Chapter 7 continuity the enabler
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Chapter 7 discusses the importance of continuity in maintaining a competitive advantage, emphasizing that it builds a company's brand, reputation, and customer relationships over time. It highlights examples like In-N-Out Burger and Nestlé to illustrate how continuity can reinforce identity and create unique capabilities, while also noting that change may be necessary as customer needs evolve and innovations arise. Companies like Southwest Airlines and Dell demonstrate how continuous strategy adaptation and maintaining core values can lead to sustained success.
Chapter 7 continuity the enabler
- 1. Chapter 7: Continuity By Araya T. and Nujjaree W.
- 2. Why is continuity Essential? A unique value proposition compared to competitors A distinctive value chain Making clear tradeoffs and different from rivals Fit across the value chain Continuity overtime Strategic continuity is essential to creating and sustaining “competitive advantage”
- 3. • It builds a company’s brand, its reputation, and its customer relationships • Example: In-N-Out Burger 1. Continuity reinforces a company’s identity “Through the times have changed, you’ll find today exactly what customer enjoyed since 1948” Old - fashioned menu and Old - fashioned value (Treat employees like family)
- 4. • Suppliers, channels, and other outside parties • Example: Nestle’ 2. Continuity helps stakeholders contribute to a company’s competitive advantage • Nestle’ developed a thriving supply base of local farmers for it’s milk in India • Starting in the 1960s with just 180 farmers • Nestle’ provided technical assistance, training, and supplies to the farmers • Now the number of farmers working with Nestle’ has grown to over 75,000.
- 5. • Allows an organization to build unique capabilities and skills tailored to its strategy Fosters improvements in individual activities and fit across activities • Unique style of service • Employees have skills and attitudes that fit the company’s strategy • It’s becoming company’s culture and hard for rivals to match
- 6. What Does Continuity Involve? The continuity does not mean that an organization should stand still Stability in core value proposition – successful company rarely reinvent themselves they reinventing their methods Telegraph and culminating Rapid information about financial market Beginning in small-town Everyday low prices
- 7. When Does strategy need to change? 1. as customer need change ,a company‘s core value proposition may simply become obsolete. 2. Innovation of all sorts can serve to invalidate the essential trade-offs on which a strategy relies. 3. A technological or managerial breakthrough can completely trump a company’s existing value proposition.
- 8. What Must Change? • You must stay on the frontier of OE In the mid 1990s BMW came behind other automaker on investment in best practice. So BMW set out new production line to cut the time in half. - OE improvement - running some activities in parallel - Revise design process using CAS (computer- Aided Styling) CAS
- 9. What Must Change? • You must change when there are ways to extend your value proposition Netflix - At first distribute DVDs by mail. - They searching for an internet based solution “Streaming” is the answer - “the cost” round-trip for a mailed DVD was about a dollar versus just five cent to stream. $ 1 $ 0.05
- 10. Strategies Emerge and Strategies Evolve • Southwest is the great example pass all the test of strategy. They have achieved what most managers can only dream of . Continuity at Southwest airline Continuity of strategy at Southwest airline is reflected in its sustained competitive advantage. Over the 30 years period , Southwest airline average ROIC was 11.4 % versus the industry’s 3.1%
- 11. Strategies Emerge and Strategies Evolve Porter is suggesting that anyone can come along and create a Southwest in 3 easy steps 1. Do some analysis (Five Force, Value Chain, Relative Cost and Value) 2. Draw an industry map, showing how current player positioned 3. Choose an unoccupied position.
- 12. Strategies Emerge and Strategies Evolve Dell - Early, core strategy is selling direct. ( to avoid the reseller’s margin) and building to order using purchased components (avoid the cost of internal technology development & component manufacturing) - Time Change, the Strategy also Change. - Dell found that the value proposition was more compelling with larger corporate customer with in-house IT-Department than with smaller purchasers. - That was the heart of Dell’s cost advantage.
- 13. Strategies Emerge and Strategies Evolve Porter’s key points is - It is rarely possible to figure out everything that will matter at the very start. - Change is inevitable, and the capacity to change is critically important. - The continuity of direction makes effective change more likely.
- 14. Thank you