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Chapter 2

Chapter 2 BU415.docx

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Wilfrid Laurier University
Phil Cutter

BU415Chapter 2Strategy and Technology Concepts and Frameworks for Week 2Understanding what Separates Winners from Losers IntroductionTechnology can be easy to copy and technology alone rarely offers sustainable advantageFirms that leverage technology for strategic positioning use technology to create competitive assets or ways of doing business that are difficult for others to copy True sustainable advantage comes from assets and business models that are simultaneously valuable rare difficult to imitate and for which there are no substitutes The Danger of Relying on TechnologyFirms strive for sustainable competitive advantagefinancial performance that consistently outperforms industry averagesThe reason so many firms suffer aggressive margineroding competition is because theyve defined themselves according to operational effectiveness rather than strategic positioning Operational effectivenessperforming the same task better than rivals perform them The fast follower problem exists when savvy rivals watch a pioneers efforts learn from their successes and missteps then enter the market quickly with a comparable or superior product at a lower cost Operational effectiveness is critical Firms must invest in techniques to improve quality lower cost and design efficient customer experiences Strategic positioningperforming different activities from those of rivals or the same activities in a different way Technology can play a critical role in creating and strengthening strategic differencesadvantages that rivals will struggle to match But What Kinds of DifferencesResourcebased view of competitive advantagethe strategic thinking approach suggesting that if a firm is to maintain sustainable competitive advantage it must control an exploitable resource or set of resources that have four critical characteristics These resources must be 1 valuable 2 rare 3 imperfectly imitable and 4 nonsubstitutableHaving all four characteristics is key Resourcebased thinking can help you avoid the trap of carelessly entering markets simply because growth is spottedPowerful ResourcesBeing aware of major sources of competitive advantage can help managers recognize an organizations opportunities and vulnerabilities and can help them brainstorm winning strategies ImitationResistant Value ChainsFirms that craft imitationresistant value chains have developed a way of doing business that others will struggle to replicate and in nearly every successful effort of this kind technology plays a key enabling role The value chain is the set of interrelated activities that bring products or services to market The Value Chain
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