1
University of Pennsylvania
Suite 300, Stouffer Commons
3702 Spruce Street
57-EXCEL (3-9235)
[email protected]
http://www.vpul.upenn.edu/lrc
GUIDE TO READING PRIMARY SOURCES
What is a primary source?
Primary sources are those constructed by people who were actually there at the time of
the event you are studying. For example, an 1865 newspaper account about the
assassination of President Lincoln is a primary source. Primary sources may include but
are not limited to: letters, journals and other items written by individuals; newspapers,
magazines and other news sources; laws, statutes and regulations; and memos, reports
and other records generated within organizations. A physical artifact, such as a piece of
pottery excavated from an archeological site, can also be viewed as a primary source. In
contrast, a secondary source is one that compiles or analyzes information about events
with which the author was not directly involved. A textbook is a secondary source, as are
many articles in scholarly journals.
Why is reading a primary source different from reading a secondary
source?
Reading primary source materials differs significantly from reading textbooks and other
secondary sources. Very often, textbooks and other secondary sources will tell the reader
what is important to remember from the text, and will organize the material specifically
with the student in mind as the audience. In contrast, because the author of a primary
source was not thinking of college students in the future as the most important audience
for his or her work, s/he did not provide a road-map to the reader to highlight what is
most important. Reading a primary source therefore puts more responsibility on the
reader to extract from the text what is important.
How should I approach reading a primary source?
PREPARATION: Learning is a process of hanging new information on a framework of
knowledge that already exists in your mind. Before starting to read, ask yourself a couple
of questions to help identify your framework.
- What do I already know about this subject?
- What do I want to get out of this reading?
WHILE READING: Try to think critically while reading a primary source. To do this,
ask yourself the following questions:
- What is the author saying?
- What does the author imply?
2
- What does the author assume?
- Is the argument valid? How does the author support the argument?
AFTER READING: Once you have read the material, take a few moments to reflect on
it. Ask yourself the following questions:
- Can you repeat in a concise statement what the author’s main argument was
and how it was supported?
- Can you extend the author’s argument to other circumstances?
- How does what you read change the framework you had in mind before you
started reading?
- What questions remain that you want to explore in this class?
- If you were going to start a discussion about this reading, what questions
would you raise?
[We.
1University of PennsylvaniaSuite 300, Stouffer Commons.docx
1. 1
University of Pennsylvania
Suite 300, Stouffer Commons
3702 Spruce Street
57-EXCEL (3-9235)
[email protected]
http://www.vpul.upenn.edu/lrc
GUIDE TO READING PRIMARY SOURCES
What is a primary source?
Primary sources are those constructed by people who were
actually there at the time of
the event you are studying. For example, an 1865 newspaper
account about the
assassination of President Lincoln is a primary source. Primary
sources may include but
are not limited to: letters, journals and other items written by
individuals; newspapers,
magazines and other news sources; laws, statutes and
regulations; and memos, reports
and other records generated within organizations. A physical
artifact, such as a piece of
pottery excavated from an archeological site, can also be
viewed as a primary source. In
contrast, a secondary source is one that compiles or analyzes
information about events
with which the author was not directly involved. A textbook is
a secondary source, as are
2. many articles in scholarly journals.
Why is reading a primary source different from reading a
secondary
source?
Reading primary source materials differs significantly from
reading textbooks and other
secondary sources. Very often, textbooks and other secondary
sources will tell the reader
what is important to remember from the text, and will organize
the material specifically
with the student in mind as the audience. In contrast, because
the author of a primary
source was not thinking of college students in the future as the
most important audience
for his or her work, s/he did not provide a road-map to the
reader to highlight what is
most important. Reading a primary source therefore puts more
responsibility on the
reader to extract from the text what is important.
How should I approach reading a primary source?
PREPARATION: Learning is a process of hanging new
information on a framework of
knowledge that already exists in your mind. Before starting to
read, ask yourself a couple
of questions to help identify your framework.
- What do I already know about this subject?
- What do I want to get out of this reading?
WHILE READING: Try to think critically while reading a
primary source. To do this,
ask yourself the following questions:
- What is the author saying?
3. - What does the author imply?
2
- What does the author assume?
- Is the argument valid? How does the author support the
argument?
AFTER READING: Once you have read the material, take a
few moments to reflect on
it. Ask yourself the following questions:
- Can you repeat in a concise statement what the author’s main
argument was
and how it was supported?
- Can you extend the author’s argument to other circumstances?
- How does what you read change the framework you had in
mind before you
started reading?
- What questions remain that you want to explore in this class?
- If you were going to start a discussion about this reading,
what questions
would you raise?
[We gratefully acknowledge the contribution made by Dr. Anita
Gelburd, lecturer
in History, to this self-help]
Topic:
In 2018, the Retail Food Group has become embroiled
4. in scandals after it was accused of wage fraud and reported that
the treatment of franchisees and their employees were akin to
'slavery'. This has led to a number of shareholder class action
suits and serious doubts as to whether the franchising model
remains fit for purpose. Making reference to relevant business
strategy concepts, frameworks and theories, critically identify
and assess what are some of the key strategic causes/problems
that led to these issues within the RFG and the
franchising business model? Your answer must include clear
links to contemporary strategy concepts/topics covered in this
unit, plus a consideration of the international, cross-cultural and
ethical contexts.
Requires:
Your essay must identify and critically evaluate the key issues
of the topic. A quality essay will not only directly address the
question/topic itself, but also recognise the relevant strategic
context. The use of statistics and industry data/trends is
strongly encouraged. However, the KEY to a high quality essay
is applying the relevant business strategy concepts and theories
in a practical scenario.
Organise and structure your essay in a clear, logical essay
format, i.e. Introduction, Body paragraphs and Conclusion. See
Essay Marking Rubric and Feedback Sheet on the Moodle site
and the Q-Manual for guidelines on how to structure academic
essays (see the link to the QManual in the Learning Resources
section of this unit guide).
Your essay must include a reference list according to the APA
style at the end of the essay, as outlined in the Q-Manual. A mix
of academic journals, peer-reviewed articles, business reports,
company websites and newspaper articles can be used, but there
should be a strong emphasis on academic journals. You MUST
include AT LEAST 8 academic journal article sources.
Relevant articles are included in the unit reading list. You are
advised to use these materials to understand the relevant
theories and concepts.
5. Please Note:
Headings are not to be used.
The reference list and appendices are NOT counted in the word
limit, but in-text citations are.
Words in tables and diagrams are counted in the word limit, but
should not drive the analysis. Instead, tables should provide
summaries of what is contained in the body of the essay. The
analysis is contained in the sentences and paragraphs.
