LECTURER: (Dr. Obi Berko Damoah) DEPARTMENT ...change over time. • Policy analyst can use these changing requirements, which are associated with different stages of industry evolution,

College of Education

School of Continuing and Distance Education 2017/2018 – 2018/2019 ACADEMIC YEAR

LECTURER: (Dr. Obi Berko Damoah) DEPARTMENT: (OHRM, UGBS)

(Contact Information:[email protected])

Course Information

Provide the following information:

Course Code: UGBS 402

Course Title: Business Policy

Course Credit 3 Credit Hours

Session Number & Session Title:

Session 6 & Business Strategies

Semester/Year: Second Semester / 2017/18 Slide 2

Course Information (contd.)

Slide 3


Lecture Period(s)

3 hours per week

Prerequisites Insert Course Prerequisites: (if applicable)

Teaching Assistant

Insert Teaching Assistant’s Information: (where applicable, provide name and contact information)

Course Instructor’s Contact


Course Instructor(s) Name

Dr. Obi Berko Damoah

Office Location GBS13, Graduate Block, 3rd Floor, Main Campus

Office Hours

Wednesdays 12:00pm – 2:00pm

Fridays 12:00pm – 2:00pm

Phone 0303963756

E-mail [email protected] Slide 4

Introduction/Subject or Session Overview

For a business to be successful, the policy chosen by firms play a major role. It determines whether the policy chosen best fits the firm’s current situation in order to gain competitive advantage. The purpose here is that in the policy planning process, every mission statement must be subjected to a successful business policy framework.

The main aim of this session is to discuss the various elements of business policies with participants and to expose them to the requirements for business success at different stages of industry evolution from a policy viewpoint.

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Session Outline

The key topics to be covered in the session are as follows:

• Basic Issues in Business Policy

• Market Focus

• Industry Evolution and Business Policy Choice

• Generic Global Competitive Policies

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Session Learning Objectives

At the end of the session, the student will: • By self-study, watching the videos and reading the required

chapter of the main text, be able to determine why a business will choose a low-cost, differentiation, or speed-based policy;

• Through the case analysis, attending the guest lecture, have the capacity to explain the nature and value of a market focus policy;

• Based on 2) above, be able to illustrate how a firm can pursue both low-cost and differentiation policies;

• Through the case analysis, watching the videos and working on the term paper, be able to decide when a business must diversify.

Slide 7

Session Learning Outcomes

Upon completion of this course, the student will have had the demonstrated the ability to:

• By self-study, watching the videos and reading the required chapter of the main text, be able to determine why a business will choose a low-cost, differentiation, or speed-based policy;

• Through the case analysis, attending the guest lecture, have the capacity to explain the nature and value of a market focus policy;

• Based on 2) above, be able to illustrate how a firm can pursue both low-cost and differentiation policies;

• Through the case analysis, watching the videos and working on the term paper, be able to decide when a business must diversify.

Slide 8

Session Activities and Assignments

• This week, complete the following tasks: • Log onto the UG Sakai LMS course site: http://sakai.ug.edu.gh/ • Watch the Videos for Session 6; • Review Lecture Slides: Session 6; • Read Chapter 8 & 9, Case #11 and 18 of Recommended Text –

Pearce, J. A. and Robinson, R. B. (2014). Strategic management: managing for global and domestic competition; (14th edition), McGraw-Hill/Irwin Inc., New York.;

• Visit the Chat Room and discuss with your group the aspects of the terms paper which session 6 sheds light on; monitored by the instructor.

• Complete the Individual self-assignment questions for Session 6.

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BASIC ISSUES IN BUSINESS STRATEGY

Topic One

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Basic Issues In Business policy

• What policies are most effective at building sustainable competitive advantages for single business units?

• Should dominant-product/service businesses diversify to build value and competitive advantage?

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Basic Issues In Business Policy cont.;

Evaluating and Choosing Business policies: Seeking Sustained Competitive Advantage

• The two most prominent sources of competitive advantage can be found in the business’s cost structure and its ability to differentiate the business from competitors.

• Businesses that have one or more sources/capabilities that let them operate at a lower cost will consistently outperform their rivals that don’t.

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Evaluating Cost Leadership Opportunities

Business success built on cost leadership requires the business to be able to provide its product or service at a cost below what its competitors can achieve

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Basic Issues In Business policy cont.;

Low-cost Policies

Business policies that seek to establish long-term competitive advantages by emphasizing and perfecting value chain activities that can be achieved at costs substantially below what competitors are able to match on a sustained basis. This allows the firm, in turn, to compete primarily by charging a price lower than competitors can match and still stay in business.

