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MGMT349 CH 6 - Organizational Strategy

Chapter 6: Organizational Strategy

Course: MGMT 12 MGT 349
Instructor: Dr. Shike
Date: 9/29/25

Resources and Competitive Advantage

  • Resources:

    • Definitions: Assets, capabilities, processes, employee time, information, and knowledge utilized by an organization.

    • Purposes: To enhance effectiveness and efficiency as well as to establish a competitive advantage.

Sustainable Competitive Advantage

  • Sustainable Advantage:

    • Definition: Value provided by a firm that cannot be replicated by other companies.

    • Criteria for achieving sustainable advantage:

    • Valuable: Resources must contribute to the firm’s survivability and performance.

    • Rare: Resources must not be possessed by a large number of firms within the industry.

    • Imperfectly imitable: Resources must be difficult to imitate, which could be due to unique historical conditions, causal ambiguity, or social complexity.

    • Nonsubstitutable: No other resources or capabilities can provide the same value for the industry.

SWOT Analysis

  • SWOT Analysis:

    • Purpose: Assessment of both internal and external environments.

    • Components:

    • Strengths: Internal attributes that support achieving objectives.

    • Weaknesses: Internal attributes that pose challenges to achieving objectives.

    • Opportunities: External conditions that can be exploited for gaining competitive advantage.

    • Threats: External challenges that could hinder performance.

    • Involves:

    • Assessing distinctive competencies and core capabilities.

    • Identifying strategic groups.

    • Involvement of shallow strategic task forces focused on strategy assessment.

Strategy-Making Process

  • Overall Process:

    • Assessing the need for strategic change

    • Conducting a situational analysis

    • Choosing strategic alternatives

Competitive Inertia and Strategic Dissonance

  • Importance for companies to avoid competitive inertia and seek strategic dissonance.

  • Competitive Inertia:

    • Explanation: Tendency of companies to continue with existing strategies even when external changes require alternatives.

  • Strategic Dissonance:

    • Recognition of misalignment between strategy and actual performance or market realities.

Categorization of Companies within a Strategic Group

  • Strategic Groups:

    • Core Firms: Central companies within a strategic group that follow closely aligned strategies.

    • Secondary Firms: Firms with strategies that are related but somewhat divergent from the core firms.

    • Consideration: Identifying core and secondary firms relevant to the organization’s strategy.

Strategic Reference Point Theory

  • Theory Explanation:

    • Decisions are based on whether the company performs above or below established strategic reference points.

    • Strategic Reference Points:

    • These points should be regularly revised to align with changing market dynamics and firm performance.

Approaches to Corporate-Level Strategy: Portfolio Strategy

  • Portfolio Strategy:

    • Objective: To minimize risk through investment diversification.

    • Strategies Include:

    • Acquisitions: Expanding through the purchase of other companies.

    • Unrelated Diversification: Investing in different markets or industries that are not directly connected to the core business.

    • Redirecting Investments: Shifting resources from mature, slow-growth businesses into newer, faster-growing ventures.

Additional Resources

  • Visual Aids:

    • Reference to visual representation such as the Boston Consulting Group Matrix.

  • Further Inquiry:

    • Encouragement for questions at the end of the presentation.

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