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Key Terms to Strategic

Management

Cyrus Ansel L. Ursua


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Competitive

Advantage


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Competitive Advantage means

Anything that a firm does especially wellcompared to rivals.


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Competitive Advantage Cycle.

STEP4. Encroachment

STEP3. Value proposal

STEP2. Barrier toImitation

STEP1. Source ofCompetitive Advantages.

Step 1. Source of Competitive Advantage

Superior assetsSuper CapabilitiesKey Success Factor

Step 2. Barriers to Imitation

higher the barrier to entry to companyWhen the new business opportunitycoming from the Market which entersfirst mover advantagebarriers to imitation


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Step 3. Value proposal form of competitive advantageOperational ExcellenceProduct Leadership

Customer Intimacy

Step 4.Encroachment prevents of competitive advantage

New competitive advantage position constructioneffort encroachment prevents of competitive advantageReinvestment of profit

asset and capability accumulationresource strengthen of competitive advantage


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CompetitiveAdvantage

Cost advantage

DifferentiationAdvantage


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A Model of Competitive advantage

Resources

DistinctiveCompetencies

Capabilities

Cost advantageOr

Differentiationadvantage

ValueCreation


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Main aspects of five forcesanalysis

1. the rivalry between existing sellers in the market

2. the potential threat of the entry of new competitors

3. the threat of substitute products becoming availablethe market

4. the bargaining power of consumer

5. the bargaining power of suppliers


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Main aspects offive forces

analysis


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Competitive advantagestrategies


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Source of Global competitiveadvantage

Adapting tolocal

marketdifferences

Exploitingeconomies

of globalscale

Exploitingeconomies

of globalscope

Tapping theoptimal

locationsfor

activitiesand

resources

Maximizingknowledge

transferacross

location


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Adapting to Local Market Differences

Companies must respond to the inevitableheterogeneity they will encounter in these markets.

Differences in language, culture, income levels,customer preferences, and distribution systems.

(a)Increased

marketshare.

(b)Improved

pricerealization.

(c)Neutralizing

localcompetitors.

Adapting tolocal marketdifferences


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Exploiting Economies of Global Scale

Building a global presence automatically expands acompany's scale of operations, giving it largerrevenues and a larger asset base.

Potential benefits of economies of scale in variousways: spreading fixed costs, reducing capital and

operating costs, pooling purchasing power, andcreating critical mass.


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Exploiting Economies of Global Scope

Global scope refers to the multiplicity of regions andcountries in which a company markets its products andservices.

(a) Providing coordinated services to globalcustomers.

A global supplier has the opportunity tounderstand the unique strategic requirementsand culture of its global customer.

(b) Market power compared with competitors


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Tapping the Optimal Locations for Activities andresources

A firm that can exploit these inter-country differences better than itscompetitors has the potential to create significant proprietary advantage

(a) Performance enhancement.

Location decisions can affect the cost structure in terms of the cost of

local manpower and other resources, the cost of transportation andlogistics, as well as government incentives.

(b) Cost reduction.

(c) Risk reduction.


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Maximizing Knowledge Transfer Across Locations

(a) Faster product and process innovation.

(b) Lower cost innovation.- A second by-product of not reinventing the wheel is considerable savingsin the costs of innovation.

(c) Reduced risk of competitive preemption.

- A global company that demands constant innovations from itssubsidiaries, but does not leverage these innovations effectively acrosssubsidiaries, risks becoming a fount of new ideas for competitors.


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Two Basic Types

Differentiation

CostLeadership

Both can be more broadly approached or narrow,which results in the third viable competitive strategy


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Strategists


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Strategists

Strategists are the individuals who are most responsible forthe success of failure of an organization.

Strategists help an organization gather, analyze


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Strategists

Strategic planners usually serve in a support or

staff role.

Any manager who has responsibility for a unit ordivision, responsibility for profit and loss outcomes,or direct authority over a major piece of thebusiness is a strategic manager (strategist).


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Vision and

MissionStatement


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What is vision?

- FUTURE ORIENTED..

- CONCEPTUAL IMAGE OF OUR

DESIRED FUTURE..- WHERE DO WE WANT TO GO?


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-describes a desirable state that acompany or individual wishes to attain atsome time in the future


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What Is mission??

-purpose and aim of your existence..

- complete description of the overall pur

pose and intentions of that Organ

ization or individual.

-something which outlines the pur

pose of an activity.

-It focuses on today.

- it is concerned about the present cou

rse of actions.


