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Chapter4StrategicManagementBrainstorming
MostwesterncorporationstopdowndecisionmakingmanagersresponsiblefordecisionmakingandaccountableforthedecisionsreachedJapanesesystemfocusesmoreontheperformanceoftheentireteamcollectivedecisionmakingbyindividualteamsIfyouwereanemployee,wouldyoupreferthecompanyischaracterizedbytop-downorcollectivedecisions?Andwhy?TextATheCoreCompetenceoftheCorporation
TheCoreCompetenceoftheCorporationCoreCompetenceiscommunication,involvement,andadeepcommitmenttoworkingacrossorganizationalboundaries.
TheCoreCompetenceoftheCorporationTherealsourcesofadvantagearetobefoundin:
Management’sabilitytoconsolidatecorporatewidetechnologiesProductionskillsintocompetenciesthatempowerindividualbusinessestoadaptquicklytochangingopportunities.TheenginefornewbusinessdevelopmentHowNottoThinkofCompetenceCultivatingcorecompetencedoesnotmean:Outspendingrivalsonresearchanddevelopment.Sharedcosts,aswhentwoormoreSBUsuseacommonfacility—aplant,servicefacility,orsalesforce—orshareacommoncomponent.IntegratingverticallyIdentifyingCoreCompetencies—AndLosingThemThreeteststoidentifycorecompetencies:Potentialaccesstoawidevarietyofmarkets.Asignificantcontributiontotheperceivedcustomerbenefitsoftheendproduct.Difficultforcompetitorstoimitate.IdentifyingCoreCompetencies—AndLosingThemWaystoloseCoreCompetencies:Cutinternalinvestmentwhileinfavorofoutsidesuppliers.Focusingtoomuchonoutsourcing.Withoutachoiceaboutwhereitwillbuildcompetenceleadership.Forgoingopportunitiestoestablishcompetenciesthatareevolvinginexistingbusinesses.FromCoreCompetenciestoCoreProductsFromCoreCompetenciestoCoreProducts: Thetangiblelinkbetweenidentifiedcorecompetenciesandendproductsisthecoreproducts—thephysicalembodimentsofoneormorecorecompetencies.FromCoreCompetenciestoCoreProductsFromCoreCompetenciestoCoreProducts: Itisessentialtomakethisdistinctionbetweencorecompetencies,coreproducts,andendproductsbecauseglobalcompetitionisplayedoutbydifferentrulesandfordifferentstakesateachlevel.FromCoreCompetenciestoCoreProductsAtthelevelofcorecompetence: Thegoalistobuildworldleadershipinthedesignanddevelopmentofaparticularclassofproductfunctionality—beitcompactdatastorageandretrieval.FromCoreCompetenciestoCoreProductsAtthelevelofcoreproducts: Itcanconsistentlyreducethecost,time,andriskinnewproductdevelopment.Inshort,well-targetedcoreproductscanleadtoeconomiesofscaleandscope.TheTyrannyoftheSBUTheimplicationsofthetwoalternateconceptsofthecorporation:‘‘TwoConceptsoftheCorporation:SBUorCoreCompetence.’’TheTyrannyoftheSBUTheneedfornewprinciplesismostobviousincompaniesorganizedexclusivelyaccordingtothelogicofSBU—anorganizationaldogmaforageneration.TheTyrannyoftheSBUThecostsofdistortion:UnderinvestmentinDevelopingCoreCompetenciesandCoreProducts.ImprisonedResources.BoundedInnovation.DevelopingStrategicArchitectureThefragmentationofcorecompetencies: Whenadiversifiedcompany’sinformationsystems,patternsofcommunication,careerpaths,managerialrewards,andprocessesofstrategydevelopmentdonottranscendSBUlines.DevelopingStrategicArchitectureAstrategicarchitectureis: Aroadmapofthefuturethatidentifieswhichcorecompetenciestobuildandtheirconstituenttechnologies.DevelopingStrategicArchitectureAstrategicarchitecturecan:Dramaticallyreducetheinvestmentneededtosecurefuturemarketleadership.Providealogicforproductandmarketdiversification.Makeresourceallocationprioritiestransparenttotheentireorganization.DevelopingStrategicArchitectureTosinksufficientlystrongroots,acompanymustanswersomefundamentalquestions:Howlongcouldwepreserveourcompetitivenessinthisbusinessifwedidnotcontrolthisparticularcorecompetence?Howcentralisthiscorecompetencetoperceivedcustomerbenefits?Whatfutureopportunitieswouldbeforeclosedifweweretolosethisparticularcompetence?RedeployingtoExploitCompetenciesOnceoverarchingcompetenciesareidentified:Askbusinessestoidentifytheprojectsandpeoplecloselyconnectedwiththem.Directanauditofthelocation,number,andqualityofthepeoplewhoembodycompetence.MakethepositivecontributionoftheSBUmanagervisibleacrossthecompany.TextBStrategicManagementofEBAYStrategicManagementofEBAYExternalAnalysis:Politicalfactors:ChanceofdepreciationofSterlingduetoexitofUKfromEU.PoliticalturmoilcanaffectEBAYbusiness.StrongrestrictionsfromtheUnitedStates.StrategicManagementofEBAYExternalAnalysis:Economicfactors:EconomicslowdowninUK.Globalrecessiondecreasesthesales.Inflation,tariffrateimposedbydifferentimportingcountry.Impositionofhighrateofcorporationtaxbygovernmentaffectsthebusiness.StrategicManagementofEBAYExternalAnalysis:Socialfactors:NumberofunemploymentmayriseDecreaseinthestandardoflivingofpeopleStrategicManagementofEBAYExternalAnalysis:Technologicalfactors:Latestanduser-friendlytechnologyisrequiredDisplaytheproductsinamoreattractivewaytothecustomersManagementcanuseanextensivedatabasetomanageinformationregardingsuppliesandcustomerTheproprietaryinformationwouldbeatriskwithsecuritybreachStrategicManagementofEBAYExternalAnalysis:Environmentalfactors:NeedstomaintainEnvironmentsafetylawinpackaging,importingandshippingthegoods.Environmentalfactorssuchaschangingregulationforenergyusecanaffectthebusiness.Therearemorebenefitsachievedbypeopleratherthanspending.StrategicManagementofEBAYExternalAnalysis:Legalfactor
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