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SMMCG8[BS-3]LN5&LN6, Conclusion, Valuable Rare Inimitable …

- - - - predict nearly 50% of profit performance
    - - more important
        
        nearly 80% of the firm
        
        some firms outperform others in the same industry
        
        e.g.
        
        Southwest Airlines
        
        stock
        
        2 more items...
        
        averaged net margins of 5.8%
        
        1 more item...
        
        Real Madrid and Barcelona(Spanish La Liga)
        
        far behind the Premier League
  - - - return on equity
      - return on capital employed
      - return on assets
    - - cash profits of the company
      - projecting our future free cash flows
    - - the company's economic value added(EVA)
    - - the difference between the value generated
      - the cost incurred by the company for the average custome
      - greater EVA
        
        the company has a competitive advantage
    - - to develop and sustain a competitive advantage over time
    - - sustaining a competitive advantage
        
        how can these performance advantages be made durable?
        
        How can they be made to last?
      - heterogeneity
        
        what are the attributes that make firms different in their performance?
        
        how can a company acquire or develop these attributes?
- - - - Less generic
        
        The sub-categories of activities used
        
        How they are connected to each other
      - Airline company
        
        major groups of activities
        
        Aircraft operation
        
        A conscious choice
        
        Highly specific
        
        Passenger amenities
        
        Route structure & scheduling
      - Discerned & illustrated
        
        Relationships between activities
        
        The categories of activities
        
        Become quite explicit & clear
        
        by the strategist
      - Service industries
        
        concept
        
        example for airline company
        
        market services
        
        pricing
        
        sell tickets
        
        plan its route structure
        
        acquire the necessary permissions and gate space to operate flights from and to specific airports
        
        purchasing or leasing aircrafts
        
        maintenance and baggge
        
        manage pilote and crew
        
        purchasing fuel
    - - How to illustrate the relationships between these activities?
      - How to organize a large set of activities into meaningful subsets?
    - - manufacturing firm
        
        coordinated with neighboring stages of the value chain.
        
        organized along a set of Support Activities
        
        adding flow of material
        
        Accounting and Finance
        
        Human Resources
        
        Information Systems
        
        Procurement
        
        Research and Development
        
        organized along a set of Primary Activities
        
        distribution logistics
        
        marketing
        
        in-bound supplier logistics
        
        post-sales customer service
        
        intermediate and final production operations
  - - - To repeatedly perform
      - Satisfactory level of execution
      - The capacity of the firm to actually DO something
        
        e.g. Apple Inc.
        
        Deployment, combination and linking of resources
        
        Need not a map to functional area
        
        Learning in organizational routines and processes
  - - - Financial
        
        cash at hand / borrowing capacity
      - Physical
        
        buildings / machinery / real estate
        
        More valuable and rare can vary quite a bit by industry and even company
    - - Technology
        
        product innovations / creative products
      - Relationships
        
        product reputation / customer relationships
        
        Playing a much bigger role in determining firm value
        
        Much more important nowadays for creating economic value
        
        Have a greater potential to differentiate firms from their rivals
      - Human capital
        
        skills & expertise
    - - The greatest potential to create
        
        Significantly increase customer value and/or reduce costs and thus increase the price-cost wedge
      - Difficult to own or access exclusively
  - - - Help increase economic value added (EVA)
    - - The ability to increase EVA is not commonly available
        
        Heterogeneity
        
        History
        
        Path dependence
        
        Foresight by management
        
        Luck
    - - a matter of judgment
      - a blended approach
  - - - Recogonize ,increase efficient , make good synergies and combine
        
        The example in the video is taliking about soccer ream
- - - - Imitation
      - Replication
        
        Different product but achieve similar results
        
        Prevent imitation and replication
        
        Solution
        
        Isolating mechanisms
        
        Causal ambiguity
        
        1 more item...
        
        Complexity
        
        1 more item...
        
        Tacit knowledge
        
        1 more item...
        
