4. Session 9 Outline: Strategy and Marketing
Begin with the end in mind – Building the Assignment 2
framework using double outline method
From industry analysis to company assessment
From generic strategy to value chain analysis – How do
we provide unique value to customers?
Competitive strategy – but is it sustainable (VRIO)?
From Vision / Mission / Corporate objectives to
marketing – How to reach consumers?
STP – the core of marketing
Competitive Analysis – Positioning Matrix
The Brand and measurement issues
IKEA Case Study
5. The General Environment
Demographic
Sociocultural
Political/Legal
Technological
Economic
Global
The general environment is composed of
factors that are both hard to predict and
difficult to control:
2-5
How does this compare with PESTLE analysis?
9. Characteristics of H & T
Inseparability—customer participation in
the service process
Simultaneity
Perishability
Intangibility (the tangible–intangible
continuum)
Heterogeneity
Cost structure
Labor intensive
Source: Okumus, Altinay and Chatoth (2010), p.25
10. What is Competitive Advantage?
Competitive?
Advantage?
One up? Par plus ONE
Sustainable?
What is unique about hospitality industry?
Models, frameworks, tools (Assignment 1) –
Five Forces model, value chain, BCG matrix, Blue Ocean
Strategy, Balance Score Card , product life cycle, PESTEL and
VIRO etc.
Apply through a consulting project
(Assignment 2)
11. Two Fundamental Questions
1. How should we compete in order to
create competitive advantages in the
marketplace?
2. How can we create competitive
advantages in the marketplace that are
unique, valuable, and difficult for rivals
to copy or substitute?
NOTE: Operational effectiveness is not enough to
sustain a competitive advantage.
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13. Strategy clock
Figure 6.6 The Strategy Clock
Source: Adapted from D. Faulkner and C. Bowman, The Essence of Competitive Strategy, Prentice Hall, 1995
16. Value-Chain Analysis
Value-chain analysis looks at the
sequential process of value-creating
activities
Value is the amount buyers are willing to pay
for what a firm provides
How is value created within the organization?
How is value created for other organizations
in the overall supply chain or distribution
channel?
The value received must exceed the costs of
production
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17. Value-Chain Analysis
Primary activities contribute to the
physical creation of the product or service;
the sale & transfer to the buyer; and
service after the sale:
Inbound logistics
Operations
Outbound logistics
Marketing & sales
Service
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18. Value-Chain Analysis
Support activities either add value by
themselves or add value through
important relationships with both primary
activities & other support activities:
Procurement
Technology development
Human resource management
General administration
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26. Primary Activity: Inbound Logistics
Inbound logistics is primarily associated
with receiving, storing & distributing
inputs to the product:
Material handling
Warehousing
Inventory control
Vehicle scheduling
Returns to suppliers
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27. Primary Activity: Operations
Operations include all activities associated
with transforming inputs in to the final
product form:
Machining
Packaging
Assembly
Testing or quality control
Printing
Facility operations
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28. Primary Activity: Outbound Logistics
Outbound logistics includes collecting,
storing, & distributing the product or
service to buyers:
Finished goods
Warehousing
Material handling
Delivery vehicle operation
Order processing
Scheduling & distribution
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29. Primary Activity: Marketing & Sales
Marketing & sales activities involve
purchases of products & services by end
users and includes how to induce buyers
to make those purchases:
Advertising
Promotion
Sales force management
Pricing & price quoting
Channel selection
Channel relations
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30. Primary Activity: Service
Service includes all actions associated with
providing service to enhance or maintain
the value of the product:
Installation
Repair
Training
Parts supply
Product adjustment
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31. Support Activity: Procurement
Procurement involves how the firm
purchases inputs used in its value chain:
Procurement of raw material inputs
Optimizing quality & speed
Minimizing associated costs
Development of collaborative win-win
relationships with suppliers
Analysis & selection of alternative sources of
inputs to minimize dependence on one
supplier
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32. Support Activity: Technology
Development
Technology development is related to a
wide range of activities:
Effective R&D activities for process & product
initiatives
Collaborative relationships between R&D and
other departments
State-of-the-art facilities & equipment
Excellent professional qualifications of
personnel
Organizational culture to enhance creativity
& innovation
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33. Support Activity: Human Resource
Management
Human resource management consists of
activities involved in recruitment, hiring,
training & development, & compensation
of all types of personnel:
Effective employee retention mechanisms
Quality relations with trade unions
Reward & incentive programs to motivate all
employees
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34. Support Activity: General
Administration
General administration involves
Effective planning systems to attain overall
goals & objectives
Excellent relations with diverse stakeholder
groups
Effective information technology to
coordinate & integrate value-creating
activities across the value chain
Ability of top management to anticipate & act
on key environmental trends & events, create
strong values, culture & reputation
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36. Example: The Value Chain in Service
Organizations
Exhibit 3.4 Some Examples of Value Chains in Service Industries
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37. Key Steps in Value Chain Analysis
1. Start by laying out the industry value
chain.
2. Compare your value chain to the
industry.
3. Zero in on price drivers, those activities
that have a high current or potential
impact on differentiation.
4. Zero in on cost drivers, paying special
attention to activities that represent a
large or growing percentage of costs.
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Source: Margretta (2012), p. 75
38. The value chain: Configuring activities to create
customer value
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Source: Margretta (2012), p. 76
41. Competitive advantage arises from the activities in a
company’s value chain
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Source: Margretta (2012), p. 88
42. Marketing Concerns
Industry growth, market size
Factors affecting consumer behavior
STP (Segmentation, target marketing, positioning)
Communication and breaking through clutter
CRM
Foot-in-the-door (bring them in, value strategy,
trading up)
The brand – from rational to emotive
Does the communication reach targeted customers?
Measurement issues (market share, brand health,
competitive set)
#-70
43. Coherence in Strategic Direction
Company vision
Massively inspiring
Overarching
Long-term
Driven by and evokes
passion
Desirable future
Hierarchy of Goals
Company vision
44. Coherence in Strategic Direction
Mission statements
Purpose of the
company
Basis of competition
and competitive
advantages
More specific than
vision
Focused on the means
by which the firm will
compete
Hierarchy of Goals
Company vision
Mission statements
45. Coherence in Strategic Direction
Strategic objectives
Operationalize the
mission statement
Provide guidance on
how the organization
can fulfill or move
toward the “higher
goals”
More specific
Cover a more well-
defined time frame
Hierarchy of Goals
Company vision
Mission statements
Strategic objectives
49. IKEA case
1. What unique value does IKEA provide?
2. What is IKEA’s generic strategy?
3. What is IKEA’s positioning? How does it
reflect in the consumer / customer
communication?
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