5How well is the company’s present strategy working ? Q1.How well is the company’s present strategy working ?
6What the strategy is ? Financial Human ressources Marketing Effort to buil competitive advantagePlanned, proactive moves to outcompete rivalsMoves to respond and react to changing conditions in the macroenvironment and industry and competitive conditionsScope of geographic coverageCollaborative partnerships and strategic alliances with othersFinancialHumanressourcesMarketingR&D andSupply chainManufacturing
17Identifying company resource strengths, competencies, and competitive capabilities A skill, an area of specialized expertise, or a competitively important capabilityValuable physical assetsValuable human assets and intellectual capitalValuable organizational assetsValuable intangible assetsAn achievement or attribute that puts the company in a position of market advantageCompetitively valuable alliances or cooperative ventures
18Assessing a company’s competencies and capabilities-What activities does it perform well? Competence- something an organization is good at doingCore competence- internal activity that is central to a company’s strategy and competitivenessDistinctive competence- valuable activity that a company performs better thanits rivals
19A distinctive competence is a competitively potent resource strength It gives a company competitively valuable capability that is unmatched by rivalsIt has potential for being the cornerstone of the company’s strategyIt can produce a competitive edge
20What is the competitive power of a resource strength? Is the resource really competitively valuable?Is the resource strength rare—is it somethingrivals lack?Is the resource strength hard to copy?Can the resource strength be trumped bysubstitute resource strengths and competitivecapabilities?
21Resource-based strategies - attempt to exploit company resources in a Competitively valuable resource strengths and competencies call for the use of a resource-based strategyResource-based strategies- attempt to exploit company resources in amanner that offers value to customers in waysrivals are unable to match- be directed at eroding or a least neutralizing the competitive potency of a particular rival’sresource strengths
23Inferior or unproven skills, expertise, or Identifying company resource weaknesses, missing capabilities, and competitive deficienciesInferior or unproven skills, expertise, orintellectual capital in competitively importantareas of the businessDeficiencies in competitively important physical,organizational, or intangible assetsMissing or competitively inferior capabilities inkey areas
25Identifying a company’s external market opportunities A company’s opportunities can be plentiful orscarce, fleeting or lasting, and can range fromwildly attractive to marginally interesting tounsuitableBig opportunities are nonetheless hard to see inadvance.
26Identifying a company’s external market opportunities Managers have to guard against viewing every industry opportunity as a company opportunityThe market opportunities most relevant to acompany are those that match up well with the company’s financial and organizationalresource capabilities
28Identifying the external threats to profitability Can stem from the emergence of cheaper or better technologies, rivals’ introduction of new or improved products and so on.They may be so imposing as to make acompany’s situation and outlook quitetenuous
29What to look for in identifying a company’s strengths, weaknesses, opportunities, and threats
30Potential resource strengths and competitive capabilities A powerful strategyCore competencies inA distinctive competence inA product that is strongly differentiated from those or rivalsCompetencies and capabilities that are well matched to industry key success factorsA strong financial condition; ample financial resources to grow the businessStrong brand-name image/companyreputationAn attractive customer baseEconomy of scale or learning/experiencecurve advantages over rivalsProprietary technology/superiortechnological skills/important patentsSuperior intellectual capital relative to key rivalsCost advantages over rivalsStrong advertising and promotionProduct innovation capabilitiesProven capabilities in improvingproduction processesGood supply chain managementcapabilitiesGood customer service capabilitiesBetter product quality relative to rivalsWide geographic coverage and/or strongglobal distribution capabilityAlliances/joint ventures with other firmsthat provide access to valuable technology, competencies, and/or attractive geographic markets
31Potential resource weaknesses and competitive deficienciesWeak dealer networks; lack of adequateglobal distribution capabilityBehind on product quality, R&D, and/ortechnological know-howIn the wrong strategic groupLosing market shareLack of management depthInferior intellectual capital relative to leading rivalsSubpar profitabilityPlagued with internal operating problems or obsolete facilitiesBehind rivals in e-commerce capabilitiesShort on financial resources to grow thebusiness and pursue promising initiativesToo much underutilized plant capacityNo clear strategic directionResources that are not well matched toindustry key success factorsNo well-developed or proven corecompetenciesA weak balance sheet, burdened with toomuch debtHigher overall unit costs relative to keycompetitorsWeak or unproven product innovationcapabilitiesA product/service with ho-hum attributes orfeatures inferior to those of rivalsToo narrow a product line relative to rivalsWeak brand image or reputation
32Potential market opportunities Openings to win market share fromrivalsSharply rising buyer demand for theindustry’s productServing additional customer groups ormarket segmentsExpanding into new geographic marketsExpanding the company’s product lineto meet a broader range of customerneedsUtilizing existing company skills ortechnological know-how to enter newproduct lines or new businessesOnline salesIntegrating forward or backwardFalling trade barriers in attractive foreignmarketsAcquiring rival firms or companies withattractive technological expertise orcapabilitiesEntering into alliances or joint ventures toexpand the firm’s market coverage or boostits competitive capabilityOpenings to exploit emerging newtechnologies
