MGS 101 IT and Management: Sustainable Competitive Advantage

7. List the five industry forcesthat determine overall levels of competition in an industry. Identify what happens to competition as these forces increase in strength.

8. Identify and differentiate between the positioning strategiesand the adaptive strategies used at the industry level.

9. List the four different adaptive strategies. One of them tends to have poorer performance than  the others. Explain why.

10. When videocassette recorders first became popular in the mid-1980s, a new form of mom-and-pop (i.e., small) business sprang up across the country: the video rental store. At the time, new videotapes of popular movies cost anywhere from $80-$200, and as the popularity of videocassette recorders grew, these small, independent video rental stores grew rapidly to meet the demand of consumers for inexpensive rentals of movies. There was considerable competition among them to be the first to have expensive, new movies available for rental. However, some stores disappointed customers by not having enough copies of new films when they were most in demand, i.e., upon their initial release on video. Within about 5 to 8 years of competition, most of these mom-and-pop video rental stores were ultimately put out of business by the large regional and national chains such as Blockbuster. Using the concept of sustainable competitive advantage along with the four conditions required to produce it, explain how such a transition from hundreds of independent mom-and-pop video stores to a few national chains could have taken place so quickly.

11. Explain how the concepts of competitive inertiaand strategic dissonance are related to the strategy making process. Explain the importance of gathering input regarding strategic plans from multiple levels of management.
    
    
12. Explain the basics of portfolio strategy. Identify the best approach to diversification using this strategy. Be sure to explain your rationale for arguing that the specified approach to diversification is the best.

13. Identify Porter's five industry forces and their role in industry-level strategy. Identify which one among these five forces could be considered the central one, with its value impacted by the relative values of the four other forces.

14. Explain what is meant by direct competition. Identify the factors that determine it, and specify the basic strategic moves involved in such competition. If you were heading a company engaged in direct competition with other firms, explain the circumstances under which you would prefer to engage in direct competition in order to develop a sustained competitive advantage?

Answers:

1: 

The main purpose of the implementation of the sustainable competitive advantage is to ensure most use of the resources that are available with the same. Following are the four conditions for sustainable competitive advantage:

• Having high value for the products that is capable of providing effectiveness and efficiency
• The products also must be rare that will ensure no other rival will have the products.
• The products also need to be 100% perfect and genuine so that it is not possible duplicate the same. This can be achieved by ensuring the implementation of the patent laws.
• The resource also needs to be non-substitutable so that it is not easily accessible to the rival brands (Kadir et al., 2018).   

2: 

The idea of competitive inertia is based upon the principles that most of the successful companies are not able change due to the internal resistance. The mangers of the companies are not able to incorporate new ideas and develop the idea of sustainability. In order to implement the strategy of competitive inertia, it is essential for the managers at the top level to implement the ideas. On the other hand, the strategic dissonance is caused by the conflicts between the top and bottom level of management. Its main purpose is to bring about change within the organization.

3:

With the help of situational analysis, it is possible to analyze the external market environment of an industry (Pike & Page, 2014). Marketing tools like SWOT can be used to analyze the internal strength and weakness of a company. There is also the tool of Porter’s five force and PESTEL analysis that can be used to make most use of the external business environment and use the same for making best types of business strategies.

4: 

It is the duty of the strategic groups within an organization to make most use of the external business organizations. It is their duty to collect proper evidence from the market in order to implement the best marketing strategy. It is their duty to properly analyze the marketing environment and make prediction about the future changes. It is also the duty make most use of the competitive advantage environment to maximize the sales volume.

5:

The BCG matrix is used as a growth share matrix that is develop the portfolio for a product. According to the matrix the business unit of a company can be divided four categories (Palia et al., 2014).

• Dogs: Under this category a company has low market share and hence, it is challenging to generate high cash flow.
• Question Marks:Here the company has the potential to develop rapidly and thereby have the capability to make high level of market share.
• Stars:The company will now develop and gain significant competitive advantage. It is also essential to maintain high level of market share.
• Cash cow: In this stage the organizational leaders becomes more mature. The company can now expect high return on the assets that were being spent during the initial stage.  

