Discuss the following in a 100 words each::
1. Why is the concept of competitive advantage central to the study of strategic management?
The concept of competitive advantage is central to the study of strategic management simply because the success of a business will depend greatly on the solid strategy it selects. A competitive advantage is the vehicle that allows a company to outperform its rivals in the industry. Strategies must be put into application, and closely monitored and revised as needed in order to keep and retain a competitive advantage. Why will consumers continue to shop one place over another? What is about the company, its products or services that consumers perceive to have more value than other companies offering similar products? These are the elements that create the competitive advantages that firms seek to achieve through strategic management. Without a competitive advantage, a firm blends in with other not so special organizations. Apple products are beloved because they are clearly unique. Just about anyone can identify an Iphone or Mac computer from the rest of the cell phones and computers on the market. Apple also has a unique operating system that differentiates them from their rivals. The perceived value that consumers has attributed to Apple is why Apple can charge a higher premium than their rivals. Apple did not just happen to obtain a good percentage of market share, they used strategic management to create a competitive advantage and the results equal success. "today’s leaders must be proactive, anticipate change, and continually refine and, when necessary, make dramatic changes to their strategies. The strategic management of the organization must become both a process and a way of thinking throughout the organization."
2. What are some of the ways in which a firm can attain a successful turnaround strategy?
When companies start to decline in production they have to find a new way to reinvent themselves. According to our reading this week, a turnaround strategy is “reversing performance decline and reinvigorating growth toward profitability” (Dess, Gregory, Lumpkin, Pg. 170). The first strategy step should involve stepping back and “carfully analyze the external and internal environments.” (Dess, Gregory, Lumpkin, Pg. 170). In analyzing these two environments, companies can analyze market segments and check with different customer groups to see if their product is still needed to the public. Companies must reposition themselves to make a comeback. The three turnaround strategies on page 170, LO5.8, tells key ways companies can accomplish those goals. 1. Assets and cost surgery: Companies may sometimes have different assets that have no return. In these cases, sales or lease may help to get a return. Cutting different areas in the company such as administration, and inventory can create a few more free dollars. Last maybe out resourcing to lower manufacture product. Open up the bidding war to different manufactures can lead to lower price.
2. Selective product and market pruning: While this strategy may also tie into the assets and cost surgery, here companies will look to see what product is working for them and which are not. After making decision to cut non-returning products, focus may shift to which products are working and location. Companies should put more effort into areas where they will gain most return.
3. Piecemeal productivity improvement: In any turnaround attempt by any company, it will take time and effort to make a change. Different strategies will yield small improvements and will probably have little effect. But, with consistent changes, those small improvements will start to add up. In any attempt, leaders of the company must sit and look at the overall picture.