Quiz #1 Flashcards
(115 cards)
1
Q
What is Strategy?
A
- A pattern of decisions in a company that reveal objectives,purposes,goals
- Unique and valuable position involving different activities
- A pattern of integrated activities
- Must be specific when targeting market (shouldn’t be vague)
2
Q
What Makes Good Strategy?
A
Adjectives (1) Unique (2) Sustainable (3) Specific (4) Creative (5) Feasible/realistic (6) Internal Consistancy
3
Q
What Strategy is Not?
A
-Catch all for organizational decisions (integrated set of choices)
-Operational Effectiveness; performing different activities from rivals or performing similar activities in different ways
Ex) Money ball, people catch on
Ex) Southwest Airlines: Not going after first class experience; target markets
4
Q
Summary Statement of Your Strategy
A
- Characterizes product line/services offered
- Markets and their market segments
5
Q
Key Aspects of Strategy: Formulation
A
o Deciding what to do, how do you decide, what do you look to do
♣ Is the market there? Is there interest?
o Externally/Environment
♣ ID opportunities and risks
♣ Responsibility to society
♣ Sell how you’re different
o Internally
♣ Determine capabilities, resources, weaknesses
♣ Personal values and goals of management
o SWOT analysis
♣ Strengths, weaknesses, opportunities, threats
6
Q
Implantation of Strategy
A
o Achieving results, what aspects are thought about?
o Organizational structure and relationships (division of labor)
o Organizational processes and behavior (incentive systems and rewards)
o Culture —> symbols
o Top leadership —> alignment and fit
7
Q
Model of Strategy in Context
A
Mission –> Objective –> Strategy –> Implementation
8
Q
Summary of Strategy
A
o Strategy is the activities that make it different and unique
o Lots of formulation and implementation
9
Q
The Five Forces
A
- Customers
- Suppliers
- Competitors
- Threat of Substitutions
- Possible/potential entrants
o RIVALRY AMONG FIRMS (PORTER)
10
Q
Power of Buyers
A
o Why is this a threat?
♣ Limits on profit potential
♣ Demand better quality, more service, or be concerned with prices
o Dependent on…
♣ Negotiating Leverage
• Few buyers
• Industry products are standardized or undifferentiated
• Face few switching costs (doesn’t take much to move between products) different chargers for new phones
♣ Price Sensitivity
• Elastic and inelastic demand
• Big cost, strapped for cash
• Quality not affected by product
• Product has little affect on other costs
o When this is high…
♣ Build on relationship, switching cost is high, make them reliant
♣ Make it hard to leave
11
Q
Power of Suppliers
A
o Threat?
♣ Can capture value for themselves
♣ Charge higher prices lower quality or shift costs
o Dependent on power, higher if…
♣ One of a kind, monopoly on the market
♣ Switching costs in a changing suppliers
♣ Products differentiated
♣ No substitute
o If high…
♣ Standardize specifications so you can easily switch
12
Q
Threat of Substitutes
A
o Threat?
♣ Perform same or similar functions by different means (outside the industry)
♣ Customers may switch to substitutes
♣ Place ceiling on prices (can’t keep charging more risk of loss)
o When high…
♣ Offers better price-performance trade off
♣ Buyers cost of switching is low
o What do you do?
