Functional Strategy

1
Functional Strategy

• Session 9

2
Efficiency in production

• Learning curve
• Economies of scale
• Economies of learning
• Process technology
• Product design
• Flexible manufacturing
• Input costs
• Capacity utilization

3
Achieving Efficiency

• Marketing
• Marketing Strategy 4 Ps
• Customer defection rates
• Materials management, JIT
• RD (product process innovation)

4
Source HBR
5
Achieving Efficiency

• Human Resource
• Training
• Self Managing teams
• Pay for performance
• Infrastructure

6
What is quality?

• Products ability to meet certain specifications
• Adaptability of the product to meet customer
  needs
• Products ability to encourage innovation

Source Prahalad Krishnan
7
Superior Quality

• TQM Concept
• Organizational commitment
• Customer Focus
• Goals to improve quality
• Employee input
• Managing defect rates
• Role of suppliers
• Integration across functions

8
TQM

• Does the process need to be improved (quality,
  cost or speed)?
• Is the process fundamentally unable to support
  strategy?
• Operational view of improvement, removed from
  strategy
• Integration of processes not considered

Source HBR
9
Failure in Innovation

• Uncertainty
• Quantum versus incremental
• Poor commercialization
• Timing of innovation
• Positioning
• Technological myopia
• Slow to market

10
To lead or to follow?
Source Grant
11
Creating competencies in innovation

• Balanced research agendas
• Project management
• Partly parallel development
• Integration across functions
• Product development teams

12
Customer Responsiveness

• Customer focus
• Leadership
• Employee motivation
• What does the customer want?
• Satisfying customer needs
• Customization
• Response time

13
What does the customer want?
Source HBR
14
Satisfying consumer needs
Compaq Nordstrom Oral B
A toothbrush that tells customers when they need
a new one.
User-friendly Installation video
No-questions asked return policy
Source MacMillan and McGrath
15
Business-level strategy

• What is satisfied?
• Customer needs
• Differentiation
• Who is being satisfied?
• Customer groups
• Segmentation
• How are customer needs satisfied?
• Distinctive competencies
• Building blocks of competitive advantage