WEEK 6 : STRENGTHENING A COMPANY’S COMPETITIVE POSITION: STRATEGIC MOVES, TIMING, AND SCOPE OF OPERATIONS.


For this week lecture we learnt about maximizing the power of a strategy which means making choices that complement a competitive approach and maximize the power of strategy into three criteria : 1) Offensive and Defensive Competitive Actions 2) Competitive Dynamics and the Timing of Strategic Moves and 3) Scope of Operations along the Industry’s Value Chain.
For the Strategic Offensive Principles:
-Relentlessly build competitive advantage and then convert it into sustainable advantage.
-Create and deploy resources in ways that cause rivals to struggle to defend themselves.
-Employ the element of surprise as opposed to doing what rivals expect and are prepared for.
-Display a strong bias for swift, decisive, and overwhelming actions to overpower rivals.

For the DEFENSIVE STRATEGIES is to protecting market position and competitive advantages. There are also purpose for this strategy which are lower the firm’s risk of being attacked, weaken the impact of an attack that does occur and influence challengers to aim their efforts at other rivals.Timing’s importance because of knowing when to make a strategic move is as crucial as knowing what move to make.Moreover, moving first is no guarantee of success or competitive advantage.The risks of moving first to stake out a monopoly position must be carefully weighted.

HORIZONTAL MERGER AND ACQUISITION STRATEGIES.

Merges is the combining of two or more firms into a single corporate entity that often takes on a new name.Meanwhile acquisition is a combination in which one firm, the acquirer, purchases and absorbs the operations of another firm, the acquired.Vertically Integrated Firm is one that participates in multiple segments or stages of an industry’s overall value chain.Vertical Integration Strategy can expand the firm’s range of activities backward into its sources of supply and/or forward toward end users of its products.There are three types of vertical integration choices which are;
# Full integration
# Partial integration
# Tapered integration

STRATEGIC ALLIANCES AND PARTNERSHIPS

Strategic Alliance is a formal agreement between two or more separate firms in which they agree to work cooperatively toward common objectives.Joint Venture is a type of strategic alliance in which the partners set up an independent corporate entity that they own and control jointly, sharing in its revenues and expenses.

The Drawbacks of Strategic Alliances and Partnerships

• Culture clash and integration problems due to different management styles and business practices.
• Anticipated gains do not materialize due to an overly optimistic view of the synergies or a poor fit of partners’ resources and capabilities.
• Risk of becoming dependent on partner firms for essential expertise and capabilities.
• Protection of proprietary technologies, knowledge bases, or trade secrets from partners who are rivals.

Principle Advantages of Strategic Alliances

      ♦They lower investment costs and risks for each partner by facilitating resource pooling and risk sharing.

     ♦They are more flexible organizational forms and allow for a more adaptive response to changing conditions.

     ♦They are more rapidly deployed—a critical factor when speed is of the essence.