Organizational Strategy

Chapter Six

Principles of
Tyler N. Johnson
Management
 Learning
Outcomes
Specify the components of sustainable competitive advantage, and explain why
it is important

Describe the steps involved in the strategy-making process

Explain the different kinds of corporate-level strategies

Describe the different kinds of industry-level strategies

Explain the components and kinds of firm-level strategies

Sustainable Competitive Advantage

Resources-the assets, capabilities,

processes, employee time, information,
and knowledge that an organization
controls

Competitive Advantage-providing greater

value for customers than competitors can

Sustainable Competitive Advantage-a

competitive advantage that other
companies have tried unsuccessfully to
duplicate and have, for the moment,
stopped trying to duplicate
Requirements for Sustainable
Competitive Advantage
Imperfectly
Imitable
Resources

Non- Sustainable
Valuable
Substitutable Competitive Resources
Resources Advantage

Rare
Resources
Strategy Making Process
Assess need for strategic change

AVOID COMPETETIVE INERTIA LOOK FOR STRATEGIC DISSONANCE

Conduct a situational analysis

Choose strategic alternatives

 Assessing the Need for Strategic Change

Avoid competitive
• This is step one of the inertia • a discrepancy between a
strategic process company’s intended
• a reluctance to change strategy and the strategic
strategies or competitive actions managers take
practices that have been when implementing that
successful in the past strategy

Look for strategic

Assessment
dissonance
Situational Analysis
Situational Analysis
Strategic Groups
Core Firms-central companies in a strategic group

Secondary Firms-firms that follow related, but somewhat

different strategies than core firms

Transient Firms-companies whose strategies change from

one strategic position to the other

Shadow-Strategy Task Force-seeks out its own company’s

weaknesses and determine how other companies could
exploit them
 Choosing strategic alternatives

Risk Avoiding Risk Seeking Strategic

Strategy Strategy Reference Points
• Protect an existing • Extended or create a • Targets used by
competitive sustainable managers to
advantage competitive determine if the
advantage firm has developed
the core
competencies it
needs to achieve a
sustainable
competitive
advantage
Strategic Reference Points
Corporate-level strategies
The overall organizational
strategy that addresses
the question: What
business (es) are we in or Two Distinctly Different
should we be in? types

Portfolio Strategies Grand Strategies

Portfolio Strategy
Acquisitions,
unrelated
diversification,
related
diversification,
single businesses

• Stars
• Question Marks
BCG Matrix
• Cash Cows
• Dogs
Diversification & Risk
Grand Strategies

Growth Strategy- focuses

on increasing profits,
revenues, market share,
or number of places
doing business

Stability Strategy- focuses on

improving the way in which the
company sells the same products
or services to the same customers

Retrenchment Strategy- focuses on turning around

very poor company performances by shrinking the
size or scope of the business
Industry-level Strategies

Five Industry
Forces

Adaptive Positioning
Strategies Strategies
Five Industry
Forces
Positioning Strategies
Cost Leadership

Differentiation

Focus Strategy
 Adaptive Strategies

Reactors
Defenders Prospectors Analyzers

• seek • Seek fast • Blend of • Use an

moderate growth defender & inconsistent
growth • Emphasize prospector strategy
• Retain risk taking strategies • Respond to
customers innovation • Imitate change
other’s
successes
Direct Competition
Strategic Moves of Direct Competition

A competitive A competitive

Response
Attack
move designed countermove,
to reduce a prompted by a
rival’s market rival’s attack, to
share or profits defend or
improve a
company’s
market share
or profit
 REFERENCES

Williams, Chuck. "Organizational Strategy." Principles of

Management. 7th ed. Mason: South-Western, 2014. 451. Print.