Company Analysis: Strategy. Collis & Montgomery n Resource Based View (RBV) of strategy n Resources:...
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Transcript of Company Analysis: Strategy. Collis & Montgomery n Resource Based View (RBV) of strategy n Resources:...
Company Analysis: Strategy
Collis & Montgomery Resource Based View (RBV) of strategy Resources: Physical (e.g., best faculty); Intangible (e.g., reputation
in marketing) A firm is a collection of resources (or capabilities) - some good and
some bad(IBM) Different firms have different sets of resources (IBM vs. Dell) The firm with the “best” set most likely to be successful RBV bridges the gap between External view (Porter) and Internal
view (Prahalad)
Collis & Montgomery, cont.
Resources need to pass the market test of value:
–Is resource hard to copy?–How quickly does resource depreciate? –Who captures the value that resource creates? –Can a unique resource be trumped by a different one?–Whose resource is really better?
Implications:Need to invest in resources; upgrade resources; to leverage resources
Managers over-estimate transferability of specific skills and assets Managers over-estimate ability to compete in highly profitable
industries Managers assume competitive advantage in one industry transfers
to others regardless of competitive dynamics
Porter’s POV Defining and communicating the company’s unique
positioning Variety-based (Product line choice - e.g., narrow) -
Marketing at Vanderbilt Needs-based (Customer segment choice) - Store
brands Access-based (Specific to how customers are
reached) - Amazon.com Making tradeoffs
Performing activities consistent with chosen position Not performing activities not consistent with chosen
position Continental vs. Continental Lite
Porter’s POV, cont. Forging a fit among firm’s activities
Simple consistency between each activity & with strategy
Activities reinforce each other Optimization of effort Locks out imitators and provides
competitive advantage Create activity system maps P&G and Value pricing; Republic
Industries Mercedes with full line strategy will
make an interesting study
P&G
Marketing
ManufacturingR&D
Global Ops.Organization
Product
Place Price
Promotion
BestProduct
MR
CPRValue
Pricing
HighQuality
LowCost
NoT.P.
LowC.P.
Advert-ising
BrandEquity
LowCost
Sm
oothP
roductionC
ycles
Value
CategoryManagement
SimplifiedProduct Line
StrategicAlliances Localized
Product
Globalization
MarketAccess
Efficiency
Customers Competitors
Components of Strategy Scope
Breadth of strategic domain: number and types of industries, product lines, market segments. Reflects company mission and strategic intent (vs. Strategic fit)
MCI... Core business (long distance), Contiguous business (fastest growing sector - communications related products: wireless paging, Internet, local service), Content (invested $2 billion in News Corp): Vision of Bert Roberts, Chairman
Goals and Objectives Desired level of accomplishment on one or more performance dimensions
and the growth vector Resource deployments
Allocation of human, financial and other resources across businesses, markets, etc.
Identification of a sustainable competitive advantage What are the distinctive competencies or strengths relative to competitors?
Synergy Improving overall efficiency and effectiveness by exploiting synergies
across businesses and product markets
Strategy Over Time: The PLC
Introduction Growth
Shakeout Maturity Decline
Adopter Categorization for New Products
2.5% Innovators 13.5% Early Adopters 34% Early Majority 34% Late Majority 16% Laggards
PLC: Implications
• Selected products/ Selected markets
•Problem solving emphasis
•Technical uncertainty
• Product / market expansion
•Competitive activity
•Customers better informed
• Product / market proliferation
•Market volatility
•Aggressive customers
• Market contraction
• Consolidation
• Regeneration
Introduction
Growth Maturity
Decline
Characteristics of PLC Stages
Introduction Growth Maturity Decline
Sales Low Rapidly Rising Peak Declining
Costs /Customer
High Average Low Low
Profits Negative Rising High Declining
Customers Innovators Early Adopters MiddleMajority
Laggards
Competitors Few Growing Stable, BeginDecline
Declining
Marketing Objectives by PLC Stage
Introduction Growth Maturity Decline
Create ProductAwareness and
Trial
MaximizeMarket Share
Maximize ProfitsWhile Defending
Market Share
ReduceExpenditure and
Milk Brand
Strategies for PLC StagesIntroduction Growth Maturity Decline
Product Basic Product ProductExtensions
DiversifyBrands and
Models
Phase OutWeak Items
Price Cost + Penetration Price to MatchCompetition
Cut Price
Distribution Selective Intensive More Intensive Selective
Advertising Awarenessamong EarlyAdopters and
Dealers
Awareness andInterest in
Mass Market
Stress BrandDifferencesand Benefits
Reduce toRetain Hard-Core Loyals
SalesPromotion
Induce Trial Reduce toExploit Heavy
Demand
Increase ForBrand
