CHAPTER 5The Five Generic Competitive StrategiesCopyri.docx

CHAPTER 5
The Five Generic Competitive Strategies
Copyright © McGraw-Hill Education. Permission required for
reproduction or display.
LEARNING OBJECTIVES
THIS CHAPTER WILL HELP YOU UNDERSTAND:
What distinguishes each of the five generic strategies and why
some of these strategies work better in certain kinds of
competitive conditions than in others
The major avenues for achieving a competitive advantage based
on lower costs
The major avenues to a competitive advantage based on
differentiating a company’s product or service offering from the
offerings of rivals
The attributes of a best-cost provider strategy—a hybrid of low-
cost provider and differentiation strategies
© McGraw-Hill Education.
WHY DO STRATEGIES DIFFER?
A firm’s competitive strategy deals exclusively with the
specifics of its efforts to position itself in the market-place,
please customers, ward off competitive threats, and achieve a
particular kind of competitive advantage.
Is the competitive advantage
pursued linked to low costs

or product differentiation?
Is the firm’s market target
broad or narrow?
Key factors that
distinguish one strategy
from another
Jump to Appendix 1 long image description
THE FIVE GENERIC COMPETITIVE STRATEGIESLow-cost
providerStriving to achieve lower overall costs than rivals on
products that attract a broad spectrum of buyersBroad
differentiationDifferentiating the firm’s product offering from
rivals’ with attributes that appeal to a broad spectrum of
buyersFocused low-costConcentrating on a narrow price-
sensitive buyer segment and on costs to offer a lower-priced
productFocused differentiationConcentrating on a narrow buyer
segment by meeting specific tastes and requirements of niche
membersBest-cost providerGiving customers more value for the
money by offering upscale product attributes at a lower cost
than rivals
FIGURE 5.1 The Five Generic Competitive Strategies

LOW-COST PROVIDER STRATEGIES
Effective low-cost approaches
Pursue cost savings that are difficult to imitate
Avoid reducing product quality to unacceptable levels
Competitive advantages and risks
Greater total profits and increased market share gained from
underpricing competitors
Larger profit margins when selling products at prices
comparable to and competitive with rivals
Low pricing does not attract enough new buyers
Rival’s retaliatory price-cutting sets off a price war
Core CONCEPTS (1 of 5)
A low-cost provider’s basis for competitive advantage is lower
overall costs than competitors.
Successful low-cost leaders, who have the lowest industry costs,
are exceptionally good at finding ways to drive costs out of
their businesses and still provide a product or service that
buyers find acceptable.
A cost driver is a factor that has a strong influence on a firm’s
costs.
STRATEGIC MANAGEMENT PRINCIPLE (1 of 7)
A low-cost advantage over rivals can translate into better
profitability than rivals attain.
MAJOR AVENUES FOR ACHIEVING A COST ADVANTAGE

Low-cost advantage
Cumulative costs across the overall value chain must be lower
than competitors’ cumulative costs.
How to gain a low-cost advantage
Perform value-chain activities more cost-effectively than rivals
Revamp the firm’s overall value chain to eliminate or bypass
cost-producing activities
Core Concept (2 of 5)
A cost driver is a factor that has a strong influence on a
company’s costs.
COST-EFFICIENT MANAGEMENT OF VALUE CHAIN
ACTIVITIES
Cost driver
A factor with a strong influence on a firm’s costs
Can be asset-based or activity-based
Securing a cost advantage
Use lower-cost inputs and hold minimal assets
Offer only “essential” product features or services
Offer only limited product lines
Use low-cost distribution channels
Use the most economical delivery methods
FIGURE 5.2 Cost Drivers: The Keys to Driving Down Company
Costs

COST-CUTTING METHODS (1 of 2)
Capturing all available economies of scale
Taking full advantage of experience and learning-curve effects
Operating facilities at full or near-full capacity
Improving supply chain efficiency
Substituting lower-cost inputs wherever there is little or no
sacrifice in product quality or performance
Using the firm’s bargaining power vis-à-vis suppliers or others
in the value chain system to gain concessions
Using online systems and sophisticated software to achieve
operating efficiencies
COST-CUTTING METHODS (2 of 2)
Improving process design and employing advanced production
technology
Being alert to the cost advantages of outsourcing or vertical
integration
Motivating employees through incentives and company culture
REVAMPING THE VALUE CHAIN SYSTEM TO LOWER
COSTS
Selling direct to consumers and bypassing the activities and
costs of distributors and dealers by using a direct sales force
and a company website
Streamlining operations to eliminate low value-added or

unnecessary work steps and activities
Reduce materials handling and shipping costs by having
suppliers locate their plants or warehouses close to the firm’s
own facilities
How Walmart Managed Its Value Chain to Achieve a Huge
Low-Cost Advantage over Rival Supermarket Chains
Which Walmart value chain activity would be most easily
overcome by rival supermarket chains?
Which Walmart value chain activities would be the most
difficult to overcome by rival supermarket chains?
Assume you have been tasked to revamp a rival supermarket’s
value chain activities to better compete with Walmart. In what
order of expected payoff should you attempt to revamp its value
chain activities?
Amazon’s Path to Becoming the Low-Cost Provider in E-
Commerce
Describe the business segment in which Amazon competes.
How well are Amazon’s competitive strengths matched to the
five forces in its competitive environment?
Which of Amazon’s value chain activities would be most easily
overcome by rivals?
Which Amazon value chain activity would be the most difficult
to overcome by rivals?
Assume you have been tasked to revamp a rival’s value chain
activities to better compete with Amazon. In what order of
expected payoff should you attempt to revamp its value chain

activities?
THE KEYS TO BEING A SUCCESSFUL LOW-COST
PROVIDER
Success in achieving a low-cost edge over rivals comes from
out-managing rivals in finding ways to perform value chain
activities faster, more accurately, and more cost-effectively by:
Spending aggressively on resources and capabilities that
promise to drive costs out of the business
Carefully estimating the cost savings of new technologies
before investing in them
Constantly reviewing cost-saving resources to ensure they
remain competitively superior
Strategic Management Principle (2 of 7)
Success in achieving a low-cost edge over rivals comes from
out-managing rivals in finding ways to perform value chain
activities faster, more accurately, and more cost-effectively.
WHEN A LOW-COST PROVIDER STRATEGY WORKS BEST
Price competition among rival sellers is vigorous.
Identical products are available from many sellers.
There are few ways to differentiate industry products.
Most buyers use the product in the same ways.
Buyers incur low costs in switching among sellers.

PITFALLS TO AVOID IN PURSUING A LOW-COST
PROVIDER STRATEGY
Engaging in overly aggressive price cutting that does not result
in unit sales gains large enough to recoup forgone profits
Relying on a cost advantage that is not sustainable because rival
firms can easily copy or overcome it
Becoming too fixated on cost reduction such that the firm’s
offering is too features-poor to gain the interest of buyers
Having a rival discover a new lower-cost value chain approach
or develop a cost-saving technological breakthrough
STRATEGIC MANAGEMENT PRINCIPLE
(3 of 7)
A low-cost provider is in the best position to win the business
of price-sensitive buyers, set the floor on market price, and still
earn a profit.
Reducing price does not lead to higher total profits unless the
added gains in unit sales are large enough to bring in a bigger
total profit despite lower margins per unit sold.
A low-cost provider’s product offering must always contain
enough attributes to be attractive to prospective buyers. Low
price, by itself, is not always appealing to buyers.

