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CHAPTER 5 FUNCTIONAL AND COMPETITIVE
STRATEGIES
LEARNING OUTCOMES
Use this Learning Outline as you read and study the chapter:
5.1 Describe the functional strategies an organization needs and explain how those strategies are
implemented and evaluated.
5.2 Explain competitive advantage and what it implies.
5.3 Describe the different competitive strategies.
5.4 Discuss how competitive strategies are implemented and evaluated.
TEXT OUTLINE
Active Learning Hint

Hand out an “empty” chapter outline or one with key information missing for the students to use in note
taking. This outline will help the students to organize the information, while keeping the students
actively listening for the information needed to complete the outline.
Strategic Management in Action Case #1: Driving for Success

You may wish to open with a Question and Answer exercise.
• The Toyota vignette illustrates the interrelationships of an organization's functional strategies and
their contributions to the company’s success. Additionally, you may want to review what a learning
organization is and link Toyota's two main principles with their status as a learning organization.
• Questions to connect previous discussion with this chapter:
• What is Toyota’s competitive advantage?
• What is Toyota’s core competency that provides the basis for their competitive advantage?
• What advantages does the Toyota five-day custom car manufacturing system provide for the
marketing department?
• How can this manufacturing pace be sustained? Can't other manufacturers imitate the Toyota
system?
Teaching Notes: _______________________________________________________________________

_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
LEARNING OUTCOME 5.1 DESCRIBE THE FUNCTIONAL STRATEGIES AN
ORGANIZATION NEEDS, AND EXPLAIN HOW THOSE
STRATEGIES ARE IMPLEMENTED AND EVALUATED
FUNCTIONAL STRATEGIES AND STRATEGIC MANAGEMENT PROCESS

A. Strategic Management in Action: Process (Figure 5.1)
1. Top-level decision makers (i.e., CEO and top management team) develop the overall goal
of what the organization hopes to achieve (i.e., its vision, mission and strategic objectives)
and establish the overall corporate strategies.
2. Functional strategies are developed taking into account the organization’s vision,
mission(s), overall corporate and competitive strategies.
3. When the organization is first founded, corporate strategies are addressed immediately
where the overall strategic goal(s) and directions are formulated by the CEO and top
management team and then functional strategies are addressed.
4. The vast majority of strategic situations are ones where the organization is not new. In these
situations; functional strategies are looked at first in the process of deciding the most
appropriate strategies—that is, the ones that will lead to a sustainable competitive
advantage.
B. What Happens after the SWOT Analysis?

1. Decision makers have information about the positive and negative aspects of both the
external and internal environments (i.e., Internal [Strengths and Weaknesses] and External
[Opportunities and Threats]).
2. If the organization’s strengths in the various functional units can be exploited as
competitive advantages, particularly in light of any relevant external opportunities, the
organization may well be on its way to achieving high levels of performance.
3. If negative trends are found in any of the organization’s external areas or weaknesses,
changes in functional strategies might be needed to counteract these.
4. Serious functional weaknesses that might be preventing a competitive advantage from being
developed may need to be corrected or minimized.

Conduct a SWOT analysis for Domino’s Pizza and address the issues presented in the Strategic
Management in Action highlight. Divide the class into groups of 4-5 students to work on the SWOT,
and then ask several of the groups to report their findings. Another method would be to divide the class
into 4 groups (or multiples of four). One group identifies the strengths, another group the weaknesses,
etc. Ask each group to report their findings to the class.
Strategic Management in Action: Super Bowl and Pizza

1. Discuss whether to try to meet peak demand – does it lead to loyalty? Is it a weakness if a company
cannot meet demand on that particular day. If you cannot supply your customers you open the door
to rival suppliers and you may lose some to other pizza-makers if you turn them away.
2. A SWOT analysis may reveal if production or delivery capacity are inadequate for the peak demand
or if there may be excess capacity.
C. What Functional Strategies Does an Organization Need?

Functional (or operational) strategies are the short-term, goal-directed decisions and actions
of the organization’s various functional units (Figure 5.2).
All organizations perform three basic functions as they create and deliver goods and services:
1) Product Strategies (design, production-operations, marketing)
2) People Strategies (human resources)
3) Support Process Strategies (information and financial-accounting systems)
1. Functional Strategies – The Product

a). Product design strategies typically involve an organization’s R&D function
b). Once products are ready to be produced, production-operations strategies ensue
c). Next, marketing strategies are implemented
2. Functional Strategies – The People

a). High-performance Work Practices are human resource policies and practices that
lead to both high individual and high organizational performance.
b). Table 5.1 lists some of the high-performance work practices that have been identified.
These types of HR strategies can:
(1) Improve knowledge, skills and abilities of organization’s current and
potential employees
(2) Increase employees’ motivation
(3) Reduce loafing on the job
(4) Help retain quality employees
(5) Encourage nonperformers to leave the organization
c). Strategic choices include:
i. Getting people into the organization (HR planning, recruiting and staffing)
ii. Making sure they have the knowledge and skills to do their jobs
iii. Helping them do their jobs better (orientation and training)
iv. Assessing how well they do those jobs and making needed corrections
(performance appraisal and disciplinary actions)
v. Motivating high levels of effort and compensating them fairly and
appropriately (compensation and benefits)
vi. Other HR Issues (employee relations, job design, diversity efforts,
workplace safety and health, workplace misbehavior)
vii. An organization’s HR policies reflect its commitment to and treatment of its
employees. Must closely align with those other strategies to assure that the
right numbers of appropriately skilled people are in the right place at the
right time and that the organization’s workforce is being used effectively
and efficiently.
3. Functional Strategies – The Support Process

a). Organizations have two main support processes – information systems and
financial-accounting systems
b). Information affects how effectively and efficiently organizational members can do
their work
c). Two strategic decisions most associated with the organization’s information system
are the choice of system technology and the choice of types of information
systems needed
d). Financial-accounting systems provide strategic decision makers with information
about the organization’s financial transactions, accounts, and standing
e). Strategic choices include:
i. Collecting and using financial and accounting data
ii. Evaluating financial performance
iii. Doing financial forecasting and budgeting
iv. Determining the optimum financing mix
v. Effectively and efficiently managing the financial-accounting functional
area
Strategic Management In Action: Loading the Airplane

• In light of all the delays and flight cancellations the airlines industry experienced in Summer 2007,
have the students discuss some ideas on how the airlines might adopt some production-operations
strategies that might make each airplane’s turnaround at the gate faster.
For Your Information—To Layoff or Not to Layoff

• Student responses may vary based on the students’ life and work experiences and the state of the
United States and global economy.
The Grey Zone – Corporate Blogs
Corporate blogs are popular and legal but not necessarily in the best interests of the company. Should
organizations promote things that are popular but may be harmful or at least may not be beneficial to the
company?
When an employee raises a concern, what are the risks to the organization of responding? Or not
responding? How might stakeholders see it?
What about government regulators or juries? Will they be more sympathetic if you ignore the concerns
of your stakeholders and it turns out that your company’s actions were harmful? What could happen
then?
Do you have to respond to every stakeholder concern?
Strategic Management in Action: Caesars Entertainment

Great service leads to more spending by gamblers. Ask your students if they think that this would hold
true to other businesses outside of the gambling environment? Does great service lead to more spending
in hotels, resorts, restaurants, retail stores, or bars?
Learning Review: Learning Outcome 5.1