Switching
Reduce toMinimal Level
Characteristics of PLC Stages
Sales level Cost per customer Profits Nature of customers (early adopter,
etc.) Competitors
Market Life Cycle
High
Price
Low
LowCost-to-serve
High
*Selected products /selected markets*Problem solvingemphasis*Customer needs knowledge*Product/Market
expansion*Competitive activity*Knowledgeablecustomers
*Product/marketproliferation*Market volatility*Aggressive customer
Implications
High
Price
Low
LowCost-to-serve
High
C
B
D
A
Value axis
Power axis
StrategiesHigh
Price
Low
LowCost-to-serve
High
C
B
D
A
Value axis
Power axis
1
2
4
3
Technology Adoption Life Cycle - Discontinuous Innovations
Innovators = Technology enthusiasts Technology eventually helps improve lives; No money; Have
influence; Gatekeepers to the life cycle; If they hate it implies trouble Early adopters = Visionaries
Believe in competitive advantage via discontinuous innovation; Bring $$ to table & demand modifications; Techies explore-visionaries exploit
Early majority = Pragmatists Do not love technology for its own sake; Believe in evolution not
revolution; Want to improve organizational effectiveness; Difficult to convince them to shift paradigms; Prefer to buy from market leaders
Late majority = Conservatives Technology skeptics; Price sensitive; Demanding consumers;
Largely untapped opportunity for high tech Laggards = Skeptics
Gadflies of high tech; Challenge the hype; Need to sell around them
Seed enthusiasts with new productsHelp them educate visionaries
Seed enthusiasts with new productsHelp them educate visionaries
Capture interest of visionariesMake them satisfied customers
Serve as good references for pragmatists
Capture interest of visionariesMake them satisfied customers
Serve as good references for pragmatists
Gain bulk of revenue by serving pragmatists ideally by becoming
market leader and setting de factostandards
Gain bulk of revenue by serving pragmatists ideally by becoming
market leader and setting de factostandards
Generate volumes and experience soproducts become reliable and cheap
to meet demands of conservatives
Generate volumes and experience soproducts become reliable and cheap
to meet demands of conservatives
Leave skeptics to their own devicesLeave skeptics to their own devices
The Adoption“Stairway”
Visionaries
Technology
Enthusiasts
Pragmatists
Conservatives
Skeptics
The EarlyMarket
The EarlyMarket
The MainstreamMarket
The MainstreamMarket
TheChasm
TheChasm
The Chasm
The EarlyMarket
The EarlyMarket
TheChasm
TheChasm
The TornadoThe Tornado
Main StreetMain Street
The BowlingAlley
The BowlingAlley
End ofLife
End ofLife
Landscape of TechnologyAdoption Life Cycle
Early Market: Time of great excitement; techies and visionarieslooking to get on board the new paradigm
The Chasm: Time of great despair; early market interest wanes, butmainstream not comfortable with the product
The Bowling Alley: Period of niche-based adoption in advance ofthe general marketplace; whole products for niche applications
The Tornado: Period of mass market adoption; marketplaceswitches over to new paradigm
Main Street: Period of aftermarket development; goal is nowto reach and flesh out the market potential
End of Life: Entry of new paradigms
Landscape of TechnologyAdoption Life Cycle
Strategy Implications of TALC
Bowling alley argues for customer-centric niche strategies
Tornado forces push in opposite direction towards mass market
Main street forces push back towards customer-centric focus
Given the dramatic reversals in strategy, firm should be acutely aware of its life cycle stage
Moving fluidly from strategy to strategy is the ultimate challenge to organization; Demands extremely flexible responses from management team
Implications for Segmentation
In the early market, do not segment - go where visionaries lead you To cross the chasm and negotiate the bowling alley, need to segment Once inside the tornado, must not segment On mains street, must segment - basis of +1 strategy
Complications
• Firms carry different products; each could be at a different TALC stage (1-2-3, ccMail, Notes)
• Different segments in the same market can be at different stages (Internet is on main street for Unix technical community, in the tornado for college students, in bowling alley for marketing researchers, early market for commercial transactions…)
• Mini-tornadoes (segment-specific) can occur in the bowling alley
• Markets at different life cycle stages interact with one another (main street financial applications being ported to tornado client-server platforms using bowling alley development tools!)
ProductLeadership Only
ProductLeadership Only
Product Leadership+
Operational Excellence
Product Leadership+
Operational Excellence
Operational Excellence+
Customer Intimacy
Operational Excellence+
Customer Intimacy
Product Leadership+
Customer Intimacy
Product Leadership+
Customer Intimacy
Value Disciplines &the Life Cycle