BROAD DIFFERENTIATION STRATEGIES
Effective Differentiation Approaches
Carefully study buyer needs and behaviors, values, and
willingness to pay for a unique product or service
Incorporate features that both appeal to buyers and create a
sustainably distinctive product offering
Use higher prices to recoup differentiation costs
Advantages of Differentiation
Command premium prices for the firm’s products
Increased unit sales due to attractive differentiation
Brand loyalty that bonds buyers to the differentiating features
of the firm’s products
Differentiation enhances profitability whenever a company’s
product can command a sufficiently higher price or produce
sufficiently greater unit sales to more than cover the added
costs of achieving the differentiation.
Core Concepts (4 of 5)
The essence of a broad differentiation strategy is to offer unique
product attributes that a wide range of buyers find appealing
and worth paying for.
A uniqueness driver is a factor that can have a strong
differentiating effect.

COST-EFFICIENT MANAGEMENT OF VALUE CHAIN
ACTIVITIES
A uniqueness driver can
Have a strong differentiating effect
Be based on physical as well as functional attributes of a firm’s
products
Be the result of superior performance capabilities of the firm’s
human capital
Have an effect on more than one of the firm’s value chain
activities
Create a perception of value (brand loyalty) in buyers where
there is little reason for it to exist
FIGURE 5.3 Value Drivers: The Keys to Creating a
Differentiation Advantage
MANAGING THE VALUE CHAIN TO CREATE THE
DIFFERENTIATING ATTRIBUTES
Create product features and performance attributes that appeal
to a wide range of buyers.
Improve customer service or add extra services.
Invest in production-related R&D activities.
Strive for innovation and technological advances.
Pursue continuous quality improvement.
Increase marketing and brand-building activities.

Seek out high-quality inputs.
Emphasize human resource management activities that improve
the skills, expertise, and knowledge of company personnel.
REVAMPING THE VALUE CHAIN SYSTEM TO INCREASE
DIFFERENTIATION
Coordinating with suppliers
to better address customer needs
Coordinating with channel
allies to enhance customer perceptions of value
Approaches
to enhancing differentiation through changes in the value chain
system
DELIVERING SUPERIOR VALUE VIA A BROAD
DIFFERENTIATION STRATEGYBroad Differentiation:
Offering Customers Something That Rivals Cannot1.Incorporate
product attributes and user features that lower the buyer’s
overall costs of using the firm’s product2.Incorporate tangible
features (e.g., styling) that increase customer satisfaction with
the product3.Incorporate intangible features (e.g., buyer image)
that enhance buyer satisfaction in noneconomic ways4.Signal
the value of the firm’s product offering to buyers (e.g., price,
packaging, placement, advertising)

DIFFERENTIATION: SIGNALING VALUE
Signaling value is important when:
The nature of differentiation is based on intangible features and
is therefore subjective or hard to quantify by the buyer.
Buyers are making a first-time purchase and are unsure what
their experience will be with the product.
Product or service repurchase by buyers is infrequent.
Buyers are unsophisticated.
STRATEGIC MANAGEMENT PRINCIPLES (6 of 7)
Differentiation can be based on tangible or intangible attributes.
Easy-to-copy differentiating features cannot produce a
sustainable competitive advantage.
Any differentiating feature that works well is a magnet for
imitators.
Overdifferentiating and overcharging are fatal strategy
mistakes.
SUCCESSFUL APPROACHES TO SUSTAINABLE
DIFFERENTIATION
Differentiation that is difficult for rivals to duplicate or imitate
Company reputation
Long-standing relationships with buyers
A unique product or service image
Differentiation that creates substantial switching costs that lock
in buyers
Patent-protected product innovation
Relationship-based customer service
WHEN A DIFFERENTIATION STRATEGY WORKS BEST

Buyer needs
and uses for
the product are diverse.
There are many ways that differentiation
can have value
to buyers.
Few rival firms are following
a similar differentiation approach
There is rapid change in the product’s technology and features
Market Circumstances
Favoring Differentiation
PITFALLS TO AVOID IN PURSUING A DIFFERENTIATION
STRATEGY
Relying on product attributes easily copied by rivals
Introducing product attributes that do not evoke an enthusiastic
buyer response
Eroding profitability by overspending on efforts to differentiate
the firm’s product offering
Offering only trivial improvements in quality, service, or
performance features vis-à-vis the products of rivals
Over-differentiating the product quality, features, or service
levels exceeds the needs of most buyers
Charging too high a price premium
FOCUSED (OR MARKET NICHE) STRATEGIES
Focused Market Niche Strategy

Focused
Low-Cost
Strategy
Focused Strategy
Approaches
Clinícas del Azúcar’s Focused Low-Cost Strategy
Which uniqueness drivers are responsible for the success of
Clinícas del Azúcar?
Which competitive conditions would mitigate against successful
entry of the Clinícas del Azúcar into the U.S. diabetes care
market?
What part do customer expectations about patient-doctor
relationships play in the delivery of health care in the U.S.?
WHEN A FOCUSED LOW-COST OR FOCUSED
DIFFERENTIATION STRATEGY IS ATTRACTIVE
The target market niche is big enough to be profitable and
offers good growth potential.
Industry leaders chose not to compete in the niche; focusers
avoid competing against strong competitors.
It is costly or difficult for multi-segment competitors to meet
the specialized needs of niche buyers.
The industry has many different niches and segments.
Rivals have little or no entry interest in the target segment.

THE RISKS OF A FOCUSED LOW-COST OR FOCUSED
DIFFERENTIATION STRATEGY
Competitors will find ways to match the focused firm’s
capabilities in serving the target niche.
The specialized preferences and needs of niche members shift
over time toward the product attributes desired by the majority
of buyers.
As attractiveness of the segment increases, it draws in more
competitors, intensifying rivalry and splintering segment
profits.
Canada Goose’s Focused Differentiation Strategy
Which decisions did CEO Dani Reiss make that launched
Canada Goods on its chosen strategic path?
Which uniqueness drivers are responsible for the success of
Canada Goose?
Which of Canada Goose’s uniqueness drivers are competitors
likely to attempt to copy first?
BEST-COST PROVIDER STRATEGIES
Value-Conscious Buyer
Best-Cost Provider
Hybrid Approach
Differentiation:
Providing desired quality, features, performance,
service attributes

Low Cost Provider:
Charging a lower price
than rivals with similar
caliber product offerings
Best-cost provider strategies are a hybrid of low-cost provider
and differentiation strategies that aim at providing more
desirable attributes (quality, features, performance, service)
while beating rivals on price.
WHEN A BEST-COST PROVIDER STRATEGY WORKS BEST
Product differentiation is the market norm.
There are a large number of value-conscious buyers who prefer
mid-range products.
There is competitive space near the middle of the market for a
competitor with either a medium-quality product at a below-
average price or a high-quality product at an average or slightly
higher price.
Economic conditions have caused more buyers to become value-
conscious.
THE RISK OF A BEST-COST PROVIDER STRATEGY—
GETTING SQUEEZED ON BOTH SIDES
High-End