♣ Uniqueness, differentiation (game day vs. at home)
♣ Better value and wider accessibility
13
Q
Threat of Entry
A
o Threat? ♣ Limits profit potential of industry o Depends on… ♣ Cost of start up or entry ♣ Barriers to entry • Benefits of seale (big batches) • Customer switching costs • Capital requirements, unequal access to distribution ♣ Reaction of incumbents • Substantial resources to fight • Won’t cut prices • Industry growth is low ♣ When high… • Keep prices down • Boost investments
14
Q
Rivalry/Competitors
A
o Threat? ♣ Limits profitability o Depends on… ♣ Intensity to compete • Competitors are numerous • Slow growth • Exit barriers are high • Rivals are high committed • Firms cannot read signals o Basis of Competition ♣ Price (if people keep lowering price, consumers get better value, lose profitability) ♣ Build in value (customer service, different features, quality)
• Strategy Formulation: Other External Factors
o Industry growth rate
o Technology and innovation
o Government
o Complementary products and services
o Changes to industry structure and 5 forces
15
Q
Global Sourcing
A
o Key Decisions:
♣ 1) Outsource or not – “Make or Buy”
♣ 2) Where should value adding activities be located
o Pros: insourcing = more control
o Cons: large initial investment in another country, high short term costs for insourcing
16
Q
Global Sourcing and the Five Forces
A
o Activities aim to exploit comparative advantages and maximize competitive advantages, but benefits depend upon…
♣ 5 forces including competitors and relationships with suppliers
♣ all has pros and cons, but need to align with strategic objectives, past experience, and environmental changes
17
Q
Innovation
A
new ideas, specific function of entrepreneurship; an have innovation w/ entrepreneurship
18
Q
Entrepreneurship
A
• realizing profit, need for something that people didn’t know they needed; difficult to copy, simple, doesn’t costs a lot to get started
o Growth and development overtime
19
Q
Sources of Good Ideas
A
o 1) Unexpected Occurrences (IBM Watson, Play-Doh)
o 2) Incongruences (tweaking something)
o 3) Process Needs (make people’s lives easier)
o 4) Demographic Changes
o 5) Changes in Perception (healthy, but not healthy enough, GMOs)
o 7) New Knowledge (new technology)
o 8) Traveling = highlighted sense of awareness
20
Q
Entrepreneurship Steps
A
o 1) ID the market o 2) Create business plans o 3) Seek investors o 4) Build enterprise o 5) Put together a team (creation of human capital)
21
Q
Elements of a Business Plan
A
o Company overview, mission statement, description of product, competitive analysis, marketing strategy, objectives, financial plans, operations
22
Q
Lean Start-Up (Blank Article)
A
o Testing and failing multiple times
o Start slow and small; hypothesis
23
Q
Business Model Canvas
A
o Laid out on one sheet
♣ Partners, channels, relationships, customer segments, value propositions, cost structure
o Reduces ricks
24
Q
Takeaways (Business Model)
A
o There’s a difference between innovation and entrepreneurship; not all ideas are profitable
o Good ideas come from a variety of places; think like a traveler
o Lean start-ups allow faster, cheaper, less risky ventures
25
Exercise App Case
o Core features vs. full product rollout
o FIRST IMPRESSION IS EVERYTHING, adding things along the way
♣ If core features aren’t different, then there’s the issue of people thinking it has been done
♣ PRODUCT MUST BE UNIQUE
o Relationship with customers?
♣ Testing and feedback
o Bowen’s Role
♣ Must be able to wear a lot of the hats; no hierarchy
o Product Scalability
♣ State with a particular sport, build on that
o Usage measures
♣ Downloads, purchasing videos
♣ Videos downloaded per person; are people coming back to the product
Ensure that your product is ready for release
26
What Makes an Entrepreneur
o 1) Possession over a company, enterprise or venture
o 2) Bring creative and innovative ideas and actions
o 3) Management and organization skills
27
Lessons
o Limited resources, must make tradeoffs, build the right human capital, focus on the market, build relationships with key stakeholders, create buzz through word of mouth
28
Takeaways (Entrepreneurship)
o Customer co-creation can support creation process and lead to other capabilities
o Value propositions differ depending on types of users
o Entrepreneurs have a lot to cover businesswise and with innovation
29
Key Positioning Strategies
o 1) ARENAS – where you are active
o 2) VEHICLES – how you will get there
o 3) DIFFERENTIATION – how will you win in the marketplace
o 4) STAGING – speed and sequence of moves
o 5) ECONOMIC LOGIC – how we will retain returns
30
Types of Strategic Positioning
o Variety Based
o Needs Based
o Access Based
o MUST BE: (1) FOCUSED (2) BROAD
31
Sustainable Competitive Advantage
o Whole matters more than individuals parts
o New position, don’t imitate
o Deepen, not dilute
32
Trade offs
You also need to make tradeoffs – chose what not to do, in order to have sustainable competitive advantage
Some activities are incompatible: gains in one area can only be achieved at the expense of another area
Create a need for choice and purposefully limit what companies can offer
Without these you may have inconsistent and confuse customers
Need to go alongside positioning
