strategic management Lecture 5 AAST dr riham adel

this is interstic lecture about strategic mgt

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Strategic Management Course

MBA Class, Fall 2023/2024 - Graduate School of Business
Professor: Prof. Dr. Riham Adel

2. Value Innovation:
The Strategic Logic of High Growth

Kim and Mauborgne advance the notion of a blue ocean strategy
which is a business-level strategy that successfully combines
differentiation and cost-leadership activities using value
innovation to reconcile the inherent trade-offs in those two distinct
strategic positions

INNOVATION

BLUE OCEAN D

SHIFT | ma :

A

blue ocean strategy
Business-level strategy
that successfully
combines differentiation
and cost-leadership
activities using value
innovation to reconcile
the inherent trade-offs.
value innovation

The simultaneous
pursuit of differentiation
and low cost in a

way that creates

a leap in value for

both the firm and the
consumers; considered
a cornerstone of blue
ocean strategy.

pared by: Prof. Riham Adel

3. 10ves
In a nutshell, Blue Ocean Strategy articulated a view of the market universe as composed of
two types of oceans -

and Blue oceans are all the industries yet to be created, where
profit and growth increasingly come from.

New market creation The best way to drive profitable growth?
Stop competing in overcrowded industries.
In those red oceans, companies try to out-
perform rivals to grab bigger slices of exist-
ing demand. As the space gets increasingly
crowded, profit and growth prospects
shrink. Products become commoditized.
Ever-more-intense competition turns the
Create new demand water bloody.

Make competition irrevevant

Disprove the value/cost
trade-off

Prepared by: Prof. Riham Adel

4. The Five Generic Competitive Strategies

Market Coverage

Presence in a Broad
Range of Market
Segments

Presence in a
Limited Number of
Market Segments

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Overall
Low-Cost
Provider
Strategy

Broad
Differentiation
Strategy

Best-Cost
Provider Strategy

Focused
Low-Cost
Strategy

Focused
Differentiation

Strategy

Value Creation Keyed
to Lower Cost

Value Creation Keyed to
Differentiating Features

Type of Competitive Advantage Pursued

A company's competitive strategy should be well
matched to its internal situation and predicated on
leveraging its collection of competitively valuable
resources and competencies.

CORE CONCEPT

A competitive strategy concerns the specifics of
management's game plan for competing success-
fully and securing a competitive advantage over
rivals in the marketplace.

CORE CONCEPT

Best-cost provider strategies are a hybrid of
low-cost provider and differentiation strategies that
aim at satisfying buyer expectations on key quality/
features/performance/service attributes and beat-
ing customer expectations on price.

Companies pursuing best-cost strategies
target value conscious buyers looking
for a good-to-very-good product or
service at an omical price. The
essence of a best provider strategy
s giving customers more value for the
money by satisfying buyer desires and
charging a lower price for these
attributes compared to rivals with
similar caliber product offering:

Prepared by: Prof. Riham Adel

5. Portfolio Strategy

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E stars
S toa] High Market Share
High Market Growth and
Dont know what todo High Market Growth
with opportunities: Doing well, great
“decide wether to, ‘opportunities.
ese E —
Market Share E
2
= ER cashcows
Low Market Share
end
Low Market Growth
ask in mente, market with limited
dificult to make prof. pee >
E Low _
Low = Market Shore nl High

BCG Matrix - strategies for managing a product portfolio
Portfolio Level Analysis
I
! 1

T T

Dogs hold low market share Cash cows are the most profitable Question marks are the brands that hold Stars operate in high growth industries
compared to competitors and brands and should be “milked” to low market share in fast growing markets and maintain high market share. Stars are
‘operate in a slowly growing market. provide as much cash as possible. consuming large amount of cash. both cash generators and cash users.

Prepared by: Prof. Riham Adel

6. 10W Typology

When an organization falls into the category

Prospector Defender
of Prospector, they are expected to
consistently be on the forefront of

i : Miles & Snow's Organizational Strategies
innovation and development. MB

The advantages of the prospector strategy ar

» Expansion in market share due to first mover advantage in the new market
* Increased opportunities, higher sales and hence more profits and margins

7 > Building customer loyalty and motivation and inspiration for your sales team
of

Dre

Prospector are innovators &

Organizations with a Strategy developers

Prepared by: Prof. Riham Adel

7. 1 Snow Typology

Defenders they don’t invest time and Feten Defender
money into trying to develop new
products. They are satisfied with their Miles & Sno’
current place in the market and defend it.

EQUIPMEN eee ices

DESIGN
PRODUCT.

7 "a
ON QUALITY

STANDARDS 4 E = SY

often are in a mature
market where less chance

to innovate, so seek profits
or revenue

Prepared by: Prof. Riham Adel

8. Snow Typolo;

Analyzers are blend of the first two
options. They have the capacity to
develop new products as well as defend M

les & Snow's
the markets already created. =o

ompetitive a
eur = see
-

Prospector

are large corporations, often
market leaders that build on
others innovations & develop
new products

Prepared by: Prof. Riham Adel

Organizations
with an

Analyzer
Strategy

9. Reactors have no one specific approach

to their business, as this means that they

are simply trying to catch up with the —— rate
N À Miles & Snow's Organi ional Strategies

market as things change over time. By

taking a reactive approach, organization

end up losing market share by time

Prospector Defender

have no specific approach
just react to market
changes

Organizations Reactor
witha Strategy

Prepared DyeProf. Riham Adel

10. Firms develop relatively patterns of strategic behavior in order to accomplish a good alignment with
perceived environmental conditions. Four unique strategies are used

Prepared by: Prof. Riham Adel