Differentiators
Low-Cost
Providers
Best-Cost
Provider
Strategy
American Giant’s Best-Cost
Provider Strategy
How can product quality lower product costs?
In which stages of an industry life cycle are low-cost
leadership, differentiation, focused niche, and best-cost
provider strategies most appropriate?
Could the higher-selling prices of American Giant’s clothing
versus its competitors be used as a proxy for measuring the
strength of its best-cost strategy?
THE CONTRASTING FEATURES OF THE FIVE GENERIC
COMPETITIVE STRATEGIES:
A SUMMARY
Each generic strategy:
Positions the firm differently in its market
Establishes a central theme for how the firm intends to
outcompete rivals
Creates boundaries or guidelines for strategic change as market
circumstances unfold

Entails different ways and means of maintaining the basic
strategy
Table 5.1 Distinguishing Features of the Five Generic
Competitive Strategies (1 of 2)Low-Cost ProviderBroad
DifferentiationFocused low-cost providerFocused
differentiationBest-Cost ProviderStrategic targetA broad cross-
section of the marketA broad cross-section of the marketA
narrow market niche where buyer needs and preferences are
distinctively differentA narrow market niche where buyer needs
and preferences are distinctively differentValue-conscious
buyers. Or, a middle-market rangeBasis of competitive
strategyLower overall costs than competitorsAbility to offer
buyers something attractively different from competitors’
offeringsLower overall cost than rivals in serving niche
membersAttributes that appeal specifically to niche
membersAbility to offer better goods at attractive pricesProduct
lineA good basic product with few frills (acceptable quality and
limited selection)Many product variations, wide selection,
emphasis on differentiating featuresFeatures and attributes
tailored to the tastes and requirements of niche
membersFeatures and attributes tailored to the tastes and
requirements of niche membersItems with appealing attributes
and assorted features; better quality, not bestProduction
emphasisA continuous search for cost reduction without
sacrificing acceptable quality and essential featuresBuild in
whatever differentiating features buyers are willing to pay for;
strive for product superiorityA continuous search for cost
reduction for products that meet basic needs of niche
membersSmall-scale production or custom-made products that
match the tastes and requirements of niche membersBuild in
appealing features and better quality at lower cost than rivals

Table 5.1 Distinguishing Features of the Five Generic
Competitive Strategies (2 of 2)Low-Cost ProviderBroad
DifferentiationFocused low-cost providerFocused
differentiationBest-Cost ProviderMarketing emphasisLow
prices, good value
Also, try to make a virtue out of product features that lead to
low costTout differentiating features.
Also, charge a premium price to cover the extra costs of
differentiating featuresCommunicate attractive features of a
budget-priced product offering that fits niche buyers’
expectationsCommunicate how product offering does the best
job of meeting niche buyers’ expectationsEmphasize delivery of
best value for the moneyKeys to maintaining the
strategyEconomical prices, good value
Also, strive to manage costs down, year after year, in every area
of the businessStress constant innovation to stay ahead of
imitative competitors
Also, concentrate on a few key differentiating features.Stay
committed to serving the niche at the lowest overall cost; don’t
blur the firm’s image by entering other market segments or
adding other products to widen market appealStay committed to
serving the niche better than rivals; don’t blur the firm’s image
by entering other market segments or adding other products to
widen market appeal.Unique expertise in simultaneously
managing costs down while incorporating upscale features and
attributesResources and capabilities requiredCapabilities for
driving costs out of the value chain syste.
Examples: large-scale automated plants, an efficiency-oriented
culture, bargaining powerCapabilities concerning quality,
design, intangibles, and innovation Examples: marketing
capabilities, R&D teams, technologyCapabilities to lower costs

on niche goods Examples: Lower input costs for the specific
product desired by the niche, batch production
capabilitiesCapabilities to meet the highly specific needs of
niche members
Examples: custom production, close customer
relations.Capabilities to simultaneously deliver lower cost and
higher-quality or differentiated feature
Examples: TQM practices, mass customization
SUCCESSFUL COMPETITIVE STRATEGIES ARE
RESOURCE-BASED
A firm’s competitive strategy is most likely to succeed if it is
predicated on leveraging a competitively valuable collection of
resources and capabilities that match the strategy.
Sustaining a firm’s competitive advantage depends on its
resources, capabilities, and competences that are difficult for
rivals to duplicate and have no good substitutes.
A company’s competitive strategy should be well-matched to its
internal situation and predicated on leveraging its collection of
competitively valuable resources and capabilities.
Appendix 1 Why Do Strategies Differ?
Two key factors that distinguish one strategy from another
Is the firm's market target broad or narrow?

Is the competitive advantage pursued linked to low costs or
product differentiation?
Return to slide
Appendix 2 Figure 5.1 The Five Generic Competitive Strategies
The illustration lists two types of competitive advantages being
pursued: lower cost and differentiation. It also lists two market
targets: a broad cross-section of buyers, and a narrow buyer
segment (or market niche). The combination of these types
creates the five generic strategies:
Overall low-cost provider strategy (lower cost or a broad cross-
section of buyers)
Focused low-cost strategy (lower cost or a narrow buyer
segment)
Broad differentiation strategy (differentiation or a broad cross-
section of buyers)
Focused differentiation strategy (differentiation or a narrow
buyer segment)
Best-Cost Provider strategy (an equal balance of competitive
advantages and market targets)
Return to slide
Appendix 3 Figure 5.2 Cost Drivers: The Keys to Driving Down
Company Costs
The cost drivers listed are:
Incentive systems and culture; economies of scale; learning and
experience; capacity utilization; supply chain efficiencies; input
costs; production technology and design; communication
systems and information technology; bargaining power; and
outsourcing or vertical integration.
Return to slide

Appendix 4 Figure 5.3 Value Drivers: The Keys to Creating a
Differentiation Advantage
The value drivers listed are: quality control processes; product
features and performance; customer services; production R&D;
technology and innovation; input quality; employee skill,
training, experience; and sales and marketing.
Return to slide
Appendix 5 Revamping the Value Chain System to Increase
Differentiation
The two approaches to enhancing differentiation through
changes in the value chain system are:
Coordinating with channel allies to enhance customer
perceptions of value
Coordinating with suppliers to better address customer needs
Return to slide
Appendix 6 When a Differentiation Strategy Works Best
The four market circumstances that favor differentiation are:
Diversity of buyer needs and uses for the product
Many ways that differentiation can have value to buyers
Few rival firms follow a similar differentiation approach
Rapid change in technology and product features
Return to slide
Appendix 7 Best-Cost Provider Strategies
A combination of differentiation (providing desired quality,
features, performance, service attributes) and low-cost provider

(charging a lower price than rivals with similar caliber product
offerings) leads to the best-cost provider hybrid approach,
which connects with the value-conscious buyer.
Return to slide
NURS 6002: Foundations of Graduate Study
Academic and Professional Success Plan
Prepared by:
Semiloore Akerele
This document is to be used for NURS 6002 Foundations of
Graduate Study to complete Assessments 1-6. Just as
importantly the document serves to organize your thoughts
about planning for your academic and professional success.
For specific instructions see the weekly assessment details in
the course, or ask your instructor for further guidance.
Week 1 | Part 1: My Academic and Professional Network
I have identified and secured the participation of the following
academic (at least two) and professional (at least two)
individuals and/or teams to form the basis of my network. This
network will help me to clarify my vision for success and will
help guide me now and in the future.
Directions: Complete the information below for each member of

your network. For more than four entries repeat the items below
with details of your additional network member(s) in the
‘ADDITIONAL NETWORK MEMBERS’ section.
NETWORK MEMBER 1
Name: Laurie Jenig BSN
Title: Nursing Manager
Organization: Aurora Behavioral Health
Academic or Professional: Professional
Why I selected this individual and/or team and how they will
support my success in the MSN program and as a practicing
nurse:
I selected this individual because of her leadership school.
Despite the pressure at her workplace she is well coordinated
and will never transfer aggression to her staff. She is a good
listener and was resourceful to me during my BSN. She thinks
carefully and she has the ability to bounce idea back and forth
with me
NETWORK MEMBER 2
Name: Bukola Adeyemi