33Potential external threats to a company’s prospects A shift in buyer needs and tastes away fromthe industry’s productAdverse demographic changes that threatento curtail demand for the industry’s productVulnerability to unfavorable industry driving forcesRestrictive trade policies on the part offoreign governmentsCostly new regulatory requirementsIncreasing intensity of competitionamong industry rivals—may squeezeprofit marginsSlowdowns in market growthLikely entry of potent new competitorsLoss of sales to substitute productsGrowing bargaining power of customers orsuppliers
35What can be gleaned from the SWOT listings? Identify company resource strengths and competitive capabilitiesConclusions concerning the company’s overall business situation:Where on the scale from “alarmingly weak” to “exceptionally strong” does the attractiveness of the company’s situation rank?What are the attractive and unattractive aspects of the company’s situation?Identify company resource weaknesses and competitive deficienciesIdentify the company’s market opportunitiesImplications for improving company strategy:Use company strengths and capabilities as cornerstones for strategyPursue those market opportunities best suited to company strengths and capabilitiesCorrect weaknesses and deficienciesUse company strengths to lessen the impact of important external threatsIdentify external threats to the company’s future well-being
36ARE THE COMPANY’S PRICES AND COSTS COMPETITIVE ?? ECONOMICS AND TRADELEE SEONG JIN
37THE SIGN OF COMPANY’S POSITION THE COMPETITIVENESS IN PRICES AND COSTS. It should be in line with rivalsTWO TOOLS ARE USED to determine the competitiveness of costs and pricesVALUE CHAIN ANALYSISBENCHMARKING APPROACH
38THE CONCEPT OF COMPANY’S VALUE CHAIN First step in understanding cost structure.It shows specific activities through which firms can create customer value and competitive advantage.Two broad catagories.The primary activitiesThe requisite support activities
40THE VALUE CHAIN SYSTEM FOR AN ENTIRE INDUSTRY A company's cost competitiveness depends not only on the costs of internally performed activities but also on costs in the value chains of its suppliers and forward channel alliesLook at page 120, Figure 4.4
41ACTIVITY-BASED COST ACCOUNTING A tool for determining the costs of value chain activities.Second step for evaluating a company’s competitivenessKEY POINT is !!costs estimates are need at least for each broad category of primary and secondary activity.
42BENCHMARKINGA tool for assessing whether a company’s value chain activities are competitivepotent tool for learning which companies are best at performing , using their techniques(OR BEST PRACTICE) to improve company's own activities.
43BENCHMARKING FOUR STAGES MAKING PLAN COLLECTING INFORMATION ANALYSIS UNIFICATIONIMPLEMENTAION
44BENCHMARKING PROBLEM is how to gain access to information about other companies practices and costs“”The leader companies are often unlikely to share their competitiveness.
45Strategic options for Remedying a cost disadvantage Internal cost disadvantageImplement the use of best practices.Try to eliminate some cost-producing activities altogether by revamping the value chain.Relocate high-cost activities to geographically cheap areas.See if certain internally performed activities can be outsourced.Others are in page 125.
46Strategic options for Remedying a cost disadvantage A supplier-related cost disadvantage.pressure suppliers for lower pricescollaborate closely with suppliersThe forward channel allies.Pressure dealer-distributors and other forward channel allies.Change to a more economical distribution strategy.Work closely with forward channel allies
47Translating Activities into competitive advantage Two Optionsperform value chain activities more proficiently.perform value chain activities more cheaply.Ggeut!! Thank you :D
48Is the company competitively stronger or weaker than key rivals? Q4.Is the company competitivelystronger or weaker than keyrivals?
49Overall competitive strength How does the company rank relative to competitors on each of the important factors that determine market success?Does the company have a net competitiveadvantage of disadvantage VS majorcompetitors?
50Quantitative competitive strength assessments Indicate where a company has a competitively strong and weakProvide insight into the company’s ability todefend or enhance its market position
51To make a list of the industry’s key success factors and most telling measures of competitive strength orweakness factorTo rate the firm and its rivals on each factorTo sum the strength rating on each factor to get an overall measure of competitive strength for each company beingratedTo use the overall strength ratings to draw conclusion
53Unweighted Rating System Each key success factor/competitivestrength measure is assumed to be equallyimportant2. Weighted Rating SystemDifferent measures of competitive strengthare unlikely to be equally important
54Interpreting the Competitive Strength Assessments High Competitive Strength RatingStrong competitive positionPossession of competitive advantageLow Competitive Strength RatingWeak positionCompetitive disadvantage
55Company’ Competitive Strength Scoresagainst rivalsWeaknessesstrength andPinpoint itsPoint directlyactions it can use tooffensive/defensiveto the kinds ofcompetitiveexploit itsstrengthsvulnerabilitiesReduce its
56"Worry List“…-draws on the results of both industry and competitive analysis and company situation analysis-to identify the specific issues/problems-centers on such concerns as "how to...," "what to do about...,"and "whether to..."
57A Good Strategy-contains ways to deal with all the strategic issues and obstacles-is a valuable precondition for good strategy making*Managers need such understanding to craft a strategy that is well suited to the company's competitive circumstances.