Strategic management: “competitive strategy,” or “business strategy”

1. Phil Gorman, Ph.D. Strategic management: “competitive strategy,” or “business strategy”

2. Strategic management • The holy grail of strategic management is creating “sustainable competitive advantage”

3. Strategic management • If you have competitive advantage then that means there is something important that you do better than your competitors

4. Strategic management • But then you also want your competitive advantage to be sustainable

5. Sustainable competitive advantage • Your business must have something that is meets the following four tests: • Valuable • Rare • Hard to copy • No good substitute

6. Sustainable competitive advantage • Your business must have something that is meets the following four tests: • Valuable • Rare • Hard to copy • No good substitute

7. Sustainable competitive advantage • Your business must have something that is meets the following four tests: • Valuable • Rare • Hard to copy • No good substitute

8. Sustainable competitive advantage • Your business must have something that is meets the following four tests: • Valuable • Rare • Hard to copy • No good substitute

9. Sustainable competitive advantage • Your business must have something that is meets the following four tests: • Valuable • Rare • Hard to copy • No good substitute

10. Sustainable competitive advantage • Example: Mobil-Exxon • Valuable • Rare • Hard to copy • No good substitute

11. Generic business strategies Source of advantage Low cost Differentiation Broad Competitive breadth Narrow

12. Generic business strategies Note “cost” is not the same as “price” Source of advantage Low cost Differentiation Broad Competitive breadth Narrow

13. Generic business strategies Source of advantage Low cost Differentiation General Motors Broad Competitive breadth Narrow

14. Generic business strategies Source of advantage Low cost Differentiation Swatch Broad Competitive breadth Narrow

15. Generic business strategies Source of advantage Low cost Differentiation Broad Competitive breadth Lincoln Electric Narrow

16. Generic business strategies Source of advantage Low cost Differentiation Broad Competitive breadth Hampshire College Narrow

17. Generic business strategies Source of advantage Low cost Differentiation Broad Competitive breadth Usually would be “stuck in the middle” Narrow

18. Generic business strategies Source of advantage Low cost Differentiation Broad Competitive breadth Dell = process innovation Narrow Sustainable competitive advantage!

19. Competitive strategy • The holy grail of strategic management is creating “sustainable competitive advantage” • You must choose a strategy; these choices can be difficult but without making the hard choices you will not achieve sustainable competitive advantage! • Four tests: • Valuable • Rare • Hard to copy • No good substitute

20. Competitive strategy • The holy grail of strategic management is creating “sustainable competitive advantage” • You must choose a strategy; these choices can be difficult but without making the hard choices you will not achieve sustainable competitive advantage! • Four tests: • Valuable • Rare • Hard to copy • No good substitute

21. Competitive strategy • The holy grail of strategic management is creating “sustainable competitive advantage” • You must choose a strategy; these choices can be difficult but without making the hard choices you will not achieve sustainable competitive advantage! • Four tests: • Valuable • Rare • Hard to copy • No good substitute

22. Competitive strategy • The holy grail of strategic management is creating “sustainable competitive advantage” • You must choose a strategy; these choices can be difficult but without making the hard choices you will not achieve sustainable competitive advantage! • Four tests: • Valuable • Rare • Hard to copy • No good substitute