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BS4 Strategic Positioning and Strategic Renewal, G5 (林奧都 - Aldo, 廖莉琪 -…
BS4 Strategic Positioning and Strategic Renewal
Generic BusinessStrategies
Things that can affect cost in a business
scale and learning economics
manufacturing
processing
managerial inefficiency / bureacracy
big source of hidden costs in many business nowadays
using this approach
help you to look cost drivers of a business
help you to reduced those costs
production techniques
capacity utilization
input costs
example
reducing Walmart's input costs
reduced building and acquiring key resources
developing strong supplier relationship
Consumer perceptions of value
product features
example
technology will always evolve
customer service
example
hotel - good serving method
customization
example
starbucks - various kind of product that can be customized by customer
complements
complements are important too
differentiation advantage
command a price premium
emphasizes value creation
focus on increasing the value created for customers
produce the unique products and services that difference with competitors
cost leadership
at a lower cost
emphasis on controlling costs
produce products and services that similar with competitors
make profit on high volume and fast turnover
Cost differentiation
broad scope
customer segments and sales channels
narrow scope
promote the aura of exclusivity around the product
making more valuable to customers
help firms in pursuing a cost leadership strategy
specific segments and/or channels
problem
not have significant scale economies to begin with.
reduce costs by avoiding some customer segments that are too costly
to serve
4 possible generic strategies
broad differentiation
focused low cost
focused differentiation
broad cost leadership
achieve cost leadership
needs to understand customer value
apply its resources, capabilities or activities in its value chain
Dual Strategies
The difficulty of dual strategies
Must repeatedly trade off the possibility to increase differentiation with the possibility to decrease cost
Basically, activities that increase differentiation will increase cost and vice versa
Trade off must be made between cost and differentiation so that the firm "won't stuck in the middle"
Firm that uses dual advantage will often ends up with competitive disadvantage if don't know when to reduce cost or increase differentiation
Example = Saab Company
1944
Saab, aircraft manufacturer start producing car
1960
Releasing distinctive designed car with many followers
1989
Struggling to make profits and 50% stakes were acquired by General Motors Company
1994
Introduced a car with common platform model to reduce cost
The new design didn't reflect Saab so it was being prostested because they lost its distinctiveness
2011
Goes bankrupt because of the decreasing differentiation
The purpose of dual strategies
To develop competitive advantage
Increase differentiation
Decrease cost
number of companies have actually been successful with a dual strategy
Dell
build computers to order
allow users to customize their computer orders
holding inventory is very expensive
Honda and Toyota are making quality, reliable cars
Total Quality Management (TQM) practices in their design
manufacturing that resulted in high quality automobiles
became a significant source of customer value
an old adage in TQM circles is that “quality is free”
by producing quality products the first time, you do away with costly rework and repair
begin to identify other sources of cost savings
simplified design
production bottlenecks
a dual strategy is not easy
strategic renewal
everything is keep changing
circuit city
sucess bulit on its strategy
leading edge logistics to ensure customer found the right assortment
having excellent store customer service
lose because leadership missteps
competiton company increase
online retailers
discount retailers
unable to adapt its overall strategy to the new enviroment
enviroment change
to diminishes the value of company's internal strengths
undermines its competitive advantage with respect its environment
losing strategic alignment
so creat new strategic
dynamic capabilities
capabilities that enable companies to change their resource
or capability base
higher order or secondary capabilities that help companies
change how they survive and perform
operational
capabilities
that is to make a living in
the present
new product development
organizational
transformation
alliances
business development
acquisitions
3-P framework
developed by Teece, Pisano and Shuen
Positions
essentially resource
positions that can be similarly employed
paths
refer to opportunity
which can be exploited by using the firm’s processes
and positions.
processes
activities and routines that are well encoded within the firm
can be deployed effectively in pursuit of a new strategy.
Conclution
Dual advantage Strategy
Risks being "Stuck in the middle"
Needs clarity and discipline
Strategic renewal--when lost strategic alignment
3P dynamic capabilities framework
Cost leadership v.s. Differentiation
Narrow and Broad scope
G5
林奧都 - Aldo
廖莉琪 - Angela
陳威霖 - Willie
劉津綝 - Alice
甄㛩媄 - Yvonne
林美娜 - Hana
黃子芸 - Delia
important in