• How does the work done in the functional areas support the creation of a competitive
advantage? If the organization’s strengths in the various functional units can be exploited as
competitive advantages, particularly in light of any relevant external opportunities, the
organization may well be on its way to achieving high levels of performance.
• What happens after the SWOT analysis is completed? After completing the SWOT analysis,
decision makers have information about the positive and negative aspects of both the external
and internal environments. The SWOT analysis points to the strategic issues organizational
decision makers need to address in their pursuit of sustainable competitive advantage and high
levels of performance.
• What are the three functional concerns of organizations? The three functional concerns for
organizations are the product, the people, and the support processes.
• What strategies are important to each of those functional concerns? For product, the strategies
are design, production-operations, and marketing. For people, it is HR strategies. And for
support process, it’s strategies related to information systems and financial-accounting systems.
LEARNING OUTCOME 5.2 EXPLAIN WHAT COMPETITIVE ADVANTAGE IS AND
WHAT IT IMPLIES
A. Competitive Advantage
1. Is a key concept of strategic management (getting it and keeping it is what managing
strategically is all about)
2. Sets an organization apart (its competitive edge)
3. Is what an organization’s competitive strategies are designed to exploit
4. Implies that there are other competitors also attempting to develop competitive advantage
and attract customers
5. An organization does something that others can’t do or does it better than others do
(distinctive capability)
6. An organization has something that other competitors don’t (unique resource)
7. Can be eroded easily (and often quickly) by competitors’ actions
B. Understanding the Competitive Environment
1. Competition is everywhere. Most industries and organizations have experienced at some
point.
2. What is Competition?
a) Competition is when organizations battle or vie for some desired object or outcome—
typically customers, market share, survey ranking, or needed resources.
Strategic Management in Action

• Describe situations, outside business and athletics, where competition is taking place.
Answers will vary based on the students and their business and life experiences.
3. Who are Competitors?

Competitors can be described according to:
a) Industry Perspective
(1) Identifies competitors as organizations that are making and selling the same or very
similar good or service.
(2) Describes industries according to the number of sellers and the degree of
differentiation (i.e., similarities or differences of the products or services).
(a) The number of sellers and the level of product-service differentiation will affect
how intensely competitive the industry is.
(b) The most intense competition is “pure competition” where there are many
sellers and no differentiation exists among the sellers.
b) Market Perspective
(1) Competitors are organizations that satisfy the same customer need.
(2) Intensity of competition depends on:
(a) How well the customer’s need is understood or defined
(b) How well different organizations are able to meet that need
c) Strategic Groups Perspective
(1) Recall “current rivalry” in Porter’s Five Forces Model from Chapter 3.
(2) Strategic group is a group of firms competing in an industry that have similar
strategies, resources and customers.
(3) A single industry could have a few or several strategic groups depending on what
strategic factors are important to customers.
(a) Two strategic factors, important to customers, used in grouping competitors are
price and quality.
(b) Important strategic factors, or strategic dimensions, used to determine an
organization’s competitors are different for every industry and can be different
even for different industry segments.
(c) Table 5.2 lists some dimensions that might be used to distinguish strategic
groups.
(4) The most relevant competitors are those in an organization’s own strategic group.
(5) Level of intensity of competition from this perspective depends on:
(a) How effectively each competitor has developed its competitive advantage
(b) The competitive strategies used by each competitor in the strategic group
(6) Controversy exists over whether or not specific, identifiable strategic groups even
exist.
(a) These questions generally concern:
(1) The factors that are used to define a strategic group
(2) How those factors are chosen and used to separate specific and identifiable
groups
Strategic Management in Action—Hot Sauce

• Ask students how many are familiar with these two brands of hot sauce.
• Ask the students why they choose one sauce over another.
• Ask the students if an ad campaign changes their mind about a product or brand.
• Ask the students what actions a hot sauce manufacturer might take to protect its competitive position.
C. The Role of Resources and Distinctive Capabilities in Gaining Competitive Advantage

Every organization has resources and capabilities to do whatever it’s in business to do.
1. Not every organization is able to:
a) Effectively exploit the resources or capabilities it has
b) Obtain the resources or capabilities it needs but doesn’t have
c) Classic case of “the haves” and “the have-nots” or “the can do’s” and “the can’t do’s”
2. Some organizations “put it all together” and develop distinctive organizational capabilities
that provide a sustainable competitive advantage, others don’t.
3. Organizations will develop strategies to:
a) Exploit their current resources and capabilities
b) Vie for needed-but-not-owned resources and capabilities to pursue and attain desired
outcomes (customers, market share, resources)
c) While other organizations (few to many) are doing exactly the same thing
4. Competitive advantage, by its very nature, implies trying to gain the edge on others.
5. As organizations fight for a sustainable competitive advantage, the stage for competition—
intense, moderate, or mild—is set.
Strategic Management—The Global Perspective: Sukhoi Holding Company

• Ask students to research other aircraft manufacturers.
• How is the Sukhoi Holding Company going to develop a competitive advantage over other aircraft
manufacturers?
D. From Competitive Advantage to Competitive Strategies

Competitive strategy is the way organizations set themselves apart to compete to create a
sustainable competitive advantage
1. The choice of competitive strategy
a) Depends on how an organization or business unit is going to compete in its particular
industry or market
b) Is based on the competitive advantage(s) that the organization has been able to develop
2. Refining and sharpening its sustainable competitive advantage (in unique resources or
distinctive capabilities) provides the basis for an organization’s competitive strategy.
Teaching Notes: _______________________________________________________________________

_____________________________________________________________________________________
_____________________________________________________________________________________

• Is competition an issue for all organizations? Discuss.
• Competition is a given for all organizations, regardless of size, type, or geographic location. Even
not-for-profit organizations compete for resources and customers.
• What is competitive advantage?
• Competitive advantage is what sets an organization apart—its competitive edge.
• Compare and contrast the three approaches to defining competitors.
• The industry perspective identifies competitors as organizations that are making the same
product or providing the same service.
▪ The marketing perspective says competitors are organizations that satisfy the same customer
need.
▪ The strategic groups perspective identifies a group of firms competing in an industry that have
similar strategies, resources and customers.
• What role do resources and distinctive capabilities play in gaining competitive advantage?
• Organizations will develop strategies to exploit their current resources and capabilities or to vie
for needed-but-not-owned resources and capabilities to pursue and attain desired outcomes such
as customers, market share and resources. They do this while other organizations (few to many)
are doing exactly the same thing. Competitive advantage, by its very nature, implies trying to gain
the edge on others. As organizations strive for a sustainable competitive advantage, the stage for
competition—intense, moderate, or mild—is set.
• Define competitive strategy. What’s the connection between competitive advantage and competitive
strategy?
• Competitive strategy is the way organizations set themselves apart to create a sustainable
competitive advantage.
• The choice of a competitive strategy is based on the competitive advantage(s) that the
organization has been able to develop.
LEARNING OUTCOME 5.3

DESCRIBE THE DIFFERENT COMPETITIVE STRATEGIES
Although it may seem there are numerous ways an organization competes, the number of
competitive strategies is actually few of possible types of competitive strategies, there are actually a
limited number of ways to describe how an organization competes.
A. Traditional Approaches to Defining Competitive Strategy
1. Miles and Snow’s Adaptive Strategies (1978) (Table 5.3):
a) Based on the strategies organizations use to adapt to their uncertain competitive
environments.
b) Generally been supportive of the appropriateness of these strategies for describing how
organizations are competing.
c) Prospector Strategy
(1) Strategy in which an organization continually innovates by finding and exploiting
new product and market opportunities.
(2) Prospector’s competitive strength is ability to:
(a) Survey a wide range of rapidly changing environmental conditions, trends and
situations to create new products and services to fit this dynamic environment.
(3) Prospector’s competitive strategy is to continually innovate, develop and test new
products and services (i.e., find new directions to pursue).
(4) Constant search for innovation creates uncertainties for prospector’s competitors
who never know what’s going to happen next or what to expect.
(5) If prospector can develop new products or services that the market desires and is
willing to pay for, it has a competitive advantage.
(6) Examples: Fox Broadcasting Network and MTV known for innovative television
network programming and willingness to pursue new directions based on its ability
to assess environmental trends.
b) Defender Strategy
(1) Strategy used by organizations to protect current market share by emphasizing
existing products and producing only a limited product line.
(2) Defenders have well-established businesses that they’re seeking to defend.
(3) Defender has success with this strategy as long as the primary technology and
narrow product line remain competitive.
(4) Over time, defenders can carve out and maintain niches within their industries that
competitors find difficult to penetrate.
(5) Example: Lincoln Electric of Cleveland, OH; Anheuser-Busch; IBM
c) Analyzer Strategy – strategy of analysis and imitation.

