Session 6

STRENGTHENING A COMPANY’S COMPETITIVE POSITION

POKOK BAHASAN

Penguatan Posisi Kompetitif: langkah, stratejik, waktu serta lingkup operasi.

1. Pemilihan strategejik untuk meningkatkan posisi pasar (stratejik ofensif)

2. Melingdungi posisi pasar dan keunggulan kompetitif (stratejik defensif)

3. Waktu penentuan stratejik ofensif dan defensif4. Memperkuat posisi pasar melalui lingkup operasi5. Strategi merger dan akuisisi horizontal6. Strategi integrasi vertikal7. Strategi alih daya: mempersempit lingkup operasi8. Aliansi stratejik dan kemitraan.

GOING ON THE OFFENSIVE – STRATEGIC OPTIONS TO IMPROVE A COMPANY’S MARKET POSITION

GOING ON TO OFFENSIVE STRATEGIES

Choosing the basisfor competitive

attack

Choosing which rivalsto attack

Blue-Ocean strategya special kind of

offensive

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Improve its market positionand business performance

Spots opportunities to gainProfitable market share

A leading market share,excellent profit marginsand rapid growth

Displaying a strong bias

CORECONCEPT

Choosing the basisfor competitive

attack

Choosing which rivalsto attack

Blue-Ocean strategya special kind of

offensive

Offensive initiative that exploit competitorweaknesses stand a better chance ofsucceeding than do those that challengecompetitor strengths

1. Market leaders that are vulnerable;2. Runner-up firm with weaknesses in

area where the challenger is strong;3. Financial strength and competitive

position;4. Small local and regional firms with

capabilities

Offer growth in revenues and profits byDiscovering or inventing new industry/product segments that create altogethernew demand

THE OFFENSIVE STRATEGIC OPTIONS

THE PRINCIPAL OFFENSIVE STRATEGY OPTIONS INCLUDE THE FOLLOWING:

• Offering an equally good or better product at a lower price

• Leapfrogging competitors by being first to market with next-generation products

• Pursuing continuous product innovation to draw sales and market share away from less innovation rivals

• Adopting and improving on the good ideas of other companies (rivals or otherwise)

• Using hit-and-run or guerrilla warfare tactics to grab market share from complacent or distracted rivals

• Launching a preemptive strike to secure an advantageous position that rivals are prevented or discouraged from duplicating?

DEFENSIVE STRATEGIES – PROTECTING MARKETPOSITION AND COMPETITIVE ADVANTAGE

• In a competitive market, all firms are subject to offensive challenges from rivals

• The purposes of defensive strategies are to lower the risk of being attacked

• Weaken the impact of any attack that occur and influence challenges to aim their efforts at other rivals

• Protect its most valuable resources and capabilities from imitation

DEFFENSIVE STRATEGIES CAN TAKE EITHER OF TWO FORMS

Blocking the avenues open To challengers

Signaling challengers that

Retaliation is likely

A defender can introduce new features, add new models or broaden its product line to close off gaps and vacant niches to opportunity seeking challengers;

Offering free training, services, providing coupons and sample giveaways to buyers most prone to experiment;

Early announcements new products or price changes;

It can grant volume discount or better financing terms to dealers or distributors

Publicly management commitment andmaintain of market share, price policy,cash and marketable securities, firms Image as a tough defender.

TIMING A COMPANY’S OFFENSIVE AND DEFENSIVE STRATEGIC MOVES

Moving first is no

guarantee of success

The potential for first mover advantages

The potential for late mover advantages

To be a first mover or not

Build a firm’s reputation and createsstrong brand loyalty. Protection thwart rapid imitation of the initial move. Set-ting the technical standard for industry.Move down the learning curve ahead ofrivals.

Allows a follower to end up with lowercosts than the first-mover. Better per-forming product. Fast-paced changes ineither technology or buyer need. Allow-ing late movers to wait until these need are clarified.

Aggressively (as a first mover or fastfollower). Cautiously (as a late mover).Likely a 10K marathon or sprint. May bebest to move quickly despite the risks.

STRENTHENING A COMPANY’S MARKET POSITION VIA ITS SCOPE OF OPERATIONS

CORE CON- CEPT

The scope of the firm refers to the range of activities which the firm performs internally, the breadth of its product and service offerings, the extent of its geographic market presence, and its mix of business, also dimensions of firm scope have relevance for business level strategy.

Include the firm’s horizontal scope, which is the range of product and service segments that the firm serves within its product or service market.

Merger and acquisitions involving other market participants provide a means for a company to expand its horizontal scope.

