Strategic Management for Eco Entrepreneurs Terms: Strategic competitiveness—Competitive advantage earned through a value creating and capturing strategy. Strategy—integrated and coordinated set of commitments and actions to achieve competitive advantage. Competitive Advantage—position vis a vis competitors that allows the organization to earn above normal rates of return (ROS, ROA, ROI) at a point in time. Not permanent. How is competitive advantage achieved? Strategic use of resources and capabilities to achieve core competencies and to exploit them. Resources are the firm’s critical inputs—labor, management and other human capital; physical capital; funding; IP; location; culture. Some of these are easily competed away. Others are not. Focus on the latter. Why? Consider key location or individuals—stars. What are the competitive advantage implications?
Strategic Management for Eco Entrepreneurs • Capabilities—directing those resources toward achieving a competitive advantage. • Core competencies—those resources that advantage the firm relative to its competitors. (key IP, key people, key leadership, key culture, key location). • Vision – a short statement that communicates the organization’s value, to whom, and why. • Mission Statement—a more lengthy statement about the organization’s value creation, to whom (the clients), why (its core capabilities), and how (what it provides).
Strategic Management for Eco Entrepreneurs • Stakeholders—those centrally affected by the organization—customers; investors; input suppliers (contractors, other); labor; management; communities. Interests may conflict. How to manage them. • Strategic leaders—senior management who formulate the vision, mission, and competitive strategies, and monitor that they are carried out.
Strategic Management for Eco Entrepreneurs • Achieving competitive advantage. • Industry analysis • Identify the market. (what is the market? Segmented?) Who are the major competitors? • What are their key advantages? Weaknesses? What opportunities? Threats? SWOT analysis. • Once the industry has been identified, then analyze the 5 major competitive factors: • New entrants • Supplier power • Buyer power • Substitutes, switching costs • Rivalry • Each of these will affect your ability to achieve competitive advantage. Value can be competed away.
Strategic Management for Eco Entrepreneurs • Remember—it is not enough to organize a venture that provides environmental benefits. • If another organization can capture that value, it reduces incentives to promote and invest in it. • Why? • The external environment • Broadly and how it impacts your industry and target market. • Industry characteristics, size of competitors, tech change, growth. • Demographics—age, location, ethnicity, size, income • Macro economics—interest rates, employment, exchange rates, GDP growth • Political/legal • Technological change • Cultural • Global
Strategic Management for Eco Entrepreneurs • Barriers to Entry—essential for competitive advantage. • Economies of scale, capital requirements • Product/service differentiation (what does this mean?) • First leader—reputation, information (downsides?) • High switching costs • Distribution access • Government policy • IP • Other core competencies
Strategic Management for Eco Entrepreneurs • For Monday, February 25, each team must hand in and present their competitor analysis and their target market definition. • Industry definition • List of competitors, analysis of 5 key competitive factors • Characteristics of the target market: location, income, age, ethnicity, education. • Identify how you would contact them. • For Wednesday, February 20, each team must: • Provide vision and mission statements • A statement as to how you might achieve a competitive advantage—barriers to entry for your venture.