6 - Corporate Strategy 2012

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LEARN. PERFORM. GROW.

6. Strategic choices (I)

Corporate Strategy Master Degree

The Faculty of International Business and Economics,

ASE Bucharest


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Detailed Course Contents:

1. Introducing Strategy

2.The Strategic Pos it ion The Environment; StrategicCapability; Expectations & Purposes

3.Strategic choices - Business-Level; Corporate-Level andInternational Strategy; Directions and Methods of

Development

4.Strategy into action Organising for Success; EnablingSuccess & Managing Strategic Chance


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Strategic choices (I)

Business-Level Strategy Business level strategies

Bases of competitive advantage the strategy clock

Sustaining competitive advantage Competitive strategy in hypercompetitive conditions

Competition and collaboration


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Business level strategies

Bases of competitive advantage the strategy

clock

Sustaining competitive advantage

Competitive strategy in hypercompetitive conditions


AGENDA for TODAY6. Strategic choices (I)

-Business-Level Strategy


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clock







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SBU

strategies

Bases of competition

Price

Differentiation

Hybrid

Focus

Achieving competitive

Advantage

Sustainability

Hyper competition

Collaboration

Detailed choice

Directions

Methods


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Bases of competitive advantage the Strategy Clock*

Focused

differentiation

DifferentiationFocused

differentiation

Low price

No frills Strategies destinated

for ultimate failure

Hybrid

5

6

8

7

43

2

1

Price HighLow

Perceived

product/servicebenefits

High

*addapted from thework of Cliff

Bowman


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NEEDS / RISKS

1 No frills Likely to be segment specific

2 Low price Risk of price war and low margins; need to be costleader

3 Hybrid Low cost base and reinvestment in low price and

differentiation

4 Differentiation

(a) without price premium

(b) with price premium

Perceived added value by user, yielding market share

benefits

Perceive added value sufficient to bear price premium

5 Focused differentiation Perceived added value to a particular segment,

warranting price premium

6 Increased price / standard

value

Higher margins if competitors do not follow; risk of

losing market share

7 Increased price / low value Only feasible in monopoly situation

8 Low value / standard price Loss of market share

Differentiation

Likely

failure

The Strategy Clock - competitive strategy options


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Price-based strategies

Accept reduced margin

Win a price war

Reduce costs

Focus on specific segments

Differentiation

Create difficulties of imitation

Achieve imperfect mobility

(of resources / competences)

Reinvest margin

Sustaining

competitive

advantage

Lock in

Achieve size / market dominance

First mover advantage

Reinforcement

Rigorous enforcement


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Three GENERIC strategies (Porter 1980)

FOCUS

DIFFERENTIATIONOVERALL

COST LEADERSHIP

Low Cost PositionUniqueness Perceived

by the Customer

Industry

wide

ParticularSegment

Only

S T R A T E G I C A D V A N T A G E

S

TRA

TE

GI

C

TARG

E

T


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Differentiation

Commonly Required Skills and

Resources

Common Organizational Requirements

Strong marketing abilities

Product engineering

Creative flair

Strong capability in basic research

Corporate reputation for quality or

technological leadership

Long tradition in the industry or unique

combination of skills drawn from other

businesses

Strong cooperation from channels

Strong coordination among functions in

R&D, product development and marketing

Subjective measurement and incentives

instead of quantitative measures

Amenities to attract highly skilled labour,

scientists or creative people


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Focus

Commonly Required Skills and

Resources

Common Organizational Requirements

combination of the previous policies (in the case of the overal l cost

leadershipand dif ferentiat iongeneric strategies) directed at the particularstrategic target


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Competitivestrategies in

hypercompetitive

conditions

Repositioning

Overcoming competitors

market-based moves

Block first-mover advantages

Imitate product/market moves

Competing

successfully

Pre-empt competition

(new strategies) Do not attack

competitor's

weaknesses

Disrupt the market

Be unpredictable

Mislead competitors

Overcoming

Competitors

barriers Shorter life cycles

Undermine

strongholds

Counter deep

pocket advantages


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AGENDA for TODAYCourse 6. Strategic choices (I)



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Competitiveness

might be improved

by collaborating

to achieve

Increased

buying power

Increased

barriers to entry

Increased

selling power

Decreased risk

of substitutionEntry to

new markets

Shared work

with customer

Stakeholder

expectations


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6 - Corporate Strategy 2012

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