PLEASE KEEP IN MIND that it is impossible to produce an
acceptable essay if you have not researched widely. Some have
failed the assignment because of lack of sufficient research, so
it is important to start work on it early.
Release date: Not applicable
Word limit: 1800 words (+/-10%)
Presentation requirements: Assignments must be submitted
with a signed cover sheet. They must also follow the essay
format, ie. Introduction, Discussion/Body paragraphs and
Conclusion. See the Individual Essay Marking and Feedback
Sheet on Moodle and the Q-Manual for guidelines on how to
structure academic essays (see the link to the Q-Manual in the
Learning Resources section of this unit guide).
All assignments MUST be submitted with either size 11 or 12
font, and with double spacing.
Estimated return date: Two weeks after submission Criteria for
marking:
Introduction - 10%
Body - 60%
Conclusion - 10%
Evidence of Research - 10%
Referencing - 5%
Presentation - 5%
It is ESSENTIAL that students view the Individual
Essay Marking Rubric and Feedback Sheet on the Moodle site
prior to commencing the task. Check to see if your work is
6. addressing each of the individual criteria before you submit
your assessment - if you can't see how it addresses the criteria,
then your marker won't be able to either!
MGB3684 BUSINESS STRATEGY
INDIVIDUAL ARGUMENTATIVE ESSAY FEEDBACK
GUIDE
STUDENT NAME:
___________________________________________________
COMMENTS
INTRODUCTION: 10%
(Purpose of the essay; company background;
statement of position; outline of the essay)
BODY/DISCUSSION: 60%
(Application of relevant key business strategy
concepts/models/theory; makes reference to
the international context and cross-cultural
factors; demonstrates understanding of
7. relevant ethical issues and concepts;
integration of relevant literature from
appropriate sources)
CONCLUSION: 10%
(Concise summary of the main points;
consistent with discussion;
implications/significance/ consequences)
EVIDENCE OF RESEARCH: 10%
(Minimum 8 academic journal articles)
REFERENCING: 5%
(Correct and consistent APA style, including
reference list on a separate page, listed
alphabetically, and including only the sources
cited in the essay)
8. PRESENTATION: 5%
(Quality of expression; logical flow of
arguments; grammar; spelling; punctuation;
evidence of proofreading; professional
layout; includes a signed cover sheet & title)
GENERAL COMMENTS:
GRADE:
4/6/2017
1
MONASH
BUSINESS
SCHOOL
9. MGBF3684 Business Strategy
Talent Management: Introduction
Dr Sarah Lindsay
MONASH
BUSINESS
SCHOOL
Definition of strategic talent management:
“Activities and processes that involve the systematic
identification of key positions which differentially contribute to
the organisation's sustainable competitive advantage, the
development of a talent pool of high potential and high
performing incumbents to fill these roles, and the
development of a differentiated human resource architecture
to facilitate filling these positions with competent incumbents
and to ensure their continued commitment to the
organisation.”
(Collings & Mellahi, 2009, p. 304)
MONASH
BUSINESS
SCHOOL
Practices to acquire, develop and deploy talent:
Talent pool Talent pipeline
Talent identification
10. 4/6/2017
2
MONASH
BUSINESS
SCHOOL
Talent Management viewed as a life cycle
(Thunnissen, Boselie& Fruytier, 2012)
Genesis: “The war for talent” (McKinsey & Co, 1997)
• Demographic changes
• Increased mobility and globalisation
• Transformations in the business environment:
• Shift away from product‐based economies
• Complexity
• Changes in organizational structure
• Relationships
TALENT
SHORTAGE!
MONASH
BUSINESS
SCHOOL
Talent Management in terms of a life cycle
(Thunnissen, Boselie& Fruytier, 2012)
• Infancy
• Undefined boundary
• Unclear scope
11. • Adolescence: Themes ‐
• Definitions
• Benefits
• Practices
US context dominant
Private sector
Large MNEs
MONASH
BUSINESS
SCHOOL
Maturity: Talent Matters report ‐
Deloitte University Press, 2017, pp.2‐3
“To be in a position to reap the
benefits that talent management
maturity offers,
Organisations globally,
and in emerging growth markets,
should instead view
the talent experience
as a networked, customizable system
individuals –
and their relationship with the organisation –
at the centre.”
12. 4/6/2017
3
MONASH
BUSINESS
SCHOOL
Justification for the practice of Talent Management
•
People, intellectual capital and talent are viewed as critical com
ponents of
strategic success irrespective of competitive and economic press
ures (p. 2428)
• Enables firms to achieve competitive advantage
•
A critical capability which distinguishes successful global firms
• Tied to the RBV of the firm –
worthy of investment/competing demands
• Alignment of talent changed strategic priorities
•
An increased focus on flexibility, quality, cost and innovativene
ss of talent
to achieve strategy
• Use of talent to support merger and acquisition activity
• Challenges: associated with international organisational
structural design
…. the dominant human capital topic of the 21st
century (Cascio & Aguinis, 2008)
13. (Garavan, 2012)
MONASH
BUSINESS
SCHOOL
“The reasons for this continued investment primarily focused on
concerns about:
• The difficulties in attracting high potential talent
• The challenge of retaining top performers
• The need to have a strong leadership pipeline;
And, most important of all
• the concern that business growth needed to be sustained.”
(TBL)(TBL)(Garavan, 2012, p.2443)
MONASH
BUSINESS
SCHOOL
Biggest risk to successful TM in MNEs: Implementation
(Garavan, 2012)
• Innovation v costs
• Partnering (co‐ordination) v cohesiveness (control)
• Openness v compliance
• Diverse perspectives v strategic decision‐making
• Building brand v costs
14. 4/6/2017
4
MONASH
BUSINESS
SCHOOL
As a component of strategic management, not (S)HR
•
An exclusive practice focused on the development of a few high
‐
performing/high performing employees considered strategically
valuable
to the organization
•
Personal and career development of a strategically valuable min
ority ‐
Not the entire workforce
•
Doesn’t necessary mean others in the organization are overlooke
d, but it
can
• May propagate a culture of competition among employees
(Swailes, Downs & Orr, 2014)
MONASH
BUSINESS
15. SCHOOL
MGBF3684 Business Strategy
Talent management: Research
Dr Sarah Lindsay
Acknowledgement: Professor Gavin Jack
MONASH
BUSINESS
SCHOOL
There are growing calls for rigorous
research into the practice and
“value” of TM;
for evidence to support the rhetoric
(Sparrow & Makram, 2015, p. 249)
4/6/2017
5
MONASH
BUSINESS
SCHOOL
Research directions which assume that TM is beneficial:
• Global talent management (GTM)
• Organisational & individual
16. • Employee experience
• Self‐initiated expatriates
There is also a growing interest in
research which considers talent management
from alternative viewpoints
(Collings, Scullion & Vaiman, 2015)
MONASH
BUSINESS
SCHOOL
Swailes et al. 2014: Counter-points:
• ‘Talent’ means different things across different cultures
• ‘Talent’ not suitable to all organization types
• The exclusive version of TM is workable, but limited
Are these sufficient justifications for TM as an exclusive practic
e?
