1 / 12

STRATEGY & COMPETITIVE ADVANTAGE

STRATEGY & COMPETITIVE ADVANTAGE. Business Proposition. Profits = Quantity (Revenue - Cost). MARGIN. 3 most fundamental variables in Business. Definition.

twatt
Download Presentation

STRATEGY & COMPETITIVE ADVANTAGE

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. STRATEGY & COMPETITIVE ADVANTAGE

  2. Business Proposition Profits = Quantity (Revenue - Cost) MARGIN 3 most fundamental variables in Business

  3. Definition • The determination of the long run goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals • Alfred Chandler, Strategy and Structure

  4. Levels of Strategy • Corporate strategy... defines the scope of the business in terms of the industries and markets in which it competes. • includes decisions about diversification, vertical integration, acquisitions, new ventures, divestments, allocation of scarce resources between business units • Business strategy... is concerned with how the firm competes within a particular industry or market... to win a business unit must adopt a strategy that establishes a competitive advantage over its rivals.

  5. Domain of Strategy • strategic competitiveness and above normal returns • concerns managerial decisions and actions which materially affect the success and survivalof business enterprises • involves the judgment necessary to strategically position a business and its resources so as to maximize long-term profits in the face of irreducible uncertainty and aggressive competition • strategy is the linkage between a business and its current and future environment

  6. Concepts of Firm Performance • firm survival • accounting profits (ROA, ROE, ROS) • surplus of revenues over expenses • economic profit/rent (economic value added, positive NPV) • normal return on capital • abnormal return - surplus after all inputs • shareholder value/market value…(EVA, Tobin’s q) • Change in market value over time

  7. Profound Objective Long-term, simple understanding of appraisal of and agreed upon the competitive resources objectives environment Common Elements in Successful Strategy Successful Strategy EFFECTIVE IMPLEMENTATION $ Source: Adapted from Robert S. Grant, 1991

  8. Sources of Superior Performance Above Normal Profits (in Excess of the Competitive Level) AvoidCompetitors Be Better ThanCompetition AttractiveIndustry AttractiveStrategic Group AttractiveNiche CostAdvantage DifferentiationAdvantage Entry Barriers Isolating Mechanisms Mobility Barriers

  9. Types of Competitive Advantage • Low Cost • Differentiation

  10. Sources of Competitive Advantage Theoretical Frameworks • The Industrial Organization View • The Resource-based View • Relationship between these two views

  11. The Emergence of Competitive Advantage • External Sources of Change (fast food, cars, oil) • Responsiveness to Change (soft drink, retail) • Innovation (book-selling, video games)

  12. Sustaining Competitive Advantage • Causal Ambiguity and Uncertain Imitability • Isolating Mechanisms -first mover advantage -deterrence and preemption -resource constraints -dynamic capabilities

More Related