chapter 6: strengthening a company's competitive position: STRATEGIC MOVES, TIMING AND SCOPE OF OPERATIONS.

       

bismillahirrahmanirrahim...SALAM ALAYK!
let's us move on to the next chapter :)

OFFENSIVE

STRATEGIC OFFENSIVE PRINCIPLES

• focus on relentlessly building competitive advantage and then converting it into sustainable advantage.
• apply resources where rivals are least able to defend themselves.
• employ the element of surprise as opposed to doing what rivals expect and are prepared for.
• display the strong bias for swift, decisive and overwhelming actions to overpower rivals.

the best company's strategic option is to SEIZE THE ATTACK, GO ON ATTACK and LAUNCH A STRATEGIC OFFENSIVE to improve its market position.

basis for COMPETITIVE ATTACK:

- avoid directly challenging a targeted competitor where it is strongest.

- use the firm's strongest strategic assets to attack a competitor's weaknesses.

- the offensive may not yield immediate results if market rivals are strong competitors.

- be prepared for the threatened competitor's counter-response.

the best offensives use a company's most powerful resources and capabilities to ATTACK RIVALS in the areas where they are weakest.

best targets for OFFENSIVE ATTACK

• market leaders that are in vulnerable competitive positions.
• runner-up firms with weaknesses in areas where the challenger is strong.
• struggling enterprises on the verge or going under.
• small local and regional firms with limited capabilities.

BLUE OCEAN STRATEGY (OFFENSIVE)

                                          

A BLUE OCEAN market space, where the industry has not yet taken shape, with no rivals and wide-open long-term growth and profit potential for a firm that can create demand for new types of products.

It offers growth in revenue and profits by discovering or inventing new industry segments that create altogether new demand.

 example: im4u, starbucks, ebay, FedEx,etc.

DEFENSIVE

Purposes of Defensive Strategies:

- lower the firm's risk of being attacked.

- weaken the impact of an attack that does occur.

- influence challengers to aim their efforts at the other rivals.

Blocking the avenues open to challengers:

• adopt alternative technologies as a hedge against rivals attacking with a new or better technology.
• introduce new features and models
• maintain economy-pricing
• discourage buyers from trying competitor's brands.
• make early announcement about new products price changes to induce buyers to postpone switching.
• challenge quality and safety of competitor's products.
• grant discounts or better terms to intermediaries.

*TIMING'S IMPORTANCE TO MAKE OFFENSIVE AND DEFENSIVE STRATEGIC

- knowing when to make a strategic move is as crucial as knowing what move to make.

- moving first is not guarantee of success or competitive advantage.

- the risks of moving first to stake out a monopoly position must be carefully weighed.

HORIZONTAL and VERTICAL

Horizontal scope is the range of product and service segments that a firm serves within its focal market. Meanwhile, vertical scope is the extent to which a firm's internal activities encompass one, some, many, or all of the activities that make up an industry's entire value chain system.

HORIZONTAL

1) MERGER: is the combining of two or more firms into a single corporate entity that often takes on a new name.

2) ACQUISITION: is a combination in which one firm, the acquirer purchases and absorbs the operations of another firm, the acquired.

VERTICAL

a vertically integrated firm is one of that performs value chain activities along more than one stage of an industry's value chain system.

1) VERTICALLY INTEGRATED FIRM: is one of that participates in multiple segments or stages of an industry's overall value chain.

2) VERTICAL INTEGRATION STRATEGY: can expand the firm's range of activities backward into its sources of supply and/or forward toward ed users its products.

TYPES OF VERTICAL INTEGRATION STRATEGIES

1)Full Integration: a firm participates in all stages of the vertical activity chain.

2) Partial Integration: a firm builds positions only in selected stages of the vertical chain.

3) Tapered Integration: involves a  mix of n-house and outsourced activity in any stage of vertical chain.

ADVANTAGES

1) add materially to a firm's technological capabilities.

2) strengthen the firm's competitive position.

3) boost the firm's profitability.

FORWARD and BACKWARD 
BACKWARD INTEGRATION involves entry into activities previously performed by suppliers or other enterprises positioned along earlier stages of the industry value chain system.
FORWARD INTEGRATION involves entry into value chain system activities closer to the end user.



OUTSOURCING involves contracting out certain value chain activities to outside vendors.

STRATEGIC ALLIANCES is a formal agreement between two or more separate companies in which they agree to work cooperatively toward some common objective.
JOINT VENTURE is a partnership involving the establishment of an independent corporate entity that the  partners own and control jointly, sharing in its revenues and expenses.




Don't despair and never lose hope,cause Allah always by our side.
nothing is easy in life. remind in mind that success will be very meaningful if we have to go through all the obstacles which  not everyone can face it..Allah will not burden us out of our capabilities. ALHAMDULILLAH :D