If yes …
What might this mean for local talented employees in large west
ern multinationals?
MONASH
BUSINESS
SCHOOL
Background to fully inclusive talent management (FITM) :
17. • ‘Talent’ as deliberately comprehensive
• Involves curiosity and open‐mindedness
• Infused with an egalitarian philosophy of mind;
• Shift the emphasis away from performance … to learning
•
Inclusive in that it is concerned with deploying the talents of all
employees (p.532)
•
Draws from positive psychology, the capability approach & sust
ainability
•
Economic benefit would be indirect effect, through the main ai
m of benefits to
employees
(Swailes et al., 2014)
While, in large organisations, it’s not possible to have an ‘all st
ar cast’ …
(TBL)(TBL)
4/6/2017
6
18. MONASH
BUSINESS
SCHOOL
Fully inclusive talent management (FITM) :
A typology of Talent Management, defined by the scope of talen
t searching and
employee inclusion:
• Partial exclusive talent management
• Partial inclusive talent management
• Fully inclusive talent management
• Elite talent management
(Swailes et al., 2014)
MONASH
BUSINESS
SCHOOL
TALENT STATUS:
TO DISCLOSE OR NOT?
MONASH
BUSINESS
SCHOOL
MGBF3684 Business Strategy
Talent Management – A critical diversity perspective
19. Dr Sarah Lindsay
Co-author: Gavin Jack
4/6/2017
7
MONASH
BUSINESS
SCHOOL
• Talent Management in MNEs is typically
exclusive
• The challenge presented to TM by
shifting workplace demographics is
recognised
• Implications for long‐standing questions
concerning organizational diversity
• Yet the issue of workplace equality
associated with the practice of TM is
under‐researched (exc. Gender)
In practice: Aspects of strategic HRM merged with workplace
relations in a new joint function
closely aligned with org strategy including the value of
diversity:
TM & Inclusion - a paradox -
MONASH
20. BUSINESS
SCHOOL
The Business Case for diversity:
It might be unrealistic for these organisations to go much beyon
d legally mandated
discrimination and policy compliance –
loss of profit at least in short term? (ROI)
or
By its strategic position, workplace equality through inclusion
might be given a fresh
mandate? (Triple Bottom Line ‐ Stakeholders)
Diversity = increased talent pool =
‘better’ human capital = competitive advantage
We propose:
current conversations around TM are paradigmatically limited
to a mainstream Strategic Human Resource Management (SHRM
) approach
and could be developed
by considering other perspectives such as critical diversity pers
pectives
(Lewis & Heckman, 2006, p.152)
MONASH
BUSINESS
SCHOOL
A 4-part conceptual agenda for CDP on TM:
• Context‐specific
21. • Power
• Intersectional
• The ‘lived’ experience
“What is required is for business schools to foster scepticism
and act more like court jesters than cheerleaders for the
corporate world”
stressing the need for students to develop the ability to assess
critically the
assumptions underpinning managerial actions
and the impact of those actions on others”
(Bridgman, 2016, p. 737)
4/6/2017
8
MONASH
BUSINESS
SCHOOL
Context-specific
• Gallardo‐Gallardo & Thunnissen
(2016): need to consider context; local
organisations have to adapt a western concept to their culture;
‘One size doesn’t fit all’
22. • CDP:
• Taking the organisational context (and history) into account:
• National
• Industry
• Organisation type/size
• Ownership
•
The notion that some have to adjust or are ‘tolerated’ implies po
wer
and the impact of power politics
MONASH
BUSINESS
SCHOOL
Power ‘On the radar’ ‘Informal’ ‘Intuitive’
‘Political’ ‘Same opportunity for all’
‘Result: Ad hoc, policy v practice’
• Assumption of universalism
•
The role and influence of power is missing from our understandi
ng of TM
• Critical diversity perspectives offer:
of the other – Foucault
of social class – Bourdieu
23. (conqueror and conquered, core and periphery) Connell
(2007) Southern Theory: south as data supporting knowledge de
veloped in
the north
When power comes into play, what is it doing to the individual
and what are the
organisational politics which come out of it?
MONASH
BUSINESS
SCHOOL
Intersectional
• Human experience isn’t neat (Van Buren, 2015)
• Social identity theory
• CDP very critical of social identity theory!
• Social identity complexity (SIC) (Roccas
& Brewer, 2009): how multiple identities are
subjectively combined to determine inclusiveness (Miller et al,
2009)
•
SIC positively related to affirmative action, multiculturalism (V
an Dommelen et al, 2015)
What might the propensity for ingroup
bias mean for decision‐making?
Does it encourage a climate of inclusion?
24. 4/6/2017
9
MONASH
BUSINESS
SCHOOL
The lived experience
• Approach: emic field research
•
Applied to: experience of Talent & Inclusion to understand how
the
powerful and decision‐makers in organisations
construct and include
organizational diversity:
versus enacted organizational values
c versus reality
13/04/2016
1
MGBF3684 Business Strategy
25. Organisational learning – assessing today’s organisations
Dr Sarah Lindsay
2
Strategic flexibility …
The ability to shift from one dominant strategy to another
Ethics
Compliance-based
ethics programs
Integrity-based
ethics programs
3
Positive Organisational Behaviour - stems from philosophy of
human thriving (the
‘good life’); includes mind and body; is dynamic
-out: Recognition that organisations
(and their
success require) healthy, strong and capable people
– leading a life of purpose and quality connection to
others; self-
regard and mastery … key is emotions
mindfulness
cy – anxiety, depression, mood surfing
26. Organisational Health - the organization is a mirror of the
individuals working
within it
… a healthy leader is at the heart of a healthy organisation
(Quick et al. 2007, Journal of Management Studies)
13/04/2016
2
Getting beyond the BS of leadership
literature…
. Build relationships, networks, connections
. Behave to be respected - not liked
. Learn, evolve and develop – yourself first
and then others
. Influence others – know & use the
techniques
McKinsey & Co 2016
Innovation
The ‘Machine’:
• Policy
• Practice
27. • Product/Service
• Process
Implementation
Approach Attitudes
What is a learning organisation?
