case study- Delta
noviazhou
CompetitiveStrategyS17CLASS.pptCompetitive Strategy
Dr. Laura Whitcomb
BUS 4970
Spring 2017
Strategic Management Definition
= The process whereby managers establish an organization’s long-term direction. This involves:
1) Setting Mission & Goals
2) Strategy Formation
--internal capabilities
--external environment
--selection of strategy
3) Strategy Implementation
4) Strategy Evaluation
How to Analyze a Case
- Mission/Vision & Objectives
- Current Strategy
- Industry Analysis
- S.W.O.T. Analysis
- Recommendations
MISSION Defined
Answers the question “What business are we in?” or “Why do we exist?”
--Customer Needs: What is being satisfied?
--Customer Groups: Who is being satisfied?
--Distinctive Competencies: How are customer needs being satisfied?
Pepsico vs. Coke?
- To be the world's premier consumer products company focused on convenient foods and beverages.
- To Refresh the World...in body, mind, and spirit.
- To Inspire Moments of Optimism... through our brands and our actions.
- To Create Value and Make a Difference... everywhere we engage.
Vision Statements
- Future-oriented; transformative
- Mission = what is; vision = what will be
- Companies may have mission or vision or both
- Mission and/or vision often accompanied by statement of company values
Vision Statements
NASA:
Reach for new heights & reveal the unknown for the benefit of humankind
Star Trek:
To boldly go where no one has gone before
GOALS
= a desired future state that a company attempts to realize.
Should be:
- precise & measurable
- addressing important issues
- challenging but realistic
- set for a specific time period
- consistent with each other
Weighting Factors: What to Avoid
Types of Goals
- Financial
- Profitability
- Revenue growth
- Long-term shareholder value
- Customer
- Product/service attributes; relationship; image
- Internal Process
- Operations, customers, innovation
- Corporate social responsibility
- Learning & growth
- Human, information, & organization resources
Levels of Strategy & Organization Structure
- Corporate Strategy
------>Corporate Head Office
- Competitive (Business-level) Strategy
------>Business Divisions
- Functional Strategy
------>R&D, HR, Finance, Operations, Marketing/Sales
Porter’s Generic Competitive Strategies
Purpose: achieve above-average long-run ROI for your industry.
- Competitive Advantage
- Cost Leadership
- Differentiation
- Competitive Scope
- Broad Target
- Narrow Target (Focus/Niche)
Porter’s Generic Competitive Strategies
Competitive Advantage/
Scope
Lower Cost
Differentiation
Broad Target
Cost Leadership
Differentiation
Narrow Target
Cost Focus
Focused Differentiation
Dolce & Gabbana
Industry Analysis:
Porter’s 5 Competitive Forces
Purpose: understand why some industries have higher profit margins & what factors can change long-run industry profitability.
- Risk of New Entry
- Rivalry Among Established Firms
- Bargaining Power of Buyers
- Bargaining Power of Suppliers
- Threat of Substitute Products
ENTRY
Barriers
- Brand Loyalty
- Absolute Cost Advantages
- patents
- access to raw materials
- superior production techniques
- Economies of Scale
- Government Regulation
Factors Affecting Intensity of RIVALRY
- Competitive Structure
- number of firms
- relative market share
- Demand conditions
- growth
- decline
- Exit barriers
Factors Affecting BARGAINING POWER
- Number of firms in buyer vs. supplier industries
- Quantity or % of total orders
- Switching costs
- Standardization vs. specialization of input
- Threat of vertical integration
The Plastic Bag Paradox
WSJ 9/6/13
Low Cost Shale Gas
Polyethylene makers:
Exxon,
Dow Chemical
Plastic bag makers
SUBSTITUTES
= products from OTHER industries that serve consumers’ needs in a way that is similar to those being served by your industry.
Example: coffee vs. tea vs. soft drinks
NOTE: Substitutes are very difficult to monitor, because they can involve technological changes in industries that did not pose any threat in the past.
Threat of Substitutes
Company Situation Analysis
- INTERNAL: Strengths & Weaknesses
- financial position: relative & changes over time
- functional capabilities: sustainable? distinctive?
- EXTERNAL: Opportunities & Threats
- demographic & socio-cultural changes
- economic & political/legal changes
- industry & technological changes
RECOMMENDATIONS
Shift from Analysis--->Synthesis
- Is a fundamental shift in strategy required or not?
- How do your recommendations line up with your SWOT analysis?
- Is this a feasible, creative solution that is supported by your analysis?
Competitive
Advantage/
Scope
Lower Cost
Differentiation
Broad Target
Cost
Leadership
Differentiation
Narrow Target
Cost Focus
Focused
Differentiation
