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What are the foundations of strategic competitiveness?

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What are the foundations of strategic competitiveness? Basic concepts of strategy: Competitive advantage operating with an attribute or set of attributes that ... – PowerPoint PPT presentation

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Title: What are the foundations of strategic competitiveness?


1
What are the foundations of strategic
competitiveness?
  • Basic concepts of strategy
  • Competitive advantage operating with an
    attribute or set of attributes that allows an
    organization to outperform its rivals.
  • Sustainable competitive advantage one that is
    difficult for competitors to imitate.

2
What are the foundations of strategic
competitiveness?
  • Basic concepts of strategy (cont.)
  • Strategy a comprehensive action plan that
    identifies long-term direction for an
    organization and guides resource utilization to
    accomplish organizational goals with sustainable
    competitive advantage.
  • Strategic intent focusing all organizational
    energies on a unifying and compelling goal.

3
What are the foundations of strategic
competitiveness?
  • Basic concepts of strategy (cont.)
  • Strategic management the process of formulating
    and implementing strategies to accomplish
    long-term goals and sustain competitive advantage.

4
What are the foundations of strategic
competitiveness?
  • Goal of strategic management is to create
    above-average returns for investors.
  • Returns exceeding those for alternative
    opportunities at equivalent risk.
  • Earning above-average returns depends in part on
    the organizations competitive environment.

5
What are the foundations of strategic
competitiveness?
  • Environments and competitive advantage
  • Monopoly.
  • Only one player and no competition.
  • Creates absolute competitive advantage.
  • Oligopoly.
  • Few players not directly competing against each
    other.
  • Long-term competitive advantage in defined market
    segment.
  • Hypercompetition.
  • Several players directly competing against each
    other.
  • Any competitive advantage is only temporary.

6
What is the strategic management process?
  • Strategy formulation
  • The process of creating strategy.
  • Involves assessing existing strategies,
    organization, and environment to develop new
    strategies and strategic plans capable of
    delivering future competitive advantage.

7
Figure 9.1 Strategy formulation and
implementation in the strategic management
process.
8
What is the strategic management process?
  • Strategic question for strategy formulation
  • What is our business mission?
  • Who are our customers?
  • What do our customers consider value?
  • What have been our results?
  • What is our plan?

9
What is the strategic management process?
  • Strategy implementation
  • The process of allocating resources and putting
    strategies into action.
  • All organizational and management systems must be
    mobilized to support and reinforce the
    accomplishment of strategies.

10
What is the strategic management process?
  • Essential tasks for strategy implementation
  • Identify organizational mission and objectives.
  • Assess current performance vis-à-vis mission and
    objectives.
  • Create strategic plans to accomplish purpose and
    objectives.
  • Implement the strategic plans
  • Evaluate results change strategic plans and/or
    implementation processes as necessary.

11
What is the strategic management process?
  • Analysis of mission
  • The reason for an organizations existence.
  • Good mission statements identify
  • Customers
  • Products and/or services
  • Location
  • Underlying philosophy
  • An important test of the mission is how well it
    serves the organizations stakeholders.

12
What is the strategic management process?
  • Analysis of mission
  • What kind of difference do we want to make in the
    world?
  • What do we want to be known for?
  • Starbuckss mission is to be the premier
    purveyor of the finest coffee in the world while
    maintaining our uncompromising principles as we
    grow.

13
Figure 9.2 How external stakeholders can be
valued as strategic constituencies of
organizations.
14
What is the strategic management process?
  • Analysis of values
  • Values are broad beliefs about what is or is not
    appropriate.
  • Strong core values for an organization helps
    build institutional identity, gives character to
    an organization, and it backs up the mission
    statement.
  • Organizational culture reflects the dominant
    value system of the organization as a whole.

15
What is the strategic management process?
  • Organizational culture ?
  • Shapes the values of managers and other
    organization members.
  • Points people in common directions.
  • Helps build institutional identity.
  • Gives character to the organization in the eyes
    of employees and external stakeholders.
  • Backs up the mission statement.
  • Guides the behavior of organizational members in
    meaningful and consistent ways.

16
What is the strategic management process?
  • Analysis of objectives
  • Objectives are specific results that
    organizations try to accomplish (like their
    goals)
  • Whereas a mission statement sets forth an
    official purpose for the organization
  • And the core values describe the appropriate
    standards of behavior for a companys
    accomplishments.