Title: PMH-NP
Organization: Aurora Behavioral Health
Academic or Professional: Professional
nurse:
Notes: I choose Bukola because she has been working with this
organization for eight years. She started as a floor nurse in this
organization, became a charge nurse and went back to school to
be Psychiatry nurse practitioner. She gave me the push I need to
go back to school. She brought some textbooks she used when
she did hers. She is well experienced in psychiatry nursing.
NETWORK MEMBER 3
Name: Silfa Jones
Title: RN, BSN
Organization: Thorek Memorial Hospital
Academic or Professional: Academics

nurse:
Notes: I choose her because we were study mate for BSN. She
currently in Walden too for psychiatry nursing. We both
attended meeting and seminars that benefitted our career the
time. She is like a push to me and it makes all easy because I
can get a physical person discuss my classes with.
NETWORK MEMBER 4
Name: Melisa P MSN
Title: charge Nurse
Organization: Thorek Memorial Hospital
Academic or Professional: Academic
nurse:
Notes: I choose Melissa because she is a resourceful person.
She had her Bachelors in psychology and the did her masters
in Nursing. Apart from being a floor Nurse she just published
her first articles in one of the local nursing Journal in Illinois.

She is currently seeking for more information on what food will
benefit schizophrenic patients. She is constantly in search of
new knowledge.
ADDITIONAL NETWORK MEMBERS
Week 2 | Part 2: Academic Resources and Strategies
I have identified the following academic resources and/or
strategies that can be applied to success in the nursing practice
in general or my specialty in particular.
Directions: In the space below Identify and describe at least
three academic resources or strategies that can be applied to the
MSN program, and at least threeprofessional resources that can
be applied to success in the nursing practice in general or your
specialty in particular. For each, explain how you intend to use
these resources, and how they might benefit you academically
and professionally.
Academic Resource/Strategy 1
Internet – The Internet is an incredible method to conduct
investigations for an essential and auxiliary purpose. Since the
arrangement of reference books are presently accessible on the
web as opposed to printed frames; I currently manage
everything on the internet. Pretty much everything is available
on the web a large portion of them are accessible in a free
source. I plan on using this insightful resource without
confinements of my ability since the internet supports types of
learning creation and information utilization that vary
enormously from the epistemological assumptions of formal
tutoring and mass guidance.

Tutoring and Help Rooms – I append myself to qualified and
prepared peer tutors who will help me with mastering my course
content and growing my potential for academic accomplishment.
At the point when joined with customary participation of classes
and recitations, visits to educators' available time, utilization of
departmental Help Rooms and development of peer study
groups, mentoring serves as a proactive advance for
guaranteeing that I scholastically succeed (Bradshaw &
Hultquist, 2016). My technique is to search for my an academic
director who will help me in recognizing different grounds
assets that may be of help as I create study abilities and great
work propensities, including Stress-busters.
Local Library – The use of my local library offers a full scope
of assets and services to help all parts of my studies. Librarians
will enable me to locate the best print and electronic assets and
show me how to utilize bibliographic software just as different
instruments that will allow me to design and manage data. My
procedure will be straightforward since more often than not I go
to classes, I will visit the library around evening time when I
am finished with my classes.
Professional Resource/Strategy 1
ANA (American Nurses Association) – My plans for joining the
association would enable me to finish the hover between
clinical practice and the outside elements that impact nursing.
Joining this association can too benefit me to increase clinical
abilities and furthermore improve both my expert network and
future profession prospects. There are such a substantial number
of devices and resources for orderlies that I trust I will probably
exploit as i advance in this field.

National Federation for Specialty Nursing Organizations
(NFSNO) – This will enable me to create the vitality, stream of
thoughts, and proactive work expected to keep up a sound
calling that advocates for the necessities of its clients and
medical attendants, and the trust of society (Sayles & Shelton,
2005).
ICN (The International Council of Nurses) - I plan to
adequately look into the International Council of Nurses since
ICN attempts to guarantee quality nursing care for all, stable
wellbeing arrangements all-inclusive, the progression of nursing
information, and the presence worldwide of a regarded nursing
profession and a skilled and fulfilled nursing workforce. The
association will enable me to create a consolidated stage for the
definition and extent of training in my field.
ADDITIONAL RESOURCES/STRATEGIES
Week 3 | Part 3: Strategies to Promote Academic Integrity and
Professional Ethics
I have analyzed the relationship between academic integrity and
writing, as well as the relationship between professional
practices and scholarly ethics. I have also identified strategies I
intend to pursue to maintain integrity and ethics of my academic
work while a student of the MSN program, as well as my
professional work as a nurse throughout my career. The results
of these efforts are shared below.
Directions: In the space below craft your analysis/writing
sample, including Part 1 (The Connection Between Academic

and Professional Integrity) and Part 2 (Strategies for
Maintaining Integrity of Work).
Part 1: Writing Sample: The Connection Between Academic and
Professional Integrity
In the space below write a 2- 3-paragraph analysis that includes
the following:
· Explanation for the relationship between academic integrity
and writing
· Explanation for the relationship between professional
practices and scholarly ethics
· Cite at least 2 resources that support your arguments, being
sure to use proper APA formatting.
· Use Grammarly and SafeAssign to improve the product.
· Explain how Grammarly, Safe Assign, and paraphrasing
contributes to academic integrity
Academic integrity is defined as the frequencies of being honest
and it is being displayed in all academic aspects. Violation of
academic integrity makes it hard for students to access suitable
knowledge which is important in having a successful academic
outcome. The most common factors associated with academic
dishonesty are related to issues such as plagiarism and academic
forgery. Plagiarism and academic forgery are considered to be
unethical in the academic environment. In a nursing career,
there is a connection between academic integrity and writing. In
academic ethics, any person is capable of displaying moral
ethics on the written work through recognizing the work of
other scholars. Integrity is considered to be the most important
aspect of writing since it is demonstrating some important
aspects of academic intellectuality (Cock, 2016). For the
purposes of ensuring that there is academic integrity while
writing a project or essay, it is always important to avoid

