well-conceived and well-communicated - focuses on its present business purpose Lifting spirits
vision functions as a valuable managerial Providing updates and progress
- who we are and what we do
tool to reports as events unfold
Who Participates in Crafting Strategy? Detail how key activities Building a capable organization
• CEO will be managed Allocating resources to strategy-critical
• Senior exec. Provide support for activities
• Managers business strategy Establishing strategy-supportive policies
Why Are Collaborative Efforts Specify how functional objectives
Instituting best practices and programs
Used in the Strategy-Making Process? are to be achieved
for
continuous improvement
Tasks of Operating Strategies
Many strategic issues are complex or cut Installing information, communication,|
across multiple areas of expertise Concern narrow strategic approaches to
and operating systems
Ideas of people with different expertise manage key operating units and
and perspectives strengthen the strategically-relevant operating activities Motivating people to pursue the target
objectives
strategizing effort Add detail to business
A team effort in crafting the strategy, and functional strategies Tying rewards to achievement of results
especially a team that includes people
responsible for implementing it,
Delegation of responsibility Creating a strategy-supportive corporate
enhances motivation, commitment, to frontline managers culture
and accountability in executing the
Uniting the Company’s Strategy-Making
Exerting the leadership necessary to
strategy and making it work drive the process forward and keep
Effort
improving
Company’s Strategy-Making Hierarchy A firm’s strategy is a collection of
initiatives undertaken by managers at all Characteristics of Good Strategy
• Corporate strategy levels in the organizational hierarchy Execution
• Business strategy
Pieces of strategy should fit Requires diligent pursuit of operating
• Functional area strategies (within
together like the pieces of a puzzle excellence
each business)
• Operating strategies (within each Key approaches used to unify all Involves a company’s entire
business) strategic initiatives into a cohesive, management team
company-wide action plan
Hinges on skills and cooperation
Tasks of Corporate Strategy Effectively communicate of operating managers who
Moves to achieve diversification company’s vision, objectives, and Push needed changes in their
major strategies to all personnel organizational units
Actions to boost performance of
Consistently deliver good results
individual businesses Exercise due diligence in
Corporate Governance:
Strategic Role of a Board of Directors
and “cut straight to the chase” Responses to prevailing market Substitute use of low-cost for high-
conditions cost raw materials
Use online systems and
Issues on the “the worry list” Initiatives to strengthen its market
sophisticated software to achieve
raise questions about position operating efficiencies
What actions need to be Adopt labor-saving operating
considered 5 generic competitive strategies
methods
What to think about doing • Low cost
Use bargaining power to gain
• Differentiation concessions from suppliers
Identifying the Strategic Issues: Some • Best cost Compare vertical integration vs.
Possibilities • Niche low cost outsourcing
• Niche differentiation
How to stave off market challenges Approach 2: Revamping the Value Chain
from new foreign competitors? Low-Cost Provider Strategies
How to combat price discounting Use direct-to-end-user
of rivals? sales/marketing methods
Make achievement of meaningful
How to reduce a company’s high Make greater use of online
lower costs than rivals
costs? technology applications
How to sustain a company’s Include features and services in
Streamline operations by
present growth product offering that buyers eliminating low-value-added or
in light of slowing buyer demand? consider essential unnecessary work steps
Whether to expand a company’s Find approaches to achieve a cost Relocate facilities closer to
product line? advantage in ways difficult for suppliers or customers
Whether to acquire a rival firm? rivals to copy or match Offer basic, no-frills
Whether to expand into foreign product/service
markets rapidly or cautiously? Low-Cost Advantage into Higher Profits: Offer a limited product/service as
What to do about aging opposed to a full product/service
demographics of a company’s Option 1: Use lower-cost edge to line
customer base? under-price competitors and attract
CHAPTER 5: 5 GENERIC price-sensitive buyers in enough Keys to Success in Achieving
COMPETITIVE STRATEGIES numbers to increase total profits Low-Cost Leadership
Strategy and Competitive Advantage Option 2: Maintain present price, be Scrutinize each cost-creating
content with present market share, activity, identifying cost drivers
and use lower-cost edge to earn a Use knowledge about cost drivers
Competitive advantage
higher profit margin on each unit sold, to manage
Attracting customers thereby increasing total profits costs of each activity down year
Defending against competitive
after year
forces Approaches to Securing a Cost Find ways to restructure value
Advantage chain to eliminate
Key to Gaining a Competitive Advantage
nonessential work steps and low-
• Do a better job than rivals of value activities
firm’s product / service offers superior performing value chain activities Work diligently to create cost-
value efficiently and cost effectively conscious corporate cultures
A good product at a low price Feature broad employee
• Revamp value chain to bypass participation in continuous
cost-producing activities that add
cost-improvement efforts and
Incorporate differentiating
limited perks for executives
features
Strive to operate with
exceptionally small corporate cause buyers to prefer firm’s How to Achieve a
staffs product or service over brands of Differentiation-Based Advantage
Aggressively pursue investments in rivals
resources and capabilities that Keys to Success
• Lower buyer’s overall costs
promise to drive costs out of the Find ways to differentiate
business
create value for buyers
• Raise the performance a buyer gets