MJF7
Strategy concepts overview
1. Basic concepts of strategy and SWOT analysis
(Jan 17)
2. Resource based view of the firm (Jan 19)
3. Competitive, cooperative, and global strategies,
(Jan 26)
4. Integration of SWOT analysis and VRIO
framework
Objective
• To share the common ground among
students in terms of the conceptual
framework of strategy
MJF7
Strategy concepts overview (1):
Basic concepts of strategy and SWOT
analysis
Corporate environments and corporate/business strategies
t
Exogenous environment
Shift of customer demands and/or technologies
Advancement of IT
Deregulation
Shift of the rules of the game
Pre-market competition
and de facto standard
Intellectual property
Global competition
protection
Value chain reconfiguration
Key issues in strategy:
Top management
Strategic intent
Value chain reconfiguration
Competitive advantage
Core competence
Diversification
Alliance
Entrepreneurship
Intellectual property
•Economic performance
Performance
Strategy
•Social performance
Endogenous resources
Human resources
R&D
Knowledge/
Technologies
Eng.
Mfg.
Financial resources
Sales
1-1. Interaction between exogenous and
endogenous environments:
Strategy
• Strategy:
A pattern of resource allocation that enables firms to
maintain or improve their performance.
Actions that the firm takes to neutralize threats and to
exploit opportunities while capitalizing on its
strengths and avoiding or fixing its weaknesses.
1-2. Interaction between exogenous and
endogenous environments:
Performance
• Performance = Expectation vs. actual
Workers
Wages
Performance
Firm X
A
A
B
Firm Y
A
A
A
Firm Z
B
B
A
Firm A
B
B
B
2. SWOT analysis: Overview
• Exogenous environment: Uncontrollable
conditions except in case of successful
political strategies
• Endogenous environment: Controllable
resources
2-1. Exogenous environment
•
•
•
•
•
•
•
Demographic
Economic
Political/legal
Sociocultural
Technological
Global/regional (See matrix)
Industrial (Porter’s five forces model)
2-1. Exogenous environment
D om estic R egional
D em ographical
S ociocultural
P olitical
Econom ic
Technological
Industrial
G lobal
2-1. Exogenous environment analysis:
Five forces model
Porter’s five forces model of environmental “threats”
Threat of
entry
Threat of
suppliers
Threat of
rivalry
Level of threat
in an industry
Threat of
substitute
Threat of
buyers
• Threat of entry = f (the cost of entry)
– EOS+capital requirement
– Product differentiation
– Cost disadvantages independent of scale
• technology, knowledge, unique access to resources,
locations, learning curve, deterrence
• Threat of suppliers = bargaining power
–
–
–
–
–
Limited numbers
Not substitutable
Not the significant customer
Critical to your business
Forward integration
• Threat of buyers
– Limited number
– Large volume of purchase
– Backward integration
• Threat of substitutes
• Threat of rivalry among competitors
–
–
–
–
–
Large numbers
Same size with the same influence
Slow industry growth
Lack of product differentiation
Productive capacity only to be added in large
increments
2-2. Opportunities in industry
environments
• Fragmented industry => Consolidation
• Emerging industry => First-mover advantages
• Mature industry => Product refinement, investment in
service quality, process innovation
• Declining industry => Leadership, niche, harvest,
divestment
• International industry => multinational, global,
transnational
2-3. Interaction between exogenous and
endogenous environments:
SWOT Analysis
• Exogenous O and T <= 5 forces model
• Endogenous S and W <= VRIIO model
• The match between environmental opportunities and
internal resources lead to “successful” strategy
formulation and implementation.