Tradeoff between cost and quality
Protects straddles of repositions
33
Fit
competitive advantage and sustainability
Locks out imitators by creating a chain of activities that complement one another and a system that is difficult to copy
Combine and configure unique activities to be consistent and reinforcing
Competition cannot imitate
Creates a chain of activities that are complementary to one another
Ex: South west airlines
34
Why Organizations Fail
o Don’t think they need to choose or trade off
| o Try to serve to all customers AKA too broad
35
Take Aways
o Strategic positioning is about performing different activities
o Different sources of positioning
o Take a sustainable position
36
Internal Resources of a Company
uniqueness; don’t have to be tangible (culture, motivation); rare, difficult to copy, or valuable; physical resources
37
Assets used to Develop Products
o Financial, physical, human, organizational
38
Resource Based View
o Assumptions – certain resources means a competitive advantage; firms have heterogeneous bundles of resources
o Reality – competitive advantage exists if resources are VALUABLE, RARE, & INIMITABLE
39
Strategically Valuable Resources
Difficult to copy, depreciate slowly, value controlled, not easily substituted
40
Components of a Vision
Core Ideology, Core Values, Core Purpose, Envisioned Future
41
Core Ideology
```
♣ Defines what you are
♣ Unchanging
♣ Not created, but discovered
♣ Authentic
♣ Guides and inspires, not about differentiating
```
42
Envisioned Future
BHAG and vivid description; what you aspire to become, achieve and create
43
BHAG
♣ BHAG – Big Hairy Audacious Goal; target, common-enemy, role-model, internal transformation
• Ex) Stanford: Harvard of West; Nike: Crush Adidas
44
Vivid Description
♣ Vivid Description – writing up future, vibrant, what happens when the BHAG is reached, paints a picture, passionate, emotional, and convincing
o Necessary to make informed decisions, stay on track, and offer strategy and guidance
o Not boring, alignment with core ideals, fundamental dynamic: preserve core, stimulate progress
45
Model of Strategy in Context
o Does not fit in a box
o Contains a mission, objectives, and strategic analysis
o Stakeholders can be customers, consumers, etc.
46
Stakeholder
anyone affected by achievement in objectives
47
Types of Stakes
interest (community issues), legal (signing a contract), moral, ownership
48
Primary Stakeholders
o any identifiable group that affects survival
| ♣ Employees, customers, suppliers, owners, competitors
49
Secondary Stakeholders
o groups that can affect firms objectives
| ♣ Government, society, community, nonprofits, media
50
Key Attributes
♣ 1) Power – influence
♣ 2) Legitimacy – socially desirable, proper, appropriate
♣ 3) Urgency – immediate attention
♣ DEFINITIVE STAKEHOLDER HAS ALL THREE
51
External Stakeholder Management
o Boundaries are eroding
o Instrumental – can lead to better performance, communication, innovation, relationship trust
o Normative – it is the right thing to do
o Create effective partners
52
Social Strategy at Nike
o 1) Social Media – partner with everyone; low customer acquisition costs
o 2) Connect with Others – meet with new people, depends on existing relationships
♣ Allows for feedback, relationship with customers, willingness to pay, other people are uploading their data and sharing it (not cost to Nike for data)
o 3) Cost Reduction
♣ Data upload form customers
♣ How easy is this to replicate?
♣ Be and early mover, add value, switching cost (switch so easily)
53
Strategic Partnership with Stakeholders: Tactics
o Customers – design teams, testing
o Suppliers – integrated order systems
o Competitors – joint ventures, collective lobbying
o Gov’t Agencies – sponsored research, panels product safety
o Local Communities and Gov’t – joint education and training programs (building the future)
o Activist Groups – Appointments to boards
o Unions – win win contracts on boards
54
Effective Partnerships have.....
• CLARITY, COMMUNICATION, LONG-TERM COMMITMENT, FORMAL MONITORING, AND EVALUATION
55
Takeaways
o Two different types of stakeholders that can advance or thwart strategy formula and implementation
o Must prioritize stakeholders
o Stakeholder attributes: legitimate, powerful, urgency
o Tactics with stakeholders – joint ventures with competitors, product design teams
56
Core Values
3 to 5; unchanging and guiding, strategic norms, internal importance, rarely change
57
Core Purpose:
♣ Reason for existence, reflects ID
| Goal: to inspire and guide, make work meaningful; should
58
Types of Strategic Positioning(Variety Based)
choice of product or service varieties rather than customer segments; serving wide subsets (JiffyLube, Ikea)
59
Types of Strategic Positioning(Needs Based)
serving broad needs (financial services, butlers)
60
Types of Strategic Positioning(Access Based)
o broad needs of many customers in a narrow market (speciality food stores)
61
1. Arenas
Where you are active
62
2. Vehicles
How you will get there
63
3. Differentiation
How you will win the market place
64
4. Staging
Speed and sequence of moves
65
5. Economic Logic
How we will retain returns
66
Rivalry Among Competitors (Threat)
Limits Profitability
67
Rivalry Among Competitors (depends on...)
