Lecture Strategic management - Chapter 5: Business-level strategy: Creating and sustaining competitive advantages

Chapter Five Business­Level Strategy: Creating and Sustaining Competitive Advantages TRANSPARENCY­41 Learning Objectives After studying this chapter, you should have a good understanding of: • The central role of competitive advantage in the study of strategic management • The three generic strategies—overall cost leadership, differentiation, and focus • How the successful attainment of generic strategies can improve a firm’s relative power vis á vis the five forces that determine an industry’s average profitability • The pitfalls managers must avoid in striving to attain generic strategies • How firms can effectively combine the generic strategies of overall cost leadership and differentiation • The importance of considering the industry life cycle to determine a firm’s business­level strategy and its relative emphasis on functional area strategies and value creating activities STRATEGIC MANAGEMENT CHAPTER 5 McGraw­Hill/Irwin Gregory G. Dess and G. T. Lumpkin Copyright © 2003 by The McGraw­Hill Companies, Inc. All rights reserved. TRANSPARENCY­42 Exhibit 5.1 Three Generic Strategies COMPETITIVE ADVANTAGE Uniqueness Perceived By the Customer Low Cost Position Industrywide Differentiation Overall Cost Leadership Particular Segment Only Focus Source: Adapted from Porter, M.E. 1980. Competitive Strategy, New York: Free Press, page 39. STRATEGIC MANAGEMENT CHAPTER 5 McGraw­Hill/Irwin Gregory G. Dess and G. T. Lumpkin Copyright © 2003 by The McGraw­Hill Companies, Inc. All rights reserved. TRANSPARENCY­43 Exhibit 5.2 Competitive Advantage and Business Performance Competitive Advantage Performance Return on Investment Sales Growth Gain in Market Share Sample Size Differentiation and Cost 35.5 15.1 5.3 123 Differentiation 32.9 13.5 5.3 160 Differentiation Cost Focus 30.2 17.0 13.5 16.4 5.5 6.1 100 141 Cost Stuck­ Focus in­the­ Middle 23.7 17.8 17.5 12.2 6.3 4.4 86 105 STRATEGIC MANAGEMENT CHAPTER 5 McGraw­Hill/Irwin Gregory G. Dess and G. T. Lumpkin Copyright © 2003 by The McGraw­Hill Companies, Inc. All rights reserved. TRANSPARENCY­44 Exhibit 5.3 Value Chain Activities: Examples of Overall Cost Leadership Firm Infra­ structure Human Resource Management Technology development Procurement Few management layers to reduce overhead costs Minimize costs associated with employee turnover through effective policies Effective use of automated technology to reduce scrappage rates Effective policy guidelines to ensure low cost raw materials (with acceptable quality levels) Standardized accounting practices to minimize personnel required Effective orientation and training programs to maximize employee productivity Expertise in process engineering to reduce manufacturing costs Shared purchasing operations with other business units Efficient layout of receiving dock operations Effective use of quality control inspectors to minimize rework on the final product Effective utilization of delivery fleets Purchase of media in large blocks Sales force utilization is maximized by territory management Thorough service repair guidelines to minimize repeat maintenance calls Use of single type of repair vehicle to minimize maintenance costs Source: Adapted from Porter, M.E. 1985. Competitive Advantage, New York: Free Press. Inbound Operations Logistics Outbound Logistics Marketing Service and Sales STRATEGIC MANAGEMENT CHAPTER 5 McGraw­Hill/Irwin Gregory G. Dess and G. T. Lumpkin Copyright © 2003 by The McGraw­Hill Companies, Inc. All rights reserved. ... - tailieumienphi.vn