        Time compression diseconomies
        
        Property rights
        
        Raise the costs for rival to mimic
      - Non-durability
      - Non-relevance
        
        The firm's ability to continue to create value
    - - Apple
        
        Reputation and brand image could be lost over time
        
        Talented employees
        
        leave
        
        stop working well together
        
        Key activities may fade from its value network
        
        Solution
        
        Pivots away
        
        from products iPhone and iWatch, towards products such as Apple TV or electric cars
    - - It's difficult for rivals to imitate
        
        Reason
        
        many choices among activities
        
        many potential combinations among activities
  - - - Performance
  - - - metaphor: Leaky Bucket
        
        Solutions
        
        Plug leaks
        
        try to preserve resources
        
        maintain activity system
        
        retain people
        
        Keep topping up
        
        New hires
        
        replace lost talent
        
        Training and Managerial Intervention
        
        strengthen activity system and capabilities
        
        Bucket
        
        company's sources of competitive advantage
        
        face the prospect
        
        internal strengths diminishment
        
        resources degrading
        
        routines and activities lost
        
        key employees and partners leaving
        
        capabilities deterioration
        
        Water
        
        Company
    - - Arguably biggest challenge
        
        with a dynamic and constantly changing environment
      - Core competencies become core rigidities
        
        acquiring or building new relevant competences
      - Requires dynamic capabilities
- - - - Expansion into retail operations
      - Technological advances
      - Emerging international markets
      - Brand extension
    - - Increased competition from coffee shops and others (restaurants, street carts, supermarkets)
      - Coffee price volatility in developing countries
      - Negative publicity from poorly treated farmers in supplying countries
      - Consumer trends toward more healthy ways and away from caffeine
    - - Customer base loyalty
      - Company operated retail stores, International stores (no franchises)
      - Valued and motivated employees, good work environment
      - Good relationships with suppliers
  - - - Inbound Logistics
        
        proprietary roasting and packaging
        
        ensuring high-quality standards right from the point of selection of coffee beans
      - Operations
        
        operates in more than 80 markets, either in the form of direct company-owned stores or licensed stores.
      - Outbound Logistics
        
        no presence of intermediaries in product selling for Starbucks. The majority of the products are sold in stores.
        
        storage and distribution to retail locations are important.
      - Marketing and Sales
        
        need-based marketing activities are carried out by the company during new product launches in the form of sampling in areas around the stores
      - Service
        
        Starbucks aims at building customer loyalty through its in-store customer service.
        
        A substantial amount of value is created when baristas make drinks for customers.
    - - Infrastructure
        
        employs business managers in its corporate offices
        
        store managers on-site that help to oversee well-designed and pleasing stores complemented with good customer service provided by the dedicated team of employees in green aprons
      - Human Resource Management
        
        company taking care of its workforce(a key reason for a low turnover of employees),which indicates great human resource management.
        
        training programs conducted for employees in a setting of a work culture, which keeps its staff motivated and efficient.
      - Technology Development
        
        launched several platforms where customers can ask questions, give suggestions, openly express opinions, and share experiences.
        
        uses Apple’s iBeacon system, where customers can order a drink through the Starbucks phone app and get a notification of its readiness when they walk in the store.
      - Procurement
        
        handles all of the procurement for its own coffee beans, which it sees as one of its competitive advantages.
  - - - In 1971, begins by selling roasted
        whole coffee beans in Seattle
      - Howard Schultz joins Starbucks in 1982, visits Italy in 1983,founds Il Giornale coffee houses
      - In 1987, Starbucks was sold to
        Schultz and merged with Il Giornale, with a total of 11 storesin Seattle and Vancouver
      - Starbucks began a rapid
        expansion of coffeehouses, and by 2018 had grown to over or 29,324 stores globally in 2018
    - - Relationships with brokers and
        growers ensures access to
        quality coffee beans
      - Multiple quality checks
        conducted before and during
        shipment
      - Starbucks has encoded roasting recipes into the software of automated roasting machines
    - - Infused with the aroma of coffee, with welcoming lounge seating and laid back ambience
      - Starbucks developed different store layout styles to fit different types of available real estate
    - - thriving business in consumer products sold through multiple channels , by leveraging its strong coffee brand
    - - Personalization---Starbucks seeks to create “customer intimacy”
        
        learn the names of customers
        
        knowing customer preferred drink
        
        customizing drinks for customer