1、Beyond Competitive StrategyOther Important Strategy Choices6ChapterScreen graphics created by:Jana F. Kuzmicki, Ph.D.Troy State University-Florida and Western Region “Successful business strategy is about actively shaping the game you play, not just playing the game you find.”The Koran“Strategies fo

2、r taking hill wont necessarily hold it.”John W. TeetsChapter RoadmapStrategic Alliances and Collaborative PartnershipsMerger and Acquisition StrategiesVertical Integration StrategiesOutsourcing StrategiesUsing Offensive Strategies to Secure Competitive AdvantageUsing Defensive Strategies to Protect

3、the Companys PositionStrategies for Using the Internet as a Distribution ChannelChoosing Appropriate Functional-Area StrategiesFirst-Mover Advantages and DisadvantagesFig. 6.1: A Companys Menu of Strategy OptionsStrategic Alliances and Collaborative Partnerships Companies sometimes use strategic all

4、iances or collaborative partnerships to complement their own strategic initiatives and strengthen their competitiveness. Such cooperative strategies go beyond normal pany dealings but fall short of merger or full joint venture partnership.Alliances Can Enhance aFirms CompetitivenessAlliances and par

5、tnerships can help companies cope with two demanding competitive challengesRacing against rivals to build a market presence in many different national marketsRacing against rivals to seize opportunities on the frontiers of advancing technologyCollaborative arrangements can help a company lower its c

6、osts and/or gain access to needed expertise and capabilitiesCapturing the Full Potentialof a Strategic AllianceCapacity of partners to defuse organizational frictionsAbility to collaborate effectively over time and work through challengesTechnological and competitive surprisesNew market developments

7、Changes in their own priorities and competitive circumstancesCollaborative partnerships nearly always entail an evolving relationship whose competitive value depends onMutual learningCooperationAdaptation to changing industry conditionsCompetitive advantage emerges when a company acquires valuable c

8、apabilities via alliances it could not obtain on its ownWhy Are Strategic Alliances Formed? To collaborate on technology development or new product development To fill gaps in technical or manufacturing expertiseTo acquire new competenciesTo improve supply chain efficiencyTo gain economies of scale

9、inproduction and/or marketingTo acquire or improve market access via joint marketing agreementsPotential Benefits of Alliances to Achieve Global and Industry LeadershipGet into critical country markets quickly to accelerate process of building a global presenceGain inside knowledge about unfamiliar

10、markets and culturesAccess valuable skills and competencies concentrated in particular geographic locationsEstablish a beachhead to participate in target industryMaster new technologies and build new expertise faster than would be possible internallyOpen up expanded opportunities in target industry

11、by combining firms capabilities with resources of partnersWhy Alliances FailAbility of an alliance to endure depends onHow well partners work togetherSuccess of partners in respondingand adapting to changing conditionsWillingness of partners torenegotiate the bargainReasons for alliance failureDiver

12、ging objectives and priorities of partnersInability of partners to work well togetherChanging conditions rendering purpose of alliance obsoleteEmergence of more attractive technological pathsMarketplace rivalry between one or more alliesMerger and Acquisition Strategies Merger Combination and poolin

13、g of equals, with newly created firm often taking on a new nameAcquisition One firm, the acquirer, purchases and absorbs operations of another, the acquired Merger-acquisitionMuch-used strategic optionEspecially suited for situations wherealliances do not provide a firm with neededcapabilities or co

14、st-reducing opportunitiesOwnership allows for tightly integrated operations, creating more control and autonomy than alliancesObjectives of Mergersand AcquisitionsTo pave way for acquiring firm to gain more market share and create a more efficient operationTo expand a firms geographic coverageTo ext

15、end a firms business into new productcategories or international marketsTo gain quick access to new technologiesTo invent a new industry and lead the convergence of industries whose boundaries are blurred by changingtechnologies and new market opportunitiesPitfalls of Mergersand AcquisitionsCombinin

16、g operations may result inResistance from rank-and-file employeesHard-to-resolve conflicts in management styles and corporate culturesTough problems of integrationGreater-than-anticipated difficulties inAchieving expected cost-savingsSharing of expertiseAchieving enhanced competitive capabilitiesVer

17、tical Integration StrategiesExtend a firms competitive scope withinsame industryBackward into sources of supplyForward toward end-users of final productCan aim at either full or partial integrationInternallyPerformedActivities, Costs, &MarginsActivities, Costs, &Margins ofSuppliersBuyer/UserValueCha

