Bài giảng Crafting & Executing Strategy - Chapter 6 Strengthening a company’s competitive position

CHAPTER 6STRENGTHENING A COMPANY’S COMPETITIVE POSITIONStrategic Moves, Timing, and Scope of OperationsStudent VersionMcGraw-Hill/IrwinCopyright đ2012 The McGraw-Hill Companies, Inc.Maximizing the Power of a StrategyOffensive and Defensive Competitive ActionsCompetitive Dynamics and the Timing of Strategic MovesScope of Operations along the Industry’s Value ChainMaking choices that complement a competitive approach andmaximize the power of strategyGOING ON THE OFFENSIVE—STRATEGIC OPTIONS TO IMPROVE A FIRM’S MARKET POSITIONStrategic Offensive Principles:Relentlessly build competitive advantage and then convert it into sustainable advantage.Create and deploy resources in ways that cause rivals to struggle to defend themselves.Employ the element of surprise as opposed to doing what rivals expect and are prepared for.Display a strong bias for swift, decisive, and overwhelming actions to overpower rivals.Choosing Which Rivals to AttackMarket leaders that are vulnerableRunner-up firms with weaknessesin areas where the challenger is strongStruggling enterprises on the verge of going underSmall local and regional firms with limited capabilitiesBest Targets for Offensive Attacks DEFENSIVE STRATEGIES—PROTECTING MARKET POSITION AND COMPETITIVE ADVANTAGELower the firm’s risk of being attacked Weaken the impact of an attack that does occurInfluence challengers to aim their efforts at other rivalsPurposes of Defensive StrategiesTIMING A FIRM’S OFFENSIVE AND DEFENSIVE STRATEGIC MOVESTiming’s Importance:Knowing when to make a strategic move is as crucial as knowing what move to make.Moving first is no guarantee of success or competitive advantage.The risks of moving first to stake out a monopoly position must be carefully weighted.STRENGTHENING A COMPANY’S MARKET POSITION VIA ITS SCOPE OF OPERATIONSRange of its activities performed internallyBreadth of its product and service offeringsExtent of its geographic market presence and mix of businessesSize of its competitive footprint on its market or industryDefining the Scope of the Firm’s Operations HORIZONTAL MERGER ANDACQUISITION STRATEGIESMergerIs the combining of two or more firms into a single corporate entity that often takes on a new name.AcquisitionIs a combination in which one firm, the acquirer, purchases and absorbs the operations of another firm, the acquired.VERTICAL INTEGRATION STRATEGIESVertically Integrated FirmIs one that participates in multiple segments or stages of an industry’s overall value chain.Vertical Integration StrategyCan expand the firm’s range of activities backward into its sources of supply and/or forward toward end users of its products.Types of Vertical Integration StrategiesFull IntegrationPartial IntegrationTaperedIntegrationVertical Integration ChoicesBackwards Integration Towards SuppliersIntegrating Backwards By:Achieving the same scale economies as outside suppliers—low-cost based competitive advantage.Matching or beating suppliers’ production efficiency with no drop-off in quality—differentiation-based competitive advantage.Reasons for Integrating Backwards:Reduction of supplier powerReduction in costs of major inputsAssurance of the supply and flow of critical inputsProtection of proprietary know-howIntegrating Forward to Enhance CompetitivenessReasons for Integrating Forward:To lower overall costs by increasing channel activity efficiencies relative to competitors.To increase bargaining power through control of channel activities.To gain better access to end users.To strengthen and reinforce brand awareness.To increase product differentiation.STRATEGIC ALLIANCES AND PARTNERSHIPSStrategic AllianceIs a formal agreement between two or more separate firms in which they agree to work cooperatively toward common objectives.Joint VentureIs a type of strategic alliance in which the partners set up an independent corporate entity that they own and control jointly, sharing in its revenues and expenses.Capturing the Benefits of Strategic AlliancesPicking a good partnerBeing sensitive to cultural differencesRecognizing that the alliance must benefit both sidesAdjusting the agreement over time to fit new circumstancesStructuring the decision-making process for swift actionsEnsuring both parties keep their commitmentsStrategic Alliance FactorsThe Drawbacks of Strategic Alliancesand PartnershipsCulture clash and integration problems due to different management styles and business practices.Anticipated gains do not materialize due to an overly optimistic view of the synergies or a poor fit of partners’ resources and capabilities.Risk of becoming dependent on partner firms for essential expertise and capabilities.Protection of proprietary technologies, knowledge bases, or trade secrets from partners who are rivals.Principle Advantages of Strategic AlliancesThey lower investment costs and risks for each partner by facilitating resource pooling and risk sharing.They are more flexible organizational forms and allow for a more adaptive response to changing conditions.They are more rapidly deployed—a critical factor when speed is of the essence.