A learning organisation is one “where people continually
expand their capacity to
create the results they truly desire, where new and expansive
patterns of
thinking are nurtured, where collective aspiration is set free,
and where
people are continually learning how to learn together” (Senge,
2006, p 3).
=> Creating & Coping
– Continuous learning and growing (change)
– Linking the individuals and the organisation as a whole
Link to
Strategic
Leaders
13/04/2016
28. 3
Learning organisations & the 5 principles
Concerns an organisation’s internal environment, focusing on
people:
. Processes and procedures, job design;
. Training and development; and
. Selection
Enabled by following the 5 principles of learning organisations:
1. Personal mastery
2. Mental models
3. Building shared vision
4. Team learning
5. Systems thinking
7
Evaluation: Criticism of Senge’s approach
• Lacks a sound theoretical basis
• Impractical
• Unworkable in bureaucratic organisations
• Lacks connection to the external environment
29. • Lacks details and support
• Time
• Cost and opportunity cost
8
• Resistance to change and the absence of effective leadership
are
major reasons for why most transformation efforts fail.
• Effective change agents must:
• Make every effort to eliminate policies, procedures, and
behaviors
that undermine the change efforts
• Be willing to alter his or her own behavior if it will minimize
resistance
• Be good listeners
The role of organisational leaders in organisational learning
9http://www.smh.com.au/business/banking-and-finance/nab-
promises-better-process-to-catch-bad-planners-20150316-
1m09lr.html
Andrew Thornton - CEO
National Australia Bank (NAB)
30. 13/04/2016
4
• Articulating a compelling reason for change
• Having open and regular communications
• Having a road map for implementation
• Having training programs for required skills/competencies
• Forming a coalition of supporters and experts
• Staying the course in spite of perceived difficulties
• Recognizing and rewarding the contributions of others
• Carefully managing resources and priorities
• Keeping the process transparent
• Having a plan for dealing with resistance
How organisational leaders enable organisational learning
10
*Check out Moodle: watch the Harvard Business clip on
the importance of organisational learning to businesses today*
Strategic Leaders
Definition:
31. Strategic leadership is the ability to anticipate, envision,
maintain flexibility and
empower others to create strategic change as necessary
(Hanson et al., 2010).
Requires:
• Openness
• Managing through others
• Managing an entire enterprise rather than a functional sub-unit
• Coping with change
Personal values:
Evidence suggests top executives have a major effect on a
firm’s culture.
Therefore, they impact on organisational activities and
performance (Mayer,
Davis & Schoorman, 1995). An organisation’s culture can be a
source of
competitive advantage Fiol (1991).
Primary responsibilities:
• Conceptualize the organization’s vision, mission, and core
values;
• Oversee the formulation of objectives, strategies, policies, and
structures that
translate vision, mission, and core values into business
decisions and hopefully
in turn, core competencies;
32. • Create an environment and culture for organizational learning
and mutual
exchange between individuals and groups;
• Serve as ethical steward and role model for the rest; and
• Establish a balanced set of organisational controls.
Strategic Leadership
12
13/04/2016
5
• Involves developing long term vision of the firm’s strategic
intent. (Long-term definitions differ – may mean 5-10
years).
• Requires adequate time to develop vision and framework
for implementation.
• Charisma helpful but not a requirement for successful
strategic leadership.
• Key is maintaining direction and structuring the firm
correctly to achieve the vision.
Hodgetts et al (2012)
Strategic leadership
33. Transformational leadership is said to be the most effective
style:
• Stimulate and inspire followers to transcend their own self-
interests for the
good of the organisation to achieve extraordinary outcomes
• Strongly correlated with:
– lower turnover rates
– higher levels of productivity, employee satisfaction,
creativity, goal
attainment and follower well-being
• Involves articulating a vision, breaking from the status quo,
providing goals and
a plan, giving meaning or a purpose to goals.
Strategic Leaders
14
Paul Polman, CEO Unilever
15
http://www.telegraph.co.uk/finance/newsbysector/epic/ulvr/113
72550/Unilever-boss-Paul-Polman-slams-capitalist-
obsession-with-profit.html
*Unilever derives nearly 60% of its sales from emerging
markets
• Organisational profits should not be put
34. ahead of global issues eg, poverty and
climate change
• Developed a “greener business model” using
sustainably sourced materials in its
packaging, acting against deforestation and
ensuring all factories are “zero waste”.
Three ambitious goals aiming to reach by 2020:
1. helping more than a billion people across the
globe improve their health and well-being;
2. halving the environmental footprint of its
products; and
3. sourcing 100% of its agricultural raw
materials sustainably while enhancing the
livelihoods of those working across its supply
chain.
13/04/2016
6
Unilever’s mission => a great place to work
16
“To achieve our company’s ambition of doubling the
size of our business whilst reducing our
environmental impact and increasing our
35. positive social impact, it is crucial that we build a
diverse and engaged workforce were everybody
can develop to his or her full potential. The
benefits of having a gender-balanced
organisation are plain to see; it helps power
creativity and innovation, deepens the talent
pool and allows us to better serve our diverse
consumer base.”
Paul Polman
http://www.unilever.com/about/who-we-are/our-leadership/
https://www.womenofinfluence.ca/2013/01/28/unilever-wins-
2013-catalyst-award-gender-diversity/
https://www.linkedin.com/grp/post/73569-
5966104240085618689
Linkedin Award 2015
(coming in at No. 3 …
ahead of Microsoft &Facebook)
Skill required for strategic leaders: Emotional intelligence (EQ)
The “innate potential to feel, use, communicate, recognize,
remember,
describe, identify, learn from, manage, understand and explain
36. emotions” http://eqi.org/eidefs.htm
*Watch the clip:
https://www.youtube.com/watch?v=OoLVo3snNA0*
EQ Research (Vidyarthi, Anand & Liden, 2014):
• leaders' emotional intelligence = ++ for employees' job
performance.
• leader's emotional competence always influences employee's
outcomes in a
positive manner, but the relationship is weaker when employees
independently
work on their tasks because less direct and frequent contact
between the
leader and employees
17
4/04/2016
1
Week 6 Objectives
1. Recognise what issues to consider in establishing a strategy-
supportive
organizational structure and organizing the work effort;
37. 2. Become aware of the pros and cons of centralized and
decentralized
decision making in implementing the chosen strategy;
3. Understand the different strategy implementation policies and
procedures employed by firms; and
4. Understand the importance of strategy evaluation.
Structuring the Organisation
4/04/2016
2
Deciding Which Value Chain Activities to Perform
Internally and Which to Outsource
Wisely choosing which activities to perform internally and
which to outsource can
lead to several strategy-executing advantages—lower costs,
heightened strategic
focus, less internal bureaucracy, speedier decision making, and
a better arsenal of
organizational capabilities.
