Page 1 Competitive Strategy
Page 2 Business-level [Competitive] Strategy Since we’re in the XYZ industry, how do we compete? Profit = (Price – Cost) x Qty. Cost or size advantage Differentiation or uniqueness advantage Marketing advantage Innovation advantage Bridge converging industries
Page 3 Breadth of Competitive Scope Source of Competitive Advantage Broad Target Market Narrow Target Market Cost Low Cost Generic Business Level Strategies Uniqueness
Page 4 Low-Cost Strategy - Operational Advantage “Dell finds it hilarious that HP and Sony fund researchers to come up with new ideas.” “Steamrollered by Dell” Newsweek, February 21, 2005
Page 5 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Value Chain and Low Cost Strategy
Page 6 Inbound Logistics Inbound Logistics Highly Efficient Systems to Link Suppliers’ Products with the Firm’s Production Processes Located in Close Proximity with Suppliers
Page 7 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Service MARGIN Relatively Few Management Layers to Reduce Overhead Effective Training Programs to Improve Worker Efficiency and Effectiveness Timing of Asset Purchases Efficient Plant Scale to Minimize Manufacturing Costs Selection of Low Cost Transport Carriers Delivery Schedule that Reduces Costs Products Priced to Generate Sales Volume Small, Highly Trained Sales Force Investments in Technology in order to Reduce Costs Associated with Manufacturing Processes Frequent Evaluation Processes to Monitor Suppliers’ Performances Policy Choice of Plant Technology Organizational Learning Efficient Order Sizes Operations Efficient Plant Scale to Minimize Mfg. Costs Timing of Asset Purchases Policy Choice of Plant Technology Organizational Learning
Page 8 Technological Development Human Resource Management Firm Infrastructure Procurement Outbound Logistics Marketing & Sales Service MARGIN Selection of Low Cost Transport Carriers Delivery Schedule that Reduces Costs National Scale Advertising Products Priced to Generate Sales Volume Small, Highly Trained Sales Force Effective Product Installations to Reduce Frequency and Severity of Recalls Frequent Evaluation Processes to Monitor Suppliers’ Performances Efficient Order Sizes Interrelationships with Sister Units Outbound Logistics Outbound Logistics Selection of Low Cost Transport Carriers Delivery Schedule that Reduces Costs Efficient Order Sizes Interrelationships with Sister Units
Page 9 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Marketing & Sales Global Scale Advertising Products Priced to Generate Sales Volume Small, Highly Trained Sales Force Marketing & Sales
Page 10 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Marketing & Sales Global Scale Advertising Products Priced to Generate Sales Volume Small, Highly Trained Sales Force Marketing & Sales Coca-Cola
Page 11 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Service Effective Product Installations to Reduce Recalls Effective Product Installations to Reduce Recalls
Page 12 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Procurement Systems and Procedures to Find the Lowest Cost Products to Purchase Raw Materials Frequent Evaluation Processes to Monitor Suppliers’ Performances Procurement
Page 13 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Technological Development Easy-to-Use Manufacturing Technologies Investments in Technology in order to Reduce Costs Associated with Manufacturing Processes
Page 14 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Human Resource Management Consistent Policies to Reduce Turnover Costs Effective Training Programs to Improve Worker Efficiency and Effectiveness
Page 15 Support Activities Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Firm Infrastructure Cost Effective MIS Systems Relatively Few Management Layers to Reduce Overhead Simplified Planning Practices to Reduce Planning Costs
Page 16 Breadth of Competitive Scope Source of Competitive Advantage Broad Target Market Narrow Target Market Cost Generic Business Level Strategies Uniqueness Cost Leadership Differentiation
Page 17 S OUTH W EST Differentiation Strategy – Uniqueness Advantage
Page 18 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Value Chain and Differentiation Strategy
Page 19 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Service MARGIN Inbound Logistics Inbound Logistics Superior handling of incoming raw materials to minimize damage and improve the quality of the final product
Page 20 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Service MARGIN Operations Rapid responses to customers unique manufacturing specifications Consistent manufacturing of attractive products
Page 21 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Outbound Logistics Outbound Logistics Accurate and responsive order processing procedures Rapid and timely product deliveries to customers
Page 22 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Marketing & Sales Extensive personal relationships with buyers Strong Coordination among functions in R&D, Marketing and Product Development Premium Pricing
Page 23 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Service Complete field stocking of replacement parts
Page 24 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Service Complete field stocking of replacement parts Caterpillar vs. Komatsu
Page 25 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Technological Development Strong capability in basic research Investments in technol-ogies to produce highly differentiated products Coordination among R&D, marketing and product development Coordination among R&D, marketing and product development
Page 26 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Support Activities Human Resource Management Compensation programs which encourage worker creativity and productivity Extensive use of subjective performance measures Superior personnel training
Page 27 Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN Support Activities Firm Infrastructure A companywide culture emphasizing quality and innovation A companywide culture emphasizing quality and innovation Highly developed Information Systems to better understand customers’ purchasing preferences
Page 28 Marketing Advantage
Page 29 Innovation Advantage
Page 30 Innovation Cycle Time Slow is good, unless you’re the one driving innovation Growth Rate Time t1t1 t2t2 t3t3
Page 31 Differentiated Beef Bluegrass Meadows Beef
Page 32 Still Perkin’
Page 33 Breadth of Competitive Scope Source of Competitive Advantage Broad Target Market Narrow Target Market Cost Generic Business Level Strategies Uniqueness Cost Leadership Differentiation Cost Leadership Focused Differentiation
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Page 38 Converging Industry Advantage Palmtop Computing Entertainment Wireless Telephony
Page 39 Razor Trials and Comparisons Try the razors Compare Evaluate
What ’ s the next big thing? Strategic Dimension 1 ? Strategic Dimension 2
Page 41 Gillette: More is Better…? 12 Blade
Page 42 Razors Design features of razors and shaving performance – Do they make a difference? – Do they create [real or perceived] value? What are relevant “strategic dimensions” of razor industry? – What needs [real or perceived] do these dimensions fulfill? Strategic Dimension 1 ? Strategic Dimension 2
Page 43 Pizza Strategy Canvas
Page 44 Women’s Razor Strategy Canvas
Page 45 Men’s Razor Strategy Canvas