BusM498

A decision tree only has you in it, no competitor is reacting

Rule 1: Look ahead, reason back

irreversible

1. Supplier power
2. Customer power
3. Rivalry
4. Substitutes
5. Barriers to entry

1. Unique
2. Switching costs
3. Threat of integration

1. Capital
2. Scale
3. Branding
4. Distribution
5. Regulation
6. First-mover

Substitutes put a ceiling on price

1. # of competitors
2. Price war
3. Barriers to exit
4. Market share

Intel case, about operational effectiveness, how it is necessary but not sufficient for long term success. Intel used strategy of marketing to end users in order to decrease customer power.

Southwest, positioning

Core Competencies vs SBU’s eliminating SBU’s to have more synergy and focus on core competency

Coke case. Porter’s five forces, competitive rivalry. Only two people in the market, battle for market share and avoid price war. Cooperative competition

Barriers to entry and patents and intellectual property

GE. Human capital, no boundaries, operations improvement, products/services

1. stretch goals
2. 360 reporting
3. rank and yank

GE

Value chain, installed base, switching costs, add on product or service

1.Exclusivity with developed games
2.Manufacturing exclusivity for licenses games
3.Royalty paid to Nintendo
4.Maintains threat of integration

Positioning, disintermediation, “Consumers at retail don’t know what they are looking for other than price, we on the other hand like to sell to the educated consumer.”

Sustaining vs. disruptive technologies, brand equity

a.Radically improve the value equation
b.Separate function and form--Swatch
c.Achieving joy of use—Ipod
d.Pushing the bounds of universality—Geographic space and demographics
e.Striving for Individuality
f.Increasing Accessibility—Online Banking, etc.
g.Rescaling Industries—Local to National to Global
h.Compressing the Supply Chain (disintermediation)
i.Driving Convergence

When a bunch of companies compete on operational effectiveness, they all start to look similar

Performing different activities than your rivals’ or performing similar activities in different ways

A course of action that outperforms all other moves, no matter what the other player does

Rifampin (inhibs DNA dependent RNA polymerase)

When you have found a pay-off table that can be simplified down to a point at which you will know what each team will do.

1. Look for dominant strategy
2. Look for dominated strategy and eliminate it
3. Look for equilibrium

A special skill that your company has

1.Provides potential access to a wide variety of markets
2.Significant contribution to end product
3.Difficult for competitors to imitate

where the business units are divided and do not work across organizational boundaries.

Make sure to incentivise correctly

1.Underinvestment
2.Imprisoned resources
3.Bounded innovation

Core values are not a wish list, it is a good description of who you are at that point in time. (southwest case)

1.Are there multiple rounds?
a.Punishment, etc.
b.Say in public what you will do if your competitor will do something (guaranteed punishment)
2.Tit for tat
a.Just mirror and play same strategy as opponent
b.Modified tit for tat (best approach for multiple round game)
3.Enter a contract

Don't automatically punish if there's been a history of good behavior. Keep a record of mistakes and if they make too many, then start tit for tat

Jack Welch, GE

1. External (Porter's 5)
2. Internal (Core Competency)
3. Resource Based View

1.Inimitable (hard to duplicate)
2.Durable (how long does it last)
3.Appropriability (who gets the value)
4.Substitutability (Porter’s five forces)
5.Superiority (over rivals)

To use it across multiple products and markets

1.Matters to consumer
2.Access to multiple markets
3.Hard to imitate

1.Overestimate transferability of specific assets and capabilities
2.Overestimate ability to compete
3.Assume leveraging generic resources will be a competitive advantage

Leverage it!

Core competence is not tangible, it is a skill. Valuable resource is tangible, it is a thing and shows up on a balance sheet

1. Product or service
2. Location
3. Customer

In order to stay in your strategic position, you must be willing to say no to some things

Once you have a strategy, customize your company to that strategy

One who connects a supplier with an end user

One that gets less valuable as time goes on, so you have an incentive to end negotiations quickly (lawyers' fees)

Both players have a dominant strategy. By playing dominant strategy, they are both worse off than if they cooperated

1.Change the payoffs
2.Multiple rounds? Punish the cheaters
3.Tit for Tat—But this can create problems
4.Modified tit for tat

The resource based view believes that strategy is about leveraging resources

A move designed to alter the beliefs and actions of other in a direction favorable to you. Strategic moves change a simultaneous move game to a sequential move game.

1. Unconditional move
2. Response rule (if-then statement)

1. Overcapacity (you try to increase market share, rationalize assets, and become leaner)
2. Geographic roll-up
3. Product/Market extention
4. R&D purposes
5. Industry convergence

“Relatedness is about resources and competencies, not products”

1. Change the payoffs (establish rep, write and use contracts)
2. Limit ability to back out (burn bridges, public announcements)
3. Use others (teamwork, agent)

The total profits earned in an industry at all points along the industry’s value chain.

A value chain is a chain of activities for a firm operating in a specific industry

Cost of changing to another company. Phone is installed base, switching cost is the plan/contract

When consumers have it, they want more of your product

When competitors locate near each other in order to increase the size of the pie, then compete to divide it