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M A R C U S. 8. CONTINUOUS REINVENTION. Learning Objectives. - PowerPoint PPT Presentation
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McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-2
8CONTINUOUS REINVENTION
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-3
Learning Objectives
Reviewing and summarizing the analytical approach to achieving sustained competitive advantage (SCA) presented in the book, which involves external and internal analysis followed by a series of moves related to timing, cost, differentiation, business scope, globalization, innovation and entrepreneurship.
Being aware that this approach to SCA must be carried out constantly and that a firm’s strategy must be regularly reinvented.
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-4
Learning Objectives (Continued)
Understanding judo as a strategy, which involves rapid movement to sweet spots followed by defense of those spots against competitors’ inevitable encroachments.
Providing examples of how firms have reinvented their strategies through such means as achieving greater closeness to customers, bridging supplier-customer gaps, and putting in place smart business designs.
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-5
Ex. 8.1 Judo Strategy: David versus Goliath
Netscape Navigator Microsoft Internet Explorer700 employees and $80 million sales in 1997
17,000 employees and $6 billion sales in 1997
Strategy: build market share, set standard
Open system
Published source code
Virtual R&D
Essentially free via server
Strategy: bundle with Windows 95 or free by downloading
Outbid for customized AOL
version
Put AOL icon on Windows desktop
Undercut MSN network
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-6
Ex. 8.2 Matched Pairs of Companies Showing
Competitive Advantage and Disadvantage (selected)
Companies 5-Year Average Market Return, 1997-2002
Sector
Amphenol
LSI Logic
34.0%
3.4
Technology
SPX
Snap-On
28.8
1.7
Manufacturing/appliance
FiServ
Parametric
31.2
-21.2
Software
Dreyers
Campbell Soup
22.4
-2.8
Food
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-7
Ex. 8.3 Seeking Sustained Competitive Advantage
Attributes Advantage DisadvantagePosition Sweet spot – being in
an uncontested space
Sour spot – being in a contested space
Movement Agility – getting to an uncontested space
Rigidity – not getting to an uncontested space
Hard-to-imitate capabilities
Discipline – protecting an uncontested space
Ineptness – inability to protect an uncontested space
Concentration Focus – exploiting an uncontested space
Diffuseness – inability to exploit an uncontested space
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-8
A Strategic Approach to the Dilemma
SCA = Sustained Competitive AdvantageEA = External AnalysisIA = Internal AnalysisM = Moves that the strategist can take
SCA = EA + IA + M
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-9
A Strategic Approach to the Dilemma (Continued)
EA = External Analysis5F = Five ForcesMF = Macroenvironmental ForcesSA = Stakeholder Analysis
EA = 5F + MF + SA
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-10
A Strategic Approach to the Dilemma (Continued)
IA = Internal Analysis7S = Seven SsVC = Value ChainRCC = Resources, Capabilities, and Competencies
IA = 7S + VC + RCC
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-11
A Strategic Approach to the Dilemma (Continued)
BS = Business StrategyT = Timing of the moves a firm might makeP = Positioning
BS = T+ P
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-12
A Strategic Approach to the Dilemma (Continued)
CS = Corporate StrategyMAD = Mergers, Acquisitions, and Divestitures
CS = MAD
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-13
A Strategic Approach to the Dilemma (Continued)
GS = Global StrategyGE = Global ExpansionOS = Outsource
GS = GE + OS
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-14
A Strategic Approach to the Dilemma (Continued)
IS = Innovation StrategyO = OpportunitiesC = Commercialization
IS = O + C
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-15
A Strategic Approach to the Dilemma (Continued)
SCA = Sustained Competitive AdvantageEA = External AnalysisIA = Internal AnalysisBS = Business StrategyCS = Corporate StrategyGS = Global StrategyIS = Innovation Strategy
SCA = [EA + IA] + [BS + CS + GS + IS]
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-16
Ex. 8.4 From Products to Solutions
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-17
Ex. 8.5 Micro-segmenting of Customers
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8-18
Ex. 8.6 Compressing the Supply Chain
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Ex. 8.7 Multiple Channels for Product Distribution
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8-20
Ex. 8.8 Where Can Value Chain Dominance Be Established?
SupportActivities
Primary Activities
InputsOutputsResearch and
Development ProductionMarketingAnd Sales Service
Company Infrastructure
Human Resources
Materials Management
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-21
Smart Designs
To create smart business designs, strategists must think in terms of customers, suppliers, distribution channels, and competing value chains.
Smart designs rest on a willingness to regularly reassess them; they cannot be taken for granted.