Analyzers
(1) Watch for and copy the successful ideas of prospectors
(2) Compete by following the direction that prospectors pioneer
(3) Thoroughly analyze new business ideas before jumping in
(4) Systematically assess and evaluate whether the move is appropriate for them
(5) Examples: Unilever’s Suave shampoo and skin care products, COSMI Corporation
(education, entertainment and business software)
Strategic Management—The Global Perspective: Pague Menos

• Ask students what they think about the Brazilian retailer copying Wal-Mart’s strategies?
• How successful can Pague Menos be by taking the low cost approach?
• What are the drawbacks to using a low cost strategy? Is it sustainable?
• What is to keep another emerging competitor from copying Pague Menos? What if the new
competitor undercuts Pague Menos’ prices?
d) Reactor Strategy – the lack of a coherent strategic plan or apparent means of

competing.
(1) Reactors:
(a) Simply react to environmental changes and make adjustments only when finally
forced to do so by environmental pressures
(b) Oftentimes unable to respond quickly to perceived environmental changes
because:
(1) They lack the needed resource or capabilities OR
(2) They’re not able to exploit their current resources and capabilities
(2) This is not a recommended competitive strategy for developing a competitive
advantage.
(3) Thought of as a “default” strategy, almost a nonstrategy position.
(4) Without significant strategic changes, a reactor will always be in a weak
competitive position.
(5) Examples: Sears; Sizzler International, Inc.; Digital Equipment Corporation
For Your Information – The Copycat Economy

• Ask the students to evaluate Clorox’s decision to market ReadyMop and determine what strategy is
being used. Was it an offensive or a defensive move on Clorox’s part?
• Ask the students if they can think of any other examples of “copycatting?” In the soft drink business
every new flavor is virtually matched immediately by a competing flavor from a rival. Diet Pepsi and
Diet Coke have spawned cherry, lemon, lime, and vanilla flavored varieties, as well as C2, a low
carb Coke and Pepsi One a very low calorie add-on to the Diet Pepsi line. The key seems to be to not
allow any competitor an advantage for any length of time. Fast-food makers have done the same
thing with gourmet salads. Wendy’s started the war with a very successful introduction of gourmet
salads and McDonald’s followed with several varieties within months. Automobile financing and
rebates are another example where there is little difference between competitors.
• How did Procter and Gamble respond to Clorox? Rather than cede any advantage to Clorox, P&G
cut its price (and its profit margin) to not be out positioned by a “fast-follower.” Possible responses
range from increased advertising to win customer attention to price cuts that then limit the ability of
new entrants to garner profits…perhaps discouraging their entry before it occurs.
Teaching Notes: _______________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
2. Porter’s Generic Competitive Strategies (1980)

a) Porter’s approach is based on an organization’s competitive advantage.
b) Competitive advantage can come from only one of two sources:
(1) Having the lowest costs in the industry
(2) Possessing significant and desirable differences from competitors
c) Another important strategic factor is the scope of the product-market in which the
organization wishes to compete—that is, broad (i.e., all or most market segments) or
narrow (i.e., only one segment or a few segments).
d) The mix of these factors provides the basis for Porter’s approach.
e) The term generic simply refers to the fact that these strategies can be pursued by any
type or size organization in any type or size industry.
(1) Cost leadership Strategy (or low-cost strategy) is one in which an organization
strives to have the lowest costs in its industry and produces products for a broad
customer base.
(a) Cost leader
(1) Chooses to compete on the basis of having the lowest costs.
(2) The main goal is to have the lowest (total unit) costs in the industry
(emphasis on costs, not prices).
(a) With the lowest costs in its industry, the cost leader:
(1) Can potentially charge the lowest prices and
(2) Still earn significant profits, even during a price war
(b) Successful pursuit of the cost leadership strategy
(1) Everything the cost leader does—every strategic decision made, every
strategic action taken—is aimed at keeping costs as low as possible.
(2) Efficiency in all areas of operations is the main objective, and all resources,
distinctive capabilities, and functional strategies are directed at that.
(3) The cost leader isn’t going to have deep and wide product lines as
providing these product or service variations is expensive.
(4) ,The cost leader has chosen to compete on the basis of low costs, not on
being different than competitors.
(5) The cost leader will market products aimed at the “average” customer.
(6) Little or no product frills or differences will be available. No fancy artwork or
plush office furniture at corporate headquarters and no corporate jets.
(7) Cost leader won’t have an elaborate high-tech, multimedia interactive Web site
unless it’s an extremely cost effective and efficient way to reach masses of
potential customers.
(8) Examples: Payless Shoe Source, Collective Brands, Nucor Corporation and
Wal-Mart. Ask the students to identify common characteristics between these
organizations
1. Other characteristics of cost leaders include:
a. Strict attention to production controls
b. Rigorous use of budgets
c. Little product differentiation—just enough to satisfy what the mass
market might demand
d. Limited market segmentation—products or services aimed at the
mass market
e. Emphasis on productivity improvements
f. Resources, distinctive capabilities and core competencies found in
production-operations and materials management
2. Drawbacks of the cost leadership strategy:
a. The main danger is that competitors might find ways of lowering
costs even further; taking away the cost leader’s cost advantage.
b. Competitors might be able to easily imitate what the cost leader is
doing and erode the cost advantage.
c. Cost leader, in its all-out pursuit of lowering costs, might lose sight
of changing customer tastes and needs.
(2) Differentiation Strategy
a) Organization competes by providing unique (different) products with features that:
i. Customers value,
ii. Perceive as different, and
iii. Are willing to pay a premium price for
b) The main goal of the differentiator is to provide products or services that are truly
unique and different in the eyes of customers.
c) Doing this, the differentiator can charge a premium price because customers perceive
that the product or service is different and that it uniquely meets their needs.
d) This premium price provides the profit incentive to compete on the basis of
differentiation.
For Your Information—Selling Luxury