• Outsourcing’s Execution-Related Benefits:
38. • Helps in outclassing rivals in strategy-critical activities and in
turning a core
competence into a distinctive competence.
• Decreases bureaucracies, flattens structure, speeds decision
making, and
shortens respond time to changing market conditions.
• Adds to a firm’s capabilities and contributes to better strategy
execution
through partnerships with suppliers and channel partners.
Structuring the Organisation
4
Aligning the Firm’s Organisational Structure with its
Strategy
• Organizational Structure
• Comprises the formal and informal arrangement
of tasks, responsibilities, lines of authority, and reporting
relationships for the
firm.
• Structure Is Aligned with Strategy When:
• Its design contributes to the creation of value for customers.
39. • Its parts are aligned with one another and also matched to the
requirements of
the strategy.
• It lowers operating costs through lower bureaucratic costs and
operational
efficiencies.
Structuring the Organisation
5
Aligning the Firm’s Organisational Structure with its Strategy
Structuring the Organisation
6
Simple Structure
(Line-and-Staff)
Functional Structure
(Departmental or Unitary)
Multidivisional Structure
(Divisional or M-form)
Matrix Structure
(Composite or Combination)
4/04/2016
40. 3
Determining How Much Authority to Delegate
Structuring the Organisation
7
Centralized
Organizational Structures
Decentralized
Organizational Structures
Basic Tenets Basic Tenets
• Decisions on most matters of importance
should be in the hands of top-level
managers who have the experience,
expertise, and judgment to decide what is
the best course of action
• Lower-level personnel have neither the
knowledge, the time, nor the inclination to
properly manage the tasks they are
performing
• Strong control from the top is a more
effective means for coordinating the firm’s
actions
• Decision-making authority should be put in
the hands of the people closest to, and
most familiar with, the situation
41. • Those with decision-making authority
should be trained to exercise good
judgment
• A firm that draws on the combined
intellectual capital of all its employees can
outperform a command-and-control firm
Determining How Much Authority to Delegate
Structuring the Organisation
8
Centralized
Organizational Structures
Decentralized
Organizational Structures
Chief Advantages Chief Advantages
• Fixes accountability through
tight control from the top
• Eliminates potential for conflicting
goals and actions on the part of lower-
level managers
• Facilitates quick decision making and
strong leadership under crisis
situations
• Encourages employees to exercise initiative
and act responsibly
42. • Promotes greater motivation and
involvement in the business on the part of
more company personnel
• Spurs new ideas and creative thinking
• Allows fast response to market change
• Entails fewer layers of management
Determining How Much Authority to Delegate
Structuring the Organisation
9
Centralized
Organizational Structures
Decentralized
Organizational Structures
Primary Disadvantages Primary Disadvantages
• Lengthens response times by
those closest to the market conditions
because they must seek approval for their
actions
• Does not encourage responsibility among
lower-level managers and rank-and-file
employees
• Discourages lower-level managers and
rank-and-file employees from exercising
any initiative
43. • Higher-level managers may be unaware
of actions taken by empowered
personnel under their supervision
• Puts the organization at risk if
empowered employees happen
to make “bad” decisions
• Can impair cross-unit collaboration
4/04/2016
4
Structuring the Organisation
Facilitating Collaboration with External Partners and
Strategic Allies
Strategic alliances
Outsourcing arrangements
Joint ventures
Cooperative partnerships
Creating a
Network
Structure:
Using
44. “relationship
managers”
to build and
maintain
cooperative
arrangements
of value to
both parties
Strategy Execution: Policies and Procedures
How Policies and Procedures Facilitate Good Strategy
Execution
Strategy Execution: Policies and Procedures
Managing for
Continuous
Improvement
Best
Practices
Benchmarking
Process
Reengineering
Total Quality
Management
(TQM)
45. Six Sigma
Quality
Programs
The purpose of using benchmarking, best practices, business
process reengineering,
TQM, and Six Sigma programs is to improve the performance of
strategy-critical
activities and thereby enhance strategy execution.
4/04/2016
5
Best Practice
A best practice is a method of performing an activity that
consistently delivers
superior results compared to other approaches.
From Benchmarking and Best Practice
Implementation to Operating Excellence
The more that organizational units use best practices in
performing their
work, the closer a company moves toward performing its value
chain
activities as effectively and efficiently as possible.
This is what excellent strategy execution is all about.
• Involves radically redesigning and streamlining work effort,
46. flows and processes to
achieve dramatic improvements in performance.
• Uses cross-functional teams, cutting-edge technology and
information systems to
reset and refocus the organization’s strategy.
Business Process Reengineering
15
4/04/2016
6
• Creating a total quality culture bent on continuously
improving the performance of
every task and value chain activity.
• Is a long-term race without a finish in which success comes
slowly in small steps
forward (kaizen).
Total Quality Management (TQM)
16
• Utilize statistical methods to improve quality by reducing
defects and variability in
47. business processes.
Six Sigma Principles
• All work is a process.
• All processes have variability.
Six Sigma Programs
17
Top-notch Strategy
Execution and
Operating
Excellence
Continuous
Improvement
(TQM, Six Sigma)
Business
Process
Reengineering
Aims at one-time
quantum
improvement
Aims at ongoing
incremental
improvements
48. • All processes create data that explain variability.
Six Sigma/TQM Action Steps
Empowering all employees
to improve quality
Emphasizing the
necessity for improved
performance
Committing to
total quality and
continuous
improvement
Fostering quality-
supportive behaviors
Using online systems
to speed the adoption
of best practices
Action Steps to Realize the Value of
TQM and Six Sigma Initiatives
4/04/2016
7
49. 1. Measuring to assess and control the progress of strategy
implementation;
and
2. Assessing components that influence the strategy – context
and environment
– to detemine whether the strategy requires adjustment.
Data analysis
http://www.cnbc.com/id/100792215
Data analytics has become a ‘sexy’ job
Evaluation involves…
Installing Information and Operating Systems
20
Benefits of Information Technologies
• Enable better strategy execution
• Strengthen organizational capabilities
• Allow for real-time tracking
• Provide monitoring of empowered employee performance
• Build closer relationships with customers
Considerations
50. • Confidentiality
• Privacy
• Proprietary
Sources of Data
Employee
Customer
Operations Supplier/partner/
collaborative ally
Key Strategic Performance Indicators
Tracked by Information Systems
Industry
Government Financial
performance
4/04/2016
8
Benefits and Challenges of Evaluation
Benefits
• Necessity
• Evidence
51. • Relevance
• Innovation
• Identification of strengths and
weaknesses
Challenges
• Extent of analysis required
• Taking action
• Importance of the issue identified
• Detailed and time consuming
• Change
• Time lags and communication
lines
• Information overload!
