1. Group Exercise
For your Case Company:
Are there examples of rivals that more closely follow CL, Diff, and Focus?
Provide 5 different company examples (hypothetical is ok) of rivals deploying one of the named grand strategies.
You have 15 minutes.

2. Break Out Reporting
Case:
Industry:
Company & Rival Generic Strategy Examples:
Grand Strategy Examples:

3. Business Strategy:Building Sustainable Competitive Advantages
Session 11
Business Strategy:Building Sustainable Competitive Advantages

4. Session Topics: Three Items
1. Evaluating and Choosing Business Strategies: Seeking Sustained Competitive Advantage
Evaluating Cost Leadership Opportunities
Evaluating Differentiation Opportunities
Evaluating Speed as a Competitive Advantage
Evaluating Market Focus as a Way to Win Competitive Advantage
2. Selected Industry Environments and Business Strategy Choices
Emerging Industries
Growth Industries
Mature
Declining Industries
Fragmented Industries
Global Industries
3. Dominant Product/Service Businesses: Diversification to Build Value

5. Key Issues: Strategic Choice in Single Businesses
1. What strategies are most effective at building sustainable competitive advantages for single business units?
2. When should dominant-product/service businesses diversify to build value and competitive advantage? What grand strategies are most appropriate?

6. How should you choose among competitive advantage strategies?

7. Prominent Sources of Competitive Advantage
Cost leadership
Sources of competitive advantage
Differentiation
Speed
Market focus

8. For Each of the Four: CL, Diff, Speed/RR, MF
Skills and Resource Requirements
Structural/Organizational Requirements
Value Chain Examples
Advantages
Risks

9. Evaluating A Business’s Cost Leadership Opportunities
A. Skills and Resources Fostering Cost Leadership
Sustained capital investment and access to capital
Process engineering skills
Intense supervision of labor or core technical operations
Products or services designed for ease of manufacture or delivery
Low-cost distribution system
B. Organizational Requirements Supporting Cost Leadership
Tight cost control
Frequent, detailed control reports
Continuous improvement and benchmarking orientation
Structured organization and responsibilities
Incentives based on meeting strict, usually quantitative targets

10. Evaluating A Business’s Cost Leadership Opportunities -- C
Evaluating A Business’s Cost Leadership Opportunities -- C. Examples of Ways Businesses Achieve Competitive Advantage
Technology development
Process innovations lowering production costs
Product redesign to reduce number of components
Global, online suppliers provide automatic restocking of orders based on sales
Inbound logistics
Operations
Outbound logistics
Marketing & sales
Service
Economy of scale in plant reduces equipment costs and depreciation
Computerized routing lowers transportation expense
Cooperative advertising with distributors creates local cost advantage in buying media space and time
Subcontracted
service
technicians
repair
product
correctly
first time
or bear
costs
Reduced levels of management cuts corporate overhead
Computerized, integrated information system reduces errors and costs
Safety training for all employees reduces absenteeism, downtime, and accidents
Human resource management
General administration
Favorable long-term contracts; captive suppliers or key customer for supplier
Procurement
margin
Profit 21

11. Advantages of a Cost Leadership Strategy
Low-cost advantages reduce likelihood of pricing pressure from buyers
Sustained low-cost advantages may push rivals into other areas, lessening price competition
New entrants must face an entrenched cost leader without experience to replicate cost advantages
Low-cost advantages should lessen attractiveness of substitutes
Higher margins allow low-cost producers to withstand supplier cost increases

12. Key Risks of Cost Leadership
Many cost-saving activities are easily duplicated
Exclusive cost leadership can become a trap
Obsessive cost cutting can shrink other competitive advantages involving key product attributes
Cost differences often decline over time

13. Industry Environments and Strategy Choices
Emerging Industries
Growth Industries
Mature Industries
Declining Industries
Fragmented Industries
Global Industries

14. For each Industry Environment …
Characteristics
Strategic Options

15. Characteristics of Markets in Emerging Industries
Proprietary technology and technological uncertainty
Competitor uncertainty regarding inadequate information
High initial cost structure
Few entry barriers
First-time buyers require initial inducement
Inability to easily obtain raw materials and components
Need for high-risk capital

16. Strategic Options for Emerging Industries
1. Ability to shape industry’s structure
2. Ability to rapidly improve product quality
3. Establish favorable relations with key suppliers
4. Ability to establish technology as dominant force
5. Acquire a core group of loyal customers
6. Ability to forecast future competitors

17. Grand Strategy Selection Matrix
Overcome weaknesses
Maximize strengths
External (acquisition or merger for resource capability)
Internal (redirected resources within the firm)
Turnaround or
retrenchment
Divestiture
Liquidation
Vertical integration
Conglomerate diversification
Concentrated growth
Market development
Product development
Innovation
Horizontal integration
Concentric diversification
Joint venture I II IV
III

18. Model of Grand Strategy Clusters
Rapid market growth
Slow market growth
Weak competitive position
Strong competitive position
1. Concentrated growth
2. Vertical integration
3. Concentric diversification
1. Reformulation of concentrated growth
2. Horizontal integration
3. Divestiture
4. Liquidation
1. Concentric diversification
2. Conglomerate diversification
3. Joint venture
1. Turnaround or retrenchment
2. Concentric diversification
3. Conglomerate diversification
4. Divestiture
5. Liquidation II I
III IV

19. Conclusion: Selecting a Business Strategy to Achieve a Competitive Advantage
Focusing on key sources of competitive advantage requiring total, consistent commitment
Selection of appropriate business strategie(s) involves
Weighing skills, resources, organizational requirements, and risks of each source of competitive advantage
Considering unique effects of the generic industry environment on a firm’s value chain activities