NOTES FOR SECTION VIDEO
INTELLECTUAL PROPERTY (IP) such as,
- Designs
- Processes
- Logos
- Songs
- Discoveries
Applying for a patent
- This covers, inventions, new processes, new machines, new ways of manufacturing
Applying for copyrights
- Covers, art, music, writing, movies, and software
Using trademark
- Business names, logo, slogans, mascots and more
Trade secrets
- Manufacturing processes
- Formulas
- Compilations of information
Legal protection
- Technology transfer (T2)
Helps negotiate the use, sharing and assigning of IP so that company and individuals can use
government technology or a joint project between a government and private sector can take place.
T2 can make it easy to license a patent or share confidential information so both parties can help
each other solve problems of make new products.
STRATEGIC MANAGEMENT
VALUE CHAIN ANALYSIS USING VRIO FRAMEWORKS
- INPUTS, PROCESS, OUTPUT
VALUE CHAIN INSIDE THE FIRM:
Under PRIMARY activities
- Product design
- Procurement of supplies
- Manufacturing
- Marketing and sales
Under SECONDARY activities
- Human resources
- Information technology
- Finance, accounting, and legal
- Research
VALUE CHAIN STEPS:
STEP 1: Identify Value Chain Activities
STEP 2: Identify the strength and weaknesses in the value chain activities
STEP 3: Analyze whether any of the strengths are sustainable competitive advantage using the VRIO
(Valuable, Rare, Inimitable, Organizational Support)
STEP 4: Assess the strategic implications of our analysis
- Using the results of the analysis, ask if;
Weaknesses - How can we obtain the resources and capabilities we need to overcome our
weaknesses?
Temporary Advantages – How can we best extend and defend our temporary advantages?
Sustainable and Competitive Advantages – How can we best exploit and reinforce our
sustainable competitive advantages?
SUSTAINABLE AND COMPETITIVE ADVANTAGES SHOULD BE THE FOUNDATION OF OUR STRATEGY
“A RIGOROUS UNDERSTANDNG OF OUR ADVANTAGES AND DISADVANTAGES IS AKEY TO
FORMULATING OUR WINNING STARTEGY”
BUSINESS STRATEGY - SWOT ANALYSIS
STRATEGY has two main branches:
1. Internal analysis
2. External analysis
SWOT Analysis (STRENGTHS, WEAKNESSES, OPPORTUNITIES, and THREAT)
- Allows us to combine internal and external analysis
STRENGTHS AND WEAKNESSES – internal environment
OPPORTUNITIES AND THREAT – external environment
USES OF SWOT ANALYSIS:
- Industry analysis
- Company analysis
- Product initiatives
- People
It allows us to visualize strengths and weaknesses and identify potential threats and opportunities
STRATEGIC ISSUES
Strategic issues are found by pinpointing the things that management needs to worry about.
ISSUES – Managers need to zero in on exactly what strategic issues company managers need to address.
CHALLENGES – the task here is to get a clear fix on exactly what industry and competitive challenges
confront the company, which internal weaknesses need fixing, and what specific problems merit front-burner
attention by company managers.
WORRY LIST – if the items on management’s “worry list” relatively minor, which suggests the company’s
strategy mostly on track, company managers seldom need to go much beyond fine-tuning the present strategy.
If the issues and problems are serious, the task of crafting better strategy has to go to the top management’s
action agenda.
Compiling a “worry list” of problems and issues creates an agenda for managerial strategy making.
FIVE COMPETITIVE STRATEGIES
A competitive strategy concerns the specifics of management’s plan for competing and securing a competitive
advantage.
LOW-COST PROVIDER STRATEGY
- Striving to achieve lower overall costs than rivals and appealing to a broad spectrum of customers,
usually by underpricing rivals.
BROAD DIFFERETIATION STRATEGY
- Seeking to differentiate the company’s product or service from rivals in ways that will appeal to a
broad spectrum of buyers.
FOCUSED LOW-COST STRATEGY
- Concentrating on a narrow buyer segment (or market niche) and outcompeting rivals by having lower
costs than rivals and thus being able to serve niche members at a lower price.
FOCUSED DIFFERENTIATION STRATEGY
- Concentrating on a narrow buyer segment (or market niche) and outcompeting rivals by offering niche
members customized attributes that meet their tastes and requirements better than rivals’
products.
BEST-COST PROVIDER STRATEGY
- Giving customers more value for the money by satisfying buyers’ expectations on key quality/features/
performance/service attributes while beating their price expectations.
LOW-COST STRATEGY
Low-Cost Leadership
- A company achieves low-cost leadership when it becomes the industry’s lowest-cost provider
rather than just being one of perhaps several competitors with low costs.
- A low-cost leader’s basis for competitive advantage is lower overall costs than competitors.
TWO OPTIONS LOW-COST
Option 1: is to use the lower-cost edge to underprice competitors.
Option 2: is to maintain price and use the lower-cost edge to earn a higher profit margin.
Achieve low-cost edge there are two major avenues for accomplishing low-cost;
1. Performing essential value chain activities more cost-effectively than rivals.
2. Revamping the firms’ overall value chain to eliminate or bypass some cost activities.
Low-Cost Strategy works best when,
- Price competition is especially vigorous
- The products of rivals are readily available
- There are few ways to achieve differentiation
- Buyers incur low costs in switching purchases
Pitfalls to avoid low-cost provider strategy
- Getting caried away with aggressive price cutting and ending up with lower profitability
- Relying on an approach to reduce costs that can be easily copied by rivals
- Becoming too fixated on cost reduction
A low-cost strategy achieves lower costs than rivals and appeals to a broad spectrum of customers,
usually by underpricing rivals.
