Two Primary Reasons for a Strategy First, if what you do is not unique in some respect and everyone can do it, then you cannot make money at it(Oster, 1999, pp. 11). Second, no advantage is permanently sustainable in a competitive market thus satisfaction with the status quo is a recipe for failure as competitors will eventually find a means to capture your market share (Hunter, 2000a) October 30 2002 Cory R A Hallam, MIT LAI/TMP 6/25
Cory R.A. Hallam, MIT LAI/TMP 6/25 October 30, 2002 Two Primary Reasons for a Strategy • First, if what you do is not unique in some respect and everyone can do it, then you cannot make money at it (Oster, 1999, pp.11). • Second, no advantage is permanently sustainable in a competitive market thus satisfaction with the status quo is a recipe for failure as competitors will eventually find a means to capture your market share (Hunter, 2000a)
Strategy and Competitive Advantage Empirical study of 6771 firms in 40 industries over 25 years was conducted to test whether businesses do sustain competitive advantage, as measured by sustained superior economic pertormance over time wggⅰ ns and ruel,2002) Only a small number of firms exhibit superior economic performance Of those that do exhibit superior economic performance, few sustain it for an extended time period(10 years), while an even rarer few sustain it for multiple decades Further, the group that makes up the superior performers experiences little composition stability(i.e. the performers change over time). October 30 2002 Cory R A Hallam, MIT LAI/TMP 725
Cory R.A. Hallam, MIT LAI/TMP 7/25 October 30, 2002 Strategy and Competitive Advantage • Empirical study of 6771 firms in 40 industries over 25 years was conducted to test whether businesses do sustain competitive advantage, as measured by sustained superior economic performance over time (Wiggins and Ruefli, 2002). – Only a small number of firms exhibit superior economic performance. – Of those that do exhibit superior economic performance, few sustain it for an extended time period (10 years), while an even rarer few sustain it for multiple decades. – Further, the group that makes up the superior performers experiences little composition stability (i.e. the performers change over time)
Strategy and Competitive Advantage There are numerous if not an infinite assortment of strategies available for firms to attempt to gain sustainable competitive advantage The dynamic nature of internal and external factors inherently necessitates the continual evolution and adaptation of strategies to maintain competitive advantage Firms will most likely experience a loss of competitive advantage after a brief period of having a competitive advantage October 30 2002 Cory R A Hallam, MIT LAI/TMP 8/25
Cory R.A. Hallam, MIT LAI/TMP 8/25 October 30, 2002 Strategy and Competitive Advantage • There are numerous, if not an infinite assortment of strategies available for firms to attempt to gain sustainable competitive advantage. • The dynamic nature of internal and external factors inherently necessitates the continual evolution and adaptation of strategies to maintain competitive advantage. • Firms will most likely experience a loss of competitive advantage after a brief period of having a competitive advantage
Strategy as it Applies to Levels of the Organization Hunter summarizes three types of strategy, namely Corporate, Business, and Functional (Hunter, 2000b) but is this the right wording? Porter argues that market competition only occurs at the business level (Porter, 1987) October 30.2002 Cory R A Hallam, MIT LAI/TMP 925
Cory R.A. Hallam, MIT LAI/TMP 9/25 October 30, 2002 Strategy as it Applies to Levels of the Organization • Hunter summarizes three types of strategy, namely Corporate, Business, and Functional (Hunter, 2000b), but is this the right wording? • Porter argues that market competition only occurs at the business level (Porter, 1987)