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CHAPTER 5The Five Generic Competitive StrategiesCopyri.docx

Chapter 5 discusses five generic competitive strategies: low-cost provider, broad differentiation, focused low-cost, focused differentiation, and best-cost provider. Each strategy targets different market segments and is designed to achieve competitive advantages through either cost reduction or product differentiation. The chapter outlines the attributes, advantages, and pitfalls of each strategy, emphasizing the need for firms to carefully manage their value chains and adapt to market conditions.

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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 © McGraw-Hill Education. 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 © McGraw-Hill Education. FIGURE 5.1 The Five Generic Competitive Strategies Jump to Appendix 2 long image description © McGraw-Hill Education.
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 © McGraw-Hill Education. 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. © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (1 of 7) A low-cost advantage over rivals can translate into better profitability than rivals attain. © McGraw-Hill Education. 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 © McGraw-Hill Education. Core Concept (2 of 5) A cost driver is a factor that has a strong influence on a company’s costs. © McGraw-Hill Education. 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 © McGraw-Hill Education. FIGURE 5.2 Cost Drivers: The Keys to Driving Down Company Costs
Jump to Appendix 3 long image description © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. 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? © McGraw-Hill Education. 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? © McGraw-Hill Education. 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 © McGraw-Hill Education. 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. © McGraw-Hill Education. 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. © McGraw-Hill Education.
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 © McGraw-Hill Education. 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. © McGraw-Hill Education. Strategic Management Principle (4 of 7) 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. © McGraw-Hill Education. Strategic Management Principle (5 of 7) 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.
© McGraw-Hill Education. 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 © McGraw-Hill Education. Core Concept (3 of 5) 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. © McGraw-Hill Education. 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. © McGraw-Hill Education.
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 © McGraw-Hill Education. FIGURE 5.3 Value Drivers: The Keys to Creating a Differentiation Advantage Jump to Appendix 4 long image description © McGraw-Hill Education. 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. © McGraw-Hill Education. 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 Jump to Appendix 5 long image description © McGraw-Hill Education. 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) © McGraw-Hill Education.
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. © McGraw-Hill Education. 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. © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 Jump to Appendix 6 long image description © McGraw-Hill Education. 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 © McGraw-Hill Education. FOCUSED (OR MARKET NICHE) STRATEGIES Focused Market Niche Strategy
Focused Low-Cost Strategy Focused Strategy Approaches © McGraw-Hill Education. 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.? © McGraw-Hill Education. 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. © McGraw-Hill Education.
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. © McGraw-Hill Education. 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? © McGraw-Hill Education. 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 Jump to Appendix 7 long image description © McGraw-Hill Education. Core Concept (5 of 5) 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. © McGraw-Hill Education. 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. © McGraw-Hill Education. THE RISK OF A BEST-COST PROVIDER STRATEGY— GETTING SQUEEZED ON BOTH SIDES High-End
Differentiators Low-Cost Providers Best-Cost Provider Strategy © McGraw-Hill Education. 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? © McGraw-Hill Education. 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 © McGraw-Hill Education. 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
© McGraw-Hill Education. 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 © McGraw-Hill Education. 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. © McGraw-Hill Education. Strategic Management Principle (7 of 7) 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. © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. 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
© McGraw-Hill Education. 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 Why I selected this individual and/or team and how they will support my success in the MSN program and as a practicing 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
Why I selected this individual and/or team and how they will support my success in the MSN program and as a practicing 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 Why I selected this individual and/or team and how they will support my success in the MSN program and as a practicing 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.
Academic Resource/Strategy 2 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. Academic Resource/Strategy 3 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.
Professional Resource/Strategy 2 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). Professional Resource/Strategy 3 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 © McGraw-Hill Education. 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 Jump to Appendix 1 long image description © McGraw-Hill Education.
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 © McGraw-Hill Education. 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 © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (1 of 8) 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.
© McGraw-Hill Education. 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. © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (2 of 8) The best offensives use a company’s most powerful resources and capabilities to attack rivals in the areas where they are competitively weakest. © McGraw-Hill Education. 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
© McGraw-Hill Education. 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 Jump to Appendix 2 long image description © McGraw-Hill Education. 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
© McGraw-Hill Education. Core Concept (1 of 8) A blue-ocean strategy offers growth in revenues and profits by discovering or inventing new industry segments that create altogether new demand. © McGraw-Hill Education. 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? © McGraw-Hill Education. 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 Jump to Appendix 3 long image description © McGraw-Hill Education. FORMS OF DEFENSIVE STRATEGIES Defensive strategies can take either of two forms Actions to block challengers Actions to signal the likelihood of strong retaliation © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (3 of 8) Good defensive strategies can help protect a competitive advantage but rarely are the basis for creating one. © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (4 of 8) There are many ways to throw obstacles in the path of would-be challengers. © McGraw-Hill Education. 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. © McGraw-Hill Education. 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 © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (5 of 8) To be an effective defensive strategy, signaling needs to be accompanied by a credible commitment to follow through. © McGraw-Hill Education. Core Concept (2 of 8) 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. © McGraw-Hill Education.