DIFFERENTIATION STRATEGY
The essence of differentiation of strategy is to offer unique product or service attributes that a wide range of
buyers find.
Succeed through differentiation, a company attempting to succeed through differentiation must study buyers’
needs and behavior carefully to learn what buyers think has value and what they are willing to pay for.
Successful differentiation allows to;
1. Command a premium price
2. Increase unit sales
3. Gain buyer loyalty to its brand
Differentiation angles:
- Unique taste
- Multiple features
- One-stop-shop
- Superior service
- Design
- Reliability
- Quality
- Technology leader
UNIQUENESS DIVER
- A uniqueness driver is a value chain activity or factor that can have a strong effect on customer value
and creating differentiation.
Customer value
- Differentiation opportunities can exist in activities all along an industry’s value chain and particularly in
activities and factors that meaningfully impact customer value.
ENHANCE DIFFERENTIATION
- Seeking out high-quality inputs
- Striving for innovation
- Pursuing continuous quality improvement
- Emphasizing human resource management
- Improving customer service
What is valuable to customers?
1. Product attributes and user features
2. Incorporate features that improve performance
3. Incorporate features that enhance satisfaction
Differentiation strategies tend to work best when;
- Buyer needs and uses are diverse
- Product or service that have value to buyers
- Few rival firms are following a similar approach
- Technological change is fast-paced
Differentiation strategies fail for several reasons;
- Attributes that are easily and quickly copied
- Buyers see little value in the unique attributes
- Overspending on efforts to differentiate
A low-cost provider strategy can always defeat a differentiation strategy when buyers are satisfied with
a basic product.
FOCUSED STRATEGY
- The targeted segment, or niche, can be identified by geographic uniqueness or by special product
attributes that appeal only to niche members.
ADVANTAGES of focusing a company’s entire competitive effort on single market niche are considerable.
- Secures competitive advantage by serving buyers in the target market niche at lowest cost than rival
competitors.
- Focused strategy has considerable attraction when a firm can lower costs significantly by limiting its
customer base to a well-defined buyer segment.
FOCUSED DIFFERENTIATION
- Keyed to offering carefully designed products or services to appeal to the unique preferences and
needs of a narrow well-defined group of buyers.
FOCUSED CONDITIONS
- The target market is big enough to be profitable
- Industry leaders have chosen not to compete
- It is costly or difficult for competitors
- The industry has many different niches
- Few rivals are attempting to specialize
RISKS
- Competitors find ways to match capabilities
- Potential for the preferences to shift over time
- Segment inundated with competitors
NICHE strategies are focused closely on serving segment-specific of niche markets.
BEST-COST STRATEGY
These are strategies that is hybrid of low-cost provider and differentiation strategies that aim at satisfying
expectations.
The essence of this strategy is giving customers more value for the money by satisfying buyer desires
for appealing features and changing lower price for these attributes compared to that of rivals.
This capability is contingent on:
A superior value chain configuration
Unmatched efficiency in managing activities
Core competencies that allow differentiation
STATUS
- When a company can incorporate appealing features in low-cost
WORKS BEST IN MARKET WHEN, the product differentiation is the norm and attractively large numbers of
value-conscious buyers can be induced to purchase midrange products.
VULNERABILITY
- Not having the requisite core competencies and efficiencies in managing value chain activities to
support the addition of differentiating
A company’s competitive strategy should be well matched to its internal situation and predicated on
leveraging its resources.
The Relationship Between Entrepreneurial Orientation and Organizational Performance
- The entrepreneurial orientation of an organization refers to a strategic set of outlooks including the
organization’s:
1. Inclination towards risk-taking
2. Tendency for building
3. Pursuing a competitive advantage
4. Bias towards proactivity
5. Level of dependency on innovation
An organization’s entrepreneurial orientation relates to the strategic stance and set of attitudes it uses to go
about its day-to-day business.
Previous studies found that organizations that have higher levels of entrepreneurial orientation displays
a set of specific entrepreneurial habits and behaviors that pervade the entire organization. These habits
and behaviors stem from the orientation and thinking of the management and leadership of the
organization.
This research briefing will be really useful for anyone interested in developing entrepreneurial attributes
within an organization.
Entrepreneurial Orientation
- Is a critical ingredient in overall business organization
- INTRAPRENEUR or an individual with entrepreneurial attributes who is employed, rather than running
their own business.
- FIVE ENTREPRENEURIAL ORIENTATION DIMENSION:
- Entrepreneurship is the process of creating value from, often hidden, opportunities
- Innovative and Creative Process
Example:
Innovation and innovation performance and behaviors creativity sales performance experimentation
and risk-taking general individual and organizational performance speed of response, organizational
agility and adaptive capacity.
- Entrepreneurial orientation on its own is not a sufficient and necessary factor for many of the outcomes
observed.
INNOVATION STRATEGY
FOUR KEY COMPONENTS OF INNOVATION STRATEGY:
1. Innovation Vision – what’s the overall purpose of innovation?
2. Relative importance of innovation - What’s the financial revenue gap we’re trying to fill?
3. Understanding and setting screening criteria – how will we evaluate one new idea from the next?
(relative to customer fit, strategic fit, financial screening criteria, technical feasibility, and market
attractiveness)
4. What’s the overall investment level that we’re willing to make for innovation, both in terms of people,
resources and financial resources? Expectations we have for that gap
Top leaders within a company should view this innovation strategy similar to our declaration of
independence, which means, that the people at the top of the organization have to sign the innovation
strategy.