• Have your students visit some of the Web sites mentioned as they consider these questions. Perhaps
several of your students have already used some of the services such as Lexus and General Electric’s
Profile washer and dryer. Encourage the students to share these “experiences” with the class.
• Are there other examples of luxury marketers trying new approaches to selling their products?
Student responses will vary on this question. Encourage students to identify as many luxury
marketers as possible.
● What do you think of these pitches?
Student responses to this question may vary based on their life and professional experiences.
• Is the differentiation strategy one that’s appropriate only in good economic times?
Student responses may vary, but should include differentiation will work in conditions where a
company’s products or services provides customers value, is perceived as different and customers
are willing to pay a premium price.
e) A successful differentiator:
i. All its capabilities, resources and functional strategies are aimed at
isolating and understanding specific market segments and developing
product features valued by customers in those various segments.
ii. Has broad and wide product lines—that is, many different models,
features, price ranges and so forth.
iii. Has countless variations of market segments and product features so
that the customer perceives the product or service as different and
unique and worth the extra price.
iv. Because the differentiation strategy can be expensive, the differentiator
also needs to control costs to protect profits, but not to the extent that it
loses its source of differentiation.
f) Examples: Gap, Old Navy, Pottery Barn
g) Other characteristics of differentiators include:
i. Differentiating themselves along as many dimensions as possible and
segmenting the market into many niches.
ii. Establish brand loyalty, where customers consistently and repeatedly
seek out, purchase and use a particular brand. Brand loyalty can be a
very powerful competitive weapon for the differentiator.
iii. The differentiator’s distinctive capabilities tend to be in marketing and
research and development.
h) Drawbacks of the differentiation strategy
i. Must remain unique in customers’ eyes, which may be difficult
depending on competitors’ abilities to imitate and copy successful
differentiation features.
ii. Customers might become more price sensitive, and product differences
might become less important.
(3) Focus strategy is when an organization pursues either a cost or differentiation
advantage but in a limited (narrow) customer group or segment.
a) A focuser:
i. Concentrates on serving a limited (narrow) customer group or segment
known as a market niche:
a. Geographical niche can be defined in terms of region or
locality.
b. Type of customer niche focuses on a specific group of
customers.
c. Product line niche would focus on a specific and specialized
product line.
2. Pursues either a cost or differentiation advantage
a. Cost focuser competes
i. By having lower costs than the overall industry cost
leader in specific and narrow niches
ii. Also successful if an organization can produce
complex or custom-built products that don’t lend
themselves easily to cost efficiencies by the industry’s
overall cost leaders
b. Differentiation focuser can use whatever forms of
differentiation the broad differentiator might use, such as:
i. Product features
ii. Product innovations
iii. Product quality
iv. Customer responsiveness
v. Specializes in one or a few segments instead of all
market segments.
c. Advantages of the focus strategy:
i. The focuser knows its market niche well and can build
strong brand loyalty by responding to changing
customers’ needs
ii. The focuser who can provide products or services that
the broad competitors can’t or won’t, will have the
niche all to itself.
Strategic Management—The Global Perspective: Abraaj Capital

• Do you think a cost focus or differentiation focus strategy might be more appropriate?
▪ A differentiation focus strategy might be more appropriate as Abraaj Capital might focus on
product features, product innovation, product quality, or customer responsiveness to outcompete
its rivals (i.e., Goldman Sachs, Citigroup) in the Middle East and Southeast Asia markets.
d. Drawbacks of the focus strategy

i. The focuser often operates on a small scale making it
difficult to lower costs significantly. However, with
technological advancements such as flexible
manufacturing systems, this drawback is not as critical
as it once was. As information and computer
technology become more affordable, focusers have
discovered that economies (cost efficiencies) don’t
necessarily have to come from large-scale production
runs.
ii. The niche customers might change their tastes or
needs. Because it is often difficult for a focuser to
change niches easily and quickly, this could be a
serious problem. In addition, any technological
changes that might impact the niche can have a similar
effect.
iii. The threat of the broad differentiator taking notice of
the focuser’s market niche, especially if the focuser is
enjoying a significant level of success, and moving in
to offer products and services to those customers.
(4) Stuck in the Middle
a) Happens when an organization isn’t successfully pursuing either a low-cost
or a differentiation competitive advantage
b) Occurs when an organization’s:
1. Costs are too high to compete with the low-cost leader.
2. Products and services aren’t differentiated enough to compete with the
differentiator.
c) This is not a preferred or profitable strategic direction.
d) Becoming “unstuck” means making consistent strategic decisions about what
competitive advantage to pursue and then doing so by aligning resources,
distinctive capabilities and core competencies.
Teaching Notes: _______________________________________________________________________

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3. Contemporary Views on Competitive Strategy

Some of the newer perspectives provide an expanded, and perhaps more realistic, description of
what competitive strategies organizations are using.
a. Integrated Low-Cost Differentiation Strategy
i. Competitive advantage by simultaneously achieving low costs and high levels of
differentiation.
ii. Technological advancements that make this hybrid competitive strategy possible are:
a) Flexible manufacturing systems
b) Just-in-time inventory systems
c) Integrated manufacturing systems
b. Just because these technological advancements are available and accessible doesn’t
mean that every organization that uses them will be able to successfully implement an
integrated low-cost differentiation strategy.
Strategic Management in Action: Dell
• A classroom discussion may be beneficial, given that many of your students will be quite familiar
with Dell computer. Ask your students to discuss whether they have Gateway, Hewlett-Packard,
IBM, or another PC manufacturer. Ask your students how Dell has lost its market share and ask for
suggestions on how it might regain the competitive edge it had.
b. Mintzberg’s Generic Competitive Strategies

i. Henry Mintzberg developed an alternative typology of six possible competitive
strategies that better reflected the increasing complexity of the competitive
environment.
The following is taken from Figure 5.4: Mintzberg’s Generic Competitive Strategies.
a) Differentiation by price: Modification of Porter’s cost leadership; advantage
from organization’s ability to charge below-average market prices.
Differentiated on basis of price.
b) Differentiation by marketing image: Organization attempts to create a
certain image in customers’ minds. Uses marketing image as potent competitive
weapon.
c) Differentiation by product design: Competition on basis of providing
desirable product features and design configurations; offers wide selections of
product features and different designs.
d) Differentiation by quality: Deliver higher reliability and performance at a
comparable price. Superior product quality pursued at a comparable price.
e) Differentiation by product support: Emphasizing customer support services.
Providing all-encompassing bundle of desired customer support services.
f) Undifferentiated strategy: No basis for differentiation or following a copycat
strategy.
ii. The verdict on Mintzberg’s alternative generic competitive strategies typology appears
to have merit.
Teaching Notes: _______________________________________________________________________

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• Describe each of Miles and Snow’s four adaptive strategies?
• Prospector strategy is one in which an organization continually innovates by finding and
exploiting new product and market opportunities.
• Defender strategy is characterized by the search for market stability and producing only a limited
product line directed at a narrow segment of the total potential market.
• Analyzer strategy is one of analysis and imitation.
• Reactor strategy is the lack of a coherent strategic plan or apparent means of competing.
• According to Porter, what are the two types of competitive advantage?
• Competitive advantage can come from either having the lowest costs in the industry or from
possessing significant and desirable differences from competitors.
• Describe each of Porter’s generic competitive strategies.
• Cost leadership strategy is one in which an organization strives to have the lowest costs in its
industry and produces products or services for a broad customer base.
• Differentiation strategy is a strategy in which the organization competes on the basis of
providing unique (different) products-services with features that customers value, perceive as
different and are willing to pay a premium price for.
• A Cost Focuser competes by having lower costs than the overall industry cost leader in specific
and narrow niches.
• The Differentiation Focuser can use whatever forms of differentiation the broad differentiator
might use—product features, product innovations, product quality, customer responsiveness, or
whatever. The only difference is that the focuser is specializing in one or a few segments instead
of all market segments.
• What does it mean to be “stuck in the middle?”
• Stuck in the middle happens when an organization isn’t successfully pursuing either a low cost
or a differentiation competitive advantage. An organization becomes stuck in the middle when its
costs are too high to compete with the low-cost leader or when its products and services aren’t
differentiated enough to compete with the differentiator.
• What is the integrated low-cost differentiation strategy and how does it contradict the concept behind
Porter’s generic competitive strategies?
• An integrated low-cost differentiation strategy is one in which an organization develops a
competitive advantage by simultaneously achieving low costs and high levels of differentiation.
• Porter’s original work maintained that an organization couldn’t simultaneously pursue a low-cost
and a differentiation advantage. Despite strong empirical support for Porter’s strategy framework,
several strategy researchers questioned this “mutual exclusivity.” Instead of having to pursue one
or the other, strategy research evidence is starting to show that organizations can pursue an
integrated low-cost differentiation strategy and do so successfully.
• Describe each of the competitive strategies in Mintzberg’s generic strategy typology.
• Differentiation by price is a modification of Porter’s cost leadership strategy.
• Differentiation by marketing image described a competitive strategy in which an organization
attempted to create a certain image in customers’ minds.
• Differentiation by product design can be used to describe organizations that competed on the basis
of providing desirable product features and design configurations.
• Differentiation by quality described a strategy in which organizations competed by delivering
higher reliability and performance at a comparable price.
• Differentiation by product support emphasized the customer support services provided by the
organization.
• Undifferentiated strategy described situations in which an organization had no basis for
differentiation or when it deliberately followed a copycat strategy.
LEARNING OUTCOME 5.4