Vertical scope is the extent to which the firm engages in the various activities that make-up the industry’s entire value chain system, from initial activities such as raw-material production all the way to retailing

and after-sales service activities. Its called as a vertical integration.

HORIZONTAL MERGER AND ACQUISITION STRATEGIES

Merger and acquisitions are much-used strategic options to strengthen a company’s market position

A merger is the combining of two or more companies into single corporate entity, with the newly created company often taking on a new name. An acquisition is a

combination in which one company, the acquirer, purchases and absorbs the operation of another, the acquired.

The difference between a merger and an acquisition relates more to the details of ownership, management control, and financial arrangements than to strategy and

competitive advantage.

Horizontal merger and acquisitions, which involve combining the operation of firms within the same product or service market, provide an effective mean for firms to

rapidly increase the scale and horizontal scope of their core business.

Merger and acquisition strategies typically set sights on achieving any of five objectives:

1. Creating a more cost-efficient operation out of the combined companies

2. Expanding a company’s geographic coverage

3. Extending the company’s business into new product categories

4. Gaining quick access to new technologies or complementary resources and capabilities

5. Leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities

WHY MERGER AND ACQUISITIONS

SOME TIMES FAIL TO PRODUCE ANTICIPATED

RESULTS

VERTICAL INTEGRATION STRATEGIES

A vertically integrated firm is one that performance value chain activities along more than one stage of an industry’s value chain system. A vertical integration

strategy can expand the firm’s range of activities backward into sources of supply and/or forward toward end users.

Vertical integration strategies can aim at full integration (participating in all stage of the vertical chain) or partial integration (building positions in selected

stages of the vertical chain). Firms can also engage in tapered integration strategies (which involve of mix of in-house and outsourced activity in any given

stage of the vertical chain)

The disadvantages of a vertical integration strategy: 1. a firm increase capital investment in the industry, 2. less flexibility in accommodation shifting buyer

preferences, and 3. may not enable a company to realize economies scale.

OUSOURCING STRATEGIES: NARROWING THE SCOPE F OPEARTIONS

Outsourcing involves a conscious decision to abandon attempts to perform certain value chain activities internally and instead to farm them out to outside specialists. The company can concentrate on marketing and managingits brand for example.

Outsourcing certain value chain activities: 1. can be performed more efficiency or effectively by outsiders, 2. the activity is not crucial to the firm’sability to achieve, 3. It improves organizational flexibility and speeds time tomarket, and 4. It reduces the company’s risk exposure to changing technology or buyer preferences.

The big risk of outsourcing if: 1. the company will farm out too many or thewrong types of activities and thereby hollow its own capabilities, and 2. Another risk of outsourcing comes from the lack of direct control.

STRATEGIC ALLIANCES AND PARTNERSHIPS

STRATEGIC ALLIANCE AND COOPERATIVE PARTNERSHIPS PROVIDE ONE WAY TO GAIN SOME OF THE BENEFITS OFFERED BY VERTICAL INTEGRATION, OUTSOURCING, AND

HORIZONTAL MERGER AND ACQUISITIONS WHILE MINIMIZING THE ASSOCIATED PROBLEM

A strategic alliance is a formal agreement between two or more separate companies in which they agree to work collaboratively toward some strategically relevant

objectively. Typically, they involve shared of financing, resources, risks, marketing, control, productions, distribution, and mutual dependence, e.q.

A special type of strategic alliance involving ownership ties is the JOINT VENTURE. A joint venture is a partnership involving the establishment of an independent

corporate entity that the partners own and control jointly, sharing in its revenues and expenses.

Why and How Strategic Alliances Are Advantageous

The most common reasons companies enter into strategic alliances are to expedite/increase the development of promising new technologies or products, toovercome deficits in their own expertise and capabilities, to improve supply chainefficiency, to share the risks of high-stake, risky ventures, to gain economies of scale in production and/or marketing, and to obtain market access.

A company that is racing to stake out a strong position in an industry of the future needs alliances to:1. Establish a stronger beachhead for participant in the target industry.2. Master new technologies and build new expertise and competencies faster than would be possible through internal efforts3. Open up broader opportunities in the target industry by melding the firm’s own capabilities with the expertise and resources of partners.

How to Make Strategic Alliances Work

A surprisingly large number of alliances never live up to expectations. The success

of alliance depends on how well the partner work

together, requires real in-the trenches collaboration, resulting in valuable win-win outcome, and its is doomed to fail. Their strategic alliance and

partnerships often credit the following factors:

They create system for managing their alliances

They build relationships with their partners and establish trust

They protect themselves from the threat of opportunism by setting up safeguards

They make commitments to their partners and see that their partners do

the same

They make learning a routine part of the management process

THANK YOU