Strategy and Policy
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wheelen_smbp12_ppt_05.pptSTRATEGIC MANAGEMENT & BUSINESS POLICY
12TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
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Organizational analysis- concerned with identifying and developing an organization’s resources and competencies
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Core and Distinctive Competencies
Resources- an organization’s assets
- Tangible
- Intangible
Capabilities- a corporation’s ability to exploit its resources
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Core and Distinctive Competencies
Competency- a cross-functional integration and coordination of capabilities
Core competency- a collection of competencies that cross divisional boundaries, is wide-spread throughout the corporation and is something the corporation does exceedingly well
Distinctive competency- core competencies that are superior to those of the competition
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Core and Distinctive Competencies
VRIO framework (Barney)
- Value
- Rare
- Imitability
- Organization
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Using Resources to Gain Competitive Advantage
Identify and classify resources in terms of strengths and weaknesses
Combine the firm’s strengths into specific capabilities and core competencies
Appraise profit potential- Are there any distinctive competencies?
Select the strategy that best exploits the firm’s capabilities and competencies relative to external opportunities
Identify resource gaps and invest in upgrading weaknesses
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Access to a Distinctive Competency
Asset endowment
Acquired from someone else
Shared with another business
Built and accumulated within the company
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Access to a Distinctive Competency
Clusters- geographic concentrations of interconnected companies and industries
Access to:
Employees
Suppliers
Information
Complementary products
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Imitability an Advantage
Durability- the rate at which a firm’s underlying resources, capabilities, or core competencies depreciate or become obsolete
Imitability- the rate at which a firm’s underlying resources, capabilities, or core competencies can be duplicated by others
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Determining the Sustainability of an Advantage
Transparency- the speed at which other firms under the relationship of resources and capabilities support a successful strategy
Transferability- the ability of competitors to gather the resources and capabilities necessary to support a competitive challenge
Replicability- the ability of competitors to use duplicated resources and capabilities to imitate the other firm’s success
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Determining the Sustainability of an Advantage
Explicit knowledge- knowledge that can be easily articulated and communicated
Tacit knowledge- knowledge that is not easily communicated because it is deeply rooted in employee experience or in the company’s culture
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Prentice Hall, Inc. ©2009
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Business models- a company’s method for making money in the current business environment
Includes
- Who the company serves
- What the company provides
- How the company makes money
- How the company differentiates and sustains competitive advantage
- How the company provides its product/service
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Business models
- Customer solutions model
- Profit pyramid model
- Multi-component system/installed model
- Advertising model
- Switchboard model
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Business models (cont’d)
- Efficiency model
- Blockbuster model
- Profit multiplier model
- Entrepreneurial model
- De Facto industry standard model
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Value chain- a linked set of value creating activities that begin with basic raw materials coming from suppliers, moving on to a series of value-added activities involved in producing and marking a product or service, and ending with distributors getting the final goods into the hands of the ultimate consumer
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Industry Value Chain Analysis
Value chain segments include:
- Upstream
- Downstream
Center of gravity- the part of the chain that is most important to the company and the point where its core competencies lie
- Vertical integration
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Corporate Value Chain Analysis
Primary activities
- Inbound logistics
- Operations
- Outbound logistics
Support activities
- Procurement
- Technology development
- Human resource management
- Firm infrastructure
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Prentice Hall, Inc. ©2009
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Corporate Value Chain Analysis
Examine each product line’s value chain in terms of the various activities involved in producing the product or service
Examine the linkages within each product line’s value chain
Examine the potential synergies among the value chains of different product lines or business units
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Basic Organizational Structures
- Simple
- Functional
- Divisional
- Strategic Business Units
- Conglomerate
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Corporate Culture: The Company Way
Corporate culture- the collection of beliefs, expectations and values learned and shared by a corporation’s members and transmitted from one generation of employees to another.
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Functions of Corporate Culture
Conveys a sense of identity for employees
Generates employee commitment
Adds to the stability of the organization as a social system
Serves as a frame of reference for employees to understand organizational activities and as a guide for behavior
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Corporate Culture: The Company Way
Cultural intensity- the degree of which members of a unit accept the norms, values and other cultural content associated with the unit
Shows the depth of the culture
Cultural integration- the extent of which units throughout the organization share a common culture
Shows the breadth of the culture
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Strategic Marketing Issues
Market position- Who are our customers?
