Long & Vickers-Koch  Mintzberg - successful strategies tend to be visions, not plans

Core Capabilities  Threshold Capabilities  Support (internal)  Basic (required)  Core Capabilities  Critical (today’s advantage)  Cutting Edge (tomorrow’s advantage)

Williams Companies  Gas Pipelines to Fiber Optics  What’s the connection?  What’s the core capability?  What about Pioneer and Domino’s?

Creating Value  low cost  best product features and quality  meeting each customer’s needs and special services

Choosing Strategy  Must match core capabilities to strategy, because:  it must be hard for competitors to copy  it is also hard for your own company to change

Barney  When performing SWOT analysis, rate internal assets by:  value  rareness  immitability (Caterpillar 2-day part policy)(Caterpillar 2-day part policy)  organization (Walmart’s reporting structure for many rural stores)(Walmart’s reporting structure for many rural stores)

Cola Wars  Pepsi challenge in Houston  7-14% share growth  price was reduced to half to get it done  No longer head to head competition  Coke  older customers (Diet Coke), soft drinks, international  Pepsi  younger customers (new generation), fast-food diversification, domestic

Porter  What is strategy?  Operational effectiveness not strategynot strategy necessary but not sufficientnecessary but not sufficient  Strategy rests on unique activities Southwest AirlinesSouthwest Airlines IkeaIkea

Origins of Strategic Positions  Variety-based  choose products or services rather than customers (Jiffy Lube, Vanguard)  Needs-based  customer segment (cans, banking)  Access-based  reaching customers - geography is one  (Carmike Cinemas)

Three generic strategies  Sustainable Strategic Position  cost-based  differentiation  focus  Trade-offs are necessary  inconsistent image or reputation  mutually exclusive activities  limits on internal coordination and control

Fit  Three levels of fit  simple consistency (Vanguard)  reinforcing activities (Neutregena, BIC)  optimization of effort (GAP)  Advantage grows out of the entire system and leads to sustainability  competitors must match the system matching just one can lead to declining performancematching just one can lead to declining performance joint probabilities of matching all?joint probabilities of matching all? (Continental Lite v. Southwest)(Continental Lite v. Southwest)

Alternative Views of Strategy Figure 8 (page 450)  Old Implicit Model  one, ideal position  benchmarking  outsourcing  partnering  key success factors  flexible, rapid responses to competitors  New Sustainable Model  unique company position  tailor activities to strategy  clear trade-offs and choices w.r.t. competitors  advantage arises from fit  sustainability from system  operational effectiveness given  growth is a trap?

D’Aveni  Hypercompetition  rapidly escalating competition based on price- quality positioning  results from: new knowledge - first mover advantagenew knowledge - first mover advantage protecting or invading product or geographic marketsprotecting or invading product or geographic markets deep pockets (deeper with alliances)deep pockets (deeper with alliances) (Seed industry?)(Seed industry?)  Moving toward perfect competition sustainable competitive advantage is difficultsustainable competitive advantage is difficult

Levels of Industry Competition  No Competition  monopoly, patents, excessive profits  Competition Avoidance  segmentation, barriers to entry, tacit cooperation, sustainable advantage and profits possible only if competitors collaborate  Hypercompetiton  aggressive positioning by disadvantaging competitors, creation of new advantages, new arenas, advantages are temporary with profits until catch-up or next move  Perfect Competition  players equal, compete on price, no abnormal profits, not preferred over lower levels of competition

7 S’s - Disrupting the Market  Vision  superior stakeholder satisfaction  strategic soothsaying  Capability  positioning speed  positioning surprise  Tactics  shifting the rules  signaling intent  simultaneous and sequential thrusts

Vision  Identify new customer needs that the customer doesn’t currently know.  Find new customers.  Create new needs.  Predict change.  These require strategic soothsaying.

Hypercompetion  Trade-offs among the 7 S’s are inevitable.  The 7 S’s will remain advantageous:  flexible  dynamic  there are trade-offs, you can’t use them all