Presentasi Competitive Strategy Chapter 6 20Okt2011

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Supplementing the ChosenCompetitive Strategy Other Important Business Strategy Choices

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Strategic Management



Once a company has settled on which of the five

basic competitive strategies to employ, attention

turns to what other strategic ations it can take to

complement its competitive approach and round

out its business strategy.




Whether to enter into strategic alliances or partnerships

Whether to pursue mergers or acquisitions

Whether to integrate backward or forward into more stages of the industry value chain

Business Strategy Choices to Complement the CompanysCompetitive Approach


Strategy considerations in rounding out the

companys overall business strategy include :



Whether and when to initiate offensive strategies

to improve the companys market position

Business Strategy Choices to Complement the CompanysCompetitive Approach

Whether and when to employ defensive strategies

to protect the companys market position

Choosing when to undertake strategic moves

whether to be a first-mover, fast follower or a late-mover

Whether to outsource certain value chain activities




Strategic Alliances and Collaborative Partnerships

S trategic Alliance - formal collaborative

arrangements where two or more companies join

forces to achieve mutually beneficial strategic

outcomes

Strategically relevant collaboration

joint contribution of resources

shared risk

shared control

mutual dependence




Strategic Alliances and Collaborative Partnerships

The strategic attractiveness of alliances

and collaborative partnerships

All owing companies to bund

l e resources and

competencies that are more val uabl e in a joint

effort than when kept separate




Reasons Companies Enter Into Strategic Alliances

Expedite the development of new technologies orproducts

Overcome deficits in technical or manufacturing

expertise

To create new skill sets and capabilities by bringing

together personnel of each partner

To improve supply chain efficiency

To gain economies of scale in

production and/or marketing

To acquire or improve market access

via joint marketing agreements




Failed Strategic Alliances and Cooperative

Partnerships C ommon reasons why as many as 60 percent to

70 percent of alliances fail each year

- Diverging objectives and priorities

- Inability to work well together

- Changing conditions that make the purpose of the

alliance obsolete

- Emergence of more attractive

technological paths

- Increased marketplace rivalry between one or more

allies




The Strategic Dangers Of Relying On Alliances For

EssentialR

esources And CapabilitiesT he Achilles heel of alliances and cooperative

partnerships is becoming dependent on other

companies for essential expertise and

capabilitiesA company must ultimately have strategic control

of critical resources and capabilities to protect

competitiveness and build competitive advantage




Merger and Acquisition Strategies An attractive strategic option for achieving operating

economies, strengthening competencies, and

opening avenues to new market opportunities

- M

erger --

the combining of two or more companiesinto a single entity, with the newly created company

often taking on a new name

- Acquisition -- is a combination in which one company,

the acquirer, purchases and absorbs the operations

of another, the acquired




Typical Objectives of Mergers and Acquisitions

C reating a more cost-efficient operation out of the

combined companies

E xpanding a companys geographic coverage

Extending the companys business into new product

categories

G aining quick access to new technologies or other

resources and competitive capabilities

Leading the convergence of industries whose boundaries

are being blurred by changing technologies and newmarket opportunities




Why Mergers And Acquisitions Sometimes Fail To Produce Anticipated Results

C ost savings are smaller

than expected

Gains in competitive

capabilities take much longer to realize or may never

materialize

Efforts to mesh the corporate

cultures can stall because of

resistance from

organization members

Managers and employees at

the acquired may continue to

do things as they were done

prior to the acquisition

K ey employees of theacquired company may leave




V ertical Integration: Operating Across More

IndustryV

alue Chain Segments

E xtend a firms competitive scope within the same

industry value chain

- Backward into sources of supply

- Forward toward end-users of final product

Can aim at either full or partial integration




IndustryV alue Chain




Potential Advantages of a V ertical Integration

StrategyThe two best reasons for vertically

integrating into more value chain segments

- S trengthen the firms competitive position

- Boost profitability




Strategic Advantages of Backward Integration

1. Potential to reduce costs exists when

- Suppliers have sizable profit margins

- Item supplied is a major cost component

- Resource requirements are easily met

2. Can produce a differentiation-based competitive

advantage when it results in a better quality part

3. Reduces risk of depending on suppliers of crucial

raw materials / parts / components




Strategic Advantages of Forward Integration

1. Advantageous for a firm to establish its own distribution

network if undependable distribution channels undermine

steady production operations

2. Direct sales and Internet retailing may lower distribution

costs. 3. For a raw materials producer, forward integration may help

achieve greater product differentiation.

4. For a manufacturer, forward integration may provide better

access to the ultimate consumer.




Disadvantages of aV

ertical Integration Strategy Boosts capital investment in the industry

I ncreases business risk if industry growth andprofits sour

M ay slow technological advances if the verticallyintegrated company is saddled with older technology

Poses all types of capacity-matching problems

May require radically different skills and businesscapabilities




Marketing Channel

Outsourcing makes strategic sense whenever:

Activity can be performed better or more cheaply by outside specialists

Activity is not crucial to achieve a

sustainable competitive advantage

It improves firm¶s ability to innovate

Firm can concentrate on core value chainactivities and leverage its resourcestrengths

Outsourcing Strategies: Narrowing the Boundaries of theOutsourcing Strategies: Narrowing the Boundaries of the

BusinessBusiness



The big risk of outsourcingThe big risk of outsourcing

Farming out the wrong types of activities

Hollowing out strategically-importantcapabilities



Strategic Options to Improve a Company¶s Market PositionStrategic Options to Improve a Company¶s Market Position²²The UseThe Use

of Strategic Offensivesof Strategic Offensives

company

Strategic

offensives arecalled for when a

company

S pots

opportunities to

gain profitable

market share at

the expense of rivals or Has no choice but

to try to whittle

away at a strong

rival¶s competitive

advantage

The best offensives use resource strengths to attack

rivals where they are weak

Presentasi Competitive Strategy Chapter 6 20Okt2011

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