```
♣ Intensity to compete
• Competitors are numerous
• Slow growth
• Exit barriers are high
• Rivals are high committed
• Firms cannot read signals
```
68
Rivalry Among Competitors (Basis for Competition)
♣ Price (if people keep lowering price, consumers get better value, lose profitability)
Build in value (customer service, different features, quality)
69
Rivalry Among Competitors (Strategy Formulation:Other External Factors)
```
o Industry growth rate
o Technology and innovation
o Government
o Complementary products and services
o Changes to industry structure and 5 forces
```
70
Threat of Substitutes (Threat?)
♣ Perform same or similar functions by different means (outside the industry)
♣ Customers may switch to substitutes
♣ Place ceiling on prices (can’t keep charging more risk of loss)
71
Threat of Substitutes (When high)
♣ Offers better price-performance trade off
| ♣ Buyers cost of switching is low
72
Threat of Substitutes (What do you do?)
♣ Uniqueness, differentiation (game day vs. at home)
| ♣ Better value and wider accessibility
73
Threat of Entry (Threat?)
Limits profit potential of industry
74
Threat of Entry (Depends on...)
```
♣ Cost of start up or entry
♣ Barriers to entry
• Benefits of seale (big batches)
• Customer switching costs
• Capital requirements, unequal access to distribution
♣ Reaction of incumbents
• Substantial resources to fight
• Won’t cut prices
• Industry growth is low
♣ When high…
• Keep prices down
• Boost investments
```
75
Power of Suppliers (Threat)
♣ Can capture value for themselves
| ♣ Charge higher prices lower quality or shift costs
76
Power of Suppliers (Dependent on power, higher if....)
♣ One of a kind, monopoly on the market
♣ Switching costs in a changing suppliers
♣ Products differentiated
♣ No substitute
77
Power of Suppliers (If high...)
♣ Standardize specifications so you can easily switch
78
Power of Buyers (Why is this a threat)
♣ Limits on profit potential
| ♣ Demand better quality, more service, or be concerned with prices
79
Power of Buyers (Dependent on)
♣ Negotiating Leverage
• Few buyers
• Industry products are standardized or undifferentiated
• Face few switching costs (doesn’t take much to move between products) different chargers for new phones
♣ Price Sensitivity
• Elastic and inelastic demand
• Big cost, strapped for cash
• Quality not affected by product
• Product has little affect on other costs
80
Power of Buyers (When this is high)
♣ Build on relationship, switching cost is high, make them reliant
♣ Make it hard to leave
81
What is the purpose of a strategy?
A mode of action/ the method by which an organization can reach objectives and grow the business in the market. Basically an approach to competing in the marketplace. It is a work in progress, not a matter of fact. The creation of a unique and valuable position
82
How is strategy execution different from strategy formulation?
The formulation of a strategy deals with identification of an opportunity and assessing the risks associated with it, whereas execution deals with the organizational structure and governance structures implementing said plan
83
How can a company / rival, particularly one that is weaker, change the game to gain a
competitive advantage?
Several methods to do this: cost-based advantage (get cheaper products), differentiation (make markedly different products that can be construed as better than others), focus on a narrow market type (niche), develop unmatched resources (durable competitive advantage in production)
84
Why is it important to compare and analyze firms within their industry?
If firms do not compare themselves closely (internally and externally) to their competitors, they can lose their competitive advantages and as a result lose their standing in their industry
85
What are three ways in which firms can establish a competitive advantage?
Cost-based advantage, differentiation, narrow market type, unmatched resources
86
How are cost drivers used to assess competitive advantage?
Cost driver is a structural factor which causes the change in the cost of an activity
. This changes the value chain, and whichever competitor controls their cost drivers better can have a competitive cost advantage.
87
How does a value proposition help a firm analyze its competitive advantage?
Once a firm has a defined value proposition, its success directly informs a firm as to their position in the market. Then, price and quality must be weighed against each other to have a balance for a company, as a competitive advantage is gained.
88
Which has a greater impact on profitability: variations in levels of cost or in willingness
to pay? Why?
Willingness to pay will prove to be more profitable because by understanding customer value of a product you can more accurately gauge the price which customers are willing to pay and charge up to the point where the customers marginal benefit equals their marginal cost
89
Explain why the concept of strategic advantage is central to the study of strategic
management.
Having a central organizational strategy that is superior to that of your competitors will allow for a business to be more successful than others (i.e. Apple)
90
Name two ways Andrews’ ideas link to other strategic frameworks / themes we have
discussed in class.
