What Is Strategy

Competitive Strategy - Introduction

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The Concept of Strategy

Sources of profit -

Profit over the cost, industry attractiveness, competitive advantage: corporate strategy and business strategy resp

Areas to consider -

What Product category, market segment, geographical areas, core technologies, value creation stages

Profit How?

Speed of expansion, low cost thru economies of scale - replication advantages, premium prices thru unmatched service.

Product features

How to get there?         Internal development, joint ventures, licensing-franchising, acquisitions

How to win?                 Brand image, customization, price, styling, product reliability

Industry Organization (I/O) model of above average returns -

Firms Strategic choices: Diversification, product differentiation, barriers to market entry, economies of scale, industry concentration, market frictions

Resource based model of above average returns -

Resources strengths, capability of firm, comp advantages, attractive industry, strategy formulation, superior returns

5 forces -

Potential entrants, suppliers, buyers, industry rivalry, substitutes

Competitive Strategy 1

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Structural Determinants of competition -

Buyer power - Sensitive to price, Relative bargaining power

Threat of Entry - Capital, Economies of scale, cost advantages, product differentiation, Legal barriers, and retaliation

Buyer power - price sensitivity, buyer competition, bargain power - size and concentration, switch cost, buyer ability to backward integrate , Substitue competition, Industry rivalry

Attractive industry - high entry barriers, supllier-buyers positions weak, fewer threats from substitutes, moderate rivalry among competitors

Sources of Superior Profitability

Strategy as Decision Support – Improves the quality of decision making;

Strategy as Coordination & Communication - Creates consistency and unity;

Strategy as Target - Improves performance by setting high aspirations

Chapter 3 - Industry Analysis: The Fundamentals

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