Competitive Strategy Final Slides

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Competitive Strategy

Naga Lakshmi Damaraju

Industries Covered

Colas
Airlines
Two-wheelers
Computers
Semiconductors
Medical Equipment
4-wheelers
Book publishing/Manufacturing
Food
Elevators

Focus

Colas---Structure and profitability


Not explicit but upstream and
downstream activities, distinctive position and differentiation
How to think about industry or how to conceptualize the boundaries of an
industry?

SouthwestFirms internal activities and consistency with chosen


low-cost strategic position

DucatiFirms internal activities and resources and capabilities


consistent with chosen differentiation position

AppleAppreciation about industry changes and fundamental


changes in the economics driving profitability, idea about
network externalities and standards, inconsistency between
low-cost and differentiation strategies

Samsung---Drivers of changes in industry structure and is the industry


really shifting as fast, dual advantage story of managing low-cost and differentiation

Focus
GE Medical: Global strategy tensions, value chain,
leverageable functions
Tato Nano: Value chain, leverageable resources and
capabilities, Product Innovation vs. Business Model
Innovation?
DanaherHarlequin: Value chain and leverageable
resources and capabilities, relatedness in diversification
Schindler: Implementation issues
strategy/structure/people etc.

Key Learnings
What is superior performance?
Market share is not an end in itself. It is
important to grow market share but it is more
important to grow it profitably (Coke vs. Pepsi).
Sources of superior performance can be in the
nature of the industry or in the distinct ways
firms configure and use their resources and
capabilities (or some random errorluck??)
(Coke and Pepsi, Southwest Airlines)

Key Learnings
Firms activities supported by tightly-knit activity systems
can prove to be barriers to imitation and therefore help
sustain competitive advantage (Southwest and Ducati)
Activity systems underlying the two basic strategic
positionscost leadership and differentiationare
inherently incompatible. It is hard to maintain both these
simultaneously. Mishandling can lead to getting stuck in
the middle (Apple).
Tightly-knit activity systems pose difficulties for growth.
However, these trade-offs are essential to strategic
choices (Ducati, Harlequinn).

Key Learnings
Strategy formulation cannot be immune to changes in
the industry and to changes in other industries (Apple).
Competitive Advantages may be immune to imitation
sometimes but may not be protected from substitution.
Uni-dimensional advantages are less sustainable.
In network industries, winner-takes it-all and therefore
the quest will be to become the standard. Timing is
very critical.
Multiple standards can co-exist only if they are
adequately differentiated.

Key Learnings
It is important to change, but it is critical to manage the process of
change and the reaction to change (Samsung). Investments into
future are important. However, it is also important to make sure that
the basket is not so distorted to disadvantage existing business.
Industry changes and the pace of change need to be understood
keeping what are the underlying drivers of profitability that are
changing (Apple and Samsung).
Links across value chain can constrain/facilitate consideration of
strategic alternatives (Samsung and GE).
Growth through diversification is a common phenomenon. However,
it being common is not an indication that it is in the best interest of
the shareholders. Research shows that diversification creates value
only under specific circumstances (Eg. Harlequinn/Danaher).

Key Learnings
While pursuing growth through global
strategy, one of the key dilemmas will be
local responsiveness vs. global
standardization. It also sensitizes to the
political side of proposing a countryspecific strategy (GE and Schindler).
The trade-offs are regarding aggregationadaptation-arbitrage (GE Medical).

Key Learnings
Growth through innovation cannot be immune to thinking
about whether the company can draw on current
resources and capabilities (Nano).
If it is all starting from scratch, it is a sort of diversification
move and then needs similar analysis of other
diversification decisions why a company might want to
do it and whether this is in the best interest of the
shareholders.
In pursuing hitherto untreaded paths, many aspects of
strategy may be emergent. However, emergent strategy
does not mean random chance.

Key Learnings
Implementation is an integral part of strategic
management process. It is important to keep
track of performance goals and also distinguish
between poor strategy vs. poor performance
(Silvio Napoli).
Good strategy is about as much as what not to
do as it is about what to do?

Other observations

Break Even Value in Ducati. Feasible numbers but decision went


against because it dilutes the current strategic position.

Break Even Value in GPC. Cannot really estimate how long it might
take for the market to come to that volume. But strategically, it was
important to have control on Chinese market.

Break Even Value in Harlequin. Very counter-intuitive. Goes up


with the fame of the author in view of advances that need to be paid
and promotional costs. Also, this is the break-even each time and
not a one-time cost.
Key learning: It is important to have strong quantitative
understanding to uncover some of the mechanics and have
information on our own systems. Your strategic reasoning has to be
much more extensive and numbers are one input into the process.

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