involvement in plagiarism to help in the presentation of
authentic and original work. When the work of other scholars is
used, it is crucial to acknowledge them through referencing.
The relationship between professional practices and scholarly
ethics
In nursing practices, it is always important to adopt the
practice of embracing scholarly ethics to ensure that there is
involvement in honesty practices. In nursing practice, ethical
standards are high values and are considered to be the moral
integrity which forms an important element towards delivering
quality healthcare services to the patients (Milton, 2015).
Evidence-based practice is important in ensuring that there is a
professional practice within the field of nursing practice and it
is usually based on the scholarly articles.it is, therefore, a
requirement that nurses put more focus on the scholarly articles
which are easily referable. A constructive link between
professionalism and the academic ethics is helping in the
creation of ethical workplace for nurses hence assisting in the
development of trust from the patients to ensure that there is a
delivery of quality care to the clients. There is also the
existence of the code of ethics which guides nursing practices
and are based on the scholarly articles written by specific
authors or organizations. It is, therefore, a requirement for
nurses to observe the code of ethics to help in improving the
quality of care being provided to the patients.
How Grammarly, safe assign and paraphrasing are contributing
to the academic integrity
Grammarly, safe assign and paraphrasing are playing an
essential role in enhancing the ability of the students.
Grammarly allows students to proofread the grammatical errors,
spelling check, and punctuation. It is also possible to check on
plagiarism which also provides the chances of making a
correction to the mistakes made and citing appropriate sources.
Correspondingly, Safe Assign and Turnitin are applications
which have been developed to help in the detection of
plagiarism. These applications are important in helping the

students or writers to gather more knowledge regarding the
appropriate methods of using academic resources and methods
of citing them during writing (Milton, 2015).
PART 2: Strategies for Maintaining Integrity of Work
Expand on your thoughts from Part 1 by:
Identifying and describing strategies you intend to pursue to
maintain integrity and ethics of your 1) academic work while a
student of the MSN program, and 2) professional work as a
nurse throughout your career. Include a review of resources and
approaches you propose to use as a student and a professional.
Based on my academic work, I have the intention of upholding
academic integrity by practicing suitable paraphrasing while
writing as well as citing scholarly articles. Grammarly will be
continuously used to ensure that the standards of the grammar
are met. I am also aiming at making a continuous consultation
with my instructor for guidance more so in the areas where I
feel to be not well conversant with. The assigned academic
work will be submitted on a timely basis and will observe time
to make sure that I sit in an area which is safe and appropriate

which might help in reducing the chances of looking at the
answers of the fellow student. Private properties such as cell
phones and bags will be placed far from the exam room to avoid
any temptation of cheating. The safe assign and Turnitin app
will be relied on to help in correcting the plagiarism issues and
making correction prior to the submission of my work. Being a
nurse, I will deeply rely on evidence-based care as well as the
standard code of ethics to help in the delivery of quality
healthcare services. I will always be honest, show empathy, and
trustworthy to the patients.
Week 4 | Part 4: Research Analysis

I have identified one topic of interest for further study. I have
researched and identified one peer-reviewed research article
focused on this topic and have analyzed this article. The results
of these efforts are shared below.
Directions: Complete Step 1 by using the table and subsequent
space below identify and analyze the research article you have
selected. Complete Step 2 by summarizing in 2-3 paragraphs the
results of your analysis using the space identified.
Step 1: Research Analysis
The scholarly article which is peer-reviewed which I selected is
“Associations of age at cannabis first use and later substance
abuse with mental health and depression in young men.”
The authors associated between age at cannabis first use and the
recurrence of cannabis usage utilizing a “Cox proportional
hazard technique.” Relationship with other unlawful medication
use, liquor reliance, nicotine reliance, psychological well-being,
and depression was examined utilizing direct relapses and
logistics relapses. In this manner, the expert practice utilization
of the speculations/ideas displayed in the article is the Cox
proportional hazard show that they explored the relationship
between the survival time of participants and at least one
indicator factors.
Complete the table below
Topic of Interest:
Associations of age at cannabis first use and later substance
abuse with mental health and depression in young men
Research Article:Include full citation in APA format, as well as
link or search details (such as DOI)

Henchoz, Y., N’Goran, A. A., Baggio, S., Deline, S., Studer, J.,
& Gmel, G. (2016). Associations of age at cannabis first use
and later substance abuse with mental health and depression in
young men. Journal of Substance Use, 21(1), 85-91.Retrieved
from:
https://www.tandfonline.com/doi/ref/10.3109/14659891.2014.96
6342?scroll=top
Professional Practice Use:
One or more professional practice uses of the theories/concepts
presented in the article
To investigates the association between a dependent variable
and one or more predictor variables simultaneously. In this
case, to associate between age at cannabis first use and the
recurrence of cannabis usage in young men as well with other
substances use like alcohol and cocaine.
Research Analysis Matrix
Add more rows if necessary
Strengths of the Research
Limitations of the Research
Relevancy to Topic of Interest
Notes
The research used Cox proportional hazard model to associate
mental health and depression with cannabis misuse
Failure to collect valid report from psychosocial impaired
substance abusers
early cannabis onset is associated with later impairments in
mental health and depression
Findings suggest that a significant association exists between
depression and the use of alcohol, cannabis, and tobacco.

Step 2: Summary of Analysis
Craft a summary (2-3 paragraph) below that includes the
following:
· Describe your approach to identifying and analyzing peer-
reviewed research
· Identify at least two strategies that you would use that you
found to be effective in finding peer-reviewed research
· Identify at least one resource you intend to use in the future to
find peer-reviewed research
I would recommend this article for professional use because it
is peer reviewed since it is bound to be accurately consistent
and achieve sensible outcomes.
To find peer-reviewed sources I previously checked my library
database. The library database had a choice to refine my search
and show just insightful articles. Two methodologies I would
use to look for a peer-reviewed article are "phrase search" – this
is the use of double statements around an expression to cut the
words together for example "sustainable advancement."
Truncation – cutting a word and finds the substitute endings of
the word, for example, create* finds create, creates, creative, or

creating.
One resource I expect to use later on to discover peer-reviewed
study is peer-reviewed journals because these articles are
composed by professionals and are audited by a few different
experts in the field before the report is distributed in the journal
to guarantee the article's quality.
Reference
Henchoz, Y., N’Goran, A. A., Baggio, S., Deline, S., Studer, J.,
& Gmel, G. (2016). Associations of age at cannabis first use
and later substance abuse with mental health and depression in
young men. Journal of Substance Use, 21(1), 85-91.Retrieved
from:
https://www.tandfonline.com/doi/ref/10.3109/14659891.2014.96
6342?scroll=top
Week 5 | Part 5: Professional Development
I have developed a curriculum vitae to capture my academic and
professional accomplishments to date. I have also developed a
statement identifying one or more professional development
goals, and a statement proposing how I might align one or more
of these professional development goals with the University’s
emphasis on social change.
The results of my efforts are below.
Directions: Complete Step 1 by developing (or copying and
pasting) a curriculum vitae (CV) in the space provided.
Complete Step 2 by completing a statement identifying your
professional development goals space identified. Complete Step

