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STRATEGY: A VIEW FROM THE TOPCHAPTER 5
Group 3Randy GreinertMason MitchellSarah YelvertonAlec Cooper
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A COMPANY’S STRATEGIC RESOURCE BASE
Consists of; Physical strengths- Plant, State-of-the-
art manufacturing facilities. Financial strengths-Excellent cash flows, and strong financial track record. Human Resource strengths- Strong
Leadership, motivated employees; could be firms most important resource
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A COMPANY’S STRATEGIC RESOURCE BASE
Strategic Organizational Resource strengths-
The Specific competencies, processes, skills, and knowledge under the control of a corporation. They include qualities such as a firm’s manufacturing experience, brand equity, innovativeness, relative cost position, and ability to adapt and learn as circumstances change.
Coors
Since
1873
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TO EVALUATE THE RELATIVE WORTH OF A COMPANY'S STRATEGIC RESOURCES, 4 QUESTIONS SHOULD BE ASKED;
1- How valuable is a resource; does it help build and sustain competitive advantage?
2- Is this a unique resource or do other competitors have similar resources?
3- Is the strategic resource easy to imitate?
4- Is the company positioned to exploit the resource?
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FINANCIAL RATIO ANALYSIS
Can provide a quick overview of a company's or business units current or past profitability, liquidity, leverage, and activity.
Examples- Return on Assets:
Current Ratio^ Inventory Turnover^
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EVA
Economic Value Added: Eva is a value-based financial performance measure that focuses on economic value creation.
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COST BENCHMARKING
Useful in assessing a firm’s costs relative to those of competing firms, or for comparing a company’s performance against best-in-class competitors.
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FIVE STEP BENCHMARK PROCESS
1) Selecting areas or operations to benchmark
2) identifying best-in-class companies or key competitors
3)Identifying key performances measures and practices
4) Collecting cost and performance data
5) Analyzing and interpreting the results
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WHY USE THE BENCHMARK PROCESS? Practical and versatile Allows for direct comparisons of the
efficiencies with which different tasks in the value chain are performing
However, dangerous to use sometimes because focuses on similarities rather than the differences
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HUMAN CAPITAL
First and foremost – Companies are run by and for people
Understanding people’s aspirations and concerns and capabilities is key to determine strategic position
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SURVEY
Study by Chief Executive shows that more focus is put on attracting, developing, and retaining human capital.
43% of surveyed CEO’s believe that finding and retaining good people is their greatest challenge
84% Believe that people issues are for more important than before
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AMERICAN SOCIETY FOR TRAINING AND DEVELOPMENT STUDY
Examined 500 companies that were U.S and publicly traded.
Concluded that top half of firms that spent the most on training had higher stockholder returns than the bottom half did.
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Continuous employee development is critical to the growth of human capital
Puts 3% of total expenses into training Six times the proportion of the average company Line and staff managers attend 11 weeks of mandatory training in their first year
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MOTOROLA
Execs report that their company receives $33 for every $1 invested in employee education
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ORGANIZATIONAL STRATEGIC RESOURCES Include a firm’s knowledge and
intellectual capital base Reputation with customers partners
suppliers and the financial community Specific competencies processes and
skills sets And its corporate culture
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COMPETITIVE ADVANTAGE
Knowledge and Intellectual capital are major drivers
Firm’s CA comes from value it delivers to its customers
Created and sustained when a company continues to mobilize new knowledge faster and more efficiently than its competitors
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KNOWLEDGE
Become an asset when it is managed and transferred
Explicit knowledge is formal and objective and can be codified and stored in books or archives
Implicit or tacit knowledge is informal and subjective. It is gained through experience and transferred through personal interaction and collaboration
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NETSCAPE
$ 4 Billion market capitalization based on its stock price even though company only sold a few million dollars per year
Based price on company’s knowledge base and quality of management
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BRANDS ARE STRATEGIC ASSETS
Provide a guarantee of reliability and quality
Build trust and reinforce value Ex: Dell, Amazon, and eBay Assist companies in building and
retaining customer loyalty Help maintain profit margins Create barriers to entry
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BUSINESS WEEK/ INTERBRAND
Two Criteria1.) Brands must be global and must be
generating significant earning in the main global markets
2.) There must be sufficient marketing and financial data available to the public for preparing a reasonable evaluation
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COMPANIES WITH STRONG BRANDS
- Succeed in growing their brands while pursuing their missions
- Which results in customer loyalty and allows the company to attempt risky expansions
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CORE COMPETENCIES
Capabilities that allow a company to build a competitive advantage
Evolve as a company develops its business process and incorporates intellectual assets
Are a set of skills or systems that create a uniquely high value for customers at best-in-class levels
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CONT.
Contribute to perceived customer benefits Are difficult for competitors to imitate Allow for leverage across marketsExamples: -Honda’s small-engine: used inMotorcycles, jet skis, and lawn mowers-Charles Schwab expanded client communication methods to: Internet, phone, branch offices, and financial
advisors
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IDENTIFYING CORE COMPETENCIES
1.) Should provide access to a broad array of markets
2.) Help differentiate core products and services
3.) Should be hard to imitate because they represent several- Skills elements- Technology elements- Organizational elements
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FORCES FOR CHANGE
Organizational resistance1. Structural, organizational rigidities2. Closed mind-sets reflecting support for obsolete
business beliefs and strategies3. Entrenched cultures reflecting values, behaviors, and
skills that are not conductive to change4. Counterproductive change momentum that is not in
tune with current strategic requirements
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COMPANY LIFE CYCLE FORCES FOR CHANGE
The forms and strengths of organizational resistance that develop highly depend on a company’s history, performance, and culture.
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LIFE CYCLE
Founder or team start up Vision or purpose is
established Initial direction is set for
the company Resources are gathered Vision is turned into
reality
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RAPID GROWTH PROBLEMS
Dilemmas of leadership Loss of focus Communication becomes harder Skill development falls behind Stress becomes more evident
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7-S MODEL
Not Hierarchical
Change in one changes in another, or if there is progress in one area means there will be progress in another area
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STAKEHOLDERS ANALYSIS
Internal and external stakeholders Stakeholders claim competitive returns
for their investments Demands reflected in thousands of
firms, from high wages, pure air, job security, product quality community service, etc.