This is a 5-6 pages eassy about management called Interview Experience and Synthesis Paper.

Organizational Strategy

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LEARNING OUTCOMES

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1 Specify the components of sustainable competitive advantage, and explain why it is important

2 Describe the steps involved in the strategy-making process

3 Explain the different kinds of corporate-level strategies

4 Describe the different kinds of industry-level strategies

5 Explain the components and kinds of firm-level strategies

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Components of Sustainable Competitive Advantage

• Allows companies to improve efficiency and effectiveness

Valuable resource

• Not controlled or possessed by many competing firms

Rare resource

• Impossible or extremely difficult for other firms to duplicate

Imperfectly imitable resource

• Produces value and has no equivalent substitutes

Nonsubstitutable resource

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Steps of the Strategy-Making Process

• Assess the need for strategic change • Competitive inertia: Reluctance to change

strategies or competitive practices that have been successful in the past

• Strategic dissonance: Discrepancy between a company’s intended strategy and the strategic actions managers take when implementing that strategy

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Steps of the Strategy-Making Process

• Conduct a situational analysis • Situational (SWOT) analysis • Strategic group • Shadow-strategy task force • Choose strategic alternatives

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Exhibit 6.1 Three Steps of the Strategy-Making Process

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Corporate-Level Strategies

• Portfolio strategy: Minimizes risk by diversifying investment among various businesses or product lines • Allows businesses to look for acquisitions • Predicts that companies can reduce risk through

unrelated diversification • BCG matrix: Portfolio strategy developed by the

Boston Consulting Group • Categorizes a corporation’s businesses by

growth rate and relative market share

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Corporate-Level Strategies

• Grand strategy: Helps an organization achieve its strategic goals • Growth strategy: Focuses on increasing profits,

or the number of places the company trades • Stability strategy: Focuses on improving the

way in which the company sells the same products or services to the same customers

• Retrenchment strategy: Focuses on turning around very poor company performance

• Recovery: Strategic actions taken after retrenchment to return to a growth strategy

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Industry-Level Strategies

• Five industry forces • Character of the rivalry: Measure of the

intensity of competitive behavior between companies in an industry

• Threat of new entrants: Measure of the degree to which barriers to entry make it easy or difficult for new companies to get started in an industry

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Industry-Level Strategies

• Threat of substitute products or services: Measure of the ease with which customers can find substitutes for an industry’s products or services

• Bargaining power of suppliers: Measure of the influence that suppliers of parts, materials, and services to firms in an industry have on the prices of these inputs

• Bargaining power of buyers: Measure of the influence that customers have on a firm’s prices

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Industry-Level Strategies

• Positioning strategies • Cost leadership: Producing a product of

acceptable quality at consistently lower production costs than competitors

• Differentiation: Providing a product that is different from competitors’ offerings that customers are willing to pay premium price for it

• Focus strategy: Involves using cost leadership or differentiation to produce a specialized product

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Industry-Level Strategies

• Adaptive strategies • Defenders: Seek moderate, steady growth by

offering a limited range of products and services to a well-defined set of customers

• Prospectors: Seek fast growth by: • Searching for new market opportunities • Encouraging risk taking • Being the first to bring innovative new

products to market

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Industry-Level Strategies

• Analyzers: Seek moderate, steady growth and limited opportunities for fast growth • Blend of the defender and prospector

strategies • Reactors: React to changes in the external

environment after they occur • Do not follow a consistent adaptive strategy

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Components of Firm-Level Strategies

• Direct competition: Rivalry between two companies that offer similar products and services • Acknowledge each other as rivals, and act and

react to each other’s strategic actions • Key factors

• Market commonality • Resource similarity

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Types of Firm-Level Strategies

• Attack: Competitive move designed to reduce a rival’s market share or profits

• Response: Competitive countermove, prompted by a rival’s attack • To defend or improve a company’s market share

or profit

SUMMARY

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• Organizations can achieve a competitive advantage by using their resources to provide greater value for customers than competitors can provide

• Types of strategies undertaken by organizations • Corporate-level strategy • Industry-level strategy • Firm-level strategy

KEY TERMS

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• Resources • Competitive advantage • Sustainable

competitive advantage • Valuable resource • Rare resource • Imperfectly imitable

resource • Nonsubstitutable

resource • Competitive inertia

• Strategic dissonance • Situational (SWOT)

analysis • Distinctive competence • Core capabilities • Strategic group • Shadow-strategy task

force • Core firms • Secondary firms

KEY TERMS

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• Strategic reference points

• Corporate-level strategy

• Diversification • Portfolio strategy • Acquisition • Unrelated

diversification • BCG matrix • Star

• Question mark • Cash cow • Dog • Related diversification • Grand strategy • Growth strategy • Stability strategy • Retrenchment strategy • Recovery • Industry-level strategy

KEY TERMS

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• Character of the rivalry • Threat of new entrants • Threat of substitute

products or services • Bargaining power of

suppliers • Bargaining power of

buyers • Cost leadership • Differentiation • Focus strategy

• Defenders • Prospectors • Analyzers • Reactors • Firm-level strategy • Direct competition • Market commonality • Resource similarity • Attack • Response

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