Strategic Management Q: Resource Based model and I/O Model Resources Resources are the inputs into a firm’s production process: such as o Physical o Organizational o Capital According to resource based model, Differences in the firms’ performances are due to their unique resources rather than their structural characteristics. ◦ The I/O Model of Above Average Returns From 1960-80, it was believed that the external environment plays the vital role in determining the strategy Thus, the Industrial Organization (I/O) model focuses on external environment’s influence on a firm’s strategic actions. Key factors to decide the firm’s performance as per I/O model o Economies of scale o Barriers to market entry o Diversification o Product differentiation ◦ What Are the Stakeholders of a Business? Any person or entity interested in a particular business is called a stakeholder.Asst. Professor Jay Padh- MBA dept.
They are affected by the business activity, and they may be part of the core decision- making team. Internal and external stakeholders may have different interests and priorities, possibly leading to conflicts of interest. ◦ Kinds of Stakeholders Internal stakeholders are owners, managers, and workers. External stakeholders are the customers and the suppliers. The community in which the organization does business also is a stakeholder. All the stakeholders are not equal, and different stakeholders will have varying considerations. These stakeholders can have direct or indirect stake in the organization and in policy-making. Q:Value Chain Analysis A value chain is a chain of activities for a firm operating in a specific industry. Products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities gives the products more added value starting with raw materials and ending with the delivered product It is based on the notion of value-added at the link level. The sum total of link-level value-added yields total value. Six business functions of the Value Chain: Research and Development Design of Products, Services, or Processes Production Marketing & Sales Distribution Customer ServiceAsst. Professor Jay Padh- MBA dept.
Primary activities Inbound Logistics Operations Outbound Logistics Marketing and Sales Service Support activities Procurement Human Resource Management Technology Development General AdministrationQ: SWOT analysis: Internal factors: Strengths Weaknesses External Factors: Opportunities ThreatsQ:Vision vs. Mission The vision is more broad and future oriented – the goal on the horizon The mission is more focused – how you will get to the horizonAsst. Professor Jay Padh- MBA dept.
Q: PEST Analysis: it is the list of external factors affecting the business Political Environmental Social Economic Q: Resources, Capacities, core competencies: Resources ◦ How a firm procures the resources Capacities ◦ How effectively a firm uses its resources Competencies ◦ How uniquely the firm positions itself in terms of performance of its product/service. The collective strength of these three factors puts the firm a step ahead of its competitors and gives the competitive advantage. Q: Common types of Industry Key Success factors Technology related KSFs Expertise in particular technology (apple, Sony) Expertise in scientific research (pharmaceuticals) Ability to improve production process (ford motors) Manufacturing related KSFs High utilization of fixed assets Access to attractive supplies of skilled laborAsst. Professor Jay Padh- MBA dept.
High labor productivity Ability to manufacture or assemble productsDistribution related KSFs A strong network of wholesale/dealers (amway) Strong direct sales capabilities via internet Marketing related KSFs A well known respected brand name (reebok, Nike) Courteous, personalized customer services Customer guarantee and warranties Clever advertising (pepsi, coke) Skills and capability related KSFs National or global distribution capabilities Design expertise Short delivery time capability Other types of KSFs Overall low cost Convenient location Ability to provide fast, convenient after sale services patentsQ: Strategic group mapping The technique for displaying the different market or competitive positions that rival firms occupy in the industry. Step 1: Analyze industry structure Step 2: Map the strategic groupsAsst. Professor Jay Padh- MBA dept.
Step 3:Measure the strength of barriers between groups Step 4: Understand companies strategy with reference to groups’ interactionQ: Six ways to achieve sustainable competitive advantage1. Intellectual property2. A dynamic product line, rather than a single product3. Dramatic cost improvement for cause4. Proven team with inside relationships5.Lock on the market or customer base6. Strong focus and differentiationQ: Strategic and tactical actions Strategic action: ◦ When a firm acts Tactical action: ◦ When a firm responds to a strategic action.Q: Likelihood of attackFirst mover incentivesSecond moversLate moversAsst. Professor Jay Padh- MBA dept.
Value-Creating Diversification • Economies of scope (related diversification) • Sharing activities • Transferring core competencies • Market power (related diversification) • Blocking competitors through multipoint competition • Vertical integration • Financial economies (unrelated diversification) • Efficient internal capital allocation • Business restructuringAsst. Professor Jay Padh- MBA dept.
Value-Neutral Diversification • Antitrust regulation • Tax laws • Low performance • Uncertain future cash flows • Risk reduction for firm • Tangible resources • Intangible resourcesValue-Reducing Diversification • Diversifying managerial employment risk • Increasing managerial compensationQ: Vertical Integration • Backward integration—a firm produces its own inputs. • Forward integration—a firm operates its own distribution system for delivering its outputs.Q: Operational Relatedness of diversification strategy:Asst. Professor Jay Padh- MBA dept.
Q. Three Types of Strategic Alliances Joint Venture Equity Strategic Alliance Nonequity Strategic AllianceQ: Reasons for Strategic Alliance:Q: Business-Level Cooperative StrategiesAsst. Professor Jay Padh- MBA dept.
Q:Corporate-Level Cooperative StrategiesAsst. Professor Jay Padh- MBA dept.