DISCUSS HOW COMPETITIVE STRATEGIES ARE IMPLEMENTED AND EVALUATED
The Grey Zone: The Class of 2015

Have students brainstorm a list of companies who have targeted them simply because they are in
college. What do these companies have in common? What approaches do they use to gain the
students as customers? Does it work? What turns them off?
A. Implementing Competitive Strategy

Implementation utilizes resources, distinctive capabilities and core competencies. If a strategy is
not implemented, then it’s nothing more than an idea. Functional strategies play a significant
role in implementing competitive strategy.
1. The Role of Functional Strategies
a) Functional strategies:
(1) Play a critical role in the implementation of its competitive strategy.
(a) The challenge in implementing the organization’s competitive strategy is to
create and exploit a sustainable competitive advantage.
(b) This competitive advantage comes from the organization’s ability to use its
resources to develop capabilities that may become distinctive.
(c) All of these details happen through the actual strategies that are being used in
the various functional work units of the organization.
(2) Have a dual role that influence both:
(a) What competitive strategy is most appropriate?
(1) Depends on what organizational resources and capabilities currently
available or being acquired and developed through the functional strategies.
(2) To successfully attain a sustainable competitive advantage, each of Porter’s
generic competitive strategies requires certain skills, resources and
organizational requirements. (Table 5.4)
(b) How is that strategy implemented?
(1) The strategy(ies) being used in each functional area should support
whatever competitive advantage (and competitive strategy) is being
pursued.
(a) If competition is based on having the lowest costs, then:
(1) Functional strategies being used should support and reinforce that
strategy.
(2) Cost efficiencies would be pursued in all operational areas, but
particularly in production-operations.
(3) Financial strategies could support the quest for operational
efficiency including such things as capital investment in technology
if it’s needed and could contribute to lowering costs.
(4) All organizational resources, distinctive capabilities and core
competencies would be directed at attaining the goal of having the
industry’s lowest costs.
(b) If the organization chose to compete on the basis of both low costs and
differentiation, then its functional strategies better reflect that choice or
it will never be able to develop a sustainable competitive advantage.

• Define fast follower (copycat) and give an example to the class. Have students debate which skills,
resources and requirements best fit a company pursuing a “fast follower” strategy.
To do this have students address the following questions:
▪ Do copycats need strong marketing abilities? Why?
▪ Do copycats need good engineering skills? Should those skills be for new product development or
for process/cost engineering?
▪ Would you focus more on control or innovation in your production process? Explain.
Strategic Management Action: Singapore Airlines (SIA)

This sidebar illustrates competitive action in the air travel industry. A key question is whether there will
be any brand loyalty to specific airlines. What makes customers loyal to a particular airline? Is it the
details or is it simply a price decision? Could famous people play a role as celebrity endorsers?
2. Competitive Actions
Once an organization’s competitive strategy is implemented through functional decisions and
actions, it will use certain postures, actions and tactics as it competes against other organizations
for customers, market share, or other desired objects or outcomes.
a) Offensive moves are when an organization attempts to exploit and strengthen its
competitive position through attacks on a competitor’s position.
(1) Frontal assault is when the attacking firm goes head-to-head with its competitor by
matching it in every possible category, such as price, promotion, product features
and distribution channel.
(2) Attack competitors’ weaknesses wherever those weaknesses are.
(a) Concentrate on geographic areas where the competitor is weak.
(b) Serve customer segments that a competitor is ignoring or the competitor’s
offerings are weak.
(c) Introduce new product models or features to fill gaps its competitors aren’t
serving.
(3) All-out attack on competitors by hitting them from both the product and the market
segment side.
(4) Avoid direct, head-on competitive challenges by maneuvering around competitors
and subtly changing the rules of the game.
(a) Create new market segments that competitors aren’t serving by introducing
products with different features.
(b) This action cuts the market out from under the competitor.
(5) “Guerilla” attacks are small, intermittent, seemingly random assaults on
competitors’ markets.
(a) Use of special promotions, price incentives, or advertising campaigns.
b) Defensive moves describe when an organization is attempting to protect its competitive
advantage and turf. These moves do not increase an organization’s competitive
advantage, but can make the competitive advantage more sustainable.
(1) Prevent challengers from attacking by not giving them any areas to attack.
(a) Offer full line of products.
(b) Use of exclusive agreements with dealers to block competitors.
(c) Protect technologies through patent and licenses.
(2) Increase competitors’ beliefs that significant retaliation can be expected if
competitive attacks are initiated.
(a) Public announcements by managers to “protect” market share.
(b) Strong responses to competitors’ moves, such as matching price cuts.
(c) Competitive counterattacks are critical if the markets or segments being
attacked are crucial to the organization.
(d) Retaliation should be used with caution against a new entrant because research
shows that the typical new entrant does not pose a serious threat and retaliation
can be expensive.
(3) The final type of defensive move involves lowering the incentive for a competitor
to attack.
(a) Lead the potential attacker to believe that the expectations of future profits are
minimal.
(b) Keep prices low and continually invest in cost lowering action.
B. Evaluating and Changing Competitive Strategy

The responsibility of managing strategically doesn’t stop once the competitive strategy is
implemented. Strategies must be monitored, assessed and evaluated for performance
effectiveness and efficiency.
1. Evaluation of the competitive strategy assesses the organization’s various functional areas
and the activities performed there. Some evaluation questions to ask:
a) What are the results of the various strategies?
b) Are they having the intended effect?
c) Is competitive advantage being successfully exploited?
d) Why or why not?
e) What if results aren’t as high as expected, or what if they’re better than expected?
f) Has the market changed and the organization hasn’t?
g) Are the organization’s numerous resources and capabilities being used effectively and
efficiently so that the needed and crucial competitive advantage is being developed and
exploited? Which ones are and which ones aren’t?
2. Changing organization’s competitive strategy when the evaluation shows the strategy isn’t
having the intended impact or hasn’t resulted in desired levels of performance.
a) Change in the organization’s fundamental competitive strategy isn’t something that
organizations want to do frequently or continually.
(1) Each competitive strategy entails the development of specific resources, capabilities
and distinctive competencies. Changing the competitive strategy means modifying
or redeveloping the organization’s resources and capabilities which is difficult and
expensive.
(2) This doesn’t, and shouldn’t, mean that an organization would never change its basic
competitive approach. What it does mean is that this type of major strategic change
should be approached realistically and intelligently.
b) Although changing the organization’s basic competitive strategy isn’t highly likely,
modifying the organization’s competitive actions is.
Teaching Notes: _______________________________________________________________________