Marketing Mix- the particular combination of key variables under a corporation’s control that can be used to affect demand and to gain competitive advantage
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Product life cycle- product monetary sales over time from introduction through growth and maturity to decline
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Brand- a name given to a company’s product which identifies that item in the mind of the consumer
Corporate brand- a type of brand in which the company’s name serves as the brand
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Corporate reputation- a widely held perception of a company by the general public
- Stakeholders’ perceptions of quality
- Corporation’s prominence in the minds of stakeholders
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Strategic Financial Issues
Financial leverage- ratio of total debt to total assets
- Used to describe how debt is used to increase earnings available to common shareholders
Capital budgeting- the analyzing and ranking of possible investments in fixed assets in terms of additional outlays and receipts that will result from each investment
- Hurdle point
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Strategic Research and Development Issues
R & D intensity- pending no R & D as a percentage of sales revenue
Technology competence- the development and use of innovative technology
Technology transfer- the process of taking new technology from the laboratory to the marketplace
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Strategic Research and Development Issues
R & D Mix- the mix of:
Basic R & D- focuses on theoretical problems
Product R & D- concentrates on marketing and is concerned with product or product packaging improvements
Engineering R & D is concerned with engineering, concentrating on quality control, and the development of design specifications and improved production equipment
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Strategic Research and Development Issues
Technology discontinuity- when a new technology cannot be used to enhance current technology, but substitutes for the technology to yield better performance
- Moore’s Law
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Prentice Hall, Inc. ©2009
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Strategic Operations Issues
Intermittent Systems- item is normally processed sequentially, but the work and sequence of the process vary
Continuous systems- work is laid out in lines on which products can be continuously assembled or processed
Operating leverage- impact of a specific change in sales volume on net operation income
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Strategic Operations Issues
Experience curve- unit production costs decline by some fixed percentage each time the total accumulated volume of production units doubles
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Strategic Operations Issues
Flexible Manufacturing for Mass Customization
- Computer Assisted Design
- Computer Assisted Manufacturing
- Economies of Scale
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Strategic Human Resource Issues
Teams
Autonomous (self-managed)- a group of people working together without a supervisor to plan, coordinate and evaluate their work
Cross-functional work teams- various disciplines are involved in a project from the beginning
Concurrent engineering- specialists work side-by-side and compare notes constantly to design cost-effective products with features customers want
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Strategic Human Resource Issues
Virtual Teams- groups of geographically or organizationally dispersed coworkers that are assembled using a combination of telecommunications and information technologies to accomplish organizational tasks- driven by 5 trends
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Strategic Human Resource Issues
- Flatter organizational structures
- Turbulent environments
- Increased employee autonomy
- Higher knowledge requirements
- Increased globalization
- Increased employee decision making
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Strategic Human Resource Issues
Quality of work life- includes improvements in:
- Introducing participative problem solving
- Restructuring work
- Introducing innovative reward systems
- Improving the work environment
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Strategic Human Resource Issues
Human diversity- the mix in the workplace of people from different races, cultures and backgrounds
- Provides a sustainable competitive advantage
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Strategic Information Systems/Technology Issues
Information systems/technology contributions to performance:
- Automation of back office processes
- Automation of individual tasks
- Enhancement of key business functions
- Development of a competitive advantage
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Strategic Information Systems/Technology Issues
Current trends in Information systems/technology Internet include:
- Intranet
- Extranet
- Web 2.0
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Strategic Information Systems/Technology Issues
Supply chain management- networks for sourcing raw materials, manufacturing products or creating services, storing, and distributing goods, and delivering them to customers and consumers
Prentice Hall, Inc. ©2009
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Prentice Hall, Inc. ©2009
5-*
- What is the relevance of the resource-based view of the
firm to strategic management in a global environment?
- How can value chain analysis help indentify a company’s
strengths and weaknesses?
- In what ways can a corporation’s structure and culture
be internal strengths and weaknesses?
- What are the pros and cons of management using the
experience curve to determine strategy?
- How might a firm’s management decide whether it should
continue to invest in current known technology or
in new, but untested technology? What factors might
encourage or discourage such a shift?
Prentice Hall, Inc. ©2009
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PowerPoint created by:
Ronald Heimler
- Dowling College- MBA
- Georgetown University- BS Business Administration
- Adjunct Professor- LIM College, NY
- Adjunct Professor- Long Island University, NY
- Lecturer- California State Polytechnic University, Pomona, CA
- President- Walter Heimler, Inc.
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