3 by writing a statement proposing how you might align one or
more of your professional development goals with the
University’s emphasis on social change.
Step 1: Curriculum Vitae (CV)
Use the space below to write your CV based on your current
education and professional background. Alternatively, you may
write this in a separate document and copy/paste the results
below.
NOTE: If needed there are a variety of online resources
available with tips and samples of graduate nurse CVs.
Step 2: Professional Development Goals
Use the space below to write a statement identifying your
professional development goals.
Step 3: Alignment with Social Change
Use the space below to write a statement proposing how you
might align one or more of your professional development goals
with the University’s emphasis on social change.
Week 6 | Part 6: Finalizing the Plan
I have considered various options for my nursing specialty,
including a close look at my selected (or currently preferred)
specialty and second-preferred specialty. I have also developed
a justification of my selected (or preferred) specialty. Lastly, I

have examined one professional organization related to my
selected or preferred specialty and considered how I can become
a member of this organization.
The results of my efforts are below.
Directions: Complete Step 1 by writing 2-3 paragraphs in the
space below comparing the nursing specialty you have selected
– or the one you prefer if your choice is still under
consideration - to your second preference. Identify each
specialty and describe the focus and the role that graduates are
prepared for. Identify any other differentiators you feel are
significant, especially those that helped or may help you reach a
decision.
Complete Step 2 by writing a paragraph identifying and
justifying your reasons for choosing your MSN specialization.
Be sure to incorporate any feedback you received from
colleagues in this week’s Discussion Forum.
Complete Step 3 by examining and identifying one professional
organization related to your selected or preferred specialty.
Explain how you can become a member of this organization.
Step 1: Comparison of Nursing Specialties
Use the space below to write 2-3 paragraphs comparing the
nursing specialty you have selected – or the one you prefer if
your choice is still under consideration - to your second
preference. Identify each specialty and describe the focus and
the role that graduates are prepared for. Identify any other
differentiators you feel are significant, especially those that
helped or may help you reach a decision.
Step 2: Justification of Nursing Specialty
Use the space below to write a paragraph identifying and

justifying your reasons for choosing your MSN specialization.
Be sure to incorporate any feedback you received from
colleagues in this week’s Discussion Forum.
Step 3: Professional Organizations
Use the space below to identify and examine one professional
organization related to your selected or preferred specialty.
Explain how you can become a member of this organization.
- END -
CHAPTER 6 Strengthening a Company’s Competitive Position:
Strategic Moves, Timing, and Scope of Operations
LEARNING OBJECTIVES

THIS CHAPTER WILL HELP YOU UNDERSTAND:
Whether and when to pursue offensive or defensive strategic
moves to improve a firm’s market position
When being a first mover or a fast follower or a late mover is
most advantageous
The strategic benefits and risks of expanding a firm’s horizontal
scope through mergers and acquisitions
The advantages and disadvantages of extending the company’s
scope of operations via vertical integration
The conditions that favor outsourcing certain value chain
activities to outside parties
When and how strategic alliances can substitute for horizontal
mergers and acquisitions or vertical integration and how they
can facilitate outsourcing
MAXIMIZING THE POWER OF A STRATEGY
Offensive and defensive
competitive
actions
Competitive
dynamics and the timing of strategic moves
Scope of
operations along
the industry’s
value chain
Making choices that complement
a competitive approach and
maximize the power of strategy

CONSIDERING STRATEGY-ENHANCING MEASURES
Whether and when to go on the offensive strategically
Whether and when to employ defensive strategies
When to undertake strategic moves—first mover,
a fast follower, or a late mover
Whether to merge with or acquire another firm
Whether to integrate backward or forward into more stages of
the industry’s activity chain
Which value chain activities, if any, should be outsourced
Whether to enter into strategic alliances or partnership
arrangements
LAUNCHING STRATEGIC OFFENSIVES TO IMPROVE A
COMPANY’S MARKET POSITION
Strategic offensive principles
Focusing relentlessly on building competitive advantage and
then striving to convert it into sustainable advantage
Applying resources where rivals are least able to defend
themselves
Employing the element of surprise as opposed to doing what
rivals expect and are prepared for
Displaying a capacity for swift, decisive, and overwhelming
actions to overpower rivals
Sometimes a company’s best strategic option is to seize the
initiative, go on the attack, and launch a strategic offensive to
improve its market position.

CHOOSING THE BASIS FOR COMPETITIVE ATTACK
Avoid directly challenging a targeted competitor where it is
strongest.
Use the firm’s strongest strategic assets to attack a competitor’s
weaknesses.
The offensive may not yield immediate results
if market rivals are strong competitors.
Be prepared for the threatened competitor’s counter-response.
The best offensives use a company’s most powerful resources
and capabilities to attack rivals in the areas where they are
competitively weakest.
PRINCIPAL OFFENSIVE STRATEGY OPTIONS
Offering an equally good or better product at a lower price
Leapfrogging competitors by being first to market with next-
generation products
Pursuing continuous product innovation to draw sales and
market share away from less innovative rivals
Pursuing disruptive product innovations to create new markets
Adopting and improving on the good ideas of other companies
(rivals or otherwise)
Using hit-and-run or guerrilla marketing tactics to grab market
share from complacent or distracted rivals
Launching a preemptive strike to secure an industry’s limited
resources or capture a rare opportunity

CHOOSING WHICH RIVALS TO ATTACK
Market leaders
that are in
vulnerable competitive positions
Runner-up firms with weaknesses
in areas where
the challenger
is strong
Struggling enterprises on
the verge of
going under
Small local
and regional
firms with limited capabilities
Best Targets for
Offensive Attacks
BLUE-OCEAN STRATEGY—A SPECIAL KIND OF
OFFENSIVE
The business universe is divided into:
An existing market with boundaries and rules in which rival
firms compete for advantage
A “blue ocean” market space, where the industry has not yet
taken shape, with no rivals and wide-open long-term growth and
profit potential for a firm that can create demand for new types
of products

A blue-ocean strategy offers growth in revenues and profits by
discovering or inventing new industry segments that create
altogether new demand.
Bonobos’s Blue-Ocean Strategy in the U.S. Men’s Fashion
Retail Industry
Given the rapidity with which most first-mover advantages
based on Internet technologies can be overcome by competitors,
what has Bonobos done to retain its competitive advantage?
Is Bonobos’s unique focused-differentiation entry into brick-
and-mortar retailing a sufficiently strong strategic move?
What would you predict is the likelihood of long-term success
for Bonobos in the retail clothing sector?
DEFENSIVE STRATEGIES—PROTECTING MARKET
POSITION AND COMPETITIVE ADVANTAGE
Purposes of
Defensive Strategies
Lower the firm’s
risk of being attacked
Weaken the impact
of an attack
that does occur
Influence challengers to aim their efforts

at other rivals
FORMS OF DEFENSIVE STRATEGIES
Defensive strategies can take either of two forms
Actions to block challengers
Actions to signal the likelihood of strong retaliation
Good defensive strategies can help protect a competitive
advantage but rarely are the basis for creating one.
There are many ways to throw obstacles in the path of would-be
challengers.
BLOCKING THE AVENUES OPEN TO CHALLENGERS
Introduce new features and models to broaden product lines to
close off gaps and vacant niches.
Maintain economy-pricing to thwart lower price attacks.
Discourage buyers from trying competitors’ brands.
Make early announcements about new products or price changes
to induce buyers to postpone switching.
Offer support and special inducements to current customers to
reduce the attractiveness of switching.
Challenge quality and safety of competitor’s products.

Grant discounts or better terms to intermediaries who handle the
firm’s product line exclusively.
SIGNALING CHALLENGERS THAT RETALIATION IS
LIKELY
Signaling is an effective defensive strategy when the firm
follows through by:
Publicly announcing its commitment to maintaining the firm’s
present market share
Publicly committing to a policy of matching competitors’ terms
or prices
Maintaining a war chest of cash and marketable securities
Making a strong counter-response to the moves of weaker rivals
to enhance its tough defender image
To be an effective defensive strategy, signaling needs to be
accompanied by a credible commitment to follow through.
Because of first-mover advantages and disadvantages,
competitive advantage can spring from when a move is made as
well as from what move is made.

