Exam 1 Review
Porter Strategy Article
Any kind of practice which allows a business or other organization to maximize the use of their inputs by developing products at a faster pace than competitors or reducing defects What is and isn’t operational effectiveness?
Operational Effectiveness Includes:
Operational Effectiveness is NOT strategy
How and why does strategy rest on:
Unique Activities - deliberately choosing a different way to deliver a mix of values and activities. Ex. South West Airlines Southwest Airlines found a position as provider for low-cost low-thrill, standardized provider of flights within US for a value-based but low-cost position where other airlines have difficulties to meet the same cost structure and activities and therefore can not compete on the chosen activity-value combination. Strategy is about finding a unique position by combining a unique set of activities Trade-offs—a company should know its limits and that it should know that certain sacrifices cannot be made without putting other activities behind. Benchmarking—used as yardstick to see current conditions of the productivity frontier within an industry; it should be used as method to identify activities that can done differently. Example: Continental Airlines creating “Continental Lite” to maintain a full-service image while challenging and imitating Southwest Airlines business concept Strategy is about choices and about what not to do
Fit—drives both competitive advantage and sustainability
Strategy is about combining activities, creating synergy that come from combining the right activities and leave other activities aside Porter distinguishes three types of fits:
Simple consistency fit (1st Order): Create consistency among functional activities throughout the company to serve the main strategic goals. Reinforcing Consistency (2nd Order): Ability to reinforce activities and communication and optimize activities on a constant basis to identify waste and eliminate redundancy. Optimization (3rd Order): Do better and eliminate redundancy to renew fit between internal capabilities and the external environment. Strategy is about finding complementary activities that create an internal and external fit What are the different types of Strategic Position?
Variety Based – Jiffy Lube (Offer one service to many customers) Needs Based – Ikea (Offer many services to a target group) Access Based – Movie Theatre in small town (Segmenting customers who are accessible in different ways, i.e. Customer Geography. Value chain Article
What is Value?
When a business creates a good or service which they can sell for a price greater than the amount invested into their resources, they are said to have created profit –or- Value What are the different aspects of the value chain?
What are the primary vs. secondary values
Inbound Logistics—Activities associated with receiving, storing, and disseminating inputs to the product Operations—Activities associated with transforming inputs into the final product form, such as machining, packaging, assembly, equipment maintenance, testing, printing, and facility operations Outbound logistics—Activities associated with collecting, storing, and physically distributing the product to buyers. Marketing and Sales—Activities associated with providing a means by which buyers can purchase the product and inducing them to do so Service—Activities associated with providing service to enhance or maintain the value of the product, such as installation, repair, training, parts supply, and product adjustment Secondary
Procurement—refers to the function of purchasing inputs used in the firm’s value chain Technology Development—Every value activity embodies technology, be it know-how, procedures, or technology embodied in process equipment. Human...
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