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There are so many student come over here such as Swiss, Singapore, Czech, etc. SKKU itself is divided into 2 areas, first at Seoul which is my place to study and the second is Suwon. Before I was looking around the campus, we got speech from the head quarters of international affair, and the vice president of international affair, Suke Kyu Lee (Ph.D.) about the agenda of the program international summer semester: designing sustainability. June 28 At this day I have a schedule from SKKU to go to the first field trip, Seoul city tour. I go to the Gyeong Bok Gung Palace, where is it a palace greatly blessed by heaven as said in the guide book. This palace was so big, and also I have seen the ceremony from this palace. But before watching the ceremony, I go to the museum of Gyeong Bok Gung where there is an historical heritage from the past, at the dynasty era. And then I moved to national museum of Korean. At this place show the Korea from traditional until modern like now. South Korea also get certificate for e-government. After that I went to Nanta Theater to watch the performance from Nanta group. They show to me like cooking theatrical. And it’s very nice performance for tourist that wants to go to Seoul. July 1 Today was my first day of college. In the classroom there are many different kinds of people from other parts of the world. The course that I took in following the international summer school is strategic management. Professor Tohyun Kim was lectured of strategic management course. He explains about what strategic management is. Strategic management is a process of formulating and implementing strategies in the face of changing environments in order for an organization to survive and prosper. This course is concerned with the actions and decisions that shape the short-term competitiveness and long-term sustainability of Organizations. And also this course takes the perspective of the general manager who has overall responsibility for the performance of an organization, especially in Profit (Business) Organization. The main idea of strategic management is explained in this chart:
The chart is about strategic management process. These are the explanation from each step: 1. Mission, Vision, and Objective: a. Mission: “What the organization does” and the reason for existence. b. Vision: “What the organization wants to be” and A statement of some desired future state c. Objective: Precise and measurable desired states to attain an organization’s vision and mission 2. External & Internal Analyses: a. External Analysis
This level was done by each business unit. vision. Business-Level Strategy: How to position a business in the market? And it’s including Cost leadership or Differentiation. This level was done by organization department such as R&D. etc. Functional-Level Strategy: Detailed plans for particular tasks or operations. requiring a creative approach. Competitive Advantage: Achieved when implemented strategies that competitors are unable to duplicate or find too costly to imitate. Stage numbers two and three are including in strategic . Internal Analysis Identifying the strengths and weaknesses of the organization c. Nonprogrammed decisions are non-routine and unstructured decisions. Corporate-Level Strategy: Which business to enter? And also it’s including Diversification. 5. And it divided into two categories. The first explanation is about rational model of decision making. Decision making is the process of identifying and choosing alternative courses of action. and objective and also external & internal analyses. And the results in the organization’s profitability that is greater than the average of all other competitors in the same industry. Opportunities. Finance. July 2 This day Professor Tohyun Kim explains about Strategic Decision Making. Professor Tohyun Kim introducing what is decision making meaning. This level is done by head office of the organization. if there are many businesses in one organization. Before explained that. SWOT Analysis (Strengths. Identifying the opportunities and threats in the external environments b. sales. Programmed decisions are repetitive and routine decisions. reached by following an established or systematic procedure. Marketing. M&A. b. and Threats) A tool to identify strategies that align an organization’s resources and capabilities to its environment in order to create and sustain its competitive advantage 3. Vertical Integration. Strategy Implementation: Putting the chosen strategies into action and designing organizations in consistent with the chosen strategies. Production. This category is divided into three level: a. Strategy Formulation: Decision making regarding choosing strategies that lead to attaining an organization’s mission and vision by creating and sustaining its competitive advantage. Weaknesses. explains how managers should make decisions and assumes that managers will make logical decisions that will be optimal for the organization. After that Professor Tohyun Kim showed the steps of rational model of decision making: Stage number one is including in strategic management process at the mission. c. and Alliance. 4. programmed decision and non-programmed decision.