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. © McGraw-Hill Education. 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 © McGraw-Hill Education. 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? © McGraw-Hill Education. 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 © McGraw-Hill Education. 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?
© McGraw-Hill Education. 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 Jump to Appendix 4 long image description © McGraw-Hill Education. Core Concept (3 of 8) 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.
© McGraw-Hill Education. Core Concepts (4 of 8) 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. © McGraw-Hill Education. 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" © McGraw-Hill Education. 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
© McGraw-Hill Education. 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 © McGraw-Hill Education. 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? © McGraw-Hill Education. 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. © McGraw-Hill Education. Core Concept (5 of 8) A vertically integrated firm is one that performs value chain activities along more than one stage of an industry’s value chain system. © McGraw-Hill Education. 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 © McGraw-Hill Education. 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. © McGraw-Hill Education. 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 Jump to Appendix 5 long image description © McGraw-Hill Education. Core Concepts (6 of 8) 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. © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. 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? © McGraw-Hill Education. 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? © McGraw-Hill Education. Core Concept (7 of 8) Outsourcing involves contracting out certain value chain activities that are normally performed in-house to outside vendors. © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (6 of 8) 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. © McGraw-Hill Education. Core Concepts (8 of 8) 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. © McGraw-Hill Education. 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
© McGraw-Hill Education. 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 © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (7 of 8) Companies that have formed a host of alliances need to manage their alliances like a portfolio. © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 Jump to Appendix 6 long image description © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (8 of 8) 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. © McGraw-Hill Education. 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. © McGraw-Hill Education. 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. © McGraw-Hill Education. 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. © McGraw-Hill Education. 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 Jump to Appendix 7 long image description © McGraw-Hill Education. 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 © McGraw-Hill Education. 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. © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 Return to slide
© McGraw-Hill Education. 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. Return to slide © McGraw-Hill Education. 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 Return to slide © McGraw-Hill Education. 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 Return to slide © McGraw-Hill Education. 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 Return to slide © McGraw-Hill Education.

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CHAPTER 5The Five Generic Competitive StrategiesCopyri.docx

  • 1.
    CHAPTER 5 The FiveGeneric 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
  • 2.
    or product differentiation? Isthe firm’s market target broad or narrow? Key factors that distinguish one strategy from another Jump to Appendix 1 long image description © McGraw-Hill Education. 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 © McGraw-Hill Education. FIGURE 5.1 The Five Generic Competitive Strategies Jump to Appendix 2 long image description © McGraw-Hill Education.
  • 3.
    LOW-COST PROVIDER STRATEGIES Effectivelow-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 © McGraw-Hill Education. 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. © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (1 of 7) A low-cost advantage over rivals can translate into better profitability than rivals attain. © McGraw-Hill Education. MAJOR AVENUES FOR ACHIEVING A COST ADVANTAGE
  • 4.
    Low-cost advantage Cumulative costsacross 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 © McGraw-Hill Education. Core Concept (2 of 5) A cost driver is a factor that has a strong influence on a company’s costs. © McGraw-Hill Education. 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 © McGraw-Hill Education. FIGURE 5.2 Cost Drivers: The Keys to Driving Down Company Costs
  • 5.
    Jump to Appendix3 long image description © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. 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
  • 6.
    unnecessary work stepsand activities Reduce materials handling and shipping costs by having suppliers locate their plants or warehouses close to the firm’s own facilities © McGraw-Hill Education. 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? © McGraw-Hill Education. 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
  • 7.
    activities? © McGraw-Hill Education. THEKEYS 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 © McGraw-Hill Education. 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. © McGraw-Hill Education. 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. © McGraw-Hill Education.
  • 8.
    PITFALLS TO AVOIDIN 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 © McGraw-Hill Education. 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. © McGraw-Hill Education. Strategic Management Principle (4 of 7) 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. © McGraw-Hill Education. Strategic Management Principle (5 of 7) 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.
  • 9.
    © McGraw-Hill Education. BROADDIFFERENTIATION 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 © McGraw-Hill Education. Core Concept (3 of 5) 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. © McGraw-Hill Education. 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. © McGraw-Hill Education.
  • 10.
