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Chapter 14Achieving Competitive
Advantage:The Case for Strategy
2Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Purpose and Overview
• Purpose– To understand the concept of strategy applied
to health care organizations – To develop a framework to analyze strategy– To explore five major advantages that form
the basis for competitive strategies
3Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Purpose and Overview
• Overview– The Concept of Strategy – Strategy Analysis Frame – Sources of Competitive Advantage – Power Strategies
4Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
The Concept of Strategy
• Competitive Strategies– Define actions – Identify assumptions and interpretations
organizations make– Identify accomplishments– Identify the plans of rivals
5Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
The Concept of Strategy
• Competitive Strategies– Conceived in context of competitive combat– Responds to threats and opportunities– Creates advantage over what might have
been attained by its rivals
6Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
The Concept of Strategy
• A definition of strategy– Concepts and ideas to achieve and sustain
competitive advantage over rivals
7Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
The Concept of Strategy
• Conceptual Components– Strategies are mostly conceptual– Competitive advantage is dynamic
• Must be achieved and sustained
8Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
The Concept of Strategy
• Conceptual Components– Actions and proprietary decisions made
during “strategy retreats” – Reflections of “business models” to obtain
advantage
9Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Strategy Analysis Frame
• Two Structural Views– Market Structure
• Influences the strategies of competitors– Competitor conduct
• Actions organizations take collectively in response to environmental and market stimuli
10Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Strategy Analysis Frame
• Two Structural Views– Resource-based
• Capabilities sustain competitive advantage • Emphasizes sustainability
– Importance to health care organizations • Quality• Complexity• Technology
11Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Strategy Analysis Frame
12Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Sources of Competitive Advantage
• Gaining and sustaining advantage is the end of strategy
• Various sources of advantage are its means
13Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Sources of Competitive Advantage
• Pace– Focus: timing and intensity of strategic action– Early-moving organizations gain advantages
over late movers • Achieving efficiencies earlier to invest in
new businesses and management capabilities
14Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Sources of Competitive Advantage
• Pace– Four strategic orientations
• Prospector • Analyzer • Defender • Reactor
15Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Sources of Competitive Advantage
16Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Sources of Competitive Advantage
• Potential– Focus: Resources that give advantage – Strategically important characteristics of
resources: • Transferability• Competitive superiority• Inimitability• Substitutability• Durability
17Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Sources of Competitive Advantage
• Potential– An internal source of advantage– Produces advantage indirectly by enhancing
other sources of advantage
18Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Sources of Competitive Advantage
19Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Sources of Competitive Advantage
• Performance– Focus:
• Superior operations and strategies• Efficiency/effectiveness of operations
– An internal source of advantage– Produces advantage indirectly by enhancing
other sources of advantage
20Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Sources of Competitive Advantage
• Position– Focus: Projection of valued images to
consumers– Three common strategies:
• Low cost• High differentiation• Distinctive niche
– External source of advantage
21Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Sources of Competitive Advantage
22Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Sources of Competitive Advantage
23Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Sources of Competitive Advantage
• Power– Focus: Effective use of organizational mass– Advantages:
• Economies of size • Economies of synergies when business units align
into larger organizations
– External source of advantage
24Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Power Strategies
• Power Strategies – Absolute vs. Relative– Absolute power
• Resources used in competitive battle– Relative power
• Advantages from resources within individual markets
25Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Power Strategies
• Four Major Power Strategies– Same businesses
• Horizontal expansion– Different businesses
• Different businesses• Vertical integration• Horizontal integration• Portfolio
26Copyright © 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.
Power Strategies
• Further thoughts on Horizontal Expansion Models– Company-level or local-level strategy
• Two key dimensions– Size – Pattern of spatial dispersion