• In managerial context, alpha is the • “Where do you go,” Alpha’s

The
one who has accumulated a
wealth of resources of every kind
managers ask themselves, “when
you’re already number one?” Alpha-
—human talent, technical skills,
distribution access, well-known
• Alpha’s managers are likely to
rest easily, confident that they can
Beta
brands, manufacturing facilities,
overpower their smaller rival in any
and cash flow—and it can fund just
confrontation
about any initiative it considers
strategic. • Beta managers will search for
undefended niches rather than
• Beta, its rival, is a relative
confront its competitor in well-
latecomer to the industry. It is
defended market segments.
much smaller than Alpha and has
no choice but to make do with • It will focus investments on a
fewer people, a smaller capital relatively small number of core
budget, more modest facilities, and competencies where management
a fraction of Alpha’s R&D budget. feels it has the potential to become
a world leader
 Competitiveness
• The first step in understanding • To diagnose competitive problems,
competitiveness is to observe we rely on industry structure
competitive outcomes: some analysis.
companies gaining market share,
• Within any particular market
others losing it, some companies
segment, it is the company’s
in the black, others bleeding red
relative competitive advantage that
ink.
determines actual profitability and
• The next step is to move from growth.
observation to diagnosis. To
• Industry structure analysis
diagnose competitive problems,
points us to the what of
we rely on industry structure
competitiveness: what makes one
analysis.
company more profitable than
• A company’s market position—the another.
particular market segments in
which the company participates—
broadly determines the potential
for profitability and growth.
Frames

“Frame” is a company’s understanding of itself and

01 its industry and drive its competitive strategy—
determine in large part which diseases a company
will fall prey to and which it will avoid.

Managerial frames bound a company’s approach

02 to competitive warfare and thus determine
competitive outcomes.

Global competition is not just product versus

03 product, company versus company, or trading bloc
versus trading bloc. It is mind-set versus mind-set,
managerial frame versus managerial frame

Why it wasn’t Ford that challenged GM’s long-held

04 managerial precepts?
 From Fit to Stretch
For Long, dominant strategy frame has been finding a fit between resources and
ambitions. Managers sees this as a strategic task where they try to allocate the
exiting resources to the projects in hand.

But there exists a much superior strategy frame...

The whole game is of
The concept of stretch supplements the idea of fit. It suggest the companies to misfit between ones
go for leveraging resources rather than just allocating it. resources and
ambitions.
 IF WE HAD MORE RESOURCES
WE COULD BE MORE STRATEGIC
IBM tried to challenge Xerox in copier
business but failed whereas Cannon
which was one-tenth in size disrupted the
whole industry.
This case explains us that it’s not the just
about allocating resources (fit) but more
about leveraging it efficiently (stretch).
Allocation To Leverage
Two popular ways of becoming more productive
are:
1) Downsizing
In this approach companies cut down on
investments and workforce. Therefore this
approach can be demoralizing and downsizing &
restructuring is not good for long term perspective.
2) Resource Leveraging
Here companies try to extract most out of the
resources one has and is seen as energizing
approach.
Further slides will be talking more on ways of
leveraging resources.
 Convergence
This requires company to first agree
upon one strategic focal point, the
ultimate strategic goal they want to
pursuit. Once these goals are set,
companies can focus on investing
and promoting only the projects that
help it achieve those aspirations. And
it is imperative that these goals don’t
change with new CEO. They need to
remain priority unless they aren’t
achieved.
One such example is of IBM and
NEC who were competing in field of
computer and communication
equipment.
This concept helps avoid diversion of
resources over time.
Focus First Method:
This prevents dilution of resources.
Focus expects top management to Concentrating
firmly stick to its task until it is Resources
accomplished.
A company can be facing issues on
multiple fronts like quality, cost,
operations etc. But allocating
resources to solve all these problems
will end up diluting improvement
efforts and end up losing on all fronts.
It is required that companies focus on
most critical performance area and
improve them first and latter target
other operations.
Inspiration can be taken from
Komatsu, initially whose quality was
inferior to Caterpillar but in 3 years it
won most prestigious Deming Prize.
 Extracting
This concept talk about how better
you learn from your competitors. The
front-line resources of company are
exposed to market reality, which
helps them to gain experience and
solve problems in innovative ways.
Companies need to learn innovative
ways to absorb these developments
to gain competitive advantage.
To leverage this concept, it is
expected from companies to have a
productive corporate culture, which
gives much needed freedom to front
line workers to solve problems in
more innovative ways. Companies
also need to spend on training of its
resources so that resources can be
more reflective while sharing
experience.
Borrowing Second Method:
This concept talks about gaining
access to skills and resources of Efficient
partners and internalizing those skills. Accumulation Of
To be successful it is important that Resources
the companies are more absorptive
rather than being arrogant.
Here borrower exploits inventions of
suppliers; shares development risk
with critical customers; borrow
resources from factor markets or do
research with foreign tax payers
money.
The relationship between borrower or
supplier can vary but ultimate motive
always remain to supplement internal
resources with resources that lie
outside companies boundaries
 Thank you
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