Does this person meet the standards set for satisfactory performance as an employee? (Satisfying) Versus Is this person the best possible person likely to be found for employment in the indefinite future? (Maximizing) July 3 This day prof. not optimal. Usually managers will be choose satisfactory because it more easy to find those people. and Legacy) model to analyze. Tohyun Kim explains about the external environment analysis. Economic. The explanations are based on SWOT analysis theory that explains the external analysis is identifying the strategic opportunities and threats in the organization’s external environment. or become flexible. but instead seek alternatives only until they find one that is satisfactory. But this kind of model can be followed or un-followed by people because each people have different minds and condition.formulation. And for the industry environment usually used Poster Five Force’s model to analyze. The external environment can have two scopes. Maximizing). And for the stage number four is including in strategic implementation and competitive advantages. Technology. so the strategy have to be adjust with the situation. . Social. Environmental. Managers do not seek all alternatives. Then Professor Tohyun Kim explained about satisfaction model (Satisfying vs. In the general environment usually used PESTEL (Politic. general and industry environment. Because to find the best person to work in our organization is more difficult than find the person that suit or good to work with us in the organization.
Second phase is growth which means that the demand (and supply) takes off with new customers and has low rivalry because focus more is on keeping up with high industry growth. in this phase the industry begins to develop and rivalry based on perfecting products. . First is embryonic. Tohyun Kim explains the industry live cycle which have four phases. the lack of innovation that can make the rivalry each industry become increasing. and opening up distribution channels.Those theories of analysis have a purpose to analyze the competitive advantages of the firm from external environment that can affect to the condition of the company. educating customers. Third phase is mature which indicate market saturates with low to no growth. the company just stuck with the condition. And then prof. And rivalry intensifies with excess productive capacity.
plant. and reputation with suppliers and customers. organizational culture. The core competencies itself means that capabilities that serve as a source of competitive advantage for an organization over its rivals. For example tangible resources are physical asset. And also the organization’s resources and capabilities should be examined alongside consideration of its value chain. Organization: Is the firm organized. goodwill. in good condition to process the resources and capabilities in order to get the competitive advantages. cash. Inimitability: Is it difficult to imitate. information system. and able to exploit the resource/capability? It means that the structure. equipment. skills. ready. Value: Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability? So it means that the valuable of the resources and capabilities in order to take over the competitive advantages. or capabilities to produce a product. the organization has to use their core competencies that have VRIO criteria. the product becomes more valuable. etc. To achieve the competitive advantage. For the sources of inimitability there are 4 things that organization must be able to have: Physical uniqueness The organization has material. Resources means that what the organizations have that be able to use in order to achieves the goal. or duplicate the resource/capability? It means that the resources and capabilities that the organization has are hard to imitate by their rivals. process. and many others. corporate governance. machinery. . culture. land. reputation. Internal analysis defines as identifying the strengths and weaknesses of an organization in terms of resources and capabilities required for achieving its goals. Social complexity Resource development requires interpersonal relations among managers. At each step. For intangible resources are brand. develop. Value Chain – the path by which products are created and sold to customers. Another model that used in analyzing the internal environment is Value Chain Analysis. culture. Path dependency Resources are unique and scarce because of all that has happened along the path followed in their development and/or accumulation. and many others. building.July 4 This day Professor Tohyun Kim explains about analyzing the internal environment of the organization. Rarity: Is control of the resource/capability in the hands of a relative few? It means that the resources and capabilities that owned by the organization is the rare one. Causal ambiguity It is difficult to disentangle the causes (or possible explanations) of either what the valuable resource is or how it can be re-created. and will there be significant cost disadvantage to a firm trying to obtain. knowledge. So it’s like how the organizations cultivate the resources with efficiently in order to achieve the goal. Then capabilities means that what the organization can do based on the resources it possesses.
