Strategy: A View F rom the Top Chapter 5

1. Group 3 Randy GreinertMason Mitchell Sarah YelvertonAlec Cooper Strategy: A View From the TopChapter 5

2. Consists of; Physical strengths- Plant, State-of-the-art manufacturing facilities. Financial strengths-Excellent cash flows, and strong financial track record. Human Resource strengths- Strong Leadership, motivated employees; could be firms most important resource A Company’s Strategic Resource Base

3. Strategic Organizational Resource strengths- The Specific competencies, processes, skills, and knowledge under the control of a corporation. They include qualities such as a firm’s manufacturing experience, brand equity, innovativeness, relative cost position, and ability to adapt and learn as circumstances change. A Company’s Strategic Resource Base Coors Since 1873

4. 1- How valuable is a resource; does it help build and sustain competitive advantage? 2- Is this a unique resource or do other competitors have similar resources? 3- Is the strategic resource easy to imitate? 4- Is the company positioned to exploit the resource? To evaluate the relative worth of a company's strategic resources, 4 questions should be asked;

5. Can provide a quick overview of a company's or business units current or past profitability, liquidity, leverage, and activity. Examples- Return on Assets: Financial ratio analysis Inventory Turnover^ Current Ratio^

6. Economic Value Added: Eva is a value-based financial performance measure that focuses on economic value creation. EVA

7. Useful in assessing a firm’s costs relative to those of competing firms, or for comparing a company’s performance against best-in-class competitors. Cost Benchmarking

8. 1) Selecting areas or operations to benchmark 2) identifying best-in-class companies or key competitors 3)Identifying key performances measures and practices 4) Collecting cost and performance data 5) Analyzing and interpreting the results Five Step Benchmark Process

9. Practical and versatile Allows for direct comparisons of the efficiencies with which different tasks in the value chain are performing However, dangerous to use sometimes because focuses on similarities rather than the differences Why use the benchmark process?

10. First and foremost – Companies are run by and for people Understanding people’s aspirations and concerns and capabilities is key to determine strategic position Human Capital

11. Study by Chief Executive shows that more focus is put on attracting, developing, and retaining human capital. 43% of surveyed CEO’s believe that finding and retaining good people is their greatest challenge 84% Believe that people issues are for more important than before Survey

12. Examined 500 companies that were U.S and publicly traded. Concluded that top half of firms that spent the most on training had higher stockholder returns than the bottom half did. American Society for Training and Development Study

13. Continuous employee development is critical to the growth of human capital Puts 3% of total expenses into training Six times the proportion of the average company Line and staff managers attend 11 weeks of mandatory training in their first year

14. Execs report that their company receives $33 for every $1 invested in employee education Motorola

15. Include a firm’s knowledge and intellectual capital base Reputation with customers partners suppliers and the financial community Specific competencies processes and skills sets And its corporate culture Organizational Strategic Resources

16. Knowledge and Intellectual capital are major drivers Firm’s CA comes from value it delivers to its customers Created and sustained when a company continues to mobilize new knowledge faster and more efficiently than its competitors Competitive Advantage

17. Become an asset when it is managed and transferred Explicit knowledge is formal and objective and can be codified and stored in books or archives Implicit or tacit knowledge is informal and subjective. It is gained through experience and transferred through personal interaction and collaboration Knowledge

18. $ 4 Billion market capitalization based on its stock price even though company only sold a few million dollars per year Based price on company’s knowledge base and quality of management Netscape

19. Provide a guarantee of reliability and quality • Build trust and reinforce value Ex: Dell, Amazon, and eBay • Assist companies in building and retaining customer loyalty • Help maintain profit margins • Create barriers to entry Brands are Strategic Assets

20. Two Criteria 1.) Brands must be global and must be generating significant earning in the main global markets 2.) There must be sufficient marketing and financial data available to the public for preparing a reasonable evaluation Business Week/ Interbrand

21. Succeed in growing their brands while pursuing their missions • Which results in customer loyalty and allows the company to attempt risky expansions Companies with Strong Brands

22. Capabilities that allow a company to build a competitive advantage Evolve as a company develops its business process and incorporates intellectual assets Are a set of skills or systems that create a uniquely high value for customers at best-in-class levels Core Competencies

23. Contribute to perceived customer benefits • Are difficult for competitors to imitate • Allow for leverage across markets Examples: -Honda’s small-engine: used in Motorcycles, jet skis, and lawn mowers -Charles Schwab expanded client communication methods to: Internet, phone, branch offices, and financial advisors Cont.

24. 1.) Should provide access to a broad array of markets 2.) Help differentiate core products and services 3.) Should be hard to imitate because they represent several - Skills elements - Technology elements - Organizational elements Identifying Core Competencies

25. Organizational resistance Structural, organizational rigidities Closed mind-sets reflecting support for obsolete business beliefs and strategies Entrenched cultures reflecting values, behaviors, and skills that are not conductive to change Counterproductive change momentum that is not in tune with current strategic requirements Forces for change

26. The forms and strengths of organizational resistance that develop highly depend on a company’s history, performance, and culture. Company life Cycle forces for change

27. Founder or team start up Vision or purpose is established Initial direction is set for the company Resources are gathered Vision is turned into reality Life Cycle

28. Dilemmas of leadership Loss of focus Communication becomes harder Skill development falls behind Stress becomes more evident Rapid Growth Problems

29. Not Hierarchical Change in one changes in another, or if there is progress in one area means there will be progress in another area 7-S Model

30. Internal and external stakeholders Stakeholders claim competitive returns for their investments Demands reflected in thousands of firms, from high wages, pure air, job security, product quality community service, etc. Stakeholders Analysis