TIMING A FIRM’S OFFENSIVE AND DEFENSIVE
STRATEGIC MOVES
Timing’s importance:
Knowing when to make a strategic move is as crucial as
knowing what move to make.
Moving first is no guarantee of success or competitive
advantage.
The risks of moving first to stake out a monopoly position
versus being a fast follower or even a late mover must be
carefully weighed.
CONDITIONS THAT LEAD TO FIRST-MOVER
ADVANTAGES
When pioneering helps build a firm’s reputation and creates
strong brand loyalty
When a first mover’s customers will thereafter face significant
switching costs
When property rights protections thwart rapid imitation of the
initial move
When an early lead enables movement down the learning curve
ahead of rivals
When a first mover can set the technical standard for the
industry
Uber’s First-Mover Advantage in Mobile
Ride-Hailing Services
Which first-mover advantages contributed to Uber’s domination
of the on-demand transportation markets in its chosen cities?

What first-mover advantages will Uber not have in entering
overseas markets?
How could Uber extend its success into smaller and less urban
markets as user growth in the larger urban markets peaks?
THE POTENTIAL FOR LATE-MOVER ADVANTAGES OR
FIRST-MOVER DISADVANTAGES
When pioneering is more costly than imitating and offers
negligible experience or learning-curve benefits
When the products of an innovator are somewhat primitive and
do not live up to buyer expectations
When rapid market evolution allows fast followers to leapfrog a
first mover’s products with more attractive next-version
products
When market uncertainties make it difficult to ascertain what
will eventually succeed
When customer loyalty is low and first mover’s skills, know-
how, and actions are easily copied or surpassed
TO BE A FIRST MOVER OR NOT
Does market takeoff depend on complementary products or
services that currently are not available?
Is new infrastructure required before buyer demand can surge?
Will buyers need to learn new skills or adopt new behaviors?
Will buyers encounter high switching costs in moving to the
newly introduced product or service?
Are there influential competitors in a position to delay or derail
the efforts of a first mover?

STRENGTHENING A FIRM’S MARKET POSITION VIA ITS
SCOPE OF OPERATIONS
Range of its
activities
performed
internally
Breadth of its
product and
service offerings
Extent of its geographic
market
presence and
its mix of
businesses
Size of its competitive footprint on
its market
or industry
Defining the Scope of
the Firm’s Operations
The scope of the firm refers to the range of activities that the
firm performs internally, the breadth of its product and service
offerings, the extent of its geographic market presence, and its
mix of businesses.
Scope issues are at the very heart of corporate-level strategy.

Horizontal scope is the range of product and service segments
that a firm serves within its focal market.
Vertical scope is the extent to which a firm’s internal activities
encompass one, some, many, or all of the activities that make
up an industry’s entire value chain system, ranging from raw-
material production to final sales and service activities.
HORIZONTAL MERGER AND ACQUISITION STRATEGIES
Merger:
Is the combining of two or more firms into a single corporate
entity that often takes on a new name
Acquisition:
Is a combination in which one firm, the "acquirer," purchases
and absorbs the operations of another firm, the "acquired"
STRATEGIC OJECTIVES FOR HORIZONTAL MERGERS
AND ACQUISITIONS
Creating a more cost-efficient operation out
of the combined companies
Expanding the firm’s geographic coverage
Extending the firm’s business into new product categories
Gaining quick access to new technologies or other resources and
capabilities
Leading the convergence of industries whose boundaries are
being blurred by changing technologies and new market
opportunities

BENEFITS OF INCREASING HORIZONTAL SCOPE
Increasing a firm’s horizontal scope strengthens its business and
increases its profitability by:
Improving the efficiency of its operations
Heightening its product differentiation
Reducing market rivalry
Increasing the firm’s bargaining power over
suppliers and buyers
Enhancing its flexibility and dynamic capabilities
Bristol-Myers Squibb’s “String-of-Pearls”
Horizontal Acquisition Strategy
Which strategic outcomes did Bristol-Myers Squibb pursue
through its “string-of-pearls” acquisition strategy?
Why did Bristol-Myers Squibb choose to pursue an acquisition
strategy that was different from its industry competitors?
How did increasing the horizontal scope of Bristol-Myers
Squibb through acquisitions strengthen its competitive position
and profitability?
WHY MERGERS AND ACQUISITIONS SOMETIMES FAIL
TO PRODUCE ANTICIPATED RESULTS
Strategic issues

Cost savings may prove smaller than expected.
Gains in competitive capabilities take longer to realize or never
materialize at all.
Organizational issues
Cultures, operating systems and management styles fail to mesh
due to resistance to change from organization members.
Key employees at the acquired firm are lost.
Managers overseeing integration make mistakes in melding the
acquired firm into their own.
A vertically integrated firm is one that performs value chain
activities along more than one stage of an industry’s value chain
system.
VERTICAL INTEGRATION STRATEGIES
Vertically integrated firm
One that participates in multiple segments or stages of an
industry’s overall value chain
Vertical integration strategy
Can expand the firm’s range of activities backward into its
sources of supply or forward toward end users of its products
TYPES OF VERTICAL INTEGRATION STRATEGIES
Full integration
A firm participates in all stages of the vertical activity chain.

Partial integration
A firm builds positions only in selected stages of the vertical
chain.
Tapered integration
A firm uses a mix of in-house and outsourced activity in any
stage of the vertical chain.
THE ADVANTAGES OF A VERTICAL INTEGRATION
STRATEGY
Benefits of a Vertical
Integration Strategy
Add materially
to a firm’s technological capabilities
Strengthen
the firm’s competitive position
Boost
the firm’s profitability
Backward integration involves entry into activities previously
performed by suppliers or other enterprises positioned along
earlier stages of the industry value chain system.
Forward integration involves entry into value chain system
activities closer to the end user.
INTEGRATING BACKWARD TO ACHIEVE GREATER

COMPETITIVENESS
Integrating backwards by:
Achieving same scale economies as outside suppliers: low-cost
based competitive advantage
Matching or beating suppliers’ production efficiency with no
drop-off in quality: differentiation-based competitive advantage
Reasons for integrating backwards
Reduction of supplier power
Reduction in costs of major inputs
Assurance of the supply and flow of critical inputs
Protection of proprietary know-how
INTEGRATING FORWARD TO ENHANCE
COMPETITIVENESS
Reasons for integrating forward
To lower overall costs by increasing channel activity
efficiencies relative to competitors
To increase bargaining power through control of channel
activities
To gain better access to end users
To strengthen and reinforce brand awareness
To increase product differentiation
DISADVANTAGES OF A VERTICAL INTEGRATION
STRATEGY
Increased business risk due to large capital investment
Slow acceptance of technological advances or more efficient
production methods