• KPIs are quantifiable measurements that reflect the critical
success factors of
an organisation.
– Reflect the success (or failure) of the company in meeting its
goals and
objectives, and even its vision/mission.
52. • KPIs must be:
– Reflective of the organisation’s goals
– Keys to its success (reflect KSFs)
– Quantifiable
• KPIs will vary depending on the organisation.
• A business’ KPI may be the percentage of its income that
comes from return customers.
• A school’s KPI may relate to graduation rates of its students.
Key Performance Indicators (KPIs)
21/03/2016
1
Week 5 Objectives
1. Explain incentives that can influence firms to use an
international
strategy;
2. Identify basic benefits firms achieve by successfully
implementing an
international strategy;
53. 3. Explore the determinants of national advantage as the basis
for
international business-level strategies;
4. Describe the three international corporate-level strategies;
5. Explain the modes firms use to enter international markets;
and
6. Discuss the major risks of using international strategies.
A strategy through which a firm sells its goods or
services outside its domestic market (across border).
Incentives to pursue an international strategy:
• Extend a product’s life cycle (especially if domestic industry
is mature with
stagnant growth)
• Gain easier access to raw materials
• Opportunities to integrate operations on a global scale-
borderless demand for
globally branded products
• Opportunities to better use rapidly developing
technologies
• Gain access to consumers in emerging markets
54. International Strategy
3
21/03/2016
2
International Expansion Example: Proctor & Gamble
1837 – P & G established in the US - Soaps and candles
1915 – Canadian plant established
1930 – Purchased Hedley & Sons in England
1948 – Established an overseas division to manage growing
international
division
1963 – Established European Technical Centre in Belgium
1973 – Entered Japanese market
1995 – Sales outside US had reached 50% of total sales.
Organisation
structure changed to four regional sectors: North America; Latin
America;
Asia and Europe; and the Middle East and Africa. All regional
sectors
reported to the Chief Operating Officer
55. 2004 – P & G had the workings of a global company in terms of
its structure.
A three-axis matrix structure in which the organisational
responsibilities
are divided among regional marketing; product-based R & D
and
manufacturing; and regional logistics.
1. Increased Market Size
• Domestic market is too small to support efficient scale
manufacturing facilities.
• Higher demand growth and income level.
• Larger markets offer higher potential returns and therefore
pose less risk.
• Strong markets may facilitate production/marketing efforts to
create value for
customers.
Benefits of International Strategy
5
https://www.youtube.com/watch?v=oTJF25pIfqY
2. Economies of Scale and Learning
• Expanding size or scope of markets helps achieve economies
56. of scale in
manufacturing as well as marketing, R&D or distribution.
• Exploit core competencies in international markets through
resource and
knowledge sharing between units and network partners across
country borders.
– By sharing resources and knowledge, firms can learn how to
create synergy,
which in turns helps each firm learn how to produce higher-
quality products
at a lower cost.
• Working in multiple international markets also provides firms
with new learning
opportunities.
Benefits of International Strategy
6
21/03/2016
3
3. Location Advantages
• Location advantages offer superior access to critical
57. resources, such as raw
materials, lower-cost labour, energy, suppliers and key
customers.
• Strong cultural match facilitates international business
transactions.
• Close proximity to customers- physical distances affect cost
(e.g. transportation
costs) and influence firms’ location choices.
• Often involves incentives (such as taxation or interest
benefits) to build industry
or economy.
• Access to industry or knowledge spillover due to geographic
cluster of
specialized suppliers.
Benefits of International Strategy
7
• Companies from a given nation are most likely to succeed in
industries in which
the four attributes (see over) are favourable.
• The attributes form a mutually reinforcing system in which the
affect of one
attribute is dependent on the state of the others.
58. Helps managers:
• Predicting where new foreign entrants are likely to come from
and their
strengths.
• Identifying the location-based advantages of conducting
certain value chain
activities of the firm in a particular country.
• Assessing the ease of entry into foreign markets,
and highlighting foreign market opportunities
where rivals are weakest.
National Competitive Advantage: Porter’s Diamond
8
The Diamond of
National Advantage
9
21/03/2016
4
Factors of production are the inputs necessary to compete in any
industry. These
include labour, land, natural resources, capital, and
59. infrastructure.
• Basic factors include natural and labour resources.
• Advanced factors include digital communication systems and
an educated
workforce.
Demand conditions are characterised by:
• The nature and size of buyers’ needs in the home market
• Size of market segment, which produces demand necessary for
creating scale-
efficient facilities
• Efficiency, which can lead to domination of the industry in
other countries
• Opportunities from specialised demand.
National Competitive Advantage: Porter’s Diamond
10
Related and supporting industries include supporting services,
facilities and
suppliers, particularly:
• Support in design
• Support in distribution
60. • Related industries involving suppliers and buyers.
The pattern of firm strategy, structure and rivalry among firms
may relate to:
• Common technical training
• Methodological product and process improvement
• Cooperative and competitive systems.
National Competitive Advantage: Porter’s Diamond
11
A firm’s international strategy can be
categorised based on its relative
emphasis on the following two
dimensions:
1. The need for global integration
• Strategy is determined by the
home office, with coordinated
resource sharing across units
2. The need for local responses
• Where individual country units
need flexibility to choose their
61. own strategies
International Strategies
12
21/03/2016
5
Multi-domestic (Localization) Strategy
• A firm varies its product offering and competitive approach
from country to
country
• Responsive to differing buyer preferences and market
conditions.
• It is a think-local, act-local approach
• Facilitated by decision making decentralized to local level.
International Strategies
13
• EXAMPLE: MTV- Popularity of superstars differ
depending on local tastes. Digital & satellite
technology made localization of programming cheaper
62. and easier, one satellite transponder beaming dozens
of MTV Networks. MTV US has control over creative
and frenetic presentations, while sharing of
programming and content are localized.
Multi-domestic (Localization) Strategy
Key characteristics
• Strategy and operating decisions are decentralised to strategic
business
units (SBU) in each country.
• Products and services are tailored to local markets.
• Business units in each country are independent.
• The strategy assumes markets differ by country or regions.
• The focus is on competition in each market.
Limitations
• Less knowledge sharing for the corporation as a whole.
• Do not allow the development of economies of scale and thus
more costly.
International Strategies
14
63. Global Strategy
• A company employs the same basic competitive approach in
all countries
where it operates, sells much the same products everywhere,
• Strives to build global brands, and coordinates its actions
worldwide with
strong headquarters control.
• It represents a think-global, act-global approach.
