Prentice Hall, 2004 Chapter 5Wheelen/Hunger

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Situational Analysis

Situational Analysis:– Process of finding a strategic fit

between external opportunities and internal strengths while working around external threats and internal weaknesses.

Prentice Hall, 2004 Chapter 5Wheelen/Hunger

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TOWS Matrix

Prentice Hall, 2004 Chapter 5Wheelen/Hunger

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Resource-Based Approach

Resource:

An asset, competency, process, skill, or knowledge controlled by the corporation.

Prentice Hall, 2004 Chapter 5Wheelen/Hunger

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Competitive Strategy

Industry Structure:–Fragmented Industry

• Many small and medium-sized local companies compete for small shares of total market– Focus strategies predominate

Prentice Hall, 2004 Chapter 5Wheelen/Hunger

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Competitive Strategy

Industry Structure:–Consolidated industry

• Mature industry dominated by a few large companies– Cost Leadership or Differentiation predominate

Prentice Hall, 2004 Chapter 5Wheelen/Hunger

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Dimensions of Quality

Quality

• Performance• Features• Reliability• Conformance• Durability• Serviceability• Aesthetics• Perceived Quality

Dimensions

Prentice Hall, 2004 Chapter 5Wheelen/Hunger

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Competitive Strategy

Strategic rollup:–Quickly consolidate fragmented

industry

–Money from venture capital

–Entrepreneur acquires hundreds of owner-operated firms

–Creates large firm with economies of scale

Prentice Hall, 2004 Chapter 5Wheelen/Hunger

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Competitive Strategy

Strategic rollup:–Differ from Conventional M&A’s

• Large number of firms• Owner-operated firms• Goal to reinvent entire industry

Prentice Hall, 2004 Chapter 5Wheelen/Hunger

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Competitive Tactics

Tactic:–Specific operating plan detailing how a

strategy is to be implemented in terms of when and where it is to be put into action.• Timing tactics• Market location tactics

Prentice Hall, 2004 Chapter 5Wheelen/Hunger

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Competitive Tactics Timing Tactics:

–First mover (pioneer)• Reputation as industry leader• High profits• Sets standards for subsequent products in

the industry

–Late mover• Able to imitate technological advances

of others– Keeps R&D costs down– Keeps risks down

Prentice Hall, 2004 Chapter 5Wheelen/Hunger

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Competitive Tactics

Market Location Tactics:–Offensive Tactics

• Frontal assault• Flanking maneuver• Bypass attack• Encirclement• Guerrilla warfare

Prentice Hall, 2004 Chapter 5Wheelen/Hunger

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Competitive Tactics

Market Location Tactics:–Defensive Tactics

• Raise structural barriers• Increase expected retaliation• Lower the inducement for attack

Prentice Hall, 2004 Chapter 5Wheelen/Hunger

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Cooperative Strategies

Cooperative Strategies:–Collusion

• Active cooperation of firms to reduce output and raise prices– Explicit– Tacit

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Cooperative Strategies

Cooperative Strategies:–Strategic Alliance:

– Partnership of two or more corporations or business units to achieve strategically significant objectives that are mutually beneficial.

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Cooperative Strategies

StrategicAlliance

Access to markets

Achieve competitiveadvantage

Obtain technology

Reduce financial risk

Reduce political risk