there is an outsourcing term. competencies. which rests on knowledge. – Intra-organizational conflict due to decisions about core competencies • • • In order to keep the sustainable competitive advantages. quality. and flexibility. and resources involved in creating a product and moving it to the customer. Supplies chains is an entire system of people. a firm must have dynamic capabilities. assets. The “Icarus Paradox” (or “Success Trap”) – A company can become so specialized and inner-directed based on past success that it loses sight of market realities. So it’s like . Then beyond the value chain. often across several firms. it’s hard to keep it continuously. Core rigidities – Core competencies have potential to become core rigidities when competencies emphasized are no longer competitively relevant. complementary assets.This is the model of value chain analysis and usually it use for differentiation or cost leader strategy it depends on the organization. Strategic supply chain management aims to improve its speed. activities. cost. and technologies. In Sustaining Competitive Advantage. And outsourcing will increase in flexibility and reduction in risk and capital investment. Dynamic capabilities are a firm’s capacity to build and protect a competitive advantage. Outsourcing means that purchase of a value-creating activity from an external supplier. So each company or organization may fail when keeping the sustainable competitiveness. It’s happen because some reasons: • Environmental dynamism – External environmental conditions and events impact a company’s core competencies Inertia – Companies find it difficult to change their strategies and structures.
“How to compete in a particular industry?” the important thing in business level strategy is customer satisfaction. generate new knowledge.the ability to sense and seize new opportunities. July 5 Today Professor Tohyun Kim explains about Strategy Formulation. WHO is to be satisfied? Market segmentation: The way customers can be grouped based on important differences in their needs or preferences • • • No market segmentation A product is targeted at the “average customer” High market segmentation A different product is offered to each market segment Focused market segmentation A product is offered to one or a few market segments WHAT is to be satisfied? Customer needs: The desires. Customers choose a product based on: • • The way the product is differentiated from other products of its type The price of the product . And also strategic competitiveness results when a firm can satisfy customers by using its competitive advantages. The definition itself is decision making regarding choosing strategies that lead to attaining an organization’s mission and vision by creating and sustaining its competitive advantage. So business level strategy means that integrate and coordinate set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets. satisfying customers is the foundation of successful business strategies. and reconfigure existing assets and capabilities. or cravings that can be satisfied through product attributes. That explanation can make some question. He explains strategy formulation especially in business level strategy. wants.
relative to competitors. • Core competencies: Resources and capabilities that serve as a source of competitive advantage for firm over its rivals Cost Leadership Strategy: Integrated set of actions designed to produce or deliver goods or services with features that are acceptable to customers at the lowest cost. standardized goods Tight cost and overhead control o Cost minimization in all activities in the firm’s value chain Merits of Cost Leadership o Protects a firm against rivalry from competitors o Continuously improving levels of efficiency and cost reduction can be difficult to replicate Serves as significant entry barriers to potential competitors Economies of scale and cost advantages o Provides more flexibility to cope with demands from powerful suppliers for input cost increases Absorb supplier price increases and relationship demands Force suppliers to hold down their prices o Protects a firm against powerful buyers Lower cost structure o Puts the firm in a favorable position with respect to substitute products Flexibility to lower prices to retain customers Pitfalls of Cost Leadership o All rivals may share a common input or raw material Sources of cost advantage may become obsolete o Erosion of cost advantages when the pricing information available to customers increases o The strategy can be imitated too easily o Too much focus on one or a few value-chain activities . Aggressive construction of efficient-scale facilities o Economies of scale Vigorous pursuit of cost reductions from experience o Experience curve effect (or learning curve effect) Avoidance of marginal customer accounts o No-frill.HOW customers are to be satisfied: Determining core competencies necessary to satisfy customer needs.