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Evaluating a Business’s Cost Leadership Opportunities

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Sustainable Low-Cost Activities 1. Some low-cost advantages reduce the likelihood of

buyers’ pricing pressure

2. Truly sustained low-cost advantages may push rivals into other areas

3. New entrants competing on price must face an entrenched cost leader

4. Low-cost advantages should lessen the attractiveness of substitute products

5. Higher margins allow low-cost producers to withstand supplier cost increases

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Risks of a Cost Leadership Policy

1. Many cost-saving activities are easily duplicated

2. Exclusive cost leadership can be a trap

3. Obsessive cost cutting can shrink other competitive advantages

4. Cost differences often decline over time

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Evaluating Differentiation

• Differentiation requires that the business have sustainable advantages that allow it to provide buyers with something uniquely valuable to them.

• Differentiation usually arises from one or more activities in the value chain that create a unique value important to buyers.

• Policy analyst use benchmarking and consider the 5 forces in considering differentiation.

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Evaluating Differentiation cont.,

A business policy that seeks to build competitive advantage with its product or service by having it be “different” from other available competitive products based on features, performance, or other factors not directly related to cost and price. The difference would be one that would be hard to create and/or difficult to copy or imitate.

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Evaluating a Business’s Differentiation Opportunities

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Evaluating Speed as a Competitive Advantage

Speed-based policy, or rapid response to customer requests or market and technological changes, have become a major source of competitive advantage for numerous firms in today’s intensely competitive global economy

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Evaluating a Business’s Rapid Response (Speed) Opportunities

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Speed can be created by

1. Customer responsiveness

2. Product development cycles

3. Product or service improvements

4. Speed in delivery or distribution

5. Information Sharing and Technology

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Risks of Speed-based Policy • Speeding up activities that haven’t been conducted in a

fashion that prioritizes rapid response should only be done after considerable attention to training, reorganization, and/or reengineering.

• Some industries may not offer much advantage to the firm that introduces some forms of rapid response.

• Customers in such settings may prefer the slower pace or the lower costs currently available, or they may have long time frames in purchasing.

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MARKET FOCUS Topic Two

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Market Focus And Competitive Advantage

Evaluating Market Focus as a Way to Competitive Advantage

• Market focus: the extent to which a business concentrates on a narrowly defined market

• Small companies, at least the better ones, usually thrive because they serve narrow market niches

• Market focus allows some businesses to compete on the basis of low cost, differentiation, and rapid response against much larger businesses with greater resources

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Market Focus And Competitive Advantage cont.;

Market Focus

This is a generic strategy that applies a differentiation policy approach, or a low-cost strategy approach, or a combination – and does so solely in a narrow (or “focused”) market niche rather than trying to do so across the broader market. The narrow focus may be geographically defined by product type features, or target customer type, or some combination of these.

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Market Focus And Competitive Advantage cont.;

Risk of Market Focus

• The risk of focus is that you attract major competitors who have waited for your business to “prove” the market

• Publicly traded companies built around focus strategies become takeover targets for large firms seeking to fill out a product portfolio

• Slipping into the illusion that it is focus itself, and not low cost, etc. that is creating the business’s success.

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INDUSTRY EVOLUTION AND BUSINESS POLICY CHOICE

Topic Three

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Industry Evolution And Business Policy Choice

Stages of Industry Evolution and Business Policy Choices

• The requirements for success in industry segments change over time.

• Policy analyst can use these changing requirements, which are associated with different stages of industry evolution, as a way to isolate key competitive advantages and shape strategic choices around them

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Industry Evolution And Business Policy Choice Cont.;

Emerging Industries

• Emerging industries are newly formed or re-formed industries that typically are created by technological innovation, newly emerging customer needs, or other economic or sociological changes

• There are no “rules of the game”

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Business Policy in Emerging Industries • Technologies that are most proprietary to the pioneering

firms and technological uncertainty will unfold • Competitor uncertainty because of inadequate information

about competitors, buyers, and the timing of demand • High initial costs but steep cost declines • Few entry barriers • First-time buyers requiring initial inducement to purchase • Inability to obtain raw materials and components until

suppliers gear up to meet the industry’s needs • Need for high-risk capital because of the industry’s uncertain

prospects

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Emerging Industries For success in this industry setting, business policy require one

or more of these features: • The ability to shape the industry’s structure • The ability to rapidly improve product quality and

performance features • Advantageous relationships with key suppliers and promising

distribution channels • The ability to establish the firm’s technology as the dominant

one • The early acquisition of a core group of loyal customers and

then the expansion of that customer base • The ability to forecast future competitors

Slide 33


Competitive Advantages and Policy Choices in Growing Industries

• Rapid growth brings new competitors into the industry.