18、insActivities, Costs,& Margins ofForward ChannelAllies &Strategic PartnersStrategic Advantagesof Backward IntegrationGenerates cost savings only if volume needed is big enough to capture efficiencies of suppliersPotential to reduce costs exists whenSuppliers have sizable profit marginsItem supplied

19、is a major cost componentResource requirements are easily metCan produce a differentiation-based competitive advantage when it results in a better quality partReduces risk of depending on suppliers of crucial raw materials / parts / componentsStrategic Advantagesof Forward IntegrationTo gain better

20、access to end usersand better market visibilityTo compensate for undependable distributionchannels which undermine steady operationsTo offset the lack of a broad product line, a firm may sell directly to end usersTo bypass regular distribution channels in favor of direct sales and Internet retailing

21、 which mayLower distribution costsProduce a relative cost advantage over rivalsEnable lower selling prices to end usersStrategic Disadvantagesof Vertical IntegrationBoosts resource requirementsLocks firm deeper into same industryResults in fixed sources of supply andless flexibility in modating buye

22、rdemands for product varietyPoses all types of capacity-matching problemsMay require radically different skills / capabilitiesReduces flexibility to make changes in component parts which may lengthen design time and ability to introduce new productsWhether vertical integration is a viablestrategic o

23、ption depends on its Ability to lower cost, build expertise,increase differentiation, or enhanceperformance of strategy-critical activitiesImpact on investment cost, flexibility, and administrative overhead Contribution to enhancing a firms competitivenessPros and Cons ofIntegration vs. De-Integrati

24、onMany companies are finding thatde-integrating value chain activities is amore flexible, economic strategic option! Outsourcing StrategiesOutsourcing involves withdrawing from certain valuechain activities and relying on outsidersto supply needed products, supportservices, or functional activitiesC

25、onceptInternallyPerformedActivitiesSuppliersSupport ServicesFunctional ActivitiesDistributors or RetailersWhen Does OutsourcingMake Strategic Sense?Activity can be performed better or more cheaply by outside specialists Activity is not crucial to achieve a sustainable competitive advantageRisk expos

26、ure to changing technology and/or changing buyer preferences is reducedOperations are streamlined toCut cycle timeSpeed decision-makingReduce coordination costsFirm can concentrate on “core” value chain activities that best suit its resource strengths Strategic Advantages of OutsourcingImproves firm

27、s ability to obtain high quality and/or cheaper components or servicesImproves firms ability to innovate by interacting with “best-in-world” suppliersEnhances firms flexibility should customer needs and market conditions suddenly shiftIncreases firms ability to assemble diverse kinds of expertise sp

28、eedily and efficientlyAllows firm to concentrate its resources on performing those activities internally which it can perform better than outsidersPitfalls of OutsourcingFarming out too many or the wrong activities, thus Hollowing out capabilitiesLosing touch with activities and expertise that deter

29、mine overall long-term successOffensive and Defensive StrategiesUsed to build new or stronger market position and/or create competitive advantageUsed to protect competitive advantage (rarely used to create advantage)Offensive StrategiesDefensive StrategiesTypes of Offensive Strategies1. Initiatives

30、to match or exceed competitor strengths2. Initiatives to capitalize on competitor weaknesses3. Simultaneous initiatives on many fronts4. End-run offensives5. Guerrilla offensives6. Preemptive strikesObjectivesAttacking Competitor StrengthsChallenging strong competitors with a lower price is foolhard

31、y unless the aggressor has a cost advantage or advantage of greater financial strength!Whittle away at a rivalscompetitive advantageGain market share by out-matchingstrengths of weaker rivalsOffer equally good product at a lower priceDevelop low-cost edge, then use it to under-price rivalsLeapfrog i

32、nto next-generation technologiesAdd appealing new features Run comparison adsConstruct new plant capacity in rivals market strongholdsOffer a wider product line Develop better customer service capabilitiesOptions for Attackinga Competitors StrengthsAttacking Competitor WeaknessesUtilize company stre

33、ngths to exploit a rivals weaknessesWeaknesses to AttackCustomers that a rival is least equipped to serveRivals providing sub-par customer serviceRivals with weaker marketing skills Geographic regions where rival is weakMarket segments a rival is neglectingObjectiveLaunching SimultaneousOffensives o

34、n Many FrontsA challenger with superior resources can overpower weaker rivals by peting them across-the-board long enough to e a market leader!ObjectiveLaunch several major initiatives toThrow rivals off-balanceSplinter their attentionForce them to use substantialresources to defend their positionEn

