Prentice Hall, 2004Chapter 5 Wheelen/Hunger 1 Situational Analysis Situational Analysis: –Process of finding a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses.

Prentice Hall, 2004Chapter 5 Wheelen/Hunger 2 TOWS Matrix

Prentice Hall, 2004Chapter 5 Wheelen/Hunger 3 Resource-Based Approach Resource: An asset, competency, process, skill, or knowledge controlled by the corporation.

Prentice Hall, 2004Chapter 5 Wheelen/Hunger 4 Competitive Strategy Industry Structure: –Fragmented Industry Many small and medium-sized local companies compete for small shares of total market –Focus strategies predominate

Prentice Hall, 2004Chapter 5 Wheelen/Hunger 5 Competitive Strategy Industry Structure: –Consolidated industry Mature industry dominated by a few large companies –Cost Leadership or Differentiation predominate

Prentice Hall, 2004Chapter 5 Wheelen/Hunger 6 Dimensions of Quality Quality Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived Quality Dimensions

Prentice Hall, 2004Chapter 5 Wheelen/Hunger 7 Competitive Strategy Strategic rollup: –Quickly consolidate fragmented industry –Money from venture capital –Entrepreneur acquires hundreds of owner-operated firms –Creates large firm with economies of scale

Prentice Hall, 2004Chapter 5 Wheelen/Hunger 8 Competitive Strategy Strategic rollup: –Differ from Conventional M&A’s Large number of firms Owner-operated firms Goal to reinvent entire industry

Prentice Hall, 2004Chapter 5 Wheelen/Hunger 9 Competitive Tactics Tactic: –Specific operating plan detailing how a strategy is to be implemented in terms of when and where it is to be put into action. Timing tactics Market location tactics

Prentice Hall, 2004Chapter 5 Wheelen/Hunger 10 Competitive Tactics Timing Tactics: –First mover (pioneer) Reputation as industry leader High profits Sets standards for subsequent products in the industry –Late mover Able to imitate technological advances of others –Keeps R&D costs down –Keeps risks down

Prentice Hall, 2004Chapter 5 Wheelen/Hunger 11 Competitive Tactics Market Location Tactics: –Offensive Tactics Frontal assault Flanking maneuver Bypass attack Encirclement Guerrilla warfare

Prentice Hall, 2004Chapter 5 Wheelen/Hunger 12 Competitive Tactics Market Location Tactics: –Defensive Tactics Raise structural barriers Increase expected retaliation Lower the inducement for attack

Prentice Hall, 2004Chapter 5 Wheelen/Hunger 13 Cooperative Strategies Cooperative Strategies: –Collusion Active cooperation of firms to reduce output and raise prices –Explicit –Tacit

Prentice Hall, 2004Chapter 5 Wheelen/Hunger 14 Cooperative Strategies Cooperative Strategies: –Strategic Alliance: –Partnership of two or more corporations or business units to achieve strategically significant objectives that are mutually beneficial.

Prentice Hall, 2004Chapter 5 Wheelen/Hunger 15 Cooperative Strategies Strategic Alliance Access to markets Achieve competitive advantage Obtain technology Reduce financial risk Reduce political risk