...Business Strategy 4 External Environment Prof. Dr. Bernd Venohr Berlin, April 2007 © 2007 Prof. Dr. Bernd Venohr Agenda Introduction to Strategy 1 2 3 4 5 6 7 8 9 Course Overview and Strategy Concept Economics of Strategy Shareholder Value External Environment Internal Environment Competitive Positioning Diversification Mergers & Acquisitions Global Strategy Business Strategy Corporate Strategy Strategy Process 10 Organizational Structure and Control 11 Strategic Leadership © 2007 Prof. Dr. Bernd Venohr 2 Agenda Introduction to Strategy 4 External Environment - General environment analysis - Industry analysis - Summary and Outlook next Session © 2007 Prof. Dr. Bernd Venohr 3 Where are we today? Introduction to Strategy 1 Course Overview Strategy Concept 2 Economics of Strategy 3 Business Strategy 4 External Environment Shareholder Value Corporate Strategy 7 8 Diversification Global Strategy 5 Internal Environment 6 Competitive Positioning Mergers & Acquisitions 9 Strategy Process 10 Organizational Structure and Control 11 Leadership © 2007 Prof. Dr. Bernd Venohr Strategic 4 General purpose of external analysis Identify Opportunities: conditions that may help firm achieve strategic competitiveness Threats: hinders or constrains firm’s pursuit of strategic competitiveness Two types of environment Macro environment Micro environment (industry) Source: Robert M. Grant...
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...DISCUSSION OF MICHAEL E. PORTER’S “WHAT IS STRATEGY?” Discussion of Michael E. Porter’s “What is Strategy?” Key Issues In today’s business, managers are trained and encouraged to focus on effectiveness and benchmark all activities in their business segment. Major goals for department heads are to achieve goals, which are often defined as measurable; for instance expenses, revenues, production numbers, activities per day, and the like. By doing so a company is thought to stay flexible enough to react instantly to changes in the market. Furthermore, positioning a company is considered as being too static. Another belief is that competitive advantages are temporary only at best and cannot be sustained. Porter (1996) describes this current business culture as dangerous, based on half-truths, and believes that it ultimately will lead companies down a path a mutual destructive competition. The main failure is to distinguish between effectiveness and strategy. While effectiveness is necessary it alone is not sufficient to achieve sustainable profitability. This can only be realized with a company-wide strategy. A strategy, which defines unique activities will differentiate a firm from its competitors and position the company strongly in the market. A strategy, which is company-wide, will ensure that these unique activities create a fit by complementing and reinforcing each other. Porter (1996) defines the key issues of today’s business philosophy as follows: • Failure to...
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...viewpoints. This article aims to explain and critically evaluate the approaches of Jay Barney and Michael E. Porter, two leading strategy theorists, in-turn explaining the basis leading to the difference. What is Strategy & Competitive Advantage? Strategy is the creation of unique and valuable position involving a different set of activities.1 A firm is said to have competitive advantage when it is implementing a strategy which is not is being implemented by it’s current or potential competitors and also sustains profits that exceed the average for it’s industry. " Is Competitive Advantage enough? The goal of much of business strategy is to achieve a sustainable competitive advantage which is the same as competitive advantage but the advantages of the strategy cannot be duplicated by the competitors. (Barney, 1989). Different authors have different viewpoint in regard to sustainable competitive advantage. A sustained competitive advantage is simply a competitive advantage that lasts for a longer period of calendar time (Porter, 1985). A competitive advantage is sustained only after the efforts to duplicate the advantages of the strategy have been ceased (Lippman and Rumelt,1982). " Michael Porter’s Viewpoint Sustainable competitive advantage is when a strategy is implemented and the same strategy is not being implemented by the current or potential competitor and that advantage lasts for a longer period of time. For example, BIC, the pen manufacturing company, has over...
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...Generic Competitive Strategies…………………………………………………………. Cost Leadership…………………………………………………………………………………………… Differentiation………………………………………………………………………………………………. Focus or Niche strategy…………………………………………………………………………………... Apple Inc……………………………………………………………………………………………………. Identification and Critical Evaluation of the Company’s Existing Strategies………………………… Apple Inc Cost leadership Strategy……………………………………………………………………… Apple Inc Differentiation Strategy………………………………………………………………………... Apple Inc Focus or Niche Strategy………………………………………………………………………. Conclusion………………………………………………………………………………………………….. References…………………………………………………………………………………………………. 1.0 Introduction A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average. The fundamental basis of above average profitability in the long run is sustainable competitive advantage. There are two basic types of competitive advantage a firm can possess: low cost or differentiation. The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus. The focus strategy has two variants, cost focus and differentiation focus. Michael Porter suggested that businesses can secure a sustainable competitive advantage by adopting one of three generic strategies. According to Michael E. Porter's...
