Strategic Leveraging


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This is a strategic leveraging slide presented under the DBA course of Strategic Issues and Management. It discusses the means by which the company can develop or improve its strategic position thru the human resources and the value chain.

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Strategic Leveraging

  1. 1. Strategic Leveraging Group VI Ferdinand C. Importado August 4, 2013
  2. 2. Strategy A strategy of a corporation forms a comprehensive master plan that states how the corporation will achieve its mission and objectives. It maximizes competitive advantages and minimizes competitive disadvantages. Wheelen and Hunger, 2010
  3. 3. Strategy A company’s strategy consists of the competitive moves and business approaches that managers employ to attract and please customers, compete, successfully, grow the business, conduct operations, and achieve targeted objectives. Thompson, Strickland and Gamble (2005)
  4. 4. Strategy according to Porter • The creation of a unique and valuable position, involving different set of activities. (1996) • It requires a strong focus on profitability rather than just growth, an ability to define a unique value proposition, and a willingness to make tough trade- offs in choosing what not to do. (2001) • Lastly, it involves the configuration of a tailored value chain that enables a company to offer unique value.
  5. 5. Value chain Logistics Operations Marketing Sales Administrative functions Human resources Research and development
  6. 6. Leveraging The exertion of a force (power) to influence a person or situation in order to gain maximum advantage. Use of a quality or (competitive) advantage in order to obtain a desired effect or result. • Small initial investment • Credit • Other borrowed funds
  7. 7. Strategic Leveraging Use of quality and competitive advantages within the value chain through the exercise of power or influence in order to attract achieve missions and targeted objectives at its maximum.
  8. 8. Scope of Strategic Leveraging • Leveraging human capital • Though employee development • Through the use of technology • Leveraging core competencies • Leveraging value across the supply chain
  9. 9. Strategic Resources Physical Financial Human Organizational • State-of-the-art manufacturing facilities • Plant or service locations • Cash flow • Financial position • Results of operation • Strong leadership • Experienced managers • Well-trained, motivated employees • Competencies • Processes, • Skills • Knowledge
  10. 10. Leveraging Human Capital Thru Employee Development • Orientation • Organizational involvement • Tracking the development • Use of sabbaticals • Evaluating human capital
  11. 11. Leveraging Human Capital Orientation Expectation setting Transforming employees as key contributors Employee success assessment Organizational involvement Sharing approach Cascading approach Tracking development How they’re doing What skills they need to work on Where else in the company they might thrive
  12. 12. Leveraging Human Capital Sabbaticals Evaluating human capital
  13. 13. Leveraging Human Capital Thru Technology • Using networks to share information • Creation of electronic team to enhance collaboration • Codifying knowledge for competitive advantage • Retaining knowledge when employees leave
  14. 14. Electronic team Advantages • Less restricted by the geographic constraints • Effective in generating social capital Requirements • Identification • Combination Process loss • Low cohesion • Low trust among members • Lack of appropriate norms • Lack of shared understanding
  15. 15. Leveraging Human Capital Thru Technology • Using networks to share information • Creation of electronic team to enhance collaboration • Codifying knowledge for competitive advantage • Retaining knowledge when employees leave
  16. 16. Retaining Knowledge Customer relationship software Email messages
  17. 17. Core Competencies Enhance competitive advantage Similar in at least one way Difficult to imitate It must enable the business to develop strengths relative to the competition. To develop a means or a point of comparison If it can be imitated, it must be costly
  18. 18. Leveraging Across Supply Chain Balancing price and functionality Commodity management Leveraging knowledge to create value
  19. 19. Balancing Price and Functionality Low technology consumer products Blue sky pioneer products Commodity products Mature initiative products LOW HIGH FUNCTIONALITY P R I C E H I G H L O W
  20. 20. Commodity products • Low functionality – low price • Products either fail or generate low return • Supplied either as the result of inferior product development process or because it is a readily available, non- differentiated commodity • Expected to generate high volume • May encourage other companies to join • Little prospect for generating higher prices • Rapid entry of me too companies
  21. 21. Low technology consumer products • Low functionality – high price • Volatile, high risk but potentially high reward market place • Brand marketing • Needs to build or capture as much volume as possible before competitors enter the market • Gains favorable customer reaction it soon attracts me too competitors • Prices can be forced down very quickly • Continuous product innovation is required
  22. 22. Blue sky pioneer products • High functionality – high price • Creates a new market • Successful if the levels of functionality can be readily sourced or manufactured including the protection intellectual property rights • Often technology led without sufficiently prudent regard to cost
  23. 23. Risks of blue sky pioneer products Damages sales volume Quickly draws me too competition Little room for price and functionality increases
  24. 24. Mature initiative products (High functionality – low price) • High functionality – low price • Target costing is adopted with all of the suppliers involved • Acts as a barrier to me too competitors • Capable of stimulating rapid product take up by customers
  25. 25. Leveraging knowledge to create and deliver value • Invest in technology and the electronic supply chain • Invest equally in inter- and intra- team processes • Make staff and supplier responsible for the development and sharing of knowledge • Maintain a strong focus on new product development • Develop an audit process. • Establish the market value of your intellectual property • Build that evaluation into the operating processes and relational strategies applied within collaborative relationships with major suppliers
  26. 26. Commodity management Beat the market Hedging Supply conditioning Single sourcing
  27. 27. Commodity management Formula pricing Rebate pricing Historical pricing with caps