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Strategic Decision Making for Competitive Advantage

Strategic Decision Making for Competitive Advantage. Business strategies: Cost leadership – economies of size Differentiation – branding Corporate strategies: Internal governance (integrated, hierarchical/flat) Alliances (non-equity, equity, joint ventures) Diversification Franchising

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Strategic Decision Making for Competitive Advantage

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  1. Strategic Decision Making for Competitive Advantage Business strategies: Cost leadership – economies of size Differentiation – branding Corporate strategies: Internal governance (integrated, hierarchical/flat) Alliances (non-equity, equity, joint ventures) Diversification Franchising International (centralized, decentralized)

  2. 51% Food Service 49% Retail Restaurants Bus. Strategy Diff/n - experience - lifestyle Fast Food Bus. Strategy Cost leadership Diff/n - lifestyle Bus. strategy Cost leadership WalMart Carrefour Bus. Strategy Diff/n Tesco (services) Corporate strategy Co-branding Bundling Diversification “load” factors reaching limit - need broader reach for competitive advantage Corporate strategy: International

  3. Food Service/Retail Mfg/Processing Bunge Cargill ConAgra Smithfield • Investment away from commodity • With a changeover by 2005 towards “customer solutions” • - health, nutrition, food applications • Contractual relationships • Alliances- non-equity/equity/joint ventures • Merger, acquisitions Corporate strategy

  4. Farm level production Commodity Super-commodity (grade determined, simple contract) Non-segregated Business strategy (historically): Cost leadership Little differentiation Corporate strategy: ?

  5. Farm level production Customer solution approach – desired traits Business strategy: Differentiation – segregation, integrity of supply chain ‘effectiveness’ in SR for market access Cost leadership in LR to sustain competitiveness Corporate strategy: Alliances – non-equity contracts, equity, joint ventures (LLC’s) Mergers, acquisitions – to gain sufficient acreage for market power

  6. Food and Ag Policy • Farm Bill – focus on farm level – business strategy • Market facilitation historical focus on business strategy • Corporate food processing, mfg, retail & food service focus on competitive advantage • Dynamic global markets • Competitive advantage, exploitation of quasi rents time sensitive • Inimitability of differentiation limited in food service and retail.

  7. TTA as a strategic decision Is traceability and assurance considered a business or corporate strategy? • IT divisions to provide information sharing – gain efficiencies e.g. in procurement • Risk management – is T&A for food safety a public or private good? If public, is this a corporate strategy, and business if private?

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