    COST-EFFICIENT MANAGEMENT OFVALUE 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 © McGraw-Hill Education. FIGURE 5.3 Value Drivers: The Keys to Creating a Differentiation Advantage Jump to Appendix 4 long image description © McGraw-Hill Education. 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.
  • 11.
    Seek out high-qualityinputs. Emphasize human resource management activities that improve the skills, expertise, and knowledge of company personnel. © McGraw-Hill Education. 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 Jump to Appendix 5 long image description © McGraw-Hill Education. 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) © McGraw-Hill Education.
  • 12.
    DIFFERENTIATION: SIGNALING VALUE Signalingvalue 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. © McGraw-Hill Education. 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. © McGraw-Hill Education. 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 © McGraw-Hill Education. WHEN A DIFFERENTIATION STRATEGY WORKS BEST
  • 13.
    Buyer needs and usesfor 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 Jump to Appendix 6 long image description © McGraw-Hill Education. 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 © McGraw-Hill Education. FOCUSED (OR MARKET NICHE) STRATEGIES Focused Market Niche Strategy
  • 14.
    Focused Low-Cost Strategy Focused Strategy Approaches © McGraw-HillEducation. 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.? © McGraw-Hill Education. 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. © McGraw-Hill Education.
  • 15.
    THE RISKS OFA 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. © McGraw-Hill Education. 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? © McGraw-Hill Education. BEST-COST PROVIDER STRATEGIES Value-Conscious Buyer Best-Cost Provider Hybrid Approach Differentiation: Providing desired quality, features, performance, service attributes
  • 16.
    Low Cost Provider: Charginga lower price than rivals with similar caliber product offerings Jump to Appendix 7 long image description © McGraw-Hill Education. Core Concept (5 of 5) 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. © McGraw-Hill Education. 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. © McGraw-Hill Education. THE RISK OF A BEST-COST PROVIDER STRATEGY— GETTING SQUEEZED ON BOTH SIDES High-End
  • 17.
    Differentiators Low-Cost Providers Best-Cost Provider Strategy © McGraw-Hill Education. AmericanGiant’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? © McGraw-Hill Education. 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
  • 18.
    Entails different waysand means of maintaining the basic strategy © McGraw-Hill Education. 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
  • 19.
    © McGraw-Hill Education. Table5.1 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
  • 20.
    on niche goodsExamples: 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 © McGraw-Hill Education. 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. © McGraw-Hill Education. Strategic Management Principle (7 of 7) 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. © McGraw-Hill Education. Appendix 1 Why Do Strategies Differ? Two key factors that distinguish one strategy from another Is the firm's market target broad or narrow?
  • 21.
    Is the competitiveadvantage pursued linked to low costs or product differentiation? Return to slide © McGraw-Hill Education. 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 © McGraw-Hill Education. 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
  • 22.
    © McGraw-Hill Education. Appendix4 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. Appendix 7 Best-Cost Provider Strategies A combination of differentiation (providing desired quality, features, performance, service attributes) and low-cost provider
  • 23.
    (charging a lowerprice 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 © McGraw-Hill Education. 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
  • 24.
    your network. Formore 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
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    Title: PMH-NP Organization: AuroraBehavioral 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: 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
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    Why I selectedthis individual and/or team and how they will support my success in the MSN program and as a practicing 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 Why I selected this individual and/or team and how they will support my success in the MSN program and as a practicing 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.
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    She is currentlyseeking 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.
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    Academic Resource/Strategy 2 Tutoringand 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. Academic Resource/Strategy 3 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.
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    Professional Resource/Strategy 2 NationalFederation 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). Professional Resource/Strategy 3 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
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    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
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    involvement in plagiarismto 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
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    students or writersto 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
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    which might helpin 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
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    I have identifiedone 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)
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    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.
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    Step 2: Summaryof 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
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    creating. One resource Iexpect 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
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    3 by writinga 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
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    have examined oneprofessional 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
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    justifying your reasonsfor 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
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    THIS CHAPTER WILLHELP 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 © McGraw-Hill Education. 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 Jump to Appendix 1 long image description © McGraw-Hill Education.
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    CONSIDERING STRATEGY-ENHANCING MEASURES Whetherand 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (1 of 8) 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.
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    © McGraw-Hill Education. CHOOSINGTHE 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. © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (2 of 8) The best offensives use a company’s most powerful resources and capabilities to attack rivals in the areas where they are competitively weakest. © McGraw-Hill Education. 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
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    © McGraw-Hill Education. CHOOSINGWHICH 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 Jump to Appendix 2 long image description © McGraw-Hill Education. 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
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    © McGraw-Hill Education. CoreConcept (1 of 8) A blue-ocean strategy offers growth in revenues and profits by discovering or inventing new industry segments that create altogether new demand. © McGraw-Hill Education. 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? © McGraw-Hill Education. 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
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    at other rivals Jumpto Appendix 3 long image description © McGraw-Hill Education. FORMS OF DEFENSIVE STRATEGIES Defensive strategies can take either of two forms Actions to block challengers Actions to signal the likelihood of strong retaliation © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (3 of 8) Good defensive strategies can help protect a competitive advantage but rarely are the basis for creating one. © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (4 of 8) There are many ways to throw obstacles in the path of would-be challengers. © McGraw-Hill Education. 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.