17
What is the strategic management process?
  • Analysis of objectives
  • Typical operating objectives according to Peter
    Drucker
  • Profitability (make money)
  • Market share (increase customers)
  • Human talent (top talent)
  • Financial health (positive cash flow)
  • Cost efficiency (low cost)
  • Product quality (high quality)
  • Innovation (leading edge)
  • Social responsibility (positive contribution to
    society)

18
SWOT ANALYSIS
  • A SWOT analysis is performed in order to
    determine the strengths, weaknesses,
    opportunities and threats of an organization
  • A major goal of a SWOT analysis is to find out
    what a companys core competency is.
  • A core competency is a special strength that
    gives an organization a competitive advantage.

19
Figure 9.3 SWOT analysis of strengths,
weaknesses, opportunities,and threats.
20
SWAT ANALYSIS
  • Note that the strengths and weaknesses stem from
    internal sources (within the company) whereas the
    opportunities and threats stem from external or
    environmental factors.
  • External factors include technology, government,
    social structures, population demographics,
    competitors, and customers. Opportunities
    usually exist as new markets, strong economy or
    weakness in competitors

21
SWOT ANALYSIS
  • What are our Opportunities?
  • Possible new markets?
  • Strong economy?
  • Weak market rivals?
  • Emerging technologies?
  • Growth of existing market?
  • What are our Threats?
  • New competitors?
  • Shortage of resources?
  • Changing market tastes?
  • New regulations?
  • Substitute products?

22
Figure 9.4 Porters model of five strategic
forces affecting industry competition.
Source Developed from Michael E. Porter,
Competitive Strategy (New York Free Press, 1980).
23
How are strategies formulated?
  • Porters generic strategies model
  • Michael Porter developed a five force model for
    industry analysis to help answer the question Is
    this an attractive industry for us to compete in?
    and How can we best compete for customers in
    this industry?

24
Porters Generic Strategies
  • According to Porter, business-level strategic
    decisions are driven by two basic factors
  • 1) Market scope How broad or how narrow is the
    target market (niche market?)
  • 2) Competitive advantage How will you compete
    by lower price or by product uniqueness?

25
Figure 9.6 Porters generic strategies framework
soft-drink industry examples.
26
Porters Generic Strategies
  • Porters generic strategies for gaining
    competitive advantage
  • Differentiation strategy
  • Cost leadership strategy
  • Focused differentiation strategy
  • Focused cost leadership strategy

27
Porters Generic Strategies
  • Differentiation where the organizations
    resources and attention are directed toward
    making its products appear different from those
    of the competition (example, Coke, Pepsi,
    Starbucks)
  • Organizations pursuing differentiation strategy
    seek competitive advantage by making their
    products clearly different from their
    competitors. The objective is to attract
    customers who become loyal. This strategy
    requires organization strength in marketing and
    creativity. Its success depends on continuing
    customer perceptions of product quality and
    uniqueness (i.e. Polo, Ralph Lauren)

28
Porters Generic Strategies
  • Cost Leadership Where the organizations
    resources an attention are directed toward
    minimizing costs to operate more efficiently than
    the competition (example, Presidents Choice
    Cola, No Frills)
  • Organizations pursuing a cost leadership strategy
    try to have lower costs than their competitors
    and therefore achieve higher profits. The
    objective is to continually improve efficiency
    with tight cost controls. (Walmart)

29
Porters Generic Strategies
  • Focused Differentiation where the organization
    concentrates on one special market segment and
    tries to offer customers in that segment a unique
    product (AW Root Beer, Canada Dry). The
    objective is to serve the customers needs better
    than anyone else.

30
Porters Generic Strategies
  • Focused cost leadership Where the organization
    concentrates on one special market segment and
    tries in that segment to be the provider with the
    lowest costs (ex. Red Cherry Pop). Another
    example is West Jet. They are a successful low
    cost airline. They took out business class and
    food services to keep costs low and they fly into
    smaller airports. This no-frills approach, has
    helped West Jet to become Canadas second largest
    airline.

31
Corporate Governance
  • Corporate governance
  • System of control and performance monitoring of
    top management.
  • Done by boards of directors and other major
    stakeholder representatives.
  • The BOD and the shareholders ensure that an
    organization operates in the best interests of
    its owners.
  • Increasing emphasis on corporate governance in
    contemporary businesses.
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