• EXAMPLE: CEMEX is a global building materials company
that centralises
operations in order to gain scale economies, among other
benefits.
International Strategies
15
21/03/2016
6
Global Strategy
Key characteristics
• Firm offers standardised products across country markets, with
64. the
competitive strategy being dictated by the home office.
• Strategic and operating decisions are centralised at the home
office.
• This involves interdependent SBUs operating in each country .
• The home office attempts to achieve integration across SBUs,
adding
management complexity.
Limitations
• Less responsive to local market opportunities.
• More effective in areas where regional integration is
occurring.
International Strategies
16
Transnational Strategy
• A think-global, act-local approach that incorporates elements
of both multi-
domestic and global strategies.
• It requires both:
– Centralisation – global coordination and control
65. – Decentralisation – local flexibility.
• The global competitive landscape fosters intense competition,
thus pressures
to reduce costs. At the same time, information sharing has
intensified the
desire for specialised, customised, differentiated products.
• EXAMPLE: Starbucks in China standardises operations and
simultaneously
decentralises some decision making for local responsiveness.
International Strategies
17
There are five available modes of entry into international
markets for firms:
International Entry Modes
18
Risk
increases
Control
increases
21/03/2016
66. 7
Exporting
• Occurs when a firm sends products it produces in its domestic
market to
international markets
– Avoids expense to establish operations in the host country
– Involves contractual agreements
– Export costs mainly include: high transportation costs and
imposed tariffs
• Firms export mostly to countries that are closest to their
facilities
• Can be either positively or negatively affected by trade
policies, such as Free
Trade Agreements (FTAs), such as NAFTA, APTA and EU
FTAs
• Limitations:
– There is little control over marketing and distribution.
International Entry Modes
19
Licensing & Franchising
• Licensing involves an agreement that allows a foreign
67. company to purchase
the right to manufacture and sell a firm’s products within a host
country’s
market or a set of markets.
• Licensor is normally paid a royalty on each unit produced and
sell.
• Limitations:
– Less control over selling and distribution
– International firms may learn the technology of the party with
whom it
formed an agreement and then produce & sell a similar
competitive
products after licensing expires
International Entry Modes
20
Licensing & Franchising
• Franchising is a type of licensing where a firm (the franchisor)
uses a
franchise as a contractual relationship to describe and control
the sharing of
its resources and capabilities with partners (franchisees).
68. • Examples: McDonald’s, Hilton International, Subway, Harvey
Norman
• Franchising spreads risks and enables firms to use resources,
capabilities
and competencies without merging or acquiring another
company.
– Especially attractive in fragmented industries such as retail
and hotels
• Also attractive to franchisee: the business model is available,
the brand is
established, training/systems usually provided, and it usually
has
demonstrated success.
International Entry Modes
21
21/03/2016
8
Strategic Alliances
• It is collaboration with a partner firm for international market
entry
– Involves shared risks and resources
69. – Facilitates development of core competencies
– Involves fewer resources and costs required for entry
• Limitations:
– Incompatibility and conflict between partner
– Lack of trust between partners
– Difficult to manage
International Entry Modes
22
Acquisitions
• In a cross-border acquisition, a firm from one country acquires
a stake in or
purchases 100 per cent of a firm located in another country.
• Allows for quick access to market.
• Limitations:
– Involves possible integration difficulties
– Costly (debt financing)
– Has complex negotiations and transaction requirements
International Entry Modes
70. 23
New Wholly Owned Subsidiaries (Greenfield Venture)
• In a greenfield venture, a firm invests directly in another
country or market by
establishing a new wholly owned subsidiary. The venture:
– Is costly and involves complex processes
– Allows for maximum control
– Has the highest potential returns, carries high risk
• When to set up subsidiaries:
– Internal start-up is cheaper than making an acquisition.
– Adding production capacity will not adversely impact the
supply–demand
balance in the local market.
– A start-up subsidiary has the ability to gain good distribution
access.
– A start-up subsidiary will have the size, cost structure, and
resource
strengths to compete head-to-head against local rivals.
International Entry Modes
24
71. 21/03/2016
9
International Entry Modes
25
Situation Appropriate Entry Mode
A firm has no foreign manufacturing expertise and
requires investment only in distribution
Exporting
A firm needs to facilitate the product improvements
necessary to enter foreign markets
Licensing & Franchising
A firm needs to connect with an experienced partner
already in the target market, reduce its risk through
the sharing of costs, and/or is facing uncertain
situations such as an emerging economy in its target
market
Strategic Alliances & Joint
Ventures
A firm must act quickly to gain rapid access to its new
market, where corruption is not an issue
Acquisitions
72. A firm’s IP rights in an emerging economy are not well
protected, the number of firms in the industry is
growing fast and the need for global integration is
high
New Wholly Owned Subsidiary
Risks in an International Environment
26
• Geographic dispersion increases coordination costs.
• Trade barriers (such as tariffs and import quotas), logistical
costs, cultural
diversity (both in terms of language and cultural
values/customs) and other
differences by country complicate the implementation of an
international
diversification strategy.
– Even the reduction of trade barriers, though the establishment
of things
such as FTAs, will not necessarily guarantee the viability of an
international strategy, eg. Australian car industry
• Resource and risk sharing through inter-organisational
networks (e.g.,
strategic alliances) is one way that firms can build flexibility.
73. The Challenge of International Strategies
27
https://www.youtube.com/watch?v=MzpXIlIm6uo
https://www.youtube.com/watch?v=kCELrz_sYXM
https://www.youtube.com/watch?v=GOHvMz7dl2A
14/03/2016
1
Week 4 Objectives
1. Define business-level strategy;
2. Explain the differences among business-level strategies; and
3. Describe the risks of using each of the business-level
strategies.
Defining ‘Business-level Strategy’
• Business- level strategy:
• An integrated and coordinated set of commitments and actions
designed to
gain a competitive advantage by exploiting core competencies
in specific,
individual product markets.
74. • Business-level strategy is the core strategy: the strategy that
the firm forms to
describe how it intends to compete in the product market.
• All firms must form and use a business-level strategy, unlike
corporate-level,
merger/acquisition, international and cooperative strategies that
will be covered
later in the semester.
3
14/03/2016
2
The Purpose of Business-level Strategy
• The purpose of business-level strategy is to create differences
between the firm’s
position and those of its competitors.
• To position itself differently, the firm must decide whether it
intends to perform
activities differently or to perform different activities.
• The firm’s business-level strategy is a deliberate choice about
how it will perform
75. the value chain’s primary and support activities to create unique
value.
