Organizational Strategy Tyler N. Johnson Principles of Management Chapter Six
Learning Outcomes
Specify the components of sustainable competitive advantage, and explain why it is important
Describe the steps involved in the strategy-making process
Explain the different kinds of corporate-level strategies
Describe the different kinds of industry-level strategies
Explain the components and kinds of firm-level strategies
Sustainable Competitive Advantage
Resources-the assets, capabilities, processes, employee time, information,
and knowledge that an organization controls
Competitive Advantage-providing greater value for customers than competitors can
Sustainable Competitive Advantage-a competitive advantage that other
companies have tried unsuccessfully to duplicate and have, for the moment,
stopped trying to duplicate
Requirements for Sustainable Competitive Advantage
Sustainable Competitive Advantage
Imperfectly Imitable
Resources
Valuable Resources
Rare Resources
Non-Substitutable
Resources
Strategy Making Process
Choose strategic alternatives
Conduct a situational analysis
Assess need for strategic change
AVOID COMPETETIVE INERTIA LOOK FOR STRATEGIC DISSONANCE
Assessing the Need for Strategic Change
•This is step one of the strategic process
Assessment
•a reluctance to change strategies or competitive practices that have been successful in the past
Avoid competitive inertia •a discrepancy between a
company’s intended strategy and the strategic actions managers take when implementing that strategy
Look for strategic dissonance
Strategic Groups
Core Firms-central companies in a strategic group
Secondary Firms-firms that follow related, but somewhat different strategies than core firms
Transient Firms-companies whose strategies change from one strategic position to the other
Shadow-Strategy Task Force-seeks out its own company’s weaknesses and determine how other companies could
exploit them
Choosing strategic alternatives
Risk Avoiding Strategy
• Protect an existing competitive advantage
Risk Seeking Strategy
• Extended or create a sustainable competitive advantage
Strategic Reference Points
• Targets used by managers to determine if the firm has developed the core competencies it needs to achieve a sustainable competitive advantage
Corporate-level strategies
The overall organizational strategy that addresses
the question: What business (es) are we in or
should we be in? Two Distinctly Different
types
Portfolio Strategies Grand Strategies
Portfolio Strategy
Acquisitions, unrelated
diversification, related
diversification, single businesses
BCG Matrix
• Stars
• Question Marks
• Cash Cows
• Dogs
Grand Strategies
Growth Strategy- focuses on increasing profits,
revenues, market share, or number of places
doing business
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 performances by shrinking the
size or scope of the business
Adaptive Strategies
Defenders
• seek moderate growth
• Retain customers
Prospectors
• Seek fast growth
• Emphasize risk taking innovation
Analyzers
• Blend of defender & prospector strategies
• Imitate other’s successes
Reactors
• Use an inconsistent strategy
• Respond to change
Strategic Moves of Direct Competition A
ttac
k A competitive move designed to reduce a rival’s market share or profits R
esp
on
se
A competitive countermove, prompted by a rival’s attack, to defend or improve a company’s market share or profit