35、d-Run OffensivesManeuver around strong competitorsCapture unoccupied or less contested marketsChange rules of competition in aggressors favorObjectivesApproaches forEnd-Run OffensivesIntroduce new products that redefine market and terms of competitionBuild presence in geographic areaswhere rivals ha

36、ve little presence Create new segments by introducing productswith different features to better meet buyer needsIntroduce next-generationtechnologies to leapfrog rivalsUse principles of surprise and hit-and-run toattack in locations and at times where conditionsare most favorable to initiatorWell-su

37、ited to small challengerswith limited resources andmarket visibilityGuerrilla OffensesApproachAppealOptions for Guerrilla OffensesMake random, scattered raids on leaders customersOccasional low-balling on priceIntense bursts of promotional activitySpecial campaigns to attract buyers fromrivals plagu

38、ed with a strike or delivery problemsChallenge rivals encountering problems with quality or providing adequate technical supportFile legal actions charging antitrust violations,patent infringements, or unfair advertisingPreemptive StrikesInvolves moving first to secure anadvantageous position that r

39、ivals are foreclosedor discouraged from duplicating!Approach Preemptive Strike OptionsSecure exclusive/dominant access to best distributors Secure best geographic locations Tie up best or most sources of essential raw materialsObtain business of prestigious customersExpand capacity ahead of demand i

40、n hopes of discouraging rivals from following suitBuild an image in buyers minds thatis unique or hard to copyChoosing Rivals to AttackFour types of firms can be the target of a fresh offensiveVulnerable market leadersRunner-up firms with weaknesseswhere challenger is strongStruggling rivals on verg

41、e of going underSmall local or regional firms with limited capabilitiesUsing Offensive Strategy to Achieve Competitive AdvantageStrategic offensives offering strongest basis for competitive advantage entailAn important core competenceA unique competitive capabilityMuch-improved performance featuresA

42、n innovative new productTechnological superiorityA cost advantage in manufacturing or distributionSome type of differentiation advantageDefensive StrategyObjectivesLessen risk of being attackedBlunt impact of any attack that occursInfluence challengers to aim attacks at other rivalsApproachesBlock a

43、venues open to challengersSignal challengers vigorousretaliation is likelyBlock Avenues Open to ChallengersParticipate in alternative technologiesIntroduce new features, add new models, or broaden product line to close gaps rivals may pursueMaintain economy-priced modelsIncrease warranty coverageOff

44、er free training and support servicesReduce delivery times for spare partsMake early announcements about newproducts or price changesChallenge quality or safety of rivals productsusing legal tacticsSign exclusive agreements with distributorsSignal Challengers Retaliation Is LikelyPublicly announce m

45、anagements strong commitment to maintain present market sharePublicly commit firm to policy ofmatching rivals terms or pricesMaintain war chest of cash reservesMake occasional counterresponseto moves of weaker rivalsStrategies forUsing the InternetStrategic Challenge What use of the Internet should

46、a company make in staking out its position in the marketplace?Five ApproachesUse company web site solely to disseminate product informationUse company web site as a minor distributionchannel for accessing customers and generating salesUse company web site as one of several importantdistribution chan

47、nels for accessing customersUse company web site as primary distributionchannel for accessing buyers and making salesUse company web site as the exclusive channelfor accessing buyers and conducting sales transactionsUsing the Internet toDisseminate Product InformationApproach Website used to provide

48、 product information of manufacturers or wholesalers Relies on click-throughs to websites ofdealers for sales transactionsInforms end-users of location of retail storesIssues Pursuing online sales maySignal weak strategic commitment to dealersSignal willingness to cannibalize dealers salesPrompt dea

49、lers to aggressively market rivals brandsAvoids channel conflict with dealers Important where strong support of dealer networks is essentialUsing the Internet as aMinor Distribution Channel Approach Use online sales toAchieve incremental salesGain online sales experienceConduct marketing researchLea

50、rn more about buyer tastes and preferencesTest reactions to new productsCreate added market buzz about productsUnlikely to provoke much outcry from dealers Brick-and-Click Strategies: An Appealing Middle Ground ApproachApproachSell directly to consumers andUse traditional wholesale/retail channelsRe

51、asons to pursue a brick-and-click strategyManufacturers profit margin from online sales is bigger than that from sales through traditional channelsEncouraging buyers to visit a firms website educates them to the ease and convenience of purchasing onlineSelling directly to end users allows a manufacturer to make greater use of build-to-order manufacturing and assemblyStrategies for Online EnterprisesApproach Use Internet as the exclusivechannel for all buyer-seller contact and transactionsSuccess depends on a firms abilityto incorpora