Tech manage

 Discussion Questions
1) In the byte titled “Strategy as a ‘Little Black Dress'” by Jeanne Liedtka the author emphasizes the importance of keeping strategy simple and attractive (but still functional), and making sure that the plan focuses primarily on the essentials. When you think of what a strategic plan for your organization should look like, what are the three or four factors that relate to your organization that you think the plan absolutely cannot ignore? HINT: To make this much easier on yourself, think of factors that directly influence your ability to seize and/or maintain a competitive advantage. (For more on what competitive advantages are, please read the following: Competitive Advantage ). One you’ve identified these essentials be sure to justify your response.

2) In the byte titled “The CEO as Strategist” by Michael Porter the author asserts that strategy ‘is about being different’. What are some of the ways in which the strategy that you’re going to develop for your organization will distinguish your organization from its competitors? Be specific and detailed in your response.

3) Remember to post a response to another students posting. This needs be done by midnight on Sunday. Read through the grading rubric located in the syllabus to see exactly what’s expected from you in the response post. 

COMPETITIVE ADVANTAGE

A competitive advantage exists when a firm has a product or service that is perceived by its
target market customers as better than that of its competitors. Unfortunately, entrepreneurs are
often confronted with two myths surrounding the creation of a competitive advantage. One is
that most good business opportunities are already gone. The other is that small firms cannot
compete well with big companies. Both of these ideas are erroneous! Nevertheless, existing
companies, large and small, do not typically welcome competitors. As one well-respected author,
Karl H. Vesper, puts it:

Established companies do their best to maintain proprietary shields… to ward off prospective as
well as existing competitors. Consequently, the entrepreneur who would create a new competitor
to attack them needs some sort of “entry wedge,” or strategic competitive advantage for
breaking into the established pattern of commercial activity.

Before choosing such an entry wedge, the entrepreneur needs to understand the basic nature of
the competition he or she faces in the marketplace. Only then can a competitive advantage be
developed properly.

The Basic Nature of Competition

The following strategies of three entrepreneurs show the simplicity of many successful
competitive advantages:

• Dale Dunning and his two partners started Wall Street Custom Clothiers in 1986, with
suits selling for $700 to $2,000. Dunning targets upscale consumers by traveling to their
offices, instead of waiting for customers in a retail shop.

• Ron Sanculi spent two years developing the perfect salsa recipe before packaging it in an
ordinary mason jar with a generic label and seeking shelf space along with many other
brands. Since 1991, Sanculi has sold nearly 500,000 bottles of Mad Butcher’s Salsa.

• Allen Conway, Sr., is the founder of Discount Labels, a company launched in 1980 to
meet the needs of customers who require small quantities of printed labels quickly- a
market of little interest to established companies. Because of its ability to fill orders
within 24 hours, the company is the nation’s largest short-run manufacturer of custom
labels.

These entrepreneurs compete successfully within their respective industries. Each understands
the nature of competition and follows a simple but sound strategy. But what are the basic factors
in a competitive market?

A number of factors determine the level of competition within an industry. Several typologies
have been developed to categorize these competitive forces. For example, Michael Porter, in his
book Competitive Advantage, identifies five factors that determine the nature and degree of
competition in an industry:

1. Bargaining power of buyers
2. Threat of substitutes
3. Bargaining power of suppliers

4. Rivalry among existing competitors
5. Threat of new competitors

To a large degree, these five market forces collectively determine the ability of a firm, whether
large or small, to be successful. Obviously, all industries are not alike; therefore, each force has
varying impact from one situation to the next. Porter identifies numerous elements of industry
structure that influence these five factors. Detailed explanation of them is, however, beyond the
scope of this discussion. Briefly stated, these factors influence the creation of a competitive
advantage as follows:

Buyer power influences the prices that firms can charge, for example, as does the threat of
substitution. The power of buyers can also influence cost and investment, because powerful
buyers demand costly service. The bargaining power of suppliers determines the cost of raw
materials and other inputs. The intensity of rivalry influences prices as well as the costs of
competing in areas such as plant, product development, advertising, and sales force. The threat
of entry places a limit on prices and shapes the investment required to deter entrants.

The more completely entrepreneurs understand the underlying forces of competitive pressure, the
better they will be able to assess market opportunities or threats facing their venture. Obviously,
which forces dominate industry competition depend on the particular circumstances. Therefore,
the challenge to the entrepreneur is to recognize and understand these forces so that the venture
is positioned best to cope with the industry environment.

Porter has identified several fatal flaws that plague entrepreneurs’ strategic thinking regarding
their competitive situation. Three of these flaws are

1. Possessing no true competitive advantage. Imitation of rivals is both hard and risky
and reflects a lack of any competitive advantage.

2. Pursuing a competitive advantage that is not sustainable. The entrepreneur must make
sure that the competitive advantage cannot be quickly imitated.

3. Misreading industry attractiveness. The most attractive industry may not be the
fastest-growing or the most glamorous.

Dess, Gregory G., G.T. Lumpkin and Marilyn L. Taylor. Strategic Management. 2 ed. New
York: McGraw-Hill Irwin, 2005.