24174570-Exploring-Corporate-Strategy-8th-Edition-06(2).ppt

7/30/2019 24174570-Exploring-Corporate-Strategy-8th-Edition-06(2).ppt

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Part 2:

Strategic Choices


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Exploring Corporate Strategy 8e, Pearson Education 2008 6-3

The Focus of Part 2:

Strategic Choices (2)

The extent to which and how it seeks to

foster innovation and entrepreneurial

endeavour

Ways in which it might pursue strategic

options in terms of organic development,

acquisitions or joint ventures

The criteria and tools by which these

choices might be evaluated


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Exhibit II.i Strategic Choices


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Exhibit II.ii The TOWS Matrix


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Strategic Choices

6: Business-Level Strategy


7/36Exploring Corporate Strategy 8e, Pearson Education 2008 6-7

Learning Outcomes (1)

Identify strategic business units (SBUs) in

organisations

Explain bases of achieving competitiveadvantage in terms of routes on the

strategy clock

Assess the extent to which these are likelyto provide sustainable competitive

advantage



Learning Outcomes (2)

Identify strategies suited to hyper-

competitive conditions

Explain the relationship betweencompetition and collaboration

Employ principles of game theory in relation

to competitive strategy



Exhibit 6.1 Business-Level Strategies



What is a

Strategic Business Unit?

Astrategic business unit (SBU)

is a part of an organisation for which

there is a distinct external market for

goods or services that is different

from another SBU.



Exhibit 6.2

The Strategy Clock



Route 1: No Frills Strategy

Low price combined with low perceived

product benefits focusing on price-

sensitive market segments

Commodity markets

Price-sensitive customers

High power, low switching costs among buyers

Opportunity to avoid major competitors



EasyJets No Frills Strategy (1)
http://www.easyjet.com/http://www.easyjet.com/



EasyJets No Frills Strategy (2)

Upon what are the bases for

easyJets no frills strategy?

How easy would it be for largerairlines such as BA to imitate the

strategy?

On what bases could other low-price

airlines compete with easyJet?



Route 2: Low-Price Strategy

Lower price than competitors while offering

similar product benefits

Pitfalls

Margin reductions

Inability to reinvest



Morrisons Low Price Strategy
http://www.morrisons.co.uk/http://www.morrisons.co.uk/



Route 3: Hybrid Strategy

Seeks to simultaneously achieve

differentiation and low price relative to

competitors

Advantageous when

Greater volumes can be achieved

Cost reductions outside differentiated activitiesare available

Used as an entry strategy



Route 4: Differentiation Strategy

Seeks to provide products that offer

benefits that differ from those offered by

competitors

Dependent upon

Identifying and understanding strategic

customer needsIdentifying key competitors strategies



Route 5: Focused Differentiation

Seeks to provide high perceived product benefits,justifying price premiums

Key issuesChoice between focus strategy and broad

differentiation

Tensions between focus strategy and other

strategiesMarket changes



Routes 6-8: Failure Strategies

6 Increase prices without increasingservice/product benefits

7 Reduction in product/service benefits

with increase in relative price

8 Reduction in benefits whilstmaintaining price



Exhibit 6.3 Sustaining

Competitive Advantage

Sustainable

competitive

advantage

Price-based

strategies

Lock-in

Differentiation



Achieving Low Prices

Operate with lower

margins

Develop a unique

cost structure

Create efficiency in

organisational

capabilities

Focus on market

segments with

low expectations


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Ryanair
http://www.ryanair.com/http://www.ryanair.com/


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Dangers of Low Price Strategies

Competitors might follow suit

Customers associate low price with

low benefits

Cost reductions may result in inability

to pursue differentiation strategy


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Yellow Tail
http://www.yellowtailwine.com.au/http://www.yellowtailwine.com.au/


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Establishing Strategic Lock-In

Size or market

dominance

First-mover

dominance

Self-reinforcing

commitment

Insistence on

preservation

of position


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Exhibit 6.5 Competitive Strategies

in Hypercompetitive Conditions


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Exhibit 6.6 Competition

and Collaboration


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What is Game Theory?

Game theoryis concerned with the

interrelationships between the

competitive moves of a set ofcompetitors.


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Chapter Summary (2)

Managers must consider the bases upon which

price-based or differentiation strategies can be

sustained on strategic capabilities

Sustainable competitive advantage is difficult toachieve in hypercompetitive conditions

Strategies of collaboration may offer alternatives

to or complement competitive strategies

Game theory provides a basis for examining

possible competitive moves


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Case Example: Madonna (1)
http://www.madonna.com/


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Case Example: Madonna (2)

Describe and explain Madonnas

competitive strategy.

Why has she experienced sustainedsuccess?

What might threaten the sustainability of

her success?

24174570-Exploring-Corporate-Strategy-8th-Edition-06(2).ppt

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