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Lecture Essentials of strategic management: The quest for competitive advantage (4e) - Chapter 1
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Lecture Essentials of strategic management: The quest for competitive advantage (4e) - Chapter 1
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Chapter 1 - Strategy, business models, and competitive advantage. The main goals of this chapter are to: Understand why every company needs a distinctive strategy to compete successfully, manage its business operations, and strengthen its prospects for long-term success; learn why it is important for a company to have a viable business model that outlines the company's customer value proposition and its profit formula; develop an awareness of the five most dependable strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage. | Student Version Why Strategy Matters? Strategy is about choosing how to compete: How to create products or services that attract and please customers. How to position the company in the industry. How to develop and deploy resources to build valuable competitive capabilities. How each functional piece of the business (R&D, supply chain activities, production, sales and marketing, distribution, finance, and human resources) will be operated. How to achieve the firm’s performance targets 2 The Importance of Strategic Uniqueness A Company’s Strategy is the distinctive set of creative strategic choices made by its managers that sets it apart from its rivals and produces its competitive edge. must tightly fit its own particular situation to achieve competitive advantage. defines how it intends to do what rival firms do not do or, better yet, what rival firms cannot do. Strategy and a Company’s Business Model Business Model Management’s blueprint for delivering a valuable product or service to customers in a manner that will yield an attractive profit. Elements of the Business Model Customer value proposition defines how the firm will satisfy buyer wants and needs at a price customers consider a good value. Profit formula describes the firm’s approach to determining a cost structure that will allow for acceptable profits given the pricing tied to its customer value proposition. Strategy and the Quest for Sustainable Competitive Advantage: Choosing a Strategic Approach low-cost provider broad differentiation focused low-cost focused differentiation best-cost provider Strategic approaches to gaining a sustainable competitive advantage A low-cost provider strategy—achieving a cost-based advantage over rivals. A broad differentiation strategy—seeking to differentiate products or services from rivals’ in ways that will appeal to a broad spectrum of buyers. A focused low-cost strategy—concentrating on a narrow buyer segment (or market niche) and outcompeting rivals by . | Student Version Why Strategy Matters? Strategy is about choosing how to compete: How to create products or services that attract and please customers. How to position the company in the industry. How to develop and deploy resources to build valuable competitive capabilities. How each functional piece of the business (R&D, supply chain activities, production, sales and marketing, distribution, finance, and human resources) will be operated. How to achieve the firm’s performance targets 2 The Importance of Strategic Uniqueness A Company’s Strategy is the distinctive set of creative strategic choices made by its managers that sets it apart from its rivals and produces its competitive edge. must tightly fit its own particular situation to achieve competitive advantage. defines how it intends to do what rival firms do not do or, better yet, what rival firms cannot do. Strategy and a Company’s Business Model Business Model Management’s blueprint for delivering a valuable product or service
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