6

The main purpose of grand strategy is to fulfill and define the path for long-term organizational growth. There are three kinds of grand strategy that includes:

• Growth: Here the purpose of the business strategy to increase the sales volume and thereby increase the level of profit margin.
• Stability:Here the main purpose of the strategy is to maintain the level of sales and market share.   
• Recovery:In this case the aim of the strategy is to recover from any financial loss, where the company is able to make best use of the available resources and opportunity

7

The porter’s five force can be used to identify all forms of external threats in business environment:

• Threat from supplier
• Threat from the bargaining power of the supplier
• Threat from the substitute products
• Threat from Competitive Rivalry
• Threat from new entrants

8: 

The main purpose of the positioning strategy is to ensure that a company is able to maintain their market share in an industry. It is also possible to implement sustainable competitive market environment. On the other hand, the main purpose of the adaptive strategy is to implement strategy for the development of sustainable growth and development. This is aimed to deal with all types of adverse situations that are faced by the organization.

9.

The different types of adaptive strategy include:

• Defending:This strategy aims to have a sustainable growth and provide offer for limited period.
• Prospectors:The aim is to develop fast progress and high level of profit in the business. It also aims to capture new market share within the industry. It is also essential to implement innovative style of marketing.
• Analyzers:Here the aim is to develop new style of marketing that can maintain a balance between the product’s prospect and defending strategy.    
• Reactors: Here consistent strategy are not being followed. The rectors believe that profit can be made by implementing change within the business market environment (Ahearne et al., 2014). Nevertheless, the major issues in this case is due to the high levels of risks that are involved in the given matter.

10.

It is essential for all business firms to ensure about the fact that strategy for competitive advantage are being implicated. It is also essential for organizations to procure their resources. This was not done in the case of videocassette recorders as they were not able to meet the demand of the customers, thereby losing competitive advantage. It is also essential for the business firms to provide products at cheaper rate without compromising the quality of the products.

11.

In the process of strategy making, competitive inertia and dissonance can be maintained by the process change management. This change can be implemented by modifying the style of leadership by the managers. It is also essential to deal with all types of resistance that prevents change within the organization. It is the duty of the top managers to deal with the take initiate and implement the change within the organization (Chen & Miller, 2015).

12.

The main purpose of the corporate strategy is to minimize all forms of risks that are involved in the business. Hence, the strategy will help in the matters of dealing with the risk identification. It can also suggest business plan that will help to reduce the business risks. It also involves the process of cash flow and aim to reduce the risks margin involved in the business. 

13.

The five force of competition analysis initiated by the Michael Porter will help in the matters of identifying all types of business environment. This can help to identify all forms of barriers that are involved in the business. As there are five major types of threats that can hamper the business, it is essential to identify the main source of risks.

14.

The mode of direct competition can be defined as a situation, where two or more business firms can offer same types of products or service (Mirrahimi et al., 2014). The main strategy for the direct competition is to deliver a message to the public about superior quality compared to that of their rivals. Companies directly compare their products by detail analysis of the product features.

References

Ahearne, M., Lam, S.K. and Kraus, F., 2014. Performance impact of middle managers' adaptive strategy implementation: The role of social capital. Strategic Management Journal, 35(1), pp.68-87.

Chen, M. J., & Miller, D. (2015). Reconceptualizing competitive dynamics: A multidimensional framework. Strategic Management Journal, 36(5), 758-775.

Kadir, A. R. A., Aminallah, A., Ibrahim, A., Sulaiman, J., Yusoff, M. F. M., Idris, M. M., ... & Malek, Z. A. (2018). The Influence of Intellectual Capital and Corporate Entrepreneurship Towards Small and Medium Enterprises’(SMEs) Sustainable Competitive Advantage: Building a Conceptual Framework. In Proceedings of the 2nd Advances in Business Research International Conference (pp. 67-77). Springer, Singapore.

Mirrahimi, S., Perthame, B., & Wakano, J. Y. (2014). Direct competition results from strong competition for limited resource. Journal of mathematical biology, 68(4), 931-949.

Palia, A. P., De Ryck, J., & Mak, W. K. (2014). Interactive Online Strategic Market Planning With the Web-based Boston Consulting Group (BCG) Matrix Graphics Package. Developments in Business Simulation and Experiential Learning, 29.

Pike, S., & Page, S. J. (2014). Destination Marketing Organizations and destination marketing: A narrative analysis of the literature. Tourism management, 41, 202-227.