Andrews=sustained competitive advantage. Similar to five forces, always need to be vigilant of competitive atmosphere and changing to conditions in order to maintain your advantage.
91
Describe the role / use of Hambrick and Frederickson’s strategy diamond. Why / how is it
useful?
It uses economic logic as the central force behind strategy, which is key as it should be the driving force behind how a firm will compete in an industry. Furthermore, it uses economic logic as a base to address the other 4 key components: staging (speed/sequence of delivery), differentiation (how will we make ours better), vehicles (how are we going to deliver it to market), and arenas (where will we be active)
92
Business Model – describe elements and explain how it relates to other readings and
frameworks (i.e., Strategy Diamond by Hambrick and Frederickson, Five Forces Model
(Porter), Resource Based View, and innovation / entrepreneurial readings).
```
o Key partners
o Key activities
o Key resources
o Cost structure
o Value propositions
o Customer relationships
o Channels
o Revenue streams
o Customer segments
```
93
Business Model – describe elements and explain how it relates to other readings and
frameworks (i.e., Strategy Diamond by Hambrick and Frederickson, Five Forces Model
(Porter), Resource Based View, and innovation / entrepreneurial readings).
(Customer Segments)
arenas in Hambrick and Fredrickson’s diamond: how do we divvy up our target market? Identify which consumers value what in our product
94
Business Model – describe elements and explain how it relates to other readings and
frameworks (i.e., Strategy Diamond by Hambrick and Frederickson, Five Forces Model
(Porter), Resource Based View, and innovation / entrepreneurial readings).
(Revenue streams)
relatable buyer bargaining power in Porter. How much force can the buyers exert on a producer to provide lower costs/higher value? How do they shape the reality for the seller?
95
Business Model – describe elements and explain how it relates to other readings and
frameworks (i.e., Strategy Diamond by Hambrick and Frederickson, Five Forces Model
(Porter), Resource Based View, and innovation / entrepreneurial readings).
(Channels)
how do we transmit our value proposition to our segmented customers? Vehicles in Hambrick/Fredrickson- what is the best manner in which we can deliver a product to the market?
96
Business Model – describe elements and explain how it relates to other readings and
frameworks (i.e., Strategy Diamond by Hambrick and Frederickson, Five Forces Model
(Porter), Resource Based View, and innovation / entrepreneurial readings).
(Customer Relationships)
who are we creating value for/understanding the customer: relatable to buyer bargaining power, how do their needs shape our product specifications (price, value)
97
Business Model – describe elements and explain how it relates to other readings and
frameworks (i.e., Strategy Diamond by Hambrick and Frederickson, Five Forces Model
(Porter), Resource Based View, and innovation / entrepreneurial readings).
(Value Propositions)
relates to economic logic that is the backbone in Hambrick and Fredrickson’s diamond, what about our product provides value to the consumer? What need of the customer are we satisfying? How will returns be gained through the delivery of our product
98
Business Model – describe elements and explain how it relates to other readings and
frameworks (i.e., Strategy Diamond by Hambrick and Frederickson, Five Forces Model
(Porter), Resource Based View, and innovation / entrepreneurial readings).
(Cost Structure)
Relateable to economic logic in Hambrick and Fredrickson’s diamond, what about our product makes economic sense to a consumer? lower cost thru a scaled advantage or a differentiation that makes the price difference worth it (porter)
99
Business Model – describe elements and explain how it relates to other readings and
frameworks (i.e., Strategy Diamond by Hambrick and Frederickson, Five Forces Model
(Porter), Resource Based View, and innovation / entrepreneurial readings).
(Key Resources)
Relatable to resource based view: what are our most important resources that help us create a competitive advantage? (Tangible/intangible resources)
100
Business Model – describe elements and explain how it relates to other readings and
frameworks (i.e., Strategy Diamond by Hambrick and Frederickson, Five Forces Model
(Porter), Resource Based View, and innovation / entrepreneurial readings).
(Key Activities)
What does our value proposition require us to do? Relatable to economic logic
101
Business Model – describe elements and explain how it relates to other readings and
frameworks (i.e., Strategy Diamond by Hambrick and Frederickson, Five Forces Model
(Porter), Resource Based View, and innovation / entrepreneurial readings).
(Key Partners)
Relatable to the five forces model: how does the bargaining power of suppliers, and the threat of their substitute product change how we approach our product?
102
Describe how an entrepreneur might go about recognizing and shaping opportunities
??????????
