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o STRATEGY IS NOT:
Grandiose statements
Failure to face competitive challenge
Operational effectiveness, competitive benchmarking
and other tactical tools
Industry V Firm Effects
o Industry effects: describe the underlying economic structure
of the industry.
Elements to all common industries:
Entry and exit barriers
Number and size of the company
Types of products and services.
o Firm effects: firm performance attributed to the actions
managers take.
VRIO Framework:
Valuable: when the resources help a firm exploit an external
opportunity or offset an external threat
Rare: when the number of firms that possess it is less than the
number of firms it would require to reach a state of perfect
competition
Costly to Imitate: the firms that do not possess the resources
are unable to develop or buy the resource at a comparable cost
Organized to Capture Value: the characteristic of having in
place an effective organizational structure, processes, and
systems to fully exploit the competitive potential of the firms
resources, capabilities, and competencies
Accounting Profitability:
o Helps access competitive advantage:
Accurately assess firm performance.
Compare and benchmark their firms performance to
other competitors in the same industry or against the
industry average.
o Publicly traded firms are required to file a Form 10-K or (10-
K report) annually with the U.S. Securities and Exchange
Commission (SEC).
Exhibit 5.1 page 144
Business Models
How do we measure and assess Competitive
Advantage
o Relative to a benchmark
Either using competitions or the industry average
o It is a multi-factual concept
o By measuring acc. Profit, shareholder value, or economic
value
o The balanced scorecard approach
o The triple bottom line
Ch. 6 Business Strategy: Differentiation, Cost
Leadership, and Blue Ocean
6.1 Business-Level Strategy: How to Compete for Advantage
Strategic Position