Less flexibility in accommodating shifting buyer preferences
that require non-internally produced parts
Internal production levels may not reach volumes that create
economies of scale
Efficient production of internally-produced components and
parts hampered by capacity matching problems
New or different resources and capabilities requirements
WEIGHING THE PROS AND CONS OF VERTICAL
INTEGRATION
Will vertical integration enhance the performance of strategy-
critical activities ways that lower cost, build expertise, protect
proprietary know-how, or increase differentiation?
What impact will vertical integration have on investment costs,
flexibility, and response times?
What administrative costs are incurred by coordinating
operations across more vertical chain activities?
How difficult will it be for the firm to acquire the set of skills
and capabilities needed to operate in another stage of the
vertical chain?
Kaiser Permanente’s Vertical Integration Strategy
What are the most important strategic benefits that Kaiser
Permanente derives from its vertical integration strategy?
Over the long term, how could the vertical scope of Kaiser
Permanente’s operations threaten its competitive position and
profitability?
Why is a vertical integration strategy more appropriate in some

industries than in others?
Outsourcing involves contracting out certain value chain
activities that are normally performed in-house to outside
vendors.
OUTSOURCING STRATEGIES: NARROWING THE SCOPE
OF OPERATIONS
Outsource an activity if it:
Can be performed better or more cheaply by outside specialists
Is not crucial to achieving sustainable competitive advantage
Improves organizational flexibility and speeds time to market
Reduces risk exposure due to new technology or buyer
preferences
Allows the firm to concentrate on its core business, leverage
key resources, and do even better what it already does best
THE BIG RISKS OF OUTSOURCING VALUE CHAIN
ACTIVITIES
Hollowing out resources and capabilities that the firm needs to
be a master of its own destiny
Loss of direct control when monitoring, controlling, and
coordinating activities of outside parties by means of contracts
and arm’s-length transactions
Lack of incentives for outside parties to make investments

specific to the needs of the outsourcing firm’s value chain
A company must guard against outsourcing activities that
hollow out the resources and capabilities that it needs to be a
master of its own destiny.
A strategic alliance is a formal agreement between two or more
separate companies in which they agree to work cooperatively
toward some common objective.
A joint venture is a partnership involving the establishment of
an independent corporate entity that the partners own and
control jointly, sharing in its revenues and expenses.
FACTORS THAT MAKE AN ALLIANCE “STRATEGIC”
A strategic alliance:
Facilitates achievement of an important business objective
Helps build, sustain, or enhance a core competence or
competitive advantage
Helps remedy an important resource deficiency or competitive
weakness
Helps defend against a competitive threat, or mitigates a
significant risk to a company’s business
Increases the bargaining power over suppliers or buyers.
Helps open up important new market opportunities
Speeds development of new technologies or product innovations

BENEFITS OF STRATEGIC ALLIANCES AND
PARTNERSHIPS
Minimize the problems associated with vertical integration,
outsourcing, and mergers and acquisitions
Are useful in extending the scope of operations via international
expansion and diversification strategies
Reduce the need to be independent and self-sufficient when
strengthening the firm’s competitive position
Offer greater flexibility should a firm’s resource requirements
or goals change over time
Are useful when industries are experiencing high-velocity
technological advances simultaneously
Companies that have formed a host of alliances need to manage
their alliances like a portfolio.
WHY AND HOW STRATEGIC ALLIANCES ARE
ADVANTAGEOUS
Strategic Alliances:
Expedite development of promising new technologies or
products
Help overcome deficits in technical and manufacturing expertise
Bring together the personnel and expertise needed to create new
skill sets and capabilities
Improve supply chain efficiency

Help partners allocate venture risk sharing
Allow firms to gain economies of scale
Provide new market access for partners
CAPTURING THE BENEFITS OF STRATEGIC ALLIANCES
Picking a good partner
Being sensitive to cultural differences
Recognizing that the alliance must benefit both sides
Adjusting the agreement over time to fit new circumstances
Structuring the decision-making process for swift actions
Ensuring both parties keep their commitments
Strategic Alliance Factors
The best alliances are highly selective, focusing on particular
value chain activities and on obtaining a specific competitive
benefit.
Alliances enable a firm to learn and to build on its strengths.
REASONS FOR ENTERING INTO STRATEGIC ALLIANCES
When seeking global market leadership
Enter into critical country markets quickly.
Gain inside knowledge about unfamiliar markets and cultures
through alliances with local partners.

Provide access to valuable skills and competencies concentrated
in particular geographic locations.
When staking out a strong industry position
Establish a stronger beachhead in target industry.
Master new technologies and build expertise and competencies.
Open up broader opportunities in the target industry.
PRINCIPLE ADVANTAGES OF STRATEGIC ALLIANCES
They lower investment costs and risks for each partner by
facilitating resource pooling and risk sharing.
They are more flexible organizational forms and allow for a
more adaptive response to changing conditions.
They are more rapidly deployed—a critical factor when speed is
of the essence.
STRATEGIC ALLIANCES VERSUS OUTSOURCING
Key advantages of strategic alliances
The increased ability to exercise control over the partners’
activities.
A greater commitment and willingness of the partners to make
relationship-specific investments as opposed to arm’s-length
outsourcing transactions.
ACHIEVING LONG-LASTING STRATEGIC ALLIANCE

RELATIONSHIPS
Collaborating with partners that do not compete directly
Establishing
a permanent trusting relationship
Continuing to collaborate is
in the parties’
mutual interest
Factors Influencing
the Longevity of Alliances
THE DRAWBACKS OF STRATEGIC ALLIANCES AND
PARTNERSHIPS
Culture clash and integration problems due to different
management styles and business practices
Anticipated gains not materializing due to an overly optimistic
view of the potential for synergies or the unforeseen poor fit of
partners’ resources and capabilities
Risk of becoming dependent on partner firms for essential
expertise and capabilities
Protection of proprietary technologies, knowledge bases, or
trade secrets from partners who are rivals
HOW TO MAKE STRATEGIC ALLIANCES WORK
Create a system for managing the alliance.
Build trusting relationships with partners.
Set up safeguards to protect from the threat of opportunism by
partners.
Make commitments to partners and see that partners do the
same.

Make learning a routine part of the management process.
Appendix 1 Maximizing the Power
of a Strategy
Making choices that complement a competitive approach and
maximize the power of strategy includes:
Offensive and defensive competitive actions
Competitive dynamics and the timing of strategic moves
Scope of operations along the industry's value chain
Return to slide
Appendix 2 Choosing Which
Rivals to Attack
The best targets for offensive attacks are: market leaders that
are in vulnerable competitive positions, runner-up firms with
weaknesses in areas where the challenger is strong, struggling
enterprises on the verge of going under, and small local and
regional firms with limited capabilities.
Return to slide
Appendix 3 Defensive Strategies—Protecting Market Position
and Competitive Advantage
The three purposes of defensive strategies
Lower the firm's risk of being attacked
Weaken the impact of an attack that does occur
Influence challengers to aim their efforts at other rivals
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Appendix 4 Strengthening a Firm’s Market Position Via Its
Scope of Operations
The scope of a firm's operations is defined as: the range of its
activities performed internally; the breadth of its product and
service offerings; the extent of its geographic market presence
and its mix of business; and the size of its competitive footprint
on its market or industry.
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Appendix 5 The Advantages of a Vertical Integration Strategy
Three benefits of a vertical integration strategy
Add materially to a firm's technological capabilities
Strengthen the firm's competitive positon
Boost the firm's profitability
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Appendix 6 Capturing the Benefits of Strategic Alliances
The strategic alliance factors are:
Being sensitive to culture differences
Recognizing that the alliance must benefit both sides
Adjusting the agreement over time to fit new circumstances
Structuring the decisions-making process for swift actions
Ensuring both parties keep their commitments
Picking a good partner
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Appendix 7 Achieving Long-Lasting Strategic Alliance
Relationships

Three factors that influence the longevity of alliances
Collaborating with partners that do not compete directly
Establishing a permanent trusting relationship
Continuing to collaborate is in the parties' mutual interest
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