Bài giảng Quản trị kinh doanh - Chapter five: Business - Level strategy: creating and sustaining competitive advantages

Chapter FiveBusiness-Level Strategy:Creating and Sustaining Competitive AdvantagesAfter studying this chapter, you should have a good understanding of:The central role of competitive advantage in the study of strategic managementThe three generic strategies—overall cost leadership, differentiation, and focusHow the successful attainment of generic strategies can improve a firm’s relative power vis á vis the five forces that determine an industry’s average profitabilityThe pitfalls managers must avoid in striving to attain generic strategiesHow firms can effectively combine the generic strategies of overall cost leadership and differentiationThe importance of considering the industry life cycle to determine a firm’s business-level strategy and its relative emphasis on functional area strategies and value creating activitiesLearning ObjectivesTRANSPARENCY-41Three Generic StrategiesCOMPETITIVE ADVANTAGEOverallCost LeadershipDifferentiationUniqueness PerceivedBy the CustomerLow Cost PositionIndustrywideParticularSegment OnlyFocusSTRATEGIC TARGETSource: Adapted from Porter, M.E. 1980. Competitive Strategy, New York: Free Press, page 39.Exhibit 5.1TRANSPARENCY-42Competitive Advantage and Business Performance Performance Return on Investment 35.5 32.9 30.2 17.0 23.7 17.8 Sales Growth 15.1 13.5 13.5 16.4 17.5 12.2 Gain in Market Share 5.3 5.3 5.5 6.1 6.3 4.4Sample Size 123 160 100 141 86 105Stuck-in-the- MiddleCost FocusDifferentiation FocusCostDifferentiationDifferentiation and CostExhibit 5.2Competitive AdvantageTRANSPARENCY-43Value Chain Activities: Examples of Overall Cost LeadershipSource: Adapted from Porter, M.E. 1985. Competitive Advantage, New York: Free Press.Few management layers to reduce overhead costsFirm Infra-structureStandardized accounting practices to minimize personnel requiredHuman Resource ManagementMinimize costs associated with employee turnover through effective policiesEffective orientation and training programs to maximize employee productivityTechnology developmentEffective use of automated technology to reduce scrappage ratesExpertise in process engineering to reduce manufacturing costsProcurementEffective policy guidelines to ensure low cost raw materials (with acceptable quality levels)Shared purchasing operations with other business unitsEfficient layout of receiving dock operationsEffective use of quality control inspectors to minimize rework on the final productEffective utilization of delivery fleetsPurchase of media in large blocksSales force utilization is maximized by territory managementThorough service repair guidelines to minimize repeat maintenance callsInbound LogisticsOperationsOutbound LogisticsMarketing and SalesServiceUse of single type of repair vehicle to minimize maintenance costsMarginMarginExhibit 5.3Source: Adapted from Porter, M.E. 1985. Competitive Advantage, New York: Free Press.TRANSPARENCY-44Comparing Experience Curve EffectsCost per Unit0 units1 millionunits2 millionunits4 millionunitsCumulative Volume$190¢80¢70¢60¢81¢64¢49¢36¢72.9¢51.2¢34.3¢21.6¢90% original cost80% original cost70% original cost64% original costExhibit 5.4TRANSPARENCY-45Value Chain Activities: Examples of DifferentiationFirm Infra-structureHuman Resource ManagementTechnology DevelopmentProcurementSuperior material handling operations to minimize damageQuick trans-fer of inputs to manufacturing processInbound LogisticsSuperior MIS – To integrate value-creating activities to improve qualityFacilities that promote firm imagePrograms to attract talented engineers and scientistsProvide training and incentives to ensure a strong customer service orientationSuperior material handling and sorting technologyExcellent applications engineering supportPurchase of high quality components to enhance product imageUse of most prestigious outletsFlexibility and speed in responding to changes in manufacturing specificationsLow defect rates to improve qualityAccurate and responsive order processingEffective product replenishment to reduce customer’s inventoryCreative and innovative advertising programsFostering of personal relationship with key customersRapid response to customers’ service requestsOperationsOutbound LogisticsMarketing and SalesServiceComplete inventory of replacement parts and suppliesMarginMarginWidely respected CEO enhances firm reputationExhibit 5.5Source: Adapted from Porter, M.E. 1985. Competitive Advantage, New York: Free Press.TRANSPARENCY-46The Erosion of Product and Service DifferentiationWhat are the raw commodities?NowNext?Personal computersServersHotel roomsCar rentalsLegal servicesCreditPolice carsGeneric drugsOcean shippingInsuranceBandwidthPharmacy ServicesNetwork hostingData-storage capacityManufacturing capacityMultibillion-dollar infrastructure projectsSource: Adapted from Colvin, G. 2000. You could be selling soybeans. Fortune: November 13:80.Exhibit 5.6TRANSPARENCY-47The U.S. Auto Industry’s Profit Pool25%20151050Operating margin0100%Auto manufacturingNew car dealersUsed car dealersAuto loansLeasingWarrantyGasolineAuto insuranceService repairAftermarket partsAuto rentalShare of industry revenueSource: Gadiesh, O. & Gilbert, J.L. 1998. Profit pools: A fresh look at strategy. Harvard Business Review, 76(3): 144.Exhibit 5.7TRANSPARENCY-48Stages of the Industry Life CycleUnit SalesProfitsOverall Cost Leadership FocusDifferentiation Overall Cost LeadershipDifferentiationDifferentiationGeneric StrategiesConsolidate, Maintain, Harvest, or ExitDefend Market Share and Extend Product Life CyclesCreate Consumer DemandIncrease Market AwarenessOverall objectiveGeneral Management and FinanceProductionSales and MarketingResearch and DevelopmentMajor functional area(s) of concernLowHighLow to ModerateLowEmphasis on process designLowLow to ModerateHigh Very HighEmphasis on product designChangingVery IntenseIncreasingLowIntensity of competitionFewManySomeVery FewNumber of segmentsNegativeLow to ModerateVery LargeLowMarket growth rateDECLINEGROWTHINTRODUCTIONSTAGEMATURITYFACTORExhibit 5.8TRANSPARENCY-49