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Copy of Strategic Management

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Cagin Bodur

on 27 May 2013

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Transcript of Copy of Strategic Management

photo credit Nasa / Goddard Space Flight Center / Reto Stöckli Strategic Moves, Timing, and Scope of Operations Strengthening A Company's Competitive Position Strategic Offensives and Defencives Offenses: Strategic offensives should, as a general rule, be based on exploiting a company's strongest strategic assets

Defensives: Strategies used to lower the risk of being attacked, weaken the impact of any attack that occurs, and influence challengers to aim their efforts at other rivals. When to be a First Mover
or a Late Mover Mergers and Acquisitions Merger: combining of two or more companies into a single corporate entity with the newly created company often taking on a new name

Acquisition: combination in which one comapny, the acquirer, purchases and absorbs the operations of another, the acquired. Vertical Integration A "Vertically Integrated Firm" is one that participates in multiple segments or stages of an industry's overall value chain. Outsourcing *Farming out certain value chain activities to outside vendors Strategic Alliance A formal agreement between two or more separate companies in which they agree to work cooperatively toward some common objective
Joint Contribution of Resources
Shared Risk
Shared control
Mutual dependence Advantages of Outsourcing 1. An activity can be performed better or more cheaply by outside specialists

2. The activity is not crucial to the firm's ability to achieve sustainable competitive advantage

3. It streamlines company operations in ways that improve organizational flexibility and speed time to market

4. It reduces the company's risk exposure to changing technology and/or buyer preferences

5. Allows a company to assemble diverse kinds of expertise speedily and efficiently

6. Allows a company to focus on its core business In Regards to Nike. Cut Costs Cutting costs by employing workers at a reduced rate or paying less for plant operation allows Nike to invest the additional profits into other areas of the business Increases Competitiveness Because Nike is able to more efficiently produce its product and reduce costs due to outsourcing, it can more competitively price its products. Finances and Risk Reduction Outsourcing allows Nike to skirt some of the financial obligations it might face with the confines of tax laws in the United States Risk Of Outsourcing Well known Strategic Alliances Joint Venture A type of strategic alliance in which the partners set up an independent corporate entity that they own and control jointly, sharing in its revenues and expenses Daimler Chrysler

Starbucks/Barnes&Noble

Disney/Hewlett Packard 1. Farming out too many of the wrong activities
-Hollowing out its own capabilities
This leads to their ability to lead the development of products being weakened
2. Lack of direct control
-May be difficult to monitor, control, and coordinate outside activities With a focus on Nike In Regards to Nike The biggest risk is the loss of control Protecting your intellectual property is a real challenge Your supplier’s questionable or unethical behavior is you PR department’s nightmare, and a distraction to your business 4:35-8 Disadvantages of Vertical Integration Advantages of Vertical Integration American Apparel Uses both forward and backward integration Does it owns:
*Fabric cutting
*Fabric Sewing
*Fabric Dying
*Distribution
*Wholesale operation
*270 Retail Stores Offensive Strategies: -Using a cost based advantage.
-Leapfrogging competitors to be the first.
-Pursuing continuous innovation.
-Adopting and improving ideas of other companies.
-Using hit and run or Guerilla tactics.
-Launching preemptive strike. Defensive Strategies: -2 main forms of defensive strategies
-Strategies to block challengers or actions to signal the likelihood of strong retaliation First Mover:
-When pioneering helps build a firm's reputation with buyers and creates brand loyalty
-When a first mover's customers will thereafter face significant switching cost
-When property rights protections thwart rapid imitation of initial move
-When an early lead enables the first mover to move down the learning curve ahead of rivals. When to be a First Mover Last Mover:
-When pioneering is more costly than initiating
-When products of innovator are primitive or do not meet expectations
-When rapid market evolution gives fast followers the opportunity to leapfrog off the first movers
-When market uncertainties make it difficult to ascertain what will eventually succeed. When to be a Last Mover Build, sustain, or enhance a core competence or competitive advantage
Block a competitive threat
Open up new market opportunities
Mitigates a significant risk to company's business Joint Venture Success -Increasing the company's scale
-Expanding a company's geographic coverage
-Extending the company's business
-Gaining quick access to new technologies or complementary resources and capabilities
-Leading the convergence of industries Benefits of Mergers/Acquisitions WiMax Mobile Networks iHeartRadio vs Pandora Orbitz vs Travelocity -Cost Savings smaller than expected
-Gains take longer than expected
-Efforts to mesh stall due to resistance
-Managers and employees argue forcefully
-Employees become disenchanted and quit
-Morale of the company drops
-Differences in management styles and operating procedures can prove hard to resolve Why they fail: Advantages vs. Disadvantages Advantages
Get into new markets quickly
Gain inside knowledge about unfamiliar markets/cultures
Access valuable skills/competencies Disadvantages
Partner gains knowledge of your company: technologies, trade secrets, etc.
Culture Clash & Integration Problems
Become dependent on partner: i.e. suppliers, factories, etc. Example : Apple as a first mover

Apple’s successes do not depend on others having to fail.
First mover advantage is great, but it can often be a detriment. It’s sort of like buying a new model of a car the first year its available. Its nice to have it first, but you will probably have to deal with all the unforeseen problems. Merger Between T-Mobile and Metro PCS -Allowed the two companies to grow in size to be more competitive with AT&T and Verizon
-Potential to combine resources
-Customer base will increase for both companies to a total of 42.5 million customers, putting them ranked 3rd amongst competitors Add to a companys technological capabilities
Strengthen the firm's competitive position
Boost profitability
All true only if it produces cost savings and/or differentiation benefits to justify the extra investment Increases business risk
Slow to embrace technological advances
Decreases operating flexibility
Hard to realize economies of scale
Calls for radical new skills and business capabilities. A company does not need to be the first one. Apple lets others fail first. The Diamond RIO and many others existed before the iPod. Google and the myth of first-mover advantage The “first-to-market” mentality has been replaced by a broader, more strategic imperative: to create a truly global ecosystem that encompasses devices, platforms and operating systems.
DropBoxx- Apple icloudd, Microsoft SkyDrive, Amazon Cloud Drive= Google Drive•Facebook= Google+•Google is a “me-too” innovator•Double Android operating system•Reverse-engineer products The End. We now open the floor to any questions!
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