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Therefore a mission statement is something which tells youwhat to do in the present in order to achieve the future..

The mission statement reflects every facet of yourbusiness: the range and nature of the products you offer, pricing, quality, service, marketplace position,growth potential, use of technology, and yourrelationships with your customers, employees,suppliers, competitors and the community.


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Difference b/w mission and vision

Mission refers to the

specific act that is to becarried out.

It declares why you exist?

Focuses on present state.

The idea that an individual

holds as the ultimate goal isthat individuals vision

What do you want tobecome?

focuses on future.


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VISION

MISSION

MISSION

MISSION

MISSION

MISSION

(ULTIMATE GOAL)

SHORT TERM GOALSAND TARGETS


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To become one of the worlds leading producers and providersof entertainment and information. (mission)

To make people happy (vision)


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"McDonald's vision and mission is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so thatwe make every customer in every restaurant smile."


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VISION- Thebest premium

ice-cream player

Mission: we exist to thrillcustomers, define and leadmulti branding, enrichstakeholders and build pow

erful brands.


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External

Threats andOpportunities


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What is an External Analysis?

The process ofscanning and evaluating anorganizations various external sectors

impacting on performance Environmental scanning

Monitoring & interpreting sweep of social,political, economic, environmental, &technological events to spot budding trends that

could eventually impact the industry Allow decision makers to know whats

happening in the external environment Recognize and anticipate external environmental

changes


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What is an External Analysis?

Evaluating external sectors involves

looking for:(1)Opportunities: Positive external

environmental trends that improve theorganizations performance

(2)Threats: Negative externalenvironmental trends that hinder theorganizations performance


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How Do You Do An External Analysis

External environmental sectors External vs. Internal Environment

External environment affects all competitors Internal environment affects only the decision

makers firm

Specific or Task Environment External sectors that directlyimpact decisions and

actions by opening up opportunities or threats General Environment External sectors that indirectlyaffect decisions and

actions and may present opportunities or threats


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How Do You Do An External Analysis

General Environment

Specific Environment

Organization

Socio-culturalDemographic

EconomicPoliticalLegal

Tech


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General Environment Five main general environmental sectors

Economic

All macroeconomic data, current statistics, trends &changes

Interest rates; exchange rates; inflation rates; budgetdeficit-surplus; trade deficits-surplus; consumer

income, spending, & debt levels; employment-unemployment rates, workforce productivity, etc.


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General Environment

Demographic Current statistical data and trends in population characteristics

Gender; Age; Income levels; Ethnic makeup; Education; Familycomposition; Geographic location; Birthrates; Employment status

Technological Improvements, advancements, and innovations

that create opportunities & threats

Communications; computing; transportation;robotics; manufacturing; telecom; consumerelectronics, etc.


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General Environment Socio-Cultural Nature of the countrys culture and how its changing

Societys traditions, values, attitudes, beliefs, tastes,patterns of behavior, and how they are changing Political-Legal The various laws, regulations, judicial decisions, and

political forces that are currently in effect at the federal,state, and local levels of government

Regulations enacted by professional associations, e.g.FASB

Potential legal, regulatory, & political changes, orpending judicial decisions that might take place & couldimpact firms


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Common Types of Driving Forces Changes in long-term industry growth rate

Changes in buyers of the product & how they use it

Product innovation Technological change/process innovation

Marketing innovation

Entry or exit of major firms

Diffusion of technical knowledge Changes in costs and efficiency


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Common Types of Driving Forces

Increasing globalization of industry Market shift from standardized to

differentiated products New regulatory policies and/or government

legislation Changing societal concerns, attitudes, and risk

lifestyles Changes in the degree of uncertainty andbusiness risk


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Responsibilities for External Analysis

Lower level or supervisory managers Encourage workers to observe and interact with external parties

(customers & supplier reps) Collect & consolidate information from workers

Middle managers Coordinate external information

Share information with other organizational units

Act as information gatherer & disseminator Monitor general information

Make neede strategic changes

Upper Management Evaluate opportunities & threats


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Benefits of Doing an External Analysis

Proactive Managers anticipate changes andplan accordingly

Provide information for Planning Decision making Strategy formulation

Acquire and control needed resources Cope effectively with increasingly dynamic

environment Make a difference with higher performance


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Challenges of Doing an External

Analysis Rapid environmental changes are difficult to

keep up with

Amount of time that the analysis can consume Identifying accurate forecasts and trends

Availability of data and information

Date post:	03-Apr-2018
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