103
Describe how one entrepreneur you have studied defined their business model and how did this framing shape the opportunity they pursued when they first entered the market? (a top grade on this answer will integrate framework and concepts from the class readings)
???????????
104
Porters 5 Forces
1. Supplier Power
2. Buyer Power
3. Competitive Rivalry
4. Threat of Substitution
5. Threat of New Entry
BY ANALYZING ALL FIVE COMPETITIVE FORCES YOU GAIN A MOSRE COMPLETE PICTURE OF WHAT IS INFLUENCING PROFITABILITY IN YOUR INDUSTRY
FROM THIS YOU CAN POSITION THE COMPANY WHERE THE FORCES ARE WEAKEST, EXPLOIT CHANGES IN FORCES, RESHAPE THE FORCES
105
Porters 5 Forces (Supplier Power)
Here you assess how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another, and so on. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are.
106
Porters 5 Forces (Buyer Power)
Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. If you deal with few, powerful buyers, then they are often able to dictate terms to you.
107
Porters 5 Forces (Competitive Rivalry)
What is important here is the number and capability of your competitors. If you have many competitors, and they offer equally attractive products and services, then you'll most likely have little power in the situation, because suppliers and buyers will go elsewhere if they don't get a good deal from you. On the other hand, if no-one else can do what you do, then you can often have tremendous strength.
108
Porters 5 Forces (Threat of Substitution)
This is affected by the ability of your customers to find a different way of doing what you do – for example, if you supply a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. If substitution is easy and substitution is viable, then this weakens your power.
109
Porters 5 Forces (Threat of new entry)
Power is also affected by the ability of people to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it.
110
Blue Ocean Strategy: Creating Blue Oceans (Red Ocean Strategy)
Markets where industry boundares are defined and accepted and the competive rules of the game are known. Companies try to outperform rivals and grab a bigger piece of demand
- All industries in existence today
- Single market with one product and slight variation
- Focus is on competition and trying to outperform rivals
- Lead to overcrowded industry with small profit growth
- Hard to find unique sustainable, competitive position
- It won't work to benchmark competitors and try to out compete them by offering a little more or a little less.
- This will drive sales up but never drive a company into uncontested market space
111
Blue Ocean Strategy: Creating Blue Oceans (Blue Ocean)
Making the competition irrelevant by creating new market space where there are no competitors
- Not in existence today
- Marked by untapped market space, demand creation, and the opportunity for highly profitable growth that is also rapid
- Driving costs down while simultaneously driving value up for buyers
-Creators of blue ocean never benchmark with competitors, instead they create a leap in value for both buyers and the company itself
Invent and capture new demand
- Competition is focused at core business and -competitive advantage
- Not about technology innovation
112
Blue Ocean Strategy: Creating Blue Oceans (How blue oceans are created)
Create new industry (ebay)
- Reconstructionist view: view the market boundaries aren't definite and can be reconstructed by actions of industry players
- Alter boundaries that already exist (cirque)
- Incumbents often create them
- Seek to alter boundaries of already existing
- There is scarcely an unattractive industry in reconstructionist vew because they can always reconstruct view
113
Blue Ocean Strategy: Creating Blue Oceans (Two Key Elements of blue ocean)
1.Competition is irrelevant)
:Don't benchmark because if you do that you are nto focusing on being something very creative
2.Offer leap value (through differentiation) while cutting costs
:it is something innovative and so different if you do it the smart way and focus on capabilities and competitive advantage then you CAN cut costs
114
Blue Ocean Strategy: Creating Blue Oceans (Blue oceans over time)
-No challenges for the first 10-15 years
-Difficult to imitate
Loyalty and buzz of customers
-Economic and cognitive barriers to imitate
Hard to capture demand for competitors,Competitor cost disadvantages. Conflicts with competitors brand
115
Three Categories of Social Issues
Generic social issues – important to society but are neither significantly affected by the company’s operations nor influence the company’s long term competitiveness
Ex: Bank and Obesity
Responsive CSR – acting as a good corporate citizen, attuned to evolving social concerns, and mitigating existing or anticipate adverse effects from business
Ex:
Value Chain Social Impacts – Social issues significantly affect by company’s activities in ordinary course of business
Ex: car company and emissions
Social Dimension of competitive context – Factors in the external environment that significantly affect the underlying drivers of competitiveness in places where the company operates
Strategic CSR – choosing a unique position and oding things differently than competitors. Moves beyond good corporate citizenship to mount a small number of initiatives who social and business benefits are large
Invest in social aspects, in context of company’s competitiveness
Integrate inside out and outside in
