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Competitive Strategy

Diogo Castro 2047013


Miguel Nbrega - 2114112

Table of Contents
1. Key Strategic Issues
1.1. Industries and their Players
1.2. Strategic Growth
1.3. Competences and Activities
2. Innovation
3. Preparing the Future
3.1. Change and Uncertainty
3.2. Environment Analysis
3.3. Scenario Planning
3.4. Risk Management

Key Strategic Issues


Industry

and their Players

Definition of industry :

The manufacturing or

technically productive enterprises in a


particular field, country, region, or economy viewed collectively, or
one
of
these
individually.

Industry, Business Dictionary, WEB. 10:00, 02 October 2015

Key Strategic Issues

The term players is applied not only to refer to the


enterprises competing each other for a share in a specific
market but also to the customers and suppliers that support
the whole industry.

Key Strategic Issues


Strategic

Growth

Vertical integration: the supply chain is owned by the


company (e.g. acquiring a supplier or customer).

Horizontal integration: the company creates or acquires


production units (e.g. acquiring a competitor).

Key Strategic Issues

Mergers and Acquisitions

Merger: Voluntary amalgamation of two firms on roughly


equal terms into one new legal entity.

Acquisition: Taking control of a firm by purchasing 51 percent (or


more)
of
its voting
shares.

Merger, Business Dictionary, WEB. 10:46 02 October 2015


Acquisition, Business Dictionary, WEB. 10:47 02 October 2015

Key Strategic Issues


Competences

and Activities

Core Business: The primary area or activity that


a company was founded on or focuses on in its business
operations.
Non-core business activities are usually performed by other
companies (Outsourcing). Only the activities that are vital to
the companys survival or that can create value for the
consumer are performed by the company.

Core Business, Business Dictionary, WEB. 11:00 02 October 2015


Prahalad, C.K and Gary Hamel. The Core Competence of the Corporation, Harvard Business Review.1990, pp. 79-91

Innovation

Joseph Schumpeter:

Innovation covers:

The introduction of a new good or a new quality of the good.


The introduction of a new method of production.
The opening of a new market.
The conquest of a new source of supply.
The carrying out of the new organization of an industry.

Schumpeter, J.A. The Theory of Economic Development. Transaction Publishers, New Jersey, 2007, 13th Printing.

Innovation
Innovation

process:

Stage 1: Idea Generation and Mobilization (Generating new


ideas and make them reach all the departments of a company)
Stage 2: Advocacy and Screening (Weighing the pros and the
cons)
Stage 3: Experimentation
Stage 4: Commercialization
Stage 5: Diffusion and Implementation

Desouza, Kevin C. et al, Crafting Organizational Innovation Processes. 2006.

Innovation
Pioneers

and followers

Innovation requires a certain amount of resources and


competences.

Not all the companies can be pioneers. Only the ones with the
required amount of assets can be trendsetters.

Innovation
Advantages

of being a pioneer (first mover)

Market leadership
Pioneer image and reputation
Competitive advantage (new technology, resources and
competences)
Trendsetting
Possibility to change or influence consumer preferences

Innovation
Disadvantages

of being a pioneer

Time and resource comsuming process


Risk
Free-rider benefits (followers)
High consumer education costs

Innovation
Advantages

of being a follower (late mover)

Benefits from pioneers mistakes


Benefits from consumer feedback
Low innovation costs

Innovation
Disadvantages

of being a follower

Reduction of the companys market share


Imitation costs
High cost competence building

Preparing the Future


Change

and Uncertainty

The business setting (companys context and environment) is


dynamic and is constantly evolving. In order to survive one
has to anticipate possible changes and prepare for attacks
from your competitors.

In order to do so, one has to constantly analyse the setting one


is involved in.

Preparing the Future


Environment Analysis

PEST Analysis (Identify political, economical, socio-cultural


and technological forces that influence/affect the company)

SWOT Analysis

Delphi Method

Preparing the Future

Porters Diamond

Preparing the Future


Five competitive forces

Preparing the Future


Scenario

Planning

Identify the environmental forces that will influence ones


business the most.
Construct what-if scenarios based on the environment analysis
Identify the issues and opportunities emerging from those
scenarios
Prepare adequate response for the emerging opportunities and
present solutions for the emerging issues

Preparing the Future


Risk

Management

The identification, analysis,assessment ,control


, andavoidance , minimization, or elimination of
unacceptablerisks.

The company should always prepare contingency


plans or crisis management plans for all the
possible risks.

Conclusion

In order to successfully outdo ones competitors, one has to


think strategically.
To be successful, one has to constantly analyse and study the
environment (business setting) of the company and use the
data obtained to plan ones strategy.
Innovation is a way of getting competitive advantage.
Scenario planning is based on constant evaluating of the
business setting. This tool helps to create long-term strategies
and helps reducing uncertainty and preparing plans of action
for possible situations.
Risk management is a vital area due to the role it plays in
solving problems create by the companys activity.

References

Acquisition, Business Dictionary, WEB. 10:47 02 October 2015


Core Business, Business Dictionary, WEB. 11:00 02 October 2015
Desouza, Kevin C. et al, Crafting Organizational Innovation Processes. 2006.
Five Competitive Forces, Digital Image, WEB. 14:12, 07 October 2015
Industry, Business Dictionary, WEB. 10:00, 02 October 2015
Kalianin, ore, A question of strategy: To be a pioneer or a follower?, 2008, pp. 89-102
Merger, Business Dictionary, WEB. 10:46 02 October 2015
Nonaka, Ikujiro. The Knowledge-Creating Company, Harvard Business Review. 1991,
pp. 96-104
Porter, Michael E., How competitive forces shape strategy, Harvard Business Review.
1979, pp. 137-145
Porters Diamond, Digital Image, WEB. 14:12, 07 October 2015
Prahalad, C.K and Gary Hamel. The Core Competence of the Corporation, Harvard
Business Review.1990, pp. 79-91
Risk Management, Business Dictionary, WEB. 14: 15, 07 October 2015
Schumpeter, J.A. The Theory of Economic Development. Transaction Publishers, New
Jersey, 2007, 13th Printing

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