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Shubhabrata Basu
PGP I Session 10
Competitors can copy Margins DO GET HIT (Indian Telecom Sector, Wal-Mart to Sams Club, Tanishq originaI)
This in NOT-ON Therefore Redefine the Unique Firm, its Sustainable Competitive Advantage and its Processes.
So What they DID?
Process consists of
Components - Asset like (T,C,F,R,S,I,M,O) Technological, Complementary, Financial, Reputations, Structural, Institutional, Market-Structure and Organizational Boundary Configuration Organizational (Ability to Reconfigure & Transform) & Managerial (Ability to Coordinate & Integrate (Mix and Match the above assets) reduce transaction & production cost)
Preferred Output Revenues (Profits) from Newer Innovative Products Schumpeterian Rent Therefore keeps itself Market Relevant e.g. Samsung Case
Process Components Assets not as inputs but as GIVEN and PRESENT within the firm (no significant transaction cost)
Process Configuration Managers can Coordinate with required assets, Prioritize the required assets and Integrate on a Large Scale
Coordinate Prioritize Integrate provides superior response time higher capacity and better ability to Changing Environment
Consequently New Innovative Products (Schumpeterian Rents) come FIRMS with DYNAMIC CAPABILITIES are likely to be the Movers & Shakers
PROCESS
Schumpeterian Rent ()
Managerial & Organizational Configuration Structural Institutional Organizational Reconfigure Transform Managerial Coordinate Integrate
Tour de Course
Core Concepts in SM Course Focus Strategy Formulation Decisions Strategic Decision Elaborated Frameworks
Core Concepts in SM
Strategic Management (SM) caters to the questions
Why & How some firms outperform others How they sustain such performance
Source of SCA
Environmental Opportunities (Outside In Model) Firms own Idiosyncratic Resources (RBV Inside Out Model)
Course Focus
Competitive Strategy One Firm One Business One (Type) of Product The Concepts Firm and Environment CR SCA SNR
Strategy Formulation Decision is fraught with (a) Planning Triggers, (b) Trade Offs, (c) Activities, (d) Employee Aspirations and (e) Problems Adopted Systems Approach Input Process Output Feedback
Planning Triggers Focus in terms of Resource Allocation or Market Position Trade Offs
Core Concepts
TC(n) = FC/(n) + VC(n) - optimal throughput n Cost(A)(1+2) < Cost(B)(1) + Cost(C)(2) Make or Buy Decision Lower RELATIVE Cost Price by eliminating non-relevant activities Higher RELATIVE Sale Price by adding Higher Utilitarian Activities Difficulty to switch Partners Synchronous and Compatibility Issues Offer/Demand with future spin off benefits e.g. Eco-Friendly Products Processes and Asset Position providing Competitive Advantages Incumbents fighting back usually with price war or better product Substitutes with greater spin off benefits Titan vs. HMT Watches Activities added to improve margin e.g. WaI-Marts Sustainability efforts Firm influencing its business partners e.g. Coke Pepsi - Bottlers Competition directly/indirectIy affecting industry players. E.g. Cola War Value Chain Activities done directly or with a partner sharing risks/costs Using the aspiration of employees to fufiI the firms objectives e.g GMTCI Expertise in a particular functional role can have pros & cons
Cost Leadership Strategy Differentiation Strategy Switching Cost Relative Strategic Importance (O/D) Relative Competitive Capabilities Competitive Retaliation Relative Superiority of Alternatives
Firm Activities
Movement in the Value Chain Span of Control Competitive Dynamics Mode of Operation
Aspirations Problems
Barriers to Entry/Exit
Stage of Firm
Frameworks
Systems Theory (InputProcessOutputFeedback) Competitive Advantage Transaction Cost Framework PEST & SWOT Porters 5 Forces Outside In Model Generic Competitive Strategies Positioning Strategies Value Chain RBV, VRIO Core Competence Framework Inside Out Model Dynamic Capabilities Framework