工商管理专业MBALectureBusiness+Level+StrategyLecture+Fiv

1、Business level StrategyDr Ita ODonovanLecture Five精选pptSome FundamentalsAlfred. D. Chandler, Jr. Received the Pulitzer prize for his work which demonstrated the evolutionary and historical nature of change and its effect on businesses. A.D. Chandler Jr. ( 1969) The structure of American Industry in

2、the twentieth Century: a historical overview. Business History Review Vol 43. 255-298Douglass C. North received a Nobel Prize for stressing the role of institutions in shaping organisational environments and organisations themselves.D.C. North (1990) Institutions, Institutional Change and Economic P

3、erformance. Cambridge: Cambridge University Press.These two ideas which show businesses are influenced from the outside- in and also influence from the inside- out are dominant in business strategy today. 精选pptSome Fundamentals continuedAt the business level of the industry five forces are considere

4、d to threaten or advantage the firm:These are:Entry barriersRivalry between industry incumbentsSubstitute products or servicesThe bargaining power of suppliersThe bargaining power of buyersAt the international level four forces were seen as sources of national competitive advantage.精选pptInternationa

5、l Level Strategy精选pptWhat we are looking atWe are going to examine competitive advantage and also discuss those theorists who come to the debate from a resources perspective (inside- out) . Resource theorists point to the internally generated competencies.The firm is seen as a bundle of firm- specif

6、ic capabilities and assetsKnowledge which the firm has is difficult to imitate ( tacit knowledge and trade secrets)Organisational processes seen as very importantCompetences seen as distinctive emphasised over physical assets,Long term development of competences, caution need to remain flexible also

7、Current routines, learning, practice, technologies, customer base, relationship with suppliers. (Teece, et al 1997)Alignment of capacity and competencies are essential in this approach精选pptCompetitive AdvantageWe are concerned with what methods the business is going to utilise to gain and sustain co

8、mpetitive advantage: Some key Principles:A cost leadership strategy: low cost producer in the industry, exploit cost advantage, no frills, scale and cost emphasisA differentiation strategy: seek uniqueness in the market along a dimension valued by buyersA focus strategy: choice of narrow scope withi

9、n an industry, a segments or group of segments become the focus to the exclusion of others精选pptCompetitive advantageLower CostDifferentiation Broad TargetCOMPETITIVE SCOPE1. Cost Leadership 2.Differentiation Narrow Target3ACost Focus3BDifferentiationFocus精选pptSome ProblemsSustainable Cost Leadership

10、: means lowest cost overtime against competitors. Requires also relative market share advantage can assist cost through economies of scale ( still caution here)We know how difficult it is to sustain both market share advantage and cost advantage.Cost leadership has a chance when used by a few firms

11、not much if used for industry wide.Need to be aware that cost based strategies generally problematic. Competitive Advantage can only be achieved in terms of a product or service by the user as having an advantage over competition精选pptDifferentiationDifferentiation in terms of price, means a higher p

12、rice, an offer that is of greater value than the competition. However one needs to consider that a firm may wish to offer a differentiated product at a similar price to competitors to gain increase in market share and volume.Differentiation must think about from whom the firm is differentiating.What

13、 is the basis for the differentiationDifferentiation is likely to be about more than cost and quality.For example, ambience of business, location of business, price options精选pptStrategy ClockHigh Hybrid 3LowPrice 2 6 Low price Added value 1 7 6,7,8 destined to fail 8 Differentiation4Focused 5 Differ

14、entiationLow Price High精选pptCompetitive Strategy OptionsStrategiesNeeds and Risks1. Low price/low added valueLikely to be segment specific2. Low PriceRisk of price war and low margins/need to be cost leader3. HybridLow cost base and reinvestment in low price and differentiation4 DifferentiationWitho

15、ut price premiumWith price premiumPerceived added value by user, yielding market share benefitsPerceived added value sufficient to bear price premium5. Focused differentiationPerceived added value to a particular segment, warranting price premium6. Increased price/standard valueHigher margins if com

16、petitors do not follow/risk of losing market share7. Increased price/low value Only feasible in monopoly situation8. Low value/standard priceLoss of market share精选pptStrategy Examples1 Low Price/low added value: Clothes trade in UK from 1990s to now. As some stores upgrade merchandise new ones enter

17、 at lower price 2. Low Price: very difficult 3. Hybrid: added value while keeping prices down suggest Japanese firms doing this for years and IKEA the Swedish furniture and household goods company.Need to consider overall cost base can sustain low margins, this needs to be considered from beginning

18、and a follow strategy for when entry has been achieved.4. Value added, or differentiation: uniqueness of product or improvement in products. Investment in R and D. or design expertise. Mercedes Cars Germany, Market based approaches, power of the brand. Levi Jeans, Tourism in countries good example N

19、epal, ( Himalayas) China, ( Forbidden City) Malaysia (Beaches) promotional brand.5. Focused Differentiation : this often means positioning your product in same category as others e.g. Chocolates, your chocolates more expensive than others Guidiva.Know which segment you are competing in, need to be c

20、onfident about breadth of market move towards global markets or focus strategy.精选pptStrategy ExamplesFailure Strategies: these are probably destined to failure, route 6 suggests increase in price without increase in value, note this is often what monopolies are accused of. Recently privatised bodies

21、 such as BT, Water Companies in UK. route 7 more severe suggests reduction in value of product or service and increase in relative priceroute 8 suggests reducing value while maintaining price, this is also dangerous The strategy clock is a market based model of options working from the outside in pe

22、rspective It focuses on the basic question what is the value of the product or service to the user.精选pptThe generic value chain Firm Infrastructure Human Resource Management Margin Technology Development Procurement Inbound Operations Outbound Marketing Services Margin Logistics Logistics & SalesPorter ( 1985)精选pptExercise Lecture FiveEssential reading Chapter five ,Business Level Strategy in DeWit and Meyer.Each Student Read the