Stramgt 258 Strategic Management: Strategy and Organization

1
Stramgt 258 Strategic ManagementStrategy and
Organization

• Session 2 Competitive Advantage and Logic
• Mark Twain Bancshares

2
Strategy

• A coherent business strategy has a clear
  statement of
• objectives what is the end-goal?
• scope in which products, markets, and activities
  will we participate?
• competitive advantage how will we make our
  products more attractive than real or potential
  competitors?
• an underlying logic why will we succeed in
  gaining the CA and retaining it?

3
Strategy Desiderata

• Key features of a good strategy
• Internal consistency, including fit with
  capabilities and resources
• External consistency Fit with the environment
  and competition

4
Sustainability

• A competitive advantage is sustainable to the
  extent that it is immune from your competitors
  actions. In other words, if you dont screw up
  and the world doesnt change too much, the
  advantage will persist no matter what your
  competitors do.
• You have control over your destiny
• Robert Burgelman

5
Network Position as Competitive Advantage

• Certain types of inter-organizational networks
  are more valuable than others.
• Firms acquire more information and opportunities
  to the extent that their networks reach out to a
  large, diverse set of contacts.
• Firms obtain information of better quality (due
  to screening of members and discipline of
  existing ones) and depth (due to trust) when the
  network consists of the strong, overlapping ties
  typical of a community or club.

6
Network Position as Competitive Advantage

• Strong networks of relations between a firm and
  its client base can be effective in blocking
  rivals access to these clients.
• Such lock-in is generally stronger when there
  are strong ties among clients as well. However,
  the firm must own the network in the sense that
  all ties go through it. If the network can
  organize independently of the firm, then it could
  threaten to move to a rival.