Focus on cost may cause the firm to overlook important customer preferences o A lack of parity on differentiation Differentiation Strategy: Firms achieve and sustain differentiation and above-average profits when price premiums exceed extra costs of being unique. price sensitivity decreases o Customer loyalty effectively positions the firm against substitutes Potential Pitfalls of Differentiation o Too high a price premium o Customers may determine that the cost of differentiation is too high Differentiation that is easily imitated Counterfeiting o o Dilution of brand identification through product-line extensions Perceptions of differentiation may vary between buyers and sellers . And also integrated set of actions designed to produce or deliver goods or services at an acceptable cost that customers perceive as unique in ways that are important to them Prestige or brand image Technology Innovation Customer service Dealer network Customized products o Differentiating on as many features as possible Merits of Differentiation o Protects a firm against rivalry from competitors o Customers are loyal purchasers of differentiated products Creates higher entry barriers due to customer loyalty Requires significant resource investment o Provides more flexibility to cope with powerful suppliers Provides higher margins that enable the firm to deal with supplier power Cost of high quality components may be passed on to customers Reduces supplier power due to prestige associated with supplying highly differentiated products o Reduces buyer power because buyers lack suitable alternative As loyalty increases.
Uniqueness that is not valuable Too much differentiation The means of differentiation may cease to provide value for which customers are willing to pay Experience can narrow customers’ perceptions of the value of a product’s differentiated features Focus Strategy: Firm selects a segment or group of segments (niche) and tailors its strategy to serve them. Reasons are: May lack resources to compete in the broader market Firms can direct resources to certain value chain activities to build competitive advantage May be able to more effectively serve a narrow market segment than larger industry-wide competitors Larger competitors may overlook small niches Two types of focus strategies Focused cost leadership Focused differentiation Merits of Focus Strategy For Examples: o Buyer groups o Youths/senior citizens Creates barriers due to customer loyalty: Most effective in niches that are least vulnerable to substitutes or where competitors are weakest Product line segments Professional painter groups o Geographic markets Urban vs. rural areas Pitfalls of Focus Strategy o o o Focused products and services still subject to competition from new entrants and from imitation A competitor may be able to focus on a more narrowly defined competitive segment and "outfocus” the focuser A company competing on an industry-wide basis may decide that the market segment served by the focus strategy firm is attractive and worthy of competitive pursuit . Firm achieves competitive advantages by dedicating itself to these segments exclusively.
and customers Pitfalls of Combination Strategies – Firms that fail to attain both strategies may end up with neither and become “stuck in the middle” • Cost structure is not low enough for attractive pricing of products and products not sufficiently differentiated to create value for target customer – therefore. distributors. flexible quantities with a minimum of manual intervention Allows “mass customization” Eliminates the tradeoff between low cost and product variety that is inherent in traditional manufacturing technologies Total Quality Management (TQM) systems • Emphasizes firm’s total commitment to the customer and continuous improvement of every process through data-driven.o Customer needs within a narrow competitive segment may become more similar to those of industry-wide customers as a whole Combination Strategy (or “Best-Cost” or “Broad Differentiation”) – Efficiently produce products with differentiated attributes • • – – – Efficiency: Sources of low cost Differentiation: Source of unique value Simultaneously concentrate on TWO sources of competitive advantage: “cost” and “differentiation” Merit: Difficult for competitors to duplicate or imitate strategy Must be competent in many of the primary and support activities Sources of flexibility useful for combination strategy: – Flexible manufacturing systems (FMS) • • • – Computer controlled process used to produce a variety of products in moderate. fail to successfully implement either low cost or differentiation strategy – Underestimating the challenges and expenses associated with coordinating value creating activities in the extended value chain . problem-solving approaches based on empowering employees – Information networks • Coordinating the “extended” value chain by linking suppliers.
This chart just show that where is the position of your organization or rivals. whether in differentiation or cost leaders strategy or maybe in combination. Then Professor Tohyun Kim explain the .July 8 Today Professor Tohyun Kim explains about chart of value creation frontier. And for the Nordstrom use the differentiation strategy and they did it very well. In these charts shows some example of US Company at retail industry. Kmart use the cost leaders but not as well as Wal-mart. So the Wal-mart has implemented the strategy very well. Then he give us an examples to use the charts. Then Saks Fifth Avenue using the combination strategy but they didn’t do it very well.
