits Are difficult for competitors to imitate Allow for leverage across marketsExamples: -Honda’s small-engine: used inMotorcycles, jet skis, and lawn mowers-Charles Schwab expanded client communication methods to: Internet, phone, branch offices, and financial

advisors

IDENTIFYING CORE COMPETENCIES

1.) Should provide access to a broad array of markets

2.) Help differentiate core products and services

3.) Should be hard to imitate because they represent several- Skills elements- Technology elements- Organizational elements

FORCES FOR CHANGE

Organizational resistance1. Structural, organizational rigidities2. Closed mind-sets reflecting support for obsolete

business beliefs and strategies3. Entrenched cultures reflecting values, behaviors, and

skills that are not conductive to change4. Counterproductive change momentum that is not in

tune with current strategic requirements

COMPANY LIFE CYCLE FORCES FOR CHANGE

The forms and strengths of organizational resistance that develop highly depend on a company’s history, performance, and culture.

LIFE CYCLE

Founder or team start up Vision or purpose is

established Initial direction is set for

the company Resources are gathered Vision is turned into

reality

RAPID GROWTH PROBLEMS

Dilemmas of leadership Loss of focus Communication becomes harder Skill development falls behind Stress becomes more evident

7-S MODEL

Not Hierarchical

Change in one changes in another, or if there is progress in one area means there will be progress in another area

STAKEHOLDERS ANALYSIS

Internal and external stakeholders Stakeholders claim competitive returns

for their investments Demands reflected in thousands of

firms, from high wages, pure air, job security, product quality community service, etc.