FUNCTIONAL LEVEL STRATEGIES DR. MARK FRUIN BUSINESS 290/291

FUNCTIONAL LEVEL STRATEGIES  SUPERIOR EFFICIENCY  SUPERIOR QUALITY  SUPERIOR CUSTOMER RESPONSIVENESS  SUPERIOR INNOVATION

EFFICIENCY  TWO FACTORS DETERMINE A FIRM’S PROFIT RATE –THE VALUE CUSTOMERS PLACE ON FIRM OFFERING –THE COSTS OF PRODUCING & DELIVERING THOSE OFFERINGS  DIFFERENCE BETWEEN COSTS OF INPUTS AND VALUE OF OUTPUT  PRODUCTIVITY MEASURES OUTPUT PER EMPLOYEE

SUPERIOR VALUE CREATION  EITHER ENJOY THE LOWEST COST STRUCTURE IN THE INDUSRY –4Ss: SCALE, SCOPE, SPECIALIZATION, & SPEED –OTHER ADVANTAGES?  OR CREATE THE MOST VALUABLE PRODUCT IN EYES OF CUSTOMERS –THE GAP BETWEEN PERCEIVED VALUE AND COSTS OF PRODUCTION

QUALITY  QUALITY PRODUCTS ARE GOODS & SERVICES THAT ARE RELIABLE  DO WELL WHAT THEY ARE DESIGNED TO DO  QUALITY CAN RESULT IN –GREATER EFFICIENCY –PRODUCTIVITY –BRAND-NAME VALUE –CUSTOMER LOYALTY –HIGHER RETAINED VALUE

SUPERIOR CUSTOMER RESPONSIVENESS  QUALITY OF FIRM OFFERINGS PLUS SUPERIOR CUSTOMER RESPONSE TIME  ABILITY TO DEVELOP NEW OFFERINGS  ABILITY TO CUSTOMIZE EXISTING OFFERINGS TO EVER SMALLER CUSTOMER SEGMENTS (WHILE MAIN- TAINING EFFICIENCY & QUALITY)

INNOVATION  ANYTHING NEW AND NOVEL IN THE WAY COMPANIES OPERATE  PRODUCT & PROCESS INNOVATIONS  ADVANCES IN PRODUCT DESIGN, FORM FACTOR, MFG, DISTRIB & MKTG PROCESSES, MANAGEMENT SYSTEMS, ORGANIZATIONAL STRUCTURES, COOP&COLLABORATE

DURABILITY OF COMPETITIVE ADVANTAGES  EXTENT TO WHICH SUPERIOR EFFICIENCY, QUALITY, CUSTOMER SATISFACTION & INNOVATION MAY BE COPIED AND DUPLICATED  BARRIERS TO IMITATION  CAPABILITY TO IMITATE –ABSORPTIVE CAPACITY  INDUSTRY DYNAMISM

COMPETITIVE ADVANTAGES  ARE ORGANIZATIONAL  USUALLY DEPEND ON CONTINUOUS IMPROVEMENT & LEARNING  ORGANIZATIONAL FLEXIBILITY & ADAPTABILITY ARE KEY TO LONGTERM SUCCESS (TO AVOID INERTIA AND EASE OF IMITATION)