工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件

1、工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件Business level StrategyBusiness level StrategyDr Ita ODonovanDr Ita ODonovanLecture FiveLecture Five工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件Alfred. D. Chandler, Jr. Received the Pulitzer prize for his work which demonstrated the evolutionary

2、and historical nature of change and its effect on businesses. A.D. Chandler Jr. ( 1969) The structure of American Industry in 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 shapin

3、g organisational environments and organisations themselves.D.C. North (1990) Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.These two ideas which show businesses are influenced from the outside- in and also influence from the inside- out are domina

4、nt in business strategy today. 工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件Some Fundamentals continuedSome Fundamentals continuedAt the business level of the industry five forces are considered to threaten or advantage the firm:These are:Entry barriersRivalry between industry incumbentsSubstitu

5、te products or servicesThe bargaining power of suppliersThe bargaining power of buyersAt the international level four forces were seen as sources of national competitive advantage.工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件International Level StrategyInternational Level Strategy工商管理专业MBALectur

6、eBusinessLevelStrategyLectureFiv课件What 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

7、 firm- specific 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

8、flexible alsoCurrent routines, learning, practice, technologies, customer base, relationship with suppliers. (Teece, et al 1997)Alignment of capacity and competencies are essential in this approach工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件We are concerned with what methods the business is goi

9、ng to utilise to gain and sustain competitive advantage: Some key Principles:A cost leadership strategy: A cost leadership strategy: low cost producer in the industry, exploit cost advantage, no frills, scale and cost emphasisA differentiation strategy: A differentiation strategy: seek uniqueness in

10、 the market along a dimension valued by buyersA focus strategy:A focus strategy: choice of narrow scope within an industry, a segments or group of segments become the focus to the exclusion of others工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件Competitive advantageCompetitive advantageLower Cost

11、Differentiation Broad TargetCOMPETITIVE SCOPE1. Cost Leadership 2.Differentiation Narrow Target3ACost Focus3BDifferentiationFocus工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件Some ProblemsSome ProblemsSustainable Cost Leadership: Sustainable Cost Leadership: means lowest cost overtime against com

12、petitors. 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 not much if used for industry wide.Need

13、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工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件DifferentiationDifferentiationDifferentiation Differentiation

14、in terms of price, means a higher price, 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 Differentiation must thi

15、nk about from whom the firm is differentiating.What 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工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件Strategy ClockStrategy Clock

16、HighHigh Hybrid 3 Hybrid 3LowLowPrice Price 2 2 6 6 Low price Low price Added valueAdded value 1 1 7 6,7,8 7 6,7,8 destined to faildestined to fail 8 8 Differentiation4Focused 5 DifferentiationLow Price High工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件Competitive Strategy OptionsCompetitive Stra

17、tegy 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 DifferentiationWithout price premium(a)With price premiumPerceiv

18、ed 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 competitors do not follow/risk of losing mar

19、ket share7. Increased price/low value Only feasible in monopoly situation8. Low value/standard priceLoss of market share工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件Strategy ExamplesStrategy Examples1 Low Price/low added value1 Low Price/low added value: Clothes trade in UK from 1990s to now. As

20、 some stores upgrade merchandise new ones enter at lower price 2. Low Price: 2. Low Price: very difficult 3. Hybrid: 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 b

21、ase can sustain low margins, this needs to be considered from beginning and a follow strategy for when entry has been achieved.4. Value added, or differentiation:4. Value added, or differentiation: uniqueness of product or improvement in products. Investment in R and D. or design expertise. Mercedes

22、 Cars Germany, Market based approaches, power of the brand. Levi Jeans, Tourism in countries good example Nepal, ( Himalayas) China, ( Forbidden City) Malaysia (Beaches) promotional brand.5. Focused Differentiation5. Focused Differentiation : this often means positioning your product in same categor

23、y as others e.g. Chocolates, your chocolates more expensive than others Guidiva.Know which segment you are competing in, need to be confident about breadth of market move towards global markets or focus strategy.工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件Strategy ExamplesStrategy ExamplesFailu

24、re Strategies: Failure 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 such as BT, Water Companies in UK. route 7 more severe suggests reduction in value of

25、 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 perspective outside in perspective It focuses on the basic question what is the value of

26、 the product or service to the user.工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件The generic value chainThe generic value chain Firm Firm InfrastructureInfrastructure Human Resource Human Resource Management Margin Management Margin Technology Technology DevelopmentDevelopment ProcurementProcure

27、ment Inbound Operations Outbound Inbound Operations Outbound Marketing Services MarginMarketing Services Margin Logistics Logistics Logistics & SalesLogistics & SalesPorter ( 1985)Porter ( 1985)工商管理专业MBALectureBusinessLevelStrategyLectureFiv课件Exercise Lecture FiveEssential reading Chapter five ,Business Le