backward and forward integration. so the company just concentrate in one business. Backward Vertical Integration – Company expands its operations into an industry that produces inputs to the company’s products Forward Vertical Integration – Company expands into an industry that uses. Method to enter or leave businesses or industries in order to maximize its long-run profitability Concentration Strategies which mean that staying only within a single industry. “How do we sustain competitive advantages in our current businesses?” and “What new businesses or industries do we wish to enter?” Corporate strategy is used to identify: 1. Value creation activities which the company should perform in those businesses 3. In this chapter. distributes. .corporate level strategies. he explains how to manage the organization that have different business or have multiple businesses. Businesses or industries that the company should compete in 2. Advantages – – Disadvantages – – It can be dangerous if the industry matures and begins to decline It may cause firms to miss the opportunity to leverage their distinctive competencies in new industries It can cause firms to develop a tendency to rest on their laurels and not engage in constant learning Focus resources – Resources devoted to competing successfully in one area Company stays focused on what it does best – Vertical Integration has two directions. Corporate-Level Strategy is integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by selecting and managing a group of different businesses and competing in different product markets. or sells the company’s products Advantages of Vertical Integration – Facilitating investments in efficiency-enhancing specialized assets Lowered cost structure or better differentiation.
coordinate. and schedule the transfer of product within the value-added chain Enables a company to respond better to changes in demand If we have the raw material and components. backward or forward integration. Disadvantages of Vertical Integration – Increased Cost Structure Company-owned suppliers may develop a higher cost structure than those of the independent suppliers Bureaucratic costs of solving transaction difficulties – Loss of Flexibility Vertical integration may lock into old or inefficient technology Prevent company from changing to a new technology that could strengthen the business model – Unpredictable Demand Creates risk in vertical integration investments Alternatives to Vertical Integration – Short-term contracts and competitive bidding – May signal a company’s lack of commitment to its supplier/buyer Strategic alliances and long-term contracting Enables creation of a stable long-term relationship Becomes a substitute for vertical integration . we don’t have to worry about the bargaining power from suppliers or buyers depend on what your direction.– Enhancing or protecting product quality To strengthen its differentiation advantage through either forward or backward integration – Improved scheduling Makes it easier and more cost-effective to plan.
Extensive diversification tends to reduce rather than improve profitability.and Firm-Specific Conditions • • – Future success of this strategy is hard to predict.g. share. and utilize resources and capabilities.Diversification Strategy: A company’s decision to enter one or more new industries (that are distinct from its established operations) to take advantage of its existing distinctive competencies and business model. Over time. Diversification for the Wrong Reasons • • Must have clear vision as to how value will be created. – Managing rivalry in multipoint competition where companies compete with each other in different industries • Signaling that competitive attacks in one industry will be met by retaliatory attacks in another industry Mutual forbearance from signaling may result in less intense rivalry. Conditions that can make diversification disadvantageous: – Changing Industry. and . Using R&D competencies to create new business opportunities in diverse areas – Sharing resources and capabilities to realize economies of scope • Business units may pool. changing situations may require businesses to be divested. – Bureaucratic Costs of Diversification • Costs are a function of • The number of business units in a company’s portfolio. • – Exploiting general organizational competencies that enhance performance within all business units • They help each business unit perform at a higher level than if it operated as an individual company.. Advantages of Diversification – Leveraging competencies to create new businesses • e.
Related diversification • Entry into a new business activity in a different industry that: • • Is related to a company’s existing business activities and Has commonalities between one or more components of activity’s value chain each • – Based on leveraging competencies and sharing resources Unrelated diversification • Entry into industries that have no obvious connection to any of a company’s value chain activities in its present industry or industries Based on using only general organizational competencies to increase profitability of each business unit • Related diversification means that the company has business in the related industry such as Apple. they produce IPod. etc.• Two Types of Diversification: – The extent to which coordination is required to gain the benefits. Laptop. etc. General Electronics. Unrelated diversification is doing multiple businesses in unrelated industry such as Philip Morris. Yamaha. July 9 July 10 July 11 .
July 12 July 15 .
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