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...BIS5101 Strategic IT-Management Prof. Dr. Karl-Heinz Rau WS 2013/14 Term Paper Topic: How Companies Could Achieve Sustainable Competitive Advantage Gahn, Philip MACFA, ID# 309601 gahnphil@hs-pforzheim.de Kominek, Lukas MACFA, ID# 300953 komluk@hs-pforzheim.de Wenz, Eugen MACFA, ID# 300636 weneug@hs-pforzheim.de th Submission date: November 2 2013 2 Table of Contents 1 Purpose and Structure ......................................................................................... 5 2 Definition and Origin of Competitive Advantage .............................................. 6 3 Approaches and Methods to Achieve Competitive Advantages......................... 8 3.1 The Traditional Approach According to Porter ........................................... 8 3.1.1 Cost Leadership ................................................................................. 10 3.1.2 Focusing on Priorities ........................................................................ 10 3.2 Modern Approaches .................................................................................. 10 3.2.1 The Strategy as a Compilation of Simple Rules ................................ 11 3.2.2 The Blue Ocean Strategy ................................................................... 12 4 Ways to achieve Sustainable Competitive Advantage...................................... 13 5 Conclusion .............................................................................
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...CONCEPT OF COMPETITIVE ADVANTAGE IS CENTRAL TO THE STUDY OF STRATEGIC MANAGEMENT, AND EXAMINE THE USE OF PORTER’S GENERIC STRATEGEIS BY COMPANIES TO COMPETE. KEY TERMS Competitive advantage. This is the favourable position an organization seeks in order to be more profitable than its competitors. Strategic management. It is the systematic analysis of the factors associated with customers and competitors (the external environment) and the organization itself (the internal environment) to provide the basis for maintaining optimum management practices. The objective of strategic management is to achieve better alignment of corporate policies and strategic priorities. Porter’s generic strategies. These are three general types of strategies developed by Michael Porter that are commonly used by businesses to achieve and maintain competitive advantage. Company. It is a voluntary association formed and organized to carry on a business. Types of companies include sole proprietorship, partnership, limited liability, corporation, and public limited company. INTRODUCTION The concept of competitive advantage is central to the study of strategic management, since a company or an organization must follow an aligned strategy to outperform their rivals in the industry. Michael Porter introduces three generic strategies that a firm may apply in order to do so they include; overall cost leadership, Differentiation and Focus. In order to create and sustain competitive advantage, companies...
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...ANALYSIS OF MICHAEL PORTER’S GENERIC STRATEGIES AND ITS USAGE IN A GLOBALIZED BUSINESS ENVIRONMENT THESIS - BACHELOR HONOURS IN BUSINESS ADMINISTRATION DIANA MARIA CAMACHO ARIAS TYPE OF DOCUMENT: DISERTATION TO OBTAIN THE DEGREE OF BACHELOR HONOURS IN BUSINESS ADMINISTRATION APPROVED BY UNIVERSIDAD DEL ROSARIO – FACULTAD DE ADMINISTRACION INSTITUTION: ÉCOLE INTERNATIONALE DE MONTPELLIER FRANCE, MONTPELLIER, MAY OF 2009 ANALYSIS OF MICHAEL PORTER’S GENERIC STRATEGIES AND ITS USAGE IN A GLOBALIZED BUSINESS ENVIRONMENT THESIS - BACHELOR HONOURS IN BUSINESS ADMINISTRATION DIANA MARIA CAMACHO ARIAS TYPE OF DOCUMENT: DISERTATION TO OBTAIN THE DEGREE OF BACHELOR HONOURS IN BUSINESS ADMINISTRATION APPROVED BY UNIVERSIDAD DEL ROSARIO – FACULTAD DE ADMINISTRACION TUTOR: TIDIANE AW INSTITUTION: ÉCOLE INTERNATIONALE DE MONTPELLIER FRANCE, MONTPELLIER, MAY OF 2009 DEDICATION I dedicate this dissertation to every person that has allowed it to be possible with the critics, to the teachers and tutors that have awaked in me the interest in this topic and also the passion for the businesses strategy, to my family that has always supported me to achieve my goals and to develop myself as a human being and also as a professional, and finally but not less important to Gabriel that has been a huge support to bring this dissertation to a satisafactory end. ACKNOWLEDGEMENTS This thesis would not have been possible without the generous assistance of the following...