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    Grant discounts orbetter terms to intermediaries who handle the firm’s product line exclusively. © McGraw-Hill Education. 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 © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (5 of 8) To be an effective defensive strategy, signaling needs to be accompanied by a credible commitment to follow through. © McGraw-Hill Education. Core Concept (2 of 8) 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. © McGraw-Hill Education.
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    TIMING A FIRM’SOFFENSIVE 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. © McGraw-Hill Education. 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 © McGraw-Hill Education. 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?
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    What first-mover advantageswill 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? © McGraw-Hill Education. 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 © McGraw-Hill Education. 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?
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    © McGraw-Hill Education. STRENGTHENINGA 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 Jump to Appendix 4 long image description © McGraw-Hill Education. Core Concept (3 of 8) 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.
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    © McGraw-Hill Education. CoreConcepts (4 of 8) 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. © McGraw-Hill Education. 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" © McGraw-Hill Education. 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
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    © McGraw-Hill Education. BENEFITSOF 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 © McGraw-Hill Education. 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? © McGraw-Hill Education. WHY MERGERS AND ACQUISITIONS SOMETIMES FAIL TO PRODUCE ANTICIPATED RESULTS Strategic issues
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    Cost savings mayprove 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. © McGraw-Hill Education. Core Concept (5 of 8) A vertically integrated firm is one that performs value chain activities along more than one stage of an industry’s value chain system. © McGraw-Hill Education. 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 © McGraw-Hill Education. TYPES OF VERTICAL INTEGRATION STRATEGIES Full integration A firm participates in all stages of the vertical activity chain.
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    Partial integration A firmbuilds 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. © McGraw-Hill Education. 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 Jump to Appendix 5 long image description © McGraw-Hill Education. Core Concepts (6 of 8) 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. © McGraw-Hill Education. INTEGRATING BACKWARD TO ACHIEVE GREATER
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    COMPETITIVENESS Integrating backwards by: Achievingsame 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. DISADVANTAGES OF A VERTICAL INTEGRATION STRATEGY Increased business risk due to large capital investment Slow acceptance of technological advances or more efficient production methods
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    Less flexibility inaccommodating 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 © McGraw-Hill Education. 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? © McGraw-Hill Education. 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
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    industries than inothers? © McGraw-Hill Education. Core Concept (7 of 8) Outsourcing involves contracting out certain value chain activities that are normally performed in-house to outside vendors. © McGraw-Hill Education. 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 © McGraw-Hill Education. 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
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    specific to theneeds of the outsourcing firm’s value chain © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (6 of 8) 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. © McGraw-Hill Education. Core Concepts (8 of 8) 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. © McGraw-Hill Education. 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
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    © McGraw-Hill Education. BENEFITSOF 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 © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (7 of 8) Companies that have formed a host of alliances need to manage their alliances like a portfolio. © McGraw-Hill Education. 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
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    Help partners allocateventure risk sharing Allow firms to gain economies of scale Provide new market access for partners © McGraw-Hill Education. 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 Jump to Appendix 6 long image description © McGraw-Hill Education. STRATEGIC MANAGEMENT PRINCIPLE (8 of 8) 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. © McGraw-Hill Education. 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.
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    Provide access tovaluable 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. © McGraw-Hill Education. 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. © McGraw-Hill Education. 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. © McGraw-Hill Education. ACHIEVING LONG-LASTING STRATEGIC ALLIANCE
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    RELATIONSHIPS Collaborating with partnersthat do not compete directly Establishing a permanent trusting relationship Continuing to collaborate is in the parties’ mutual interest Factors Influencing the Longevity of Alliances Jump to Appendix 7 long image description © McGraw-Hill Education. 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 © McGraw-Hill Education. 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.
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    Make learning aroutine part of the management process. © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 © McGraw-Hill Education. 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 Return to slide
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    © McGraw-Hill Education. Appendix4 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. Return to slide © McGraw-Hill Education. 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 Return to slide © McGraw-Hill Education. 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 Return to slide © McGraw-Hill Education. Appendix 7 Achieving Long-Lasting Strategic Alliance Relationships
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    Three factors thatinfluence 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 Return to slide © McGraw-Hill Education.