FUNCTIONAL LEVEL STRATEGIES

1
FUNCTIONAL LEVEL STRATEGIES

• DR. MARK FRUIN
• BUSINESS 290/291

2
FUNCTIONAL LEVEL STRATEGIES

• SUPERIOR EFFICIENCY
• SUPERIOR QUALITY
• SUPERIOR CUSTOMER RESPONSIVENESS
• SUPERIOR INNOVATION

3
EFFICIENCY

• TWO FACTORS DETERMINE A FIRMS PROFIT RATE
• THE VALUE CUSTOMERS PLACE ON FIRM OFFERING
• THE COSTS OF PRODUCING DELIVERING THOSE
  OFFERINGS
• DIFFERENCE BETWEEN COSTS OF INPUTS AND VALUE OF
  OUTPUT
• PRODUCTIVITY MEASURES OUTPUT PER EMPLOYEE

4
SUPERIOR VALUE CREATION

• EITHER ENJOY THE LOWEST COST STRUCTURE IN THE
  INDUSRY
• 4Ss SCALE, SCOPE, SPECIALIZATION, SPEED
• OTHER ADVANTAGES?
• OR CREATE THE MOST VALUABLE PRODUCT IN EYES OF
  CUSTOMERS
• THE GAP BETWEEN PERCEIVED VALUE AND COSTS OF
  PRODUCTION

5
QUALITY

• QUALITY PRODUCTS ARE GOODS SERVICES THAT ARE
  RELIABLE
• DO WELL WHAT THEY ARE DESIGNED TO DO
• QUALITY CAN RESULT IN
• GREATER EFFICIENCY
• PRODUCTIVITY
• BRAND-NAME VALUE
• CUSTOMER LOYALTY
• HIGHER RETAINED VALUE

6
SUPERIOR CUSTOMER RESPONSIVENESS

• QUALITY OF FIRM OFFERINGS PLUS SUPERIOR CUSTOMER
  RESPONSE TIME
• ABILITY TO DEVELOP NEW OFFERINGS
• ABILITY TO CUSTOMIZE EXISTING OFFERINGS TO EVER
  SMALLER CUSTOMER SEGMENTS (WHILE MAIN- TAINING
  EFFICIENCY QUALITY)

7
INNOVATION

• ANYTHING NEW AND NOVEL IN THE WAY COMPANIES
  OPERATE
• PRODUCT PROCESS INNOVATIONS
• ADVANCES IN PRODUCT DESIGN, FORM FACTOR, MFG,
  DISTRIB MKTG PROCESSES, MANAGEMENT SYSTEMS,
  ORGANIZATIONAL STRUCTURES, COOPCOLLABORATE

8
DURABILITY OF COMPETITIVE ADVANTAGES

• EXTENT TO WHICH SUPERIOR EFFICIENCY, QUALITY,
  CUSTOMER SATISFACTION INNOVATION MAY BE COPIED
  AND DUPLICATED
• BARRIERS TO IMITATION
• CAPABILITY TO IMITATE
• ABSORPTIVE CAPACITY
• INDUSTRY DYNAMISM

9
COMPETITIVE ADVANTAGES

• ARE ORGANIZATIONAL
• USUALLY DEPEND ON CONTINUOUS IMPROVEMENT
  LEARNING
• ORGANIZATIONAL FLEXIBILITY ADAPTABILITY ARE KEY
  TO LONGTERM SUCCESS (TO AVOID INERTIA AND EASE OF
  IMITATION)