La sac Flashcards
Define competitive advantage
occurs when a firm, industry or economy has a lower cost price structure than its rivals. In this situation, goods and services can be sold more cheaply, undercutting competitors, and expanding domestic and foreign sales. The concept can also be extended to product quality range and flexibility in adapting to new trends in the market.
def org inertia
Organisational inertia is a term used to describe an established company that remains rigid in its
thinking, traditions and actions rather than being open to change.
eg. Kodak no change bro
def globalisation
is the movement across nations of trade, investment, technology, nance and labour brought about by the removal of trade barriers.
In the case of Telstra, how can managers be both a driving and restraining force (4
Managers’ are a driving force for change as they are often the ones that provide the personal “drive” to initiate and maintain the momentum of the change. They will also often share their vision and try and get others inspired to change by being role models for the change. For example, Chief executive of Telstra Andy Penn expressing his vision to make Foxtel successful in the future is a clear example of a manager striving for change.
However if the change was not envisioned by that manager, i.e. if Andy Penn was ordered by a CEO to part-take in this change etc., or that he is not convinced by the change, or fear it may threaten his position he can act to seriously inhibit the chances of its success, by negatively influencing the employees, not prioritising the change tasks, or ignoring the change tasks completely.
In the case of Telstra, how can employees be both a driving and restraining force
Employees can be a major source of resistance as Change is emotional and disorientating for those who partake in it and if the employees fear for the unknown, fear for their job security, or fail to see a reason to change, they will resist the change. For example, if company Telstra got purchased by someone else, the employees will resist change as they will fear the unknown, not knowing whether their job is secure or not, linking to one of the Lawrence and Norhia’s four drives defending as there is uncertainty.
However, If employees support and are happy with the change they can be a great force for “driving” change through the rest of the business as they are able to influence others and through empowerment, or employee centred management styles and skills as they can have an active role in pursuing change. For example, if the management style changed to a more employee centred style such as Laissez-faire, the employees will feel empowered and will be satisfied with the change.
two financial consideration when implementing change
Financial consideration is a very obvious restraining force as that whilst the business may have the intentions to change, if it can’t find the finances to pay for these changes then the changes themselves are unlikely to occur as envisioned as cost and revenue issues for a business and The financial cost of its implementation can restrain a change.
For Telstra two financial considerations would be retraining the workforce and purchasing new equipment. As technology is always evolving, it is essential for Telstra to have cutting-edge equipment and technology that allows them to perform business activities as efficient and effective as possible, allowing them to have the competitive advantage over their competitors. However, in order to use this equipment, it may require training for the employees to use, therefore being another financial consideration, as training is both time and money consuming because either it on the job training potentially hindering the productivity of the company due to there being one on one training involving an employee. Or it may involve off the job training, therefore costing money for someone external to teach the employee(s) how to use certain equipment.
In the case of Telstra, how is competition a driving force (3
A business needs to respond to the actions of competitors or risk being left out of the industry. For if customers transfer their allegiance to a competitor with a better good or service, this leads to reduced market share, declining sales, declining revenue and profits and ultimately business collapse. The pursuit of a competitive edge is therefore a constant driving force for a business. An example of this is the rise in streaming services such as Netflix, as Ne tflix is challenging Telstra’s entertainment service Foxtel, now there being a constant interaction between Foxtel and Netflix in the television industry with customer promotions, sales discounts, products moving into each others traditional market areas or looking for new market opportunities etc.
Explain two competitive forces
In Michael Porter’s generic strategies theory, when deciding which strategy to implement, Porter states that business should understand the competitive forces that make up their industry. Two of these 5 competitive forces are threat of substitution and competitive rivalry.
threat of substitution refers to how easy it is for customers to find a similar good or service like Telstra and Optus are often considered close substitutes, as are banks with regards to interest rates on home loans. Telstra will constantly be monitoring the actions of Optus to ensure that they maintain the competitive advantage.
Competitive rivalry is the main driver of competition as it is the number and capability of competitors in the market. If a business is operating in a market with many competitors, most of whom are offering undifferentiated products and services, then a business may find they have a reduced market attractiveness.
Explain the MP strategy in relation to Telstra (5
Michael Porter’s theory is a strategic management theory which describes how a business can seek to acquire a competitive advantage in its industry or market and therefore dominate that industry or increase its market share in it. It is therefore a very proactive theory which has two underlying concepts
In order for Telstra to gain a competitive advantage over their competitors, it will be ideal for them to implement Michael Porter’s generic approach and apart of the theory there are three steps involved:
in the first step Telstra will need to carry out a SWOT analysis, this is where Telstra will asses their Strengths, Weaknesses, Opportunities and Strengths for each of the two strategies. Businesses should consider undertaking a SWOT analysis in regular intervals to evaluate the impact of future change.
Step Two involves Telstra assessing how they perform in terms of the five forces being supplier power, buyer power, competitive rivalry, threat of substitution sonf threat of new entry in order to understand the competitive forces that make up their industry, therefore identifying weather new products, services or businesses have the potential to be profitable.
The third and final step involves Telstra comparing the SWOT analysis with the results of the five forces and ultimately selecting the generic strategy that provides the strongest set of options for the future.
Dependant on the results, Telstra will select one of the approaches being
differentiation or lower cost to implement in the running of the organisation.
