Strategic Leveraging

Group VIFerdinand C. Importado

August 4, 2013

Strategy

A strategy of a corporation forms a comprehensive master plan that states how the corporation will achieve its mission and objectives. It maximizes competitive advantages and minimizes competitive disadvantages.

Wheelen and Hunger, 2010

Strategy

A company’s strategy consists of the competitive moves and business approaches that managers employ to attract and please customers, compete, successfully, grow the business, conduct operations, and achieve targeted objectives.

Thompson, Strickland and Gamble (2005)

Strategy according to Porter

• The creation of a unique and valuable position, involving different set of activities. (1996)

• It requires a strong focus on profitability rather than just growth, an ability to define a unique value proposition, and a willingness to make tough trade-offs in choosing what not to do. (2001)

• Lastly, it involves the configuration of a tailored value chain that enables a company to offer unique value.

Value chain

Logistics Operations Marketing Sales

Administrative functions

Human resources

Research and development

Leveraging

The exertion of a force (power) to influence a person or situation in order to gain maximum advantage.

Use of a quality or (competitive) advantage in order to obtain a desired effect or result.• Small initial

investment• Credit • Other borrowed

funds

Strategic Leveraging

Use of quality and competitive advantages within the value chain through the exercise of power or influence in order to attract achieve missions and targeted objectives at its maximum.

Scope of Strategic Leveraging

• Leveraging human capital• Though employee development• Through the use of technology

• Leveraging core competencies• Leveraging value across the supply chain

Strategic Resources

Physical Financial

Human Organizational

• State-of-the-art manufacturing facilities

• Plant or service locations

• Cash flow• Financial position• Results of

operation

• Strong leadership• Experienced

managers• Well-trained,

motivated employees

• Competencies• Processes,• Skills • Knowledge

Leveraging Human Capital

Thru Employee Development• Orientation• Organizational involvement• Tracking the development• Use of sabbaticals• Evaluating human capital

Leveraging Human Capital

Orientation

Expectation setting Transforming employees as key contributorsEmployee success assessment

Organizational involvement

Sharing approachCascading approach

Tracking development

How they’re doingWhat skills they need to work onWhere else in the company they might thrive

Leveraging Human Capital

Sabbaticals

Evaluating human capital

Leveraging Human Capital

Thru Technology• Using networks to share information• Creation of electronic team to enhance

collaboration• Codifying knowledge for competitive

advantage• Retaining knowledge when employees

leave

Electronic team

Advantages

• Less restricted by the geographic constraints

• Effective in generating social capital

Requirements

• Identification• Combination

Process loss

• Low cohesion• Low trust

among members

• Lack of appropriate norms

• Lack of shared understanding

Leveraging Human Capital

Thru Technology• Using networks to share information• Creation of electronic team to enhance

collaboration• Codifying knowledge for competitive

advantage• Retaining knowledge when employees

leave

Retaining Knowledge

Customer relationship software

Email messages

MOTIVATION

Core Competencies

Enhance competitive advantage

Similar in at least

one way

Difficult to imitate

It must enable the business to develop strengths relative to the competition.

To develop a means or a point of comparison

If it can be imitated, it must be costly

Leveraging Across Supply Chain

Balancing price and

functionality

Commodity management

Leveraging knowledge to create

value

Balancing Price and Functionality

Low technology consumer products

Blue sky pioneer products

Commodity products

Mature initiative products

LOW HIGH

FUNCTIONALITY

PRICE

HIGH

LOW

Commodity products

• Low functionality – low price• Products either fail or generate low

return• Supplied either as the result of inferior

product development process or because it is a readily available, non-differentiated commodity

• Expected to generate high volume • May encourage other companies to join• Little prospect for generating higher

prices • Rapid entry of me too companies

Low technology consumer products

• Low functionality – high price• Volatile, high risk but potentially high

reward market place• Brand marketing• Needs to build or capture as much

volume as possible before competitors enter the market

• Gains favorable customer reaction it soon attracts me too competitors

• Prices can be forced down very quickly• Continuous product innovation is

required

Blue sky pioneer products

• High functionality – high price• Creates a new market• Successful if the levels of

functionality can be readily sourced or manufactured including the protection intellectual property rights

• Often technology led without sufficiently prudent regard to cost

Risks of blue sky pioneer products

Damages sales volume

Quickly draws me too competition

Little room for price and functionality increases

Mature initiative products (High functionality – low price)

• High functionality – low price• Target costing is adopted with

all of the suppliers involved • Acts as a barrier to me too

competitors • Capable of stimulating rapid

product take up by customers

Leveraging knowledge to create and deliver value

• Invest in technology and the electronic supply chain• Invest equally in inter- and intra- team processes• Make staff and supplier responsible for the development

and sharing of knowledge• Maintain a strong focus on new product development• Develop an audit process.• Establish the market value of your intellectual property • Build that evaluation into the operating processes and

relational strategies applied within collaborative relationships with major suppliers

Commodity management

Beat the market

Hedging

Supply conditioning

Single sourcing

Commodity management

Formula pricing

Rebate pricing

Historical pricing with caps