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• Why is strategy implementation critical?
• If a strategy is not implemented, then it’s nothing more than a strategic idea or plan.
• Describe the role(s) that functional strategies play in implementing the organization’s competitive
strategy.
• In implementation, functional strategies play a dual role of what and how. What competitive
strategy is most appropriate and how that strategy is implemented.
• Describe the offensive and defensive competitive actions an organization might use.
• Offensive moves are when an organization attempts to exploit and strengthen its competitive
position through attacks on a competitor’s position.
• A frontal assault is when the attacking firm goes head-to-head with its competitor and matches the
competitor in every possible category such as price, promotion, product features, and distribution
channel. Another offensive tactic is to attack competitors’ weaknesses. Another offensive tactic is
to use an all-out attack on competitors by hitting them from both the product and the market
segment side. Another type of offensive move is to avoid direct, head-on competitive challenges
by maneuvering around competitors and subtly changing the rules of the game. Finally, another
possible offensive tactic is to use “guerilla” attacks.
• Defensive moves describe when an organization is attempting to protect its competitive advantage
and turf.
• One defensive move is to prevent challengers from attacking by not giving them any areas to
attack. Another possible defensive move is to increase competitors’ beliefs that significant
retaliation can be expected if competitive attacks are initiated. The final type of defensive move
involves lowering the incentive for a competitor to attack.
• How should an organization’s competitive strategy be evaluated?
• The responsibility of managing strategically doesn’t stop once the competitive strategy is
implemented. Strategies must be monitored, assessed, and evaluated for performance
effectiveness and efficiency.
• Most organizations’ competitive strategies are targeted at increasing sales revenues, market share,
or profitability, so data on these particular performance areas would be required to determine what
impact the competitive strategies are having.
THE BOTTOM LINE
Learning Outcome 5.1: Describe the functional strategies an organization needs and
explain how those strategies are implemented and evaluated.
• Functional strategies: short-term, goal-directed decisions and actions of the
organization’s various functional areas.
• All organizations must acquire and transform resources (inputs) into outputs (products),
which are then made available to the organization’s customers or clients.
• Organizations have three functional concerns: the product, the people, and the support
processes.
• The Product: product functional strategies include product design, production–
operations, and marketing.
• Product design and development strategies are part of the R&D functional area.
Strategic choices include timing (first mover: organization that’s first to bring a new
product or innovation to the marketplace); who will do design and development
(separate R&D department, cross-functional team: a group of individuals from various
departments who work together on product or process development, or some
combination); and how design and development process will take place (formal or
informal process, type of and how much research, and extensive or limited use of
various R&D tasks).
• Production-operations: process of creating and providing goods and services. Strategic
choices include how and where products will be produced. These choices encompass
the design and management of the production-operations process.
• Marketing: process of assessing and meeting the wants and needs of individuals or
groups by creating, offering, and exchanging products of value. Marketing strategies are
directed at managing the two Cs: customers and competitors. Strategic choices involve
segmentation or target market, differentiation, positioning, marketing mix, connecting
with customers, gaining marketing insights, building strong brands, designing effective
marketing communications and managing the marketing functional area.
• The People: people (HR) functional strategies reflect an organization’s commitment to
and its treatment of its employees. HR strategies can be a significant source of
competitive advantage and can have a positive impact on performance (high-
performance work practices: HR practices that lead to both high individual and high
organizational performance). Strategic choices involve getting people into the
organization, making sure they have the necessary knowledge and skills to do their jobs
and helping them do those jobs better, assessing how well they do those jobs and
making needed corrections, and motivating high levels of effort and compensating them
fairly. May also address other HR issues such as employee relations, diversity efforts,
etc.
• The Support Processes: support processes support the organization as it does its work.
The two main ones include information systems and financial-accounting systems.
• Information system: a system for collecting, processing, storing and disseminating
information that managers need to operate a business. Strategic choices involve the
choice of system technology and the choice of types of information systems desired.
• Financial–accounting systems provide strategic decision makers with information about
the organization’s financial accounts and financial position. Strategic choices include
collecting and using financial–accounting data, evaluating financial performance, doing
financial forecasting and budgeting, determining the optimum financing mix and
effectively and efficiently managing the financial-accounting area.
Learning Outcome 5.2: Explain what competitive advantage is and what it implies.
• Competitive advantage: what sets an organization apart, which can come from
distinctive capabilities or unique resources. It implies there are other competitors.
• Competition: when organizations battle or vie for some desired object or outcome. The
types of competition an organization might face can be understood by looking at who
competitors are.
• Three approaches to defining an organization’s competitors include: (1) industry
perspective, which identifies competitors as organizations that are making and selling
the same or highly similar goods or services; (2) market perspective, which says
competitors are organizations that satisfy the same customer need; and (3) strategic
groups concept, which is based on the idea there are groups of firms competing within
an industry that have similar strategies, resources and customers.
• Organizations develop strategies that exploit resources and capabilities to get a
competitive advantage, thus setting the stage for competition.
• Competitive strategy: strategy for how an organization or business unit is going to
compete.
Learning Outcome 5.3: Describe the different competitive strategies.
• The traditional approaches to defining competitive strategies are Miles and Snow’s
adaptive strategies and Porter’s generic competitive strategies.
• Miles and Snow’s four adaptive strategies include: (1) prospector: a strategy in which
an organization continually innovates by finding and exploiting new product and market
opportunities, (2) defender: a strategy used by an organization to protect its current
market share by emphasizing existing products and producing a limited product line, (3)
analyzer: a strategy of analysis and imitation, and (4) reactor: a strategy characterized
by the lack of a coherent strategic plan or apparent means of competing.
• Porter’s generic competitive strategies are based on competitive advantage (either low
costs or unique and desirable differences) and product–market scope (broad or narrow).
He identifies three strategies: (1) cost leadership: a strategy in which an organization
strives to have the lowest costs in its industry and produces products for a broad
customer base; (2) differentiation: a strategy in which an organization competes by
providing unique (different) products in the broad market that customers value, perceive
as different, and are willing to pay a premium price for; the differentiator works hard to
establish brand loyalty: customers consistently and repeatedly seek out, purchase, and
use a particular brand; (3) focus: a strategy where an organization pursues either a cost
or differentiation advantage in a limited customer segment.
• Porter also identifies a strategy of stuck in the middle, which happens when an
organization can’t develop a low cost or a differentiation advantage.
• There are two contemporary views on competitive strategy. The first is the integrated
low cost–differentiation strategy, which involves simultaneously achieving low costs
and high differentiation. Some organizations have been able to do this because of
technology.
• The second contemporary view is Mintzberg’s generic competitive strategies. He
proposes that an organization’s strategy is either differentiation or being
undifferentiated. If it chooses differentiation, it does so by price, marketing image,
product design, product quality, or product support.
Learning Outcome 5.4: Discuss how competitive strategies are implemented and
evaluated.
• Competitive strategies are implemented through the functional strategies; that is, the
resources and distinctive capabilities found in the functional areas influence which
competitive strategy is most feasible. In addition, the functional strategies support the
organization’s competitive advantage and strategy.
• Competitive strategies are also implemented through competitive actions, which
include: (1) offensive moves: an organization’s attempts to exploit and strengthen its
competitive position through attacks on a competitor’s position, and (2) defensive
moves: an organization’s attempts to protect its competitive advantage and turf.
• Competitive strategies are evaluated by the performance results obtained. What
competitive weaknesses and strengths does the organization have?
• Changing the competitive strategy isn’t something that organizations do frequently
because it’s based on specific resources, distinctive capabilities and core competencies
developed in the functional areas. Changing would mean modifying or redeveloping
those. What is likely to be changed are the organization’s competitive actions.
Suggestions for using YOU as Strategic Decision Maker: Building Your Skills exercises
1. This is a good opportunity to discuss the "value chain" concept. Have your students conduct an
Internet search for value chain related articles. One site of particular note is Industry Week's Web
site (www.iwvaluechain.com). Have the students review various articles available for download or
review. [Learning Outcome 5.1: Describe the functional strategies an organization needs and
explain how those strategies are implemented and evaluated; Course Level Objectives:
Identify and describe common types of functional strategies; AACSB: Reflective thinking
skills]
2. There are many good articles available about Jack Welch from Fortune, Time, Business Week, etc.
Have your students research this leader and his decisions over the last few years with General
Electric with particular focus on functional activities. [Learning Outcome 5.1: Describe the
functional strategies an organization needs and explain how those strategies are implemented
and evaluated; Course Level Objectives: Identify and describe common types of functional
strategies; AACSB: Reflective thinking skills]
3. Visit the Web site www.cybercrime.gov, link to “economic espionage” for a list of cases and press
releases regarding economic espionage. It may be interesting for the students to visit the site, and
select a case to review, and then evaluate the implications for functional strategy formulation and
implementation. Ask the students to brainstorm ways there are to protect businesses from having
their highly confidential information stolen. [Learning Outcome 5.1: Describe the functional
strategies an organization needs and explain how those strategies are implemented and
evaluated; Course Level Objectives: Identify and describe common types of functional
strategies; AACSB: Reflective thinking skills]
4. Take a class poll to determine how many of the students have used online customer service
activities, and why they use them. Is it easier/better than calling customer service? Why? From the
organization’s point of view, what are the advantages and disadvantages? Ask the students to
brainstorm how the strategic decision makers can address the disadvantages. [Learning Outcome
5.1: Describe the functional strategies an organization needs and explain how those strategies
are implemented and evaluated; Course Level Objectives: Discuss best practices for strategy
implementation; AACSB: Reflective thinking skills]
5. As an alternative, this exercise could be divided among groups in the class. Ask each group to
research a different type of sponsorship, provide several examples and evaluate the strategy. Have
the groups report back to the class. [Learning Outcome 5.2: Explain competitive advantage and
what it implies; AACSB: Reflective thinking skills]
6. You may wish to have students record their “perfect job” description prior to assigning this
exercise. Ask the students to do research on companies they would like to work for and then
compare what they find in their research with their expectations. Quality of work life has been the
focus of many research activities over the last couple of decades. [Learning Outcome 5.2:
Explain competitive advantage and what it implies; AACSB: Communication skills,
Reflective thinking skills]
7. You may wish to begin by establishing a few of the expectations organizations have for new
information technology systems. Ask the class members to consider who will be using the system
and how the information will be used. [Learning Outcome 5.2: Explain competitive advantage
and what it implies; AACSB: Reflective thinking skills]
8. This a good exercise to illustrate the multifunctional dimensions of strategic planning. Ask the
students in groups to prepare a one-page “talking points,” bulleted list of its key points for
distribution and presentation to the entire class. [Learning Outcome 5.1: Describe the functional
evaluated; Course Level Objectives: Discuss best practices for strategy implementation;
AACSB: Reflective thinking skills]
9. You might discuss the criteria Fortune uses to select the top 100 and to compare the list year-to-
year. Can the strategies employed work at all types of organizations? Why or why not? This
exercise could be an individual, but might be more effective as a small group project. [Learning
Outcome 5.1: Describe the functional strategies an organization needs and explain how those
strategies are implemented and evaluated; Course Level Objectives: Discuss best practices
for strategy implementation; AACSB: Reflective thinking skills]
10. This is a good extension of a discussion on sources of competitive advantage. You may wish to
include “copyright” protection and international issues in the classroom discussion. [Learning
Outcome 5.4: Discuss how competitive strategies are implemented and evaluated; Course
Level Objectives: Discuss best practices for strategy implementation; AACSB: Use of
information technology, Reflective thinking skills]
11. The Art of War can be a very interesting exercise. Inevitable comparisons will arise with United
States military-related actions such as Iraq, Granada, the Gulf War, Vietnam and Korea. You may
address some of the statements in this exercise for greater understanding, however, be prepared for
students to take a different view than former generations. After the class discussion, have the
students look for business examples. [Learning Outcome 5.3: Describe the different
competitive strategies; Course Level Objectives: Discuss best practices for strategy
12. This assignment could be used as a group out-of-class assignment, as a lively, in-class discussion or
exam essay question. [Learning Outcome 5.2: Explain competitive advantage and what it
implies; Course Level Objectives: Discuss best practices for strategy implementation;
AACSB: Analytic skills]
13. This could be assigned as an out-of-class project for individuals or groups. The Web site
[www.interbrand.com] will contain the brand survey for the students to use. [Learning Outcome
5.4: Discuss how competitive strategies are implemented and evaluated; Course Level
Objectives: Discuss best practices for strategy implementation; AACSB: Use of information
technology, Reflective thinking skills]
Strategic Management in Action Cases