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...www.ccsenet.org/ijbm International Journal of Business and Management Vol. 5, No. 7; July 2010 Competitive Advantages and Strategic Information Systems Mahmood Hemmatfar, Ph. D. Faculty Member of Islamic Azad University, Brojerd Branch, Iran Mahdi Salehi, Ph. D. (Corresponding author) Assistant Prof. Department of Accounting and Management Ferdowsi University of Mashhad, Iran Tel: 98-912-1425-323 E-mail: Mahdi_salehi54@yahoo.com Marziyeh Bayat, Ph. D. Faculty Member of Islamic Azad University, Hamedan Branch, Iran Abstract Information edge and 3rd millennium predisposed so many of revolutions. Business organization with emphasize on information systems is try to gathering desirable information for decision making. Because of comprehensive change in business background and emerge of computers and internet, the business structure and needed information had change, the competitiveness as a major factor for life of organizations in information edge is preyed of information technology challenges. In this article we have reviewed in the literature of information systems and discussed the concepts of information system as a strategic tool. Keywords: Strategic information systems, Information technology, Information sciences, Decision support systems, Competitive advantages 1. Introduction The potential usefulness of different kinds of Information System (IS) for environmental management is well recognized (Díez et al, 2009). Perhaps we can say advances in information...
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...and implementation? Why? Porter (1996) describes strategy as the creation of unique and valuable positioning that requires a set of different activities to make competitive trade-offs and strategic fit that creates competitive advantage and superior profitability. Operational effectiveness, on the other hand, refers to performing similar activities better than the rivals through benchmarking and incorporating best industry practices (Michael E. Porter, 1996). Porter (1996) discusses that strategy aims to position the company in performing different activities from its competitors or perform similar operational activities in different ways; whereas operational effectiveness presents how the company compares, acquires, and improves similar operational functions of its competitors. Although operational effectiveness may have its benefits of building efficiency and productivity, it is insufficient and unnecessary to the formulation and implementation of strategy. This is because it drives competitive convergence (Michael E. Porter, 1996) that makes the company homogenous to the other companies in the same playing field for incorporating same operational activities (despite making them “better”). With this, competitors can and may imitate certain management practices, technologies, and other tactics to have more efficient ways in meeting the needs of customers - which presents a big threat. This offshoots the company to having no advantage over its rivals. Taking any...
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...reviewer(s), etc., please visit www.BaselineScience.com B a s e l i n e S c i e n c e , I n c . • w w w. b a s e l i n e s c i e n c e . c o m Matching Dell: A Strategic Case Analysis Dan Demers GS 604, Thursday 5:00 – 7:20 Matching Dell: Dell’s Key Strategic Issues At the close of the case, Dell is presented with two key strategic issues. The first strategic issue facing Dell is the movement of rivals seeking to mimic Dell’s direct sales model, while the second strategic issue is the declining trend in pricing in the Personal Computer Industry and the effects this trend will have on the operations and profitability of both Dell and Dell’s Rivals. In this case analysis, I recommend that Dell answer these issues by assuming a Cost Leadership in a Broad Market strategy to win the price war on cost, establish strategic relationships with system integrators and resellers to counter the product diversification threat of multi-offering Rivals, and strengthen its brand presence internationally to enable continued market growth. Personal Computer Industry: Industry Structure Analysis In this analysis, I define the Personal Computer Industry as that which is comprised of computer manufacturers responsible for the assembly of personal computers, either in entirety or with the assistance of contractors or channel partners. Dell is included in this definition, as are Dell’s Rivals highlighted in the case. In applying Michael Porter’s Five Forces Modeli, it is clear that the Personal...
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..., please visit www.BaselineScience.com B a s e l i n e S c i e n c e , I n c . • w w w. b a s e l i n e s c i e n c e . c o m Matching Dell: A Strategic Case Analysis Dan Demers GS 604, Thursday 5:00 – 7:20 Matching Dell : D ell’s Key Strategic Issue s At the close of the case, Dell is presented with two key strategic issues. The first strategic issue facing Dell is the movement of rivals seeking to mimic Dell’s direct sales model, while the second strategic issue is the declining trend in pricing in the Personal Computer Industry and the effects this trend will have on the operations and profitability of both Dell and Dell’s Rivals. In this case analysis, I recommend that Dell answer these issues by assuming a Cost Leadership in a Broad Market strategy to win the price war on cost, establish strategic relationships with system integrators and resellers to counter the product diversification threat of multi-offering Rivals, and strengthen its brand presence internationally to enable continued market growth. Personal Computer Industry : Industry Structure Analysis In this analysis, I define the Personal Computer Industry as that which is comprised of computer manufacturers responsible for the assembly of personal computers, either in entirety or with the assistance of contractors or channel partners. Dell is included in this definition, as are Dell’s Rivals highlighted in the case. In applying Michael Porter’s Five Forces Modeli, it is clear that the...