4
Types of Business-level Strategies
5
To position the firm, management may choose from 5 business-
level
strategies:
• Low-cost
• Focused low-cost
• Best-cost provider
These strategies are based on 2 dimensions:
• Target market
– Broad vs Narrow
• Competitive advantage
– Low Cost vs Differentiation
• Differentiation
• Focused differentiation
Competitive Advantage
76. • Low Cost: Lower cost than rivals
– Performing activities differently from rivals
• Differentiation: The ability to differentiate and command a
price premium that
exceeds the extra cost of doing so
– Performing different activities from rivals
Target Market
• Broad: Using capabilities to create value for customers on an
industry-wide basis
in many customer segments
• Narrow: Serving the needs of a narrow customer group,
tailoring its strategy to suit
that group at the expense of others
Types of Business-level Strategies
6
14/03/2016
3
Low-Cost Provider Strategy
7
77. 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
(eg. Geely vs Kia).
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 set off a price war.
Cost Drivers: Cost-Cutting Methods
8
• Striving to capture all available economies of scale.
• Taking full advantage of experience and learning-curve
78. effects.
• Trying to operate facilities at full capacity.
• Improving supply chain efficiency.
• Using lower cost inputs wherever doing so will not entail too
great a sacrifice in quality.
• Using the firm’s bargaining power vis-à-vis suppliers or
others in the value chain system to
gain concessions.
• Using communication systems and information technology to
achieve operating efficiencies.
• Employing advanced production technology and process
design to improve overall efficiency.
• Being alert to the cost advantages of outsourcing or vertical
integration.
• Motivating employees through incentives and company
culture.
https://www.youtube.com/watch?v=hDqWJEfIyKc
When a Low-Cost Strategy Works Best
9
1. Price competition among rival sellers is vigorous.
2. Identical products are available from many sellers.
79. 3. There are few ways to differentiate industry products.
4. Most buyers use the product in the same ways.
5. Buyers incur low costs in switching among sellers.
6. The majority of industry sales are made to a few, large
volume buyers.
7. New entrants can use introductory low prices to attract
buyers and build a
customer base.
14/03/2016
4
Low-Cost Provider Strategy: Pitfalls to Avoid
10
• Engaging in overly aggressive price cutting 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
80. 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.
Differentiation Strategy
11
A differentiation strategy is an integrated set of actions taken to
produce goods or
services (at an acceptable cost- see Mercedes vs Maybach) that
customers
perceive as being different in important ways.
Effective Differentiation Approaches:
• Carefully study buyer needs and behaviours, 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:
81. • Command premium prices for the firm’s products
• Increased unit sales due to attractive differentiation
• Brand loyalty that bonds buyers to the firm’s products
Uniqueness Drivers: Enhancing Differentiation
12
• Striving to create superior product features, design, and
performance.
• Improving customer service or adding additional services.
• Pursuing production R&D activities.
• Striving for innovation and technological advances.
• Pursuing continuous quality improvement.
• Increasing emphasis on marketing and brand-building
activities.
• Seeking out high-quality inputs.
• Emphasizing human resource management activities that
improve the skills,
expertise, and knowledge of company personnel.
14/03/2016
5
82. 1.
Incorporate product attributes and user features that lower
the buyer’s overall costs of using the firm’s product.
2.
Incorporate tangible features (e.g., styling) that increase
customer satisfaction with the product.
3.
Incorporate intangible features (e.g., buyer image) that
enhance buyer satisfaction in noneconomic ways.
4.
Signal the value of the firm’s product (e.g., price, packaging,
placement, advertising) offering to buyers.
Broad Differentiation:
Offering Customers Something That Rivals Cannot
Differentiation: Delivering Superior Value
13
When a Differentiation Strategy Works Best
14
Diversity of
buyer needs
and uses for
the product
Many ways that
differentiation
can have value
83. to buyers
Few rival firms
follow a similar
differentiation
approach
Rapid change
in technology
and product
features
Market Circumstances
Favoring Differentiation
Differentiation Strategy: Pitfalls to Avoid
15
• 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.
84. • Adding frills and features such that the product exceeds the
needs and use
patterns of most buyers.
• Charging too high a price premium.
14/03/2016
6
Focused (Market Niche) Strategy
16
A focused strategy is an integrated set of actions taken to
produce goods or deliver
services that serve the needs of a particular segment.
• Types of focused strategy:
• Focused differentiation
– Eg. Bentley https://www.youtube.com/watch?v=I8RhLzKdEZc
• Focused cost leadership
– Eg. IKEA https://www.youtube.com/watch?v=KomSWbBcpAg
• Firms with a focused strategy gain a competitive advantage in
narrow/specific
85. market niches or segments, even though they do not possess an
industry-wide
competitive advantage.
Focus Strategy
17
• Examples of specific market segments that
can be targeted by a focus strategy are:
• Particular buyer groups
– E.g. youths or senior citizens
• Different segments of a product line
– E.g. professional craftsmen versus do-it-yourselfers
• Different geographic markets
– E.g. Victoria vs South Australia
When a Focused Strategy is Attractive
18
• 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
86. 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 interest in the target segment.
14/03/2016
7
Focused Strategy: Competitive Risks
19
• Competitors will find ways to match the focused firm’s
capabilities in serving the
target niche.
• The specialized preferences and needs of niche members to
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.
87. ‘Best Cost’ Strategy
20
A ‘best cost’ strategy is an integrated set of actions taken to
simultaneously pursue
low cost and differentiation.
• Firms with this strategy offer efficiently produced products
(low cost) with some
unique features (differentiation).
• Requires firms to be competent and flexible in an increased
number of primary
and support activities.
• Examples: Zara and Target (‘Expect more. Pay less’)
When a Best Cost Strategy is Attractive
21
• Product differentiation is the market norm.
• There are a large number of value-conscious buyers who
prefer midrange
products.
• There is competitive space near the middle of the market for a
competitor with
88. 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.
14/03/2016
8
Best Cost Strategy: Competitive Risks
22
• Difficult Balance – Firms pursuing the best cost strategy often
find it hard to
achieve both reduced costs and product differentiation
simultaneously.
• ‘Stuck in the Middle’ – The firm’s cost structure is not low
enough to allow it to
attractively price its products, and that its products are also not
sufficiently unique
to create value for the target customer. This may also result
from firms failing to
implement either the cost leadership or differentiation
strategies.
89. * Research indicates firms using ‘pure
strategies’ (either cost leadership or
differentiation) outperform firms using
‘hybrid strategy’ (best cost).
Primary Source Evidence
Name: _______________________________________________
Date: ________________________
1. What type of source is it?
2. Who authored/created it?
3. When was it created?
4. What historical events were occurring when it was created?
5. Why was it created? Who was the intended audience?
6. What point of view/position does the author/creator
represent?