1. 1 UCS BA in Management Organisational Strategy Session 9

2. 2 Aims and Objectives By the end of this session candidates should be able to : Demonstrate understanding of strategic options and implications of choice

3. 3 Bases of Strategic Choice R1 strat wk 9.ppt R10 parent matrix.pptR10 parent matrix.ppt

4. 4 Strategic Business Units Elements of Business level strategy 1.Bases of competition - 2.Achieving competitive advantage – 3.Detailed choices A strategic business unit is a part of an organisation for which there is a distinct external market for goods or services that is different from another SBU A strategic business unit is a part of an organisation for which there is a distinct external market for goods or services that is different from another SBU

5. 5 Bases of Competitive Advantage Competitive strategy –The bases for achieving competitive advantage –The bases for providing best value Porter’s 3 generic strategies –Overall Cost leadership –Differentiation –Focus –Avoiding middle ground – R2 strat wk 9.pptR2 strat wk 9.ppt

6. 6 Activity – R3 strat wk 9 porter.docR3 strat wk 9 porter.doc –

7. 7 The Strategy Clock Bowman and D’Aveni’s market facing strategies Provide customer needs better or more effectively than competitors R4 strat wk 9.ppt “No Frills” Strategy (routes 1+2) Low price / Low perceived product/service benefits Focus on price-sensitive market segment Commodity-like products or services High buyer power and/ or low switching costs Small number of providers with similar market shares Avoiding the major competitors R5 strat wk 9.ppt

8. 8 Hybrid Strategy (route 3) Appropriate Circumstances - Able to achieve greater volumes than competitors, Clarity about activities on which differentiation can be built (core competences) Entry strategy in market with established competitors Simultaneously achieving differentiation and a price lower than competitors Simultaneously achieving differentiation and a price lower than competitors

9. 9 Differentiation Strategies (route 4) Success depends on –Identification of strategic customers and knowing what they value –Knowing the competitors Narrow competitor base – focused differentiation Wide competitor base – address bases of differentiation valued by customers Offering benefits different from competitors Widely valued by buyers Better products/services at same or higher price Public sector - centre of excellence – attract higher funding Offering benefits different from competitors Widely valued by buyers Better products/services at same or higher price Public sector - centre of excellence – attract higher funding

10. 10 Focused Differentiation ( route 5) Choice to be made between focused differentiation and broad differentiation if growth required ( new ventures). Difficult when the focus strategy is only part of an organisation’s overall strategy. Possible conflict with stakeholder expectations Market situation may change, reducing differences between segments High perceived product/service benefits to selected market segment (niche) Premium products, heavily branded High perceived product/service benefits to selected market segment (niche) Premium products, heavily branded

11. 11 Failure Strategies ( routes 6,7,8) Increase price without increasing product/service benefit Raise price without increasing benefits Reduce benefits / increase price Reduce benefits whilst maintaining price Do not provide perceived value-for-money in terms of product features, price or both Do not provide perceived value-for-money in terms of product features, price or both

12. 12 Activity – Strategic clock R7

13. 13 Strategies of differentiation (Mintzberg) Price - lower price. Image Support Quality Design different by design, unique features Undifferentiation If enough room in market – copycats

14. 14 Sustaining Competitive Advantage

15. 15 Competitive Strategies in Hypercompetitive Conditions Hypercompetitive Competitive advantage is temporary Competitive advantage relates to an organisation’s ability to change

16. 16 Competitive Strategies in Hypercompetitive Conditions

17. 17 Game Theory Strategist must anticipate competitor reactions Core assumptions: –Competitor will behave rationally and try to win –Competitor is in an interdependent relationship with other competitors –Competitors are aware of the interdependencies and of the moves that competitors could take – The inter-relationships between the competitive moves of a set of competitors

18. 18 Case study R11