Case #1 Driving for Success
1. Keys to Toyota’s success include: Tight control of the production process so that they know that
they are within specifications or if variation has occurred. This system then allows Toyota to
customize (by controlled variation) the product in a short period of time without risking losing
control of the production process and suffering poor quality. Toyota produces very high quality
products that are innovative enough to satisfy most customers. [Learning Outcome 5.1: Describe
the functional strategies an organization needs and explain how those strategies are
implemented and evaluated; Course Level Objectives: Discuss best practices for strategy
2. Production is most important to Toyota as evidenced by their investment in such strong production
controls and methods. Their cars are sold based on their quality and their resulting high resale
values. These attributes support their marketing campaigns that showcase the quality of Toyota’s
cars. Encourage students to list the production strategies detailed in the case to show the firm’s
engineering and production expertise. [Learning Outcome 5.1: Describe the functional
evaluated; Course Level Objectives: Discuss best practices for strategy implementation;
3. Coordination among the strategies at Toyota is especially important as most contribute to the
production process. Ask students: What would happen if Toyota launched marketing campaigns
praising the highly innovative and sporty styling of a Camry (a fairly conservative model)? How
would consumers react to that message which seems inconsistent with the car’s styling? [Learning
Outcome 5.4: Describe how competitive strategies are implemented and evaluated; Course
Level Objectives: Discuss best practices for strategy implementation; AACSB: Reflective
thinking skills]
4. You might have students compare the advertising and descriptions of Toyota’s mainstream vehicles
with the approach they are using to reach a more trendy and youthful market with the Scion car line.
Scion is a big departure for Toyota from its traditional focus but still builds on its key strengths of
cost control and engineering by introducing boldly styled cars with quality construction but at a low
price. Ask students why Toyota introduced this new line? (Could it be to get first time buyers into
the Toyota “family” hoping for their continued loyalty in future car purchases as they move beyond
these low priced cars? [Learning Outcome 5.1: Describe the functional strategies an
organization needs and explain how those strategies are implemented and evaluated; Course
Level Objectives: Discuss best practices for strategy implementation; AACSB: Use of
information technology, Reflective thinking skills]
Case #2 They’ve Got Game
1. Miles and Snow: A prospector is consistently developing new products and innovative advertising
and endorsements.
Porter’s framework: Broad scope with differentiation between segments but the same overall
approach of designing innovative look and using big stars to promote. [Learning Outcome 5.2:
Explain competitive advantage and what it implies; Course Level Objectives: Discuss best
practices for strategy implementation; AACSB: Reflective thinking skills]
2. Nike’s competitive advantages that have contributed to its competitive advantage are: high brand
image; innovative designs; memorable ads and endorsers; and lots of store shelf space. Nike’s
ability to advertise in unique ways complements innovative product design. [Learning Outcome
5.2: Explain competitive advantage and what it implies; Course Level Objectives: Discuss
best practices for strategy implementation; AACSB: Reflective thinking skills]
3. Yes, Nike’s functional strategies support its competitive strategy by the following: keeping its costs
down but prices up to make room for expensive endorsements; efficient ad campaigns in that they
can travel well across borders and still have meaning and stars have good recognition abroad also;
and by staying innovative and having clever ads Nike continues to draw large numbers of
enthusiastic buyers willing to pay higher prices for perceived value added. [Learning Outcome
5.3: Describe the different competitive strategies; Course Level Objectives: Discuss best
4. To maintain its strong competitive position, Nike is going to have to stay innovative; need to be
perceived as the best product with serious sports enthusiasts not just the best marketers; continue to
hire up-and-coming stars; and avoid any scandals so as to limit its competitors’ ability to make any
inroads into Nike’s markets. [Learning Outcome 5.2: Explain competitive advantage and what
it implies; Course Level Objectives: Discuss best practices for strategy implementation;
Case #3 Rewind and Replay
1. Miles and Snow: Originally, Netflix was probably a Prospector as it sought innovation. However,
recent decisions have put the company in the Reactor category. Some students could make a case
that the firm is a Defender now that new competitors have entered the market.
Porter’s framework: Students may identify one or more of Porter’s strategies. However, based
upon the information presented in the case, one might argue that a differentiation strategy is taking
place as Netflix attempts to demonstrate to consumers its uniqueness compared to others. Although,
a case could also be made that Netflix is now stuck in the middle as it is neither different nor low
cost. [Learning Outcome 5.2: Explain competitive advantage and what it implies; Course
Level Objectives: Discuss best practices for strategy implementation; AACSB: Reflective
thinking skills]
2. Students might identify any number of competitive advantages for Netflix. They should be able to
explain how the firm’s resources, capabilities, and/or core competencies contributed to this
competitive advantage, using material from the chapter. [Learning Outcome 5.2: Explain
competitive advantage and what it implies; Course Level Objectives: Discuss best practices
3. Students may focus on all three functional concerns (product, people, and support processes). For
product, be sure that they look at Netflix’s design – especially how product is delivered to the
consumer. Also, the production/operations as well as marketing should be mentioned. For people
strategies, well-trained customer service will be important when customers have a problem. Finally,
for support processes, the information systems and financial-accounting systems must be modern
and sound. [Learning Outcome 5.2: Explain competitive advantage and what it implies;
Course Level Objectives: Discuss best practices for strategy implementation; AACSB:
4. This is an opinion question, but students might focus on price (being the low cost provider) or on
service (offering more selection in a faster format). [Learning Outcome 5.2: Explain competitive
advantage and what it implies; Course Level Objectives: Discuss best practices for strategy
Case #4 Casting a Wider Net
1. Students may focus on the fact that there are literally thousands of widely different products in a
single location – providing something for every type of buyer. Shopping at these huge stores
becomes an experience with lots of participatory demonstrations of products. Restaurants and other
features make the shop a destination…more fun than the average mall or “big box” store visit. Bass
Pro Shops are a chain of locations that seek to duplicate the success of the original store. [Learning
Outcome 5.1: Describe the functional strategies an organization needs and explain how those
strategies are implemented and evaluated; Course Level Objectives: Discuss best practices
2. Some challenges in replicating this strategy for Bass Pro are: The need to standardize what is sold
and how it is promoted (efficiency argument for global or uniform production function) and how to
incorporate local needs and interests that differ regionally. For example, Bass Pro in Minnesota
might showcase camping and lake fishing, minimizing scuba or surf fishing equipment (not as much
need for that in MN).
Another issue for Bass Pro is to ensure its sales associates are knowledgeable of their products. It
may be a problem to hire skilled bass fishing experts in Nevada or New Mexico where fishing is not
as common a sport as in Missouri. In addition, as the chain of shops expands, Bass Pro will run up
against competitors who are entrenched in the local market and may be able to successfully defend
their markets making investment in new mega-stores less profitable. [Learning Outcome 5.2:
Explain competitive advantage and what it implies; Course Level Objectives: Discuss best
3. Visit the Web site. [Learning Outcome 5.2: Explain competitive advantage and what it
implies; Course Level Objectives: Discuss the functions of vision statements, mission
statements, and long-term corporate objectives; AACSB: Use of information technology,
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The Project Gutenberg eBook of A visit to a farm house;
or, An introduction to various subjects connected with
rural economy
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Title: A visit to a farm house; or, An introduction to various subjects