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...www.ccsenet.org/ijbm International Journal of Business and Management Vol. 5, No. 7; July 2010 Competitive Advantages and Strategic Information Systems Mahmood Hemmatfar, Ph. D. Faculty Member of Islamic Azad University, Brojerd Branch, Iran Mahdi Salehi, Ph. D. (Corresponding author) Assistant Prof. Department of Accounting and Management Ferdowsi University of Mashhad, Iran Tel: 98-912-1425-323 E-mail: Mahdi_salehi54@yahoo.com Marziyeh Bayat, Ph. D. Faculty Member of Islamic Azad University, Hamedan Branch, Iran Abstract Information edge and 3rd millennium predisposed so many of revolutions. Business organization with emphasize on information systems is try to gathering desirable information for decision making. Because of comprehensive change in business background and emerge of computers and internet, the business structure and needed information had change, the competitiveness as a major factor for life of organizations in information edge is preyed of information technology challenges. In this article we have reviewed in the literature of information systems and discussed the concepts of information system as a strategic tool. Keywords: Strategic information systems, Information technology, Information sciences, Decision support systems, Competitive advantages 1. Introduction The potential usefulness of different kinds of Information System (IS) for environmental management is well recognized (Díez et al, 2009). Perhaps we can say advances in information...
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...FEB, 2016 Individual Assignment Increasing competitive advantage, unit 5 mustafa.malik Contents Competitive Advantage 2 Low Cost Leadership 2 Differentiation 3 Focus on Niche 3 Resources required to execute these strategies 4 Competitive Advantage Objectives Measurement 4 References: 5 Competitive Advantage Businesses always look for a competitive advantage to look different and to offer something right for a selected target audience. Competitive advantage is to indentify customer’s needs, to develop a high quality product with a decent price and to deliver it better than the others. As stated by Cole Ehmke & M.S. a competitive advantage is to answer this question “Why should the customer purchase from this operation rather than the competition? (Cole Ehmke, M.S: 5-01)”. The key point is that a brand has loyal customers for a reason. These loyal customers are often the cause of a successful growing business that builds upon a strong competitive edge than the competitors as stated by Michael E. Porter, a “Competitive advantage is at the heart of a firm's performance in competitive markets (J Collins, Michael E. Porter: 102)”. A competitive advantage can be sourced through many factors such as a high quality product, a superior customer service, less price then rivals, better location, more reliable product than the competitor, better design and providing a better value for money. According to Porter these factors can be categorized into three generic...
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...a great shopping experience through improved customer engagement, and leveraging our real estate to support new store formats consistent with the repositioning of our brand. Maintain efficient operations by building greater speed and flexibility into the supply chain to deliver the right product to the right store at the right time in the appropriate proportions across the approximately 4,600 store network. On-Trend Targeted Product We identifies fashion trends timely and integrates these insights into on-trend product in our stores. Generic Strategy - Porter Porter’s generic strategies: low cost, differentiation, specialization. Key stakeholders & their influence. PEST model, macro environment. – Five Forces model, micro/industry environment. Porter's Five Forces Model And Three Generic Strategies Porter's Five Forces Model Porter's Five Competitive Forces model is a framework made by Michael Porter that is used by businesses when thinking about business strategy and the impact of Information technology. This model can help a business decide whether to, enter an industry or expand your business in the industry you are already working on. The five forces in the model are the following: Buyer Power, Supplier Power, and Threat of substitute products or services, Threat of new entrants, Rivalry among existing companies. The generic + strategy + trap Since the...
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...Wakefield American Military University Abstract Porter’s Five Forces Model is a holistic approach towards competitive strategy. The model provides a framework for the strategic direction of management teams that are seeking an edge over their competitors and additional factors that may undermine profits. The model displays the dynamics between the competitive rivals, buyer’s bargaining power, suppliers, new entrant’s threat and substitutes. The implementation of Porter’s Five Forces Model is crucial on international business practice in order to establish a successful overseas operation and reduce cost of expansion. Global business expansion has become a common practice. Modern organizations are prone to take advantage of international attractive markets that are highly profitable and offer incentives for foreign companies. Implementation of the model increases the chances of success for firms that are considering branching out or simply starting a new company overseas. The Company’s management strategic vision also benefits from Porter’s Model because it points out the forces that affect the organization’s profitability. However, Porter’s modeling techniques have some limitations such as the absence of providing meaningful advice for preventive actions and profitability based solely on fighting competitors without taking in consideration opportunities of competitive strategic alliances. In conclusion, Porter’s Five Forces Model influences the profitability, product...
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