STRATEGY, COMPETITIVE ADVANTAGE

1. A component of Planning STRATEGY, COMPETITIVE ADVANTAGE

2. Competitive Advantage – is providing greater value for customers than competitors • The goal of most organizations is to, first create a competitive advantage then to sustain the competitive advantage for a long time • The only true competitive advantage is one which competitors can not duplicate/imitate

3. STRATEGIC MANAGEMENT • Strategic management is process of planning and implementing strategies which create a sustainable competitive advantage • The operative words in strategic management is to plan and implement • To create a sustainable competitive advantage the organization must use its resources effectively and efficiently

4. RESOURCES FOR A SUSTAINABLE ADVANTAGE (“SA”) • Organization might have one or more resources which can create a SA: • Physical assets (manufacturing plants, raw materials) which other organizations might not have • Capabilities (i.e. certain processes, technology) which others might not have • Patents or information/knowledge others might not have • People with skills others might not have • Financial strengths (cash, balance sheet, etc.) others might not have

5. STEPS OF STRATEGY MAKING PROCESS • Assess the need for strategy – either new or change, then • Conduct a “situational analysis” • What are our internal strengths and weaknesses • What external opportunities or threats exist • This dual analysis is called SWOT analysis • Choose a strategic alternative

6. 3 LEVELS OF STRATEGY • Corporate strategy – sets a long term (5+ years) direction for the organization • Business strategy – establishes how the business competes for customers • Functional strategy – guides the use of all resources available to the organization

7. CHOICES OF CORPORATE STRATEGY • Organizations can select from 3 types of corporate strategies: • Growth strategy – strategies intended to purse larger size and expand operations quickly • Retrenchment strategy – reduce the scale of operations to gain efficiencies or improve performance • Stability strategy – maintain the present course of action without major operational change

8. BUSINESS STRATEGY CHOICES • Must address 2 basic factors: (a) how broad or narrow/focused a market do you want to compete, and (b) how will you do to gain a competitive advantage • Choice of how to gain an advantage: • Differentiation – offer the customer something which is distinctive no other organization does as well, or • Cost leadership – having the lowest costs in your industry enabling organization to offer customers low prices