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long term efficient & effective planning, organizing, leading and controlling designed to achieve the mission & goals of an organization.
the fundamental purpose that sets a firm apart from other firm's & identifies the scope of its operation in product & market terms is defined as the company mission
- Entry Barriers
- Supplier Power
- Buyer Power
- Substitite Availability
- Competitive Rivalry
What do we do with the results of an external environmental analysis?
Determine the organzations opportunites and threats
Why does a firm need to study it's internal environment?
To evaluate its strengths and weaknesses within it's organizational structure
What are resources?
- asssets of a company both tangible and intangible
- i.e. capital, lean production, brand image, etc.
What are capabilities?
a company's skills at coordinating its resources & putting them to productive use
What are the criteria used to determine if capabilities are core competencies?
- Costly to imitate
What do we do with the results of an internal market analysis?
Determine the firm's strengths and weaknesses
When does a firm attain a sustainable competitive advantage?
When its efficiency, quality, innovation and responsiveness to customers is best in the industry
What are the four functional level strategies of a firm?
- Cost leadership
- Focused cost leadership
- Focused differentation
- Integrated cost/leadership differentiation
- an integrated set of actions designed to produce goods at lowest cost to BROAD market segments.
- ex. WalMart
an integrated set of actions designed to create goods that are distinct (or perceived so) to BROAD market segments
Focused cost leadership
- set of actions designed to produce goods at lowest costs to NARROW market segments
- i.e. IKEA
- set of actions designed to create goods that are distinct (or perceived so) at lowest cost to NARROW market segments
- i.e. Ferrari, Rolex
Focused cost/leadership differentiation
- set of actions designed to produce distinct goods (or perceived so) at lowest cost to NARROW market segments
- i.e. McDonald's, Southwest
Competitive Risk of Cost Leadership
- Technological innovation can wipe out cost advantage
- Cost leaders can lose track of the prerequisite needs of customers, suppliers & buyers
Competitive Risk of Differentiation
- Learning can erase the differentiation
Competitive Risk of 'Focused Strategies'
- All assocaited with cost leadership and differentation
- Competitors focus more on narrow market segments
- Focused targets can become the interest of nonfocused companies
- Narrow market may become the whole
Competitive Risks of Integrated Cost Leadership/Differentiation
- All associated with low cost, differentiation & focused strategies
- You must achieve and keep a low cost and differentiated product or you can be stuck in the middle
Strategies in Fragmented Industries
- Horizontal Merger
- Using IT & the Internet
Stages in Industry Life Cycle
Stages in Product Life Cycle
Stages in Product Adoption Cycle
- Early adopters
- Early Majority
- Late Majority
Reasons for slow growth in embryonic markets
- First products -lower quality
- Undeveloped channels of distribution
- Lack of complementary products
- High product cost
Reasons for growth (mass markets) phase
- Technology makes product easier to use (increase value to customer)
- Complementary products are developed
- Cost & prices fall and demand risks
Strategies to Manage Rivalry
- Price signaling: vigorous response to price changes
- Price leadership: a dominant firm chooses a price and the rest follow with no collusion
- Nonprice competition: real and defacto
- product differentiation
- product development
- market development
- product proliferation
- capacity control