-Successful firms capitalize on economies of scale and scope, create management structures and invest in research and development
-Once a firm loses the opportunity to be a first mover, it is hard to regain competitive advantage
-Economies of scale and scope
-Invest in marketing and distribution
-Geographical expansion in product expansion
-Entrepreneurial enterprise-staying small
-Diversification, related and unrelated
-Separation of top vs. middle managers
-Entrepreneurial enterprises becoming managerial
-Growth through unrelated diversification is a poor business strategy
-Business ownership patterns have diminished the likelihood of many firms’ long-term success
-Organizational growth is characterized as a series of developmental phases
-Management practices that work well in one phase bring on a crisis in the next
-Evolution and revolution
-Leadership, autonomy, control, red tape, “?”- crises
-Creativity, direction, delegation, coordination, collaboration- phases of growth
-Organizational structure; management style
Employees examples of red tape:
-Each department has its own agenda, and departments don’t cooperate to help other departments get the job done
-Top managers are dangerously ill-informed and insulated from what is happening on the front lines or in “the field”
-Quantitative measurements are favored over qualitative measurements, so the concentration is on quantities of output, with less and less concern for quality of output
-Both employees and customers are treated more as numbers than people
Operational effectiveness: You perform activities better than your competitors
Strategy: You perform different activities from your competitors, or the same activity in different ways
-Operational effectiveness is necessary, but not sufficient for long-term success
Strategy- Importance of uniqueness
-Variety-based positioning= Be unique by having distinctive products or services
-Needs-based positioning= Be unique by targeting a special group of customers
-Access-based positioning= Be unique by reaching your customers in special ways
Operational Effectiveness vs. Strategy
Operational Effectiveness- Be able to produce something the cheapest and fastest way possible better than the competition. But for the long-term success, in order to be successful, a company needs strategy. Strategy is being able to be unique its what sets that specific company away from others.
Ex: IKEA- very efficient company, cheap furniture for younger people. Strategy sets it apart from other furniture stores by targeting younger/working class customers. Other stores make you wait weeks to get product, IKEA gives you product right away.
Focusing on a specific, unique product.
Ex: Apple- computers with no viruses, etc.
Company chooses to differentiate itself by choosing customers geographically.
Ex: Movie theater in small town where no theater existed before. They can use older, cheaper technology because they are not competing with other theaters.
Ex 2: Dell used to sell computers exclusively online. Was able to avoid fees of selling in stores and consequently sell for less.
Once a company chooses its strategy, it sticks to it and gives up chance at other strategy.
Ex: IKEA gives up opportunity to sell to higher income people with higher quality furniture.
Straddling- imitation. Company keeps its positives while trying to add strengths and positives from other companies.
Benchmarking is the step before straddling. Slightly improving your product based on a competitor’s advantage.
Ex: offering a 3 year warranty instead of the current 1 year warranty because your competitor offers it.
Many aspects of a company can coincide and help each other out-