Long & Vickers-Koch

1. Long & Vickers-Koch • Mintzberg - successful strategies tend to be visions, not plans

2. Threshold Capabilities Support (internal) Basic (required) Core Capabilities Critical (today’s advantage) Cutting Edge (tomorrow’s advantage) Core Capabilities

3. Williams Companies • Gas Pipelines to Fiber Optics • What’s the connection? • What’s the core capability? • What about Pioneer and Domino’s?

4. Creating Value • low cost • best product features and quality • meeting each customer’s needs and special services

5. Choosing Strategy • Must match core capabilities to strategy, because: • it must be hard for competitors to copy • it is also hard for your own company to change

6. Barney • When performing SWOT analysis, rate internal assets by: • value • rareness • immitability • (Caterpillar 2-day part policy) • organization • (Walmart’s reporting structure for many rural stores)

7. Cola Wars • Pepsi challenge in Houston • 7-14% share growth • price was reduced to half to get it done • No longer head to head competition • Coke • older customers (Diet Coke), soft drinks, international • Pepsi • younger customers (new generation), fast-food diversification, domestic

8. Porter • What is strategy? • Operational effectiveness • not strategy • necessary but not sufficient • Strategy rests on unique activities • Southwest Airlines • Ikea

9. Origins of Strategic Positions • Variety-based • choose products or services rather than customers (Jiffy Lube, Vanguard) • Needs-based • customer segment (cans, banking) • Access-based • reaching customers - geography is one • (Carmike Cinemas)

10. Three generic strategies • Sustainable Strategic Position • cost-based • differentiation • focus • Trade-offs are necessary • inconsistent image or reputation • mutually exclusive activities • limits on internal coordination and control

11. Fit • Three levels of fit • simple consistency (Vanguard) • reinforcing activities (Neutregena, BIC) • optimization of effort (GAP) • Advantage grows out of the entire system and leads to sustainability • competitors must match the system • matching just one can lead to declining performance • joint probabilities of matching all? • (Continental Lite v. Southwest)

12. Old Implicit Model one, ideal position benchmarking outsourcing partnering key success factors flexible, rapid responses to competitors New Sustainable Model unique company position tailor activities to strategy clear trade-offs and choices w.r.t. competitors advantage arises from fit sustainability from system operational effectiveness given growth is a trap? Alternative Views of Strategy Figure 8 (page 450)

13. D’Aveni • Hypercompetition • rapidly escalating competition based on price-quality positioning • results from: • new knowledge - first mover advantage • protecting or invading product or geographic markets • deep pockets (deeper with alliances) • (Seed industry?) • Moving toward perfect competition • sustainable competitive advantage is difficult

14. Levels of Industry Competition • No Competition • monopoly, patents, excessive profits • Competition Avoidance • segmentation, barriers to entry, tacit cooperation, sustainable advantage and profits possible only if competitors collaborate • Hypercompetiton • aggressive positioning by disadvantaging competitors, creation of new advantages, new arenas, advantages are temporary with profits until catch-up or next move • Perfect Competition • players equal, compete on price, no abnormal profits, not preferred over lower levels of competition

15. 7 S’s - Disrupting the Market • Vision • superior stakeholder satisfaction • strategic soothsaying • Capability • positioning speed • positioning surprise • Tactics • shifting the rules • signaling intent • simultaneous and sequential thrusts

16. Vision • Identify new customer needs that the customer doesn’t currently know. • Find new customers. • Create new needs. • Predict change. • These require strategic soothsaying.

17. Hypercompetion • Trade-offs among the 7 S’s are inevitable. • The 7 S’s will remain advantageous: • flexible • dynamic • there are trade-offs, you can’t use them all