¡Descarga Strategic Management: Understanding Long-Term Direction and Competitive Advantage y más Apuntes en PDF de Estrategia Empresarial solo en Docsity!
LESSON 1 : Introduction to Strategic Management
1.1. Origins of Strategic Management and Strategic Attitude Strategy: long-term direction o fan organization Strategic Management appears when environments change from stability to turbulence and is based on a strategic attitude. In stable environments management needs to focus on efficiency. Under turbulent environments managers need to focus on efficacy. Strategic Attitude is characterized by being:
- Extroverted
- (Pro)Active and voluntaristic
- Anticipatory
- Open to change
- (Self)Critical
1.2. Strategy: Concept and Components ‘The determination of the long-run goals and objectives of an enterprise and the adoption of courses of action and the allocation of resource necessary for carrying out these goals’- Alfred D. Chandler “Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value’- Michael Porter STRATEGY is the direction and scope of an organization over the long term, which achieves advantage in a changing environment through its configuration of resources and capabilities with the aim of fulfill stakeholders expectations. Scope of activity = Arenas
- It defines the set of activities or business in which a firm operates and wants to operate in the future
- An activity or business is defined by Thus, they are likely to: Be complex in nature Made in uncertain situations Affect operational decisions Require an integrated approach (both inside and outside the firm) Imply substantial changes Strategic decisions are about : The long-term direction of a firm The scope of activities of a firm The attainment of an advantage over competitors To face up to environmental changes affecting the firm To build on resources and capabilities (strategic capability) Values and expectations of stakeholders
- Offering products or services that are differentiated (perceived as different) from the ones offered by competitors: Differentiation Competitive Advantage
- Offering products or services with lower costs than competitors can achieve: Cost Competitive Advantage - By configuring distinctive capabilities and competitive advantage the firm aims at determining how to compete. - Cost competitive advantage It is created when a firm’s cost structure leads that firm to have overall lower costs than competitors, in principle for similar - or comparable in quality - products or services Economies of scale Learning and experience effects Optimization of the use of the installed capacity Access to raw materials Geographical location Exclusive technologies Differentiation competitive advantage
- It is created when a company offers a product or service that the buyer perceives as unique in some of its defining attributes, so that such a product or service can be more highly priced
- Any tangible or intangible feature of the product or service that is relevant in the customer’s purchase decision-making process SYNERGY Fundamental characteristic of systems: the value of the system as a whole is different than the added separate value of its parts Function: improve management by coordinating - in a positive synergistic way - the choice of activity scope, distinctive capability development, and competitive advantage building Ways to generate synergies Physical resources sharing o Collective assembling of financial resources, internal transfer of financial resources Type of synergy: Financial synergies
o Concentrated purchases, indirect cost sharing, technology sharing, overcapacity Type of synergy: Productive synergies o Distribution channel, sales force .. Type of synergy: Business synergies Capabilities sharing (intangible) o Competencies, skills and experience of managers Type of synergy: Management synergies o Unlimited technological capabilities: Know how … Type of synergy: Productive synergies o Unlimited commercial capabilities: brand, advertising, knowledge, loyalty, reputation ... Type of synergy: Business synergies ACTIVITY SCOPE: current and future fields of activity o ACTIVITY= Product + market = Needs + Technology + Market o Dynamic view of the scope of activity DISTINCTIVE CAPABILITIES OR CORE COMPETENCES: Any capability that distinguishes a company from its competitors. Competency of the business that is essential or central to its overall performance and success. o Resources (tangibles or intangibles) o Capabilities or skills (personal characteristics and organizational characteristics) COMPETITIVE ADVANTAGE: characteristics that place the firm in a position of advantage compared to competitors o Cost competitive advantage o Differentiation competitive advantage SYNERGY: To define this 3 components looking for a synergy between them ELEMENTS: Arenas, Vehicles, Staging, Differentiators and Economic Logic.
- Arenas: areas in which a firm will be active. Decisions about a firm’s arenas may encompass its products, services, distribution channels, etc. It helps you determine which particular industry or geographic segments are the firm’s prime competitive arenas. - Vehicles: are the means for participating in targeted arenas. For instance, a firm that wants to go international can do so in different ways. - Staging: timing and speed, or pace, of strategic moves. Staging choices typically reflect available resources, including cash, human capital, and knowledge. - Differentiators: features and attributes of a company’s product or service that help it beat its competitors in the marketplace.
1.3. The Strategic Management Process Economic Logic How will we obtain our returns? Lowest costs through scale advantages? Lowest cost through scope and replication advantages? Premium prices due to unmatched service? Premium prices due to proprietary product features? Fees paid as a result of licensing or franchising? Staging What will be our speed and sequence of moves into Arenas?
- Speed of expansion?
- Heavily impacted by Vehicles
- May be different in different Arenas
- Sequence of initiatives?
- Impacted by priority of Arenas
- May be impacted by Vehicles Vehicles How will we get to the Arenas we have selected? Internal Development? Joint Ventures? Licensing? Franchising? Acquisitions? Differentiators How will we win consumers in the Arenas?
- Image, Customization, Price, Style, Reliability, Overall Value? Arenas Where will we be active?
- What product categories, market segments, geographic areas, core technologies, value creation stages? How much emphasis will each area receive?
- Which areas are most important?
1.4. Levels of Strategy and Strategic Business Units (SBU) Corporate Strategy Aims at defining the relationship of the company with the environment, by specifying the activity scope and the distinctive capabilities required. Is concerned with the overall scope of an organization and how value is added to the constituent business. Where to Compete Business Strategy Aims at defining how to compete and the distinctive capabilities necessary to sustain an advantageous position in each of the businesses. How to Compete Functional Strategy Aims at defining how to optimize resources and capabilities within each of the business functions in order to deploy business and corporate strategies A firm that operates in only one activity has:
- Corporate=competitive Strategy
- Functional strategy This firm is diversified; it operates in three activities. It has:
- One Corporate strategy
- Three Competitive Strategies
- Functional strategy
