1 Problem Statement

2 Internal Analysis
 Resources are bundled to create organizational capabilities. In turn, capabilities are the
source of a firm’s core competencies, which are the basis of competitive advantages.
 The more intangible resources, the more sustainable will be the competitive advantage
that is based on.
 Capabilities exist when resources have been purposely integrated to achieve a specific
tasks or set of tasks.
 Strategic Resources & Capabilities
+ Tangible Resources  Assets that can be observed and quantified( Financial,
Organizational, Physical & Technological Resources)
+ Intangible Resources  Assets that are rooted deeply in the firm’s history to
accumulate over time, and are relatively difficult for competitors to analyze
and imitate (Human, Innovation & Reputational Resources)
+ Capabilities  Skills & Knowledge of employees (Often developed in specific
functional areas or in a part of a functional area).
 Core Competencies are capabilities that serve as a source of competitive advantage for
a firm over its rivals.
+ VRIN model (Valuable, Rare, Costly to imitate, non-substitutable): Capabilities
to fully satisfy all four criteria are core competencies
+ Well-performed internal activity central to company’s competitiveness and
profitability
+ Quality, Innovation, Customer Service
 Value Chain  allows firms to understand the parts of its operations that create value
and those that don’t. Shows how a product moves from the raw-material stage to the
final customer. Competitive advantage by differentiation or low costs.
a. Upstream - Inbound Logistics & Operations
b. Primary Activities - Outbound Logistics (creating)
c. Downstream - Sales + Marketing & Service
d. Support - HR, Procurement, Firm Infrastructure & Technological
+ Outsourcing  Cost Advantage - Improve business focus, access to world-
class capabilities, share risks, free internal resources and sheds non-core
activities
 Weaknesses
 Threats
3 External Analysis
 General Environment - Macro-Environment – Focusing on environmental trends
1- Demographics - (Population size, age structure, geographic distribution,
Ethnic Mix, Income Distribution)
2- Economic – Firms seek to compete in a relatively stable economics with
strong growth potential
3- Political/Legal
 4- Socio-cultural – Societies attitudes and cultural values. Ex: women in
workplace
5- Technological
6- Global (new global markets, existing changing markets, int’l political events)
7- Physical
 Industry Environment – Focusing on industry’s profitability and potential
Porter’s 5 Forces  Industry Attractiveness – ATTRACTIVE IF:
1- Bargaining Power of Buyers - LOW
2- Bargaining Power of Suppliers - LOW
3- Threat of New Entrants  Barriers to Entry (Economies of Scale, Product
Differentiation, Capital Requirements, Switching Costs, Access to distribution
Channels..) - HIGH
4- Threat of Substitutes - LOW
5- Competitive Rivalry – MODERATE

Lifecycle and Growth Rate

o Introduction, Growth, Maturity & Decline
 Competitor Analysis – Focusing on predicting competitor’s actions, responses and
intentions.
(How companies gather and interpret information about their competitors)
Major Competitors, Partial Competitors & Complementors
 Opportunities & Threats
4 Description of firm’s strategy – business and corporate level
 BUSINESS LEVEL STRATEGY
TYPES OF BUSINESS LEVEL STRATEGIES

1. Low Cost Leadership  Tight cost control - Dollarama

2. Differentiation  Marketing, R&D, Creativity - Fiji Water
3. Focused - Low Cost Leadership - Forever 21
4. Focused - Differentiation - Canada Goose
5. Integrated (Low Cost / Differentiation)
  Strategic fit among activities is fundamental not only to competitive advantage but
also to the sustainability of the advantage.

o INTERNATIONAL BUSINESS LEVEL STRATEGY

 CORPORATE LEVEL STRATEGY
Types and Levels of diversification:
1. Low Levels of Diversification:
Single Business  95% or more of revenues comes from a single business
Dominate Business  between 70% and 95% of revenue come from a
single business
2. Moderate to High Levels of Diversification
Related Constrained  less than 70% of revenues comes from the
dominant business, and all businesses share product, technological and
distribution linkages
Related linked (Mixed related and unrelated)  less than 70% of revenues
comes from the dominant business, and there are only limited links
between the businesses.
3. Very High Levels of Diversification
Unrelated  less than 70% of revenue comes from the dominant
business, and there are no common links between businesses.

 INTERNATIONAL CORPORATE LEVEL STRATEGY

3 Levels: Multi-domestic, Global, Transitional
Choices of International Entry Modes: Exporting, Licensing, Strategic Alliances
(Early Market Developments)

5 Alternatives  Strategic Options

6 Evaluation of options Alternatives  Pros, Cons, Costs and Benefits
7 Recommended Solution  Link recommendation to analysis (how it affects firms
strategy/position)
  MERGER AND ACQUISITION
 Reasons to acquire: Increase market power, overcome entry barriers to new markets
or regions, avoid product dev. Cost and increase speed to market, reduce the risk of
entering new market, diversification, avoid excessive competition, learn and develop
new capabilities.
 To increase market power, firms use horizontal (acquisition of a company competing
in the same industry), vertical (acquiring a supplier or distributor of its goods and
services) and related (integrating resources and capabilities) acquisitions.
 The acquiring and acquired firms must have experience in terms of adapting to
change and R&D and innovation.
 Restructuring: Downsizing, Down scoping and Leveraged buyouts
 INTERNATIONAL STRATEGY
 Reasons: increased demand in foreign countries, extend product life cycle, secure
needed resources (ex: raw materials) …etc.
 Four Basic Benefits
1- Increased market size 2- ROI 3- Economies of scale & Learning 4- Location Adv.
 CO-OPERATIVE STRATEGY
 Strategic Alliance vs. Collusive
 Types of Strategic Alliances: Joint Ventures, Equity Strategic Alliance, Non-equity
strategic alliance.
 Slow-Cycle Markets (Tobacco, railroad), low innovation and not easy to get in
 Fast-Cycle Markets (Computers, New Phones), unstable, unpredictable and complex
 Standard- Cycle Markets (Fast Food)
 Business level cooperative strategies:
1. Complementary strategic alliances vertical or horizontal
2. Competition response strategy
3. Uncertainty reducing strategy
4. Competition reducing strategy
 Corporate level cooperative strategies:
1. Diversifying strategic alliance
2. Synergistic strategic alliance
3. Franchising

 To develop a competitive advantage using an alliance, the resources and capabilities that are
integrated through alliance must be Valuable, Rare, Costly to imitate, non substitutable.

 Cross-border strategic alliance: strategy in which firms with headquarters in different countries decide
to combine some of their resources and capabilities to create a competitive advantage

 Network cooperative strategy: strategy wherein several firms agree to multiple partnerships for the
purpose of achieving shared objectives

 Competitive risks: inadequate contracts, misrepresentation of competencies, partners fail to use their
complementary resources, holding alliance partner’s specific investments hostage