• At this stage, growth industry policy that emphasize brand recognition, product differentiation, and the financial resources to support both heavy marketing expenses and the effect of price competition on cash flow can be key strengths

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Industry Evolution And Business PolicyChoice Cont.;

Growth Industries • For success in this industry setting, business policy require one or

more of the following features:

• The ability to establish strong brand recognition

• The ability and resources to scale up to meet increasing demand

Strong product design skills to be able to adapt products and services

The ability to differentiate the firm’s product[s] from competitors entering the market

R&D resources and skills to create product variations

The ability to build repeat buying from established customers

Strong capabilities in sales and marketing

Slide 35


Competitive Advantages and Policy Choices in Mature Industries

• As an industry evolves, its rate of growth eventually declines

• Firms working with the mature industry policy sell increasingly to experienced, repeat buyers who are now making choices among known alternatives

• Competition becomes more oriented to cost and service as knowledgeable buyers expect similar price and features

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Mature Industries Policy elements of successful firms in maturing industries often

include the following: • Product line pricing • Emphasis on process innovation that permits low-cost product

design, manufacturing methods, and distribution synergy • Emphasis on cost reduction • Careful buyer selection to focus on buyers who are less

aggressive, more closely tied to the firm, and able to buy more from the firm

• Horizontal integration to acquire rival firms whose weaknesses can be used to gain a bargain price

• International expansion to markets where attractive growth and limited competition still exist

Slide 37


Competitive Advantages and Policy Choices in Declining Industries

• Declining industries are those that make products or services for which demand is growing slower than demand in the economy as a whole or is actually declining.

• Focus on higher growth or a higher return.

• Emphasize product innovation and quality improvement.

• Emphasize production and distribution efficiency.

• Gradually harvest the business.

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• Competitive Advantages and Policy Choices in Declining Industries

• A fragmented industry is one in which no firm has a significant market share and can strongly influence industry outcomes.

• Tightly managed decentralization.

• “Formula” facilities.

• Increased value added.

• Specialization.

• Bare bones/no frills.

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Competitive Advantage in Global Industries • A global industry is one that comprises firms whose

competitive positions in major geographic or national markets are fundamentally affected by their overall global competitive positions

– License foreign firms to produce and distribute the firm’s products

– Maintain a domestic production base and export products to foreign countries

– Establish foreign-based plants and distribution to compete directly in the markets of one or more foreign countries

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GENERIC GLOBAL COMPETITIVE POLICY

Topic Four

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Generic Global Competitive Strategies

Four Generic Global Competitive Policy

• Broad-line global competition

• Global focus policy

• National focus policy

• Protected niche policy

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Generic Global Competitive Strategies Cont.;

Grand Strategy Selection Matrix

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Generic Global Competitive Policy Cont.;

Building Value as a Basis for Choosing Diversification or Integration

• The grand policy selection matrix and model of grand policy clusters are useful tools to help dominant product company managers evaluate and narrow their choices among alternative grand policy

• Dominant product company managers who choose diversification or integration eventually create another management challenge

Slide 44

References

• Supplementary Reading

•

• Dess, G. G. & Lumpkin, G. T. (2003), Strategic Management: Creating competitive advantages, McGraw-Hill/Irwin Inc., New York.

•

• Johnson, G., Scholes K. & Whittington R (2008), Exploring Corporate Strategy: Text and Cases, Pearson Education Limited, England

•

• In addition:

•

• Any good introductory text in Strategic Management/Business Policy

• Business section of any newspaper

• Strategic Management publications (consult the library).

Slide 45

References Cont.;

Journals

• Management decision

• Strategic management journal

Youtube

• https://www.youtube.com/watch?v=iUw39-rg-80

• https://www.youtube.com/watch?v=mCneHPhkWTM

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https://www.youtube.com/watch?v=iUw39-rg-80







Documents

LECTURER: (Dr. Obi Berko Damoah) DEPARTMENT ...change over time. • Policy analyst can use these changing requirements, which are associated with different stages of industry evolution,