1. Chapter 6 – Organizational Strategy
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2. Learning Outcomes
Specify the components of sustainable competitive advantage, and explain why it is important
Describe the steps involved in the strategy- making process
Explain the different kinds of corporate-level strategies
Describe the different kinds of industry-level strategies
Explain the components and kinds of firm- level strategies

3. Resources and Competitive Advantage
LO 1
Resources: Assets, capabilities, processes, employee time, information, and knowledge used by an organization to:
Improve its effectiveness and efficiency
Create and sustain competitive advantage
Competitive advantage: Providing greater value for customers than competitors can

4. Sustainable Advantage
LO 1
Value provided by a firm that cannot be duplicated by other companies
To achieve sustainable advantage, resources must be:
Valuable
Rare
Imperfectly imitable
Nonsubstitutable

5. Strategy-Making Process
LO 2
Assessing the need for strategic change
Conducting a situational analysis
Choosing strategic alternatives

6. Assessing the Need for Strategic Change
LO 2
Companies should avoid competitive inertia and look for strategic dissonance
Competitive inertia: Reluctance to change strategies or competitive practices that have been successful in the past
Strategic dissonance
Discrepancy between a company’s intended strategy and the strategic actions taken by managers when implementing that strategy

7. Situational (SWOT) Analysis
LO 2
Assessment of:
Strengths and weaknesses in an organization’s internal environment
Opportunities and threats in an organization’s external environment
Involves:
Assessing a company’s distinctive competencies and core capabilities
Identifying strategic groups

8. Situational (SWOT) Analysis (continued)
LO 2
Forming shadow-strategy task forces
Shadow-strategy task force: Committee that analyzes a company’s own weaknesses to determine how they could be exploited

9. Categorization of Companies within a Strategic Group
LO 2
Central companies in a strategic group
Core firms
Firms that follow strategies related to but somewhat different from those of the core firms
Secondary firms

10. Strategic Reference Point Theory
LO 2
Managers should either choose a risk-avoiding strategy or a risk-seeking strategy
Decision is based on whether the company falls above or below strategic reference points
Strategic reference points should be frequently revised to better focus on new challenges and opportunities

11. 6.3 Strategic Reference Points
LO 2
6.3 Strategic Reference Points

12. Approaches to Corporate-Level Strategy: Portfolio Strategy
LO 3
Minimizes risk by diversifying investment
Strategies
Developing new businesses or looking for acquisitions
Reducing risk through unrelated diversification
Routing investments from mature, slow-growth businesses into newer, faster-growing businesses

13. 6.4 Boston Consulting Group Matrix
LO 3
6.4 Boston Consulting Group Matrix

14. 6.5 Relationship between Diversification and Risk
LO 3
6.5 Relationship between Diversification and Risk

15. Approaches to Corporate-Level Strategy: Grand Strategy
LO 3
Helps an organization achieve its strategic goals
Types
Growth strategy: Focuses on increasing profits or market share
Stability strategy: Focuses on improving the current sales strategy
Retrenchment strategy: Focuses on turning around very poor company performance
Recovery: Strategic actions taken after retrenchment to return to a growth strategy

16. Industry-Level Strategies
LO 4
Porter’s five industry forces
Positioning strategies
Adaptive strategies

17. 6.6 Porter’s Five Industry Forces
LO 4
Porter’s Five Industry Forces

18. Positioning Strategies
LO 4
Producing a product of acceptable quality at consistently lower production costs than competitors
Cost leadership
Providing a product or service that is different from competitors’ offerings that customers are willing to pay a premium price for it
Differentiation
Using cost leadership or differentiation to produce a specialized product or service for a specially targeted group of customers
Focus strategy

19. Adaptive Strategies: Types
LO 4
Defenders: Seek moderate, steady growth by offering a limited range of products and services to a well-defined set of customers
Prospectors: Seek fast growth by:
Searching for new market opportunities
Encouraging risk taking
Being the first to bring innovative new products to market

20. Adaptive Strategies: Types (continued)
LO 4
Analyzers: Seek to minimize risk and maximize profits by imitating the proven successes of prospectors
Reactors: React to changes in the external environment after they occur
Do not follow a consistent adaptive strategy

21. Firm-Level Strategy
LO 5
Direct competition: Rivalry between two companies that offer similar products and services
Companies act and react to each other’s strategic actions
Key factors
Market commonality
Resource similarity

22. 6.7 A Framework of Direct Competition
LO 5
6.7 A Framework of Direct Competition

23. Strategic Moves of Direct Competition
LO 5
Attack
Competitive move designed to reduce a rival’s market share or profits
Response
Competitive countermove to defend or improve a company’s market share or profit
Types
Mirroring the competitor’s move
Responding with a different dimension from the competitor’s move or attack

24. Key Terms Resources Strategic dissonance Competitive advantage
Sustainable competitive advantage
Valuable resource
Rare resource
Imperfectly imitable resource
Nonsubstitutable resource
Competitive inertia
Strategic dissonance
Situational (SWOT) analysis
Distinctive competence
Core capabilities
Strategic group
Shadow-strategy task force
Core firms
Secondary firms
Strategic reference points

25. Key Terms (continued 1) Corporate-level strategy Diversification
Portfolio strategy
Acquisition
Unrelated diversification
BCG matrix
Star
Question mark
Cash cow
Dog
Related diversification
Grand strategy
Growth strategy
Stability strategy
Retrenchment strategy
Recovery
Industry-level strategy
Character of the rivalry
Threat of new entrants
Threat of substitute products or services

26. Key Terms (continued 2) Bargaining power of suppliers
Bargaining power of buyers
Cost leadership
Differentiation
Focus strategy
Defenders
Prospectors
Analyzers
Reactors
Firm-level strategy
Direct competition
Market commonality
Resource similarity
Attack
Response

27. Types of strategies undertaken by organizations
Summary
Firms can achieve sustainable competitive advantage if their resources are valuable, rare, imperfectly imitable, and nonsubstitutable
Types of strategies undertaken by organizations
Corporate-level strategy
Industry-level strategy
Firm-level strategy