Transcript Stramgt 258 Strategic Management: Strategy and Organization Session 2: Competitive Advantage and Logic

Stramgt 258
Strategic Management:
Strategy and Organization
Session 2: Competitive Advantage and Logic
Mark Twain Bancshares
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?
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Strategy Desiderata
• Key features of a good strategy:
– Internal consistency, including fit with
capabilities and resources
– External consistency: Fit with the environment
and competition
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Sustainability
• A competitive advantage is sustainable to
the extent that it is immune from your
competitors’ actions. In other words, if you
don’t screw up and the world doesn’t
change too much, the advantage will persist
no matter what your competitors do.
• “You have control over your destiny”
– Robert Burgelman
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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.
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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.
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