Chapter 9

Subjective 1: What must be done?

1. Competitive tactic

A tactic is a specific operating plan that details how a strategy is to be

implemented in terms of when and where it is to be put in action.
By their nature, tactics are narrower in scope and shorter in time horizon than
are strategies.Tactics therefore may be viewed as link between the formulation
and implementation of strategy.
Some of tactics available to implement competitive strategies are timing
tactics and market locations tactics.

A. Timing Tactics: when to compete:

A timing tactic deals with when a company implements a strategy.

The first company to manufacture and sell a new product or service is called the
first mover (or pioneer).Some of the advantages:

 Company is able to establish a reputation as an industry leader

 Move down the learning curve to assume the cost leader position
 Earn high profits
 Set standard for all subsequent products in the industry
 Profit advantages only if first movers has sufficient resources

Late movers may be able to imitate the technological advances of others (and
thus keep R&D costs low), keep risks down by waiting until a new technological
standard or market is established and take advantage of the first mover’s natural
inclination to ignore market segments. Late movers tend to be large firms with
considerable resources and related experience.

B. Market Location Tactics: where to compete

A market location tactic deals with where a company implements a strategy.

A company or business unit can implement a competitive strategy either offensively or
defensively. An offensive tactic usually takes place in an established competitor’s market
location. A defensive tactic usually takes place in the firm’s own current market position
as a defense against possible attack by a rival.

Offensive tactics. Some of the methods used to attack a competitor’s position

are:
• Frontal assault: The attacking Firm goes head to head with its competitor. It
matches the competitor in every category from price to promotion to distribution
channel.this is generally a very expensive tactic and may serve to awaken a
sleeping giant.
• Flanking maneuver a firm may attack a part of the market where the competitor
is weak.
• Bypass attack this tactic attempts to cut the market from under established
defender by offering a new type of product that make the competitor’s product
unnecessary.
• Encirclement occurs as an attacking company or unit encircles the competitor’s
position in terms of products or markets or both. The encircle has great product
variety and or serves more markets
• Guerilla warfare hit and run. Guerrilla warfare is characterized by the use of
small, intermittent assaults on different market segment held by the competitor.

Defensive tactics
Aim to lower the probability of attack, divert attacks to less threatening avenues
or lessen the intensity of an attack.
The make a company’s or business unit‘s competitive advantage more sustainable
by causing a challenger to conclude that an attack is unattractive.
These tactics deliberately reduce short-term profitability to ensure long-term
profitability:

 Raise structural barriers: Entry Barriers act to block a challenger’s

logical avenues of attack.

 Increase expected retaliation: This tactic is any action that increase the
perceived threat of retaliation for an attack. Management may strongly
defend any erosion of market share by drastically cutting prices or
matching a challenger’s promotion through a policy of accepting any price
reduction coupons for a competitor’s product.

 Lower the inducement for attack: reduce a challenger’s expectation of

future profits in the industry, with price kept very low, there is little profit
to incentive for a new entrant.
 Subjective 2: Achievieng Synergy

What is synergy? According to Goold and Campbell, what are the six forms it can take?
Answer:
This is the reason corporation commonly reorganize after an acquisition. Synergy is said
to exist for a divisional corporation if the return on investment of each division is greater
than what the return would be if each division were an independent business.
Synergy can take place in one of six forms:

1. Shared know how: combined units often benefit from sharing knowledge or skills.
This is a leveraging of core competencies
2. Coordinated strategies: aligning the business strategies of two or more business
units may provide a corporation significant advantage by reducing inter-unit
competition and developing a coordinated response to common competitors.
3. Shared tangible resources: combined units can sometimes save money by sharing
resources. Such as common manufacturing facility or R&D lab,
4. Economies of scale or scope: coordinating the flow of products or services of one
unit with that of another unit can reduce inventory, increase capacity utilization,
and improve market access.
5. Pooled negotiating power: combined units can combine their purchasing to gain
bargaining power over common suppliers to reduce costs and improve quality.
6. New business creation: exchanging knowledge and skills can facilitate new
products or services by extracting discrete activities from various units and
combining them in a new unit or by establishing joint ventures among internal
business units.
 Subjective 3: Advanced Types of Organizational Structures

What is the matrix structure? What are the three conditions which usually exist when the
matrix structure is found?

The Matrix structure may be very appropriate when organization conclude that neither
functional nor divisional forms are right for their situations.
In matrix structures, functional and product forms are combined simultaneously at the same
level of the organization. Employees have two supervisors a product or project manager,
and a functional manager.
The matrix structure was developed to combine the stability of the functional structure with
the flexibility of the product form.
The matrix structure is very useful when external environment is very complex and
changeable.
However it produce conflicts revolving around duties, authority and resource allocations,
a continuous battle for power between product and functional managers is likely.

The matrix structure is often found in an organization or within an SBU when the following
three conditions exist:
 Ideas need to be cross-fertilized across projects or products
 Resources are scarce
 Abilities to process information and to make decisions need to be improved.