Profiling a specific competitor is often important to management. However, many competitive profiles will fail to give management insights into how competitors will respond to your own strategy. Understanding this inter-relationship is important for knowing how to position your company in relation to the competition. One of the most popular models for this type of competitor analysis is the so-called Four Corners Analysis. The Four Corners Analysis developed by Harvard Business School professor and strategy guru Michael Porter is a model well designed to help company strategists assess a competitor’s intent and objectives, and the strengths it is using to achieve them. By examining a competitor’s current strategy, future goals, assumptions about the market, and core capabilities, the Four Corners Model helps analysts address four core questions: What drives the competitor? Look for drivers at various levels and dimensions so you can gain insights into future goals. What is Continue reading
Strategic Management Terms
Capacity Expansion Strategy
Growing an existing business often involves expansion of capacity, in terms of plant, human resources, technological infrastructure, R&D facilities, etc. Any major capacity expansion is a strategic decision that involves significant resource commitments and is often difficult to reverse. So such a decision has to be made carefully. Capacity expansion strategy is often narrowly applied to manufacturing. But in many businesses, there is no or little manufacturing. So, capacity needs to be understood in terms of the investments made in the most critical area of the value chain. Thus, in the pharmaceutical industry, capacity has to be defined in terms of scientific manpower and sales force. In a software development company, capacity has to be understood in terms of the number of programmers employed. In a Business School, capacity may be defined as the number of professors available to teach students. According to Michael Porter, the decision to expand capacity Continue reading
What are Dynamic Capabilities?
Concept of Dynamic Capabilities of a Firm A dynamic capability refers to company’s ability to integrate, build and transform internal and external competencies. They can help an organization to achieve innovative forms of competitive advantage through integration, building and transformation of internal and external competencies, as to respond to changes in the environment. This management theory was defined by David Teece, Gary Pisano, and Amy Shuen in their 1997 paper Dynamic Capabilities and Strategic Management. In the context of achieving organizational change, aligned to the external pressure: namely, these capabilities are perceived as business processes that use resources — specifically the processes of integration, restructuring, acquisition and release resources — to adapt or create market changes. Dynamic capabilities are especially helpful in explaining the sources of competitive advantage in extremely volatile markets. Dynamic capabilities are determined by organizational and managerial processes, positions and paths. The organizational and managerial processes refer Continue reading
Resource Based View (RBV) of Competitive Advantage
Jay Barney’s approach is known as resource based view of competitive advantage operates on the assumptions that firms are heterogeneous in terms of their control of important strategic resources and that resources are not perfectly mobile between firms. Firm resources are defines as strengths that firms can use to conceive of and implement their strategies. Classifications of resources are physical capital resources, human capital resources and organisational capital resources. Physical technology, plant and equipment, geographic location and access to raw materials come under physical capital resources. Human capital resources are the training, experience, judgement, intelligence, relationships and insight of the individual managers and workers of the firm. Organisational capital resources include the formal reporting structure, the informal and formal planning, coordinating and controlling systems, the informal relations among groups within a firm and other agents in the firm’s environment. Summary of resource based view is that firm can only have Continue reading
The Importance of Mission and Vision Statements
The corporate strategy starts through Vision and Mission Statements can be accessed by culture, core values and its core values on which it competes. Mission statement shows the exact purpose of the organization. This statement is primary objective of the organization to show the plans, aims and programs of the company. A mission statement is bit different from the vision statement. A clear mission statement also focus on what are the advantages which is you are offering to your patrons as well as consumers it also tells you exact purpose of your organization. A good mission statement is like a born of success for the organization. It is very for the companies to find out the ways and also do the regular confirmation whether company or organization is on the right way or not. A purpose of a clear mission statement to an organization to align the people as well Continue reading
Business Strategy: The Three Generic Strategies
Three of the most widely read books on competitive analysis in the 1980s were Michael Porter’s Competitive Strategy, Competitive Advantage, and Competitive Advantage of Nations. In his various books, Porter developed three generic strategies that, he argues, can be used singly or in combination to create a defendable position and to outperform competitors, whether they are within an industry or across nations. The strategies are (1) overall cost leadership, (2) differentiation, and (3) focus on a particular market niche. Cost Leadership, Differentiation, and Scope These strategies are termed generic because they can be applied to any size or form of business. We refer to them as trade-off strategies because Porter argues that a firm must choose to embrace one strategy or risk not having a strategy at all. Overall lower cost or cost leadership overall cost-leadership strategy, a strategy in which an organization attempts to gain a competitive advantage by Continue reading