connected with rural economy
Author: active 1801-1820? S. W.
Editor: T. H.
Release date: May 25, 2022 [eBook #68171]
Language: English
Original publication: United Kingdom: William Darton, 1820
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*** START OF THE PROJECT GUTENBERG EBOOK A VISIT TO A FARM

HOUSE; OR, AN INTRODUCTION TO VARIOUS SUBJECTS CONNECTED
WITH RURAL ECONOMY ***
A Tribute of
Regard,
Presented by
Thy Affectionate
Friend
Frontispiece.
The Farm Yard.
VISIT
TO
A FARM HOUSE;
OR,
AN INTRODUCTION
TO
VARIOUS SUBJECTS
CONNECTED WITH
RURAL ECONOMY.
EMBELLISHED WITH BEAUTIFUL PLATES.
By S. W.
AUTHOR OF “A VISIT TO LONDON.”
SEVENTH EDITION,
REVISED AND CORRECTED
By T.H.
LONDON:
WILLIAM DARTON, 58, HOLBORN HILL.
And to be had of all Booksellers.
1820.
(Entered at Stationers’ Hall.)
[PRICE HALF-A-CROWN.]
PREFACE.
This little Work was undertaken to excite the attention of those
children, who live in the country, to the various objects by which they
are surrounded; and to furnish those residing in the metropolis and
other large cities, with some information relative to rural economy,
which their situation prevents them acquiring by personal
observation.
The author acknowledges that she is totally incompetent deeply to
discuss the phenomena of nature, or the science of agriculture; she
should indeed think it inconsistent to introduce scientific researches
into a Work of this kind. But a slight investigation of the simple arts
by which the nourishment of man is effected, or of some of those
wonders of creative power which daily present themselves to view,
cannot, in her opinion, be deemed an improper exercise even at an
early age.
VISITS
TO
A FARM HOUSE.
CHAPTER I.
Cows.
“What a delightful morning!” exclaimed little Arthur Benson on

opening his eyes, and seeing the sun shine bright into his room;
“Charles, Charles,” continued he, turning to his brother, who was still
asleep, “let us get up directly, and we shall have time for a little walk
before grandpapa and grandmamma come down stairs.” Charles
obeyed the summons, and they were soon dressed. They then went
into the garden, and from the garden into the field adjoining; both
highly pleased with all they saw, for they had never slept out of
London before, and the country was quite a new scene to them.
“See,” said Charles, “how all the cows are gathered together by that
gate; and here comes a man they call old Ralph with a pail on his
arm. Pray, Ralph, what do the cows want there?” “They want to be
milked,” said Ralph, “and through that gate is the way to the farm
yard.” “Are you going to milk them, and may we come with you?”
inquired Arthur.
Leave being given, they tripped along by the side of the good old
servant; but both stood at some distance behind when they came
near the cows, as they felt rather afraid of going close to such large
animals. “Why, now, masters, what is there to be afraid of?” said
Ralph, who found they had left off talking and suddenly shrunk back.
“The cows will not hurt you, if you do not hurt them.” “Don’t they
sometimes toss people with their great horns?” asked Charles. “Here
and there you may meet with a vicious one,” replied the man, “but in
common they are very gentle.”
Arthur. I remember my papa told me never to run in the way of the
cows that we meet in London streets.
Ralph. Aye, that is a very different thing. The poor cattle are not
used to be there, so sometimes they may be frightened; and then,
the butchers are often cruel, and will beat and drive them about, as I
have heard, so that for what I know it may be best to keep out of
their way; but here there is nothing of the sort. I do not ill use them,
and they are always quiet with me.
The little Bensons then recovered from their fears, and wanted to
milk the cows themselves. The trial was made, and they were
surprised to find that they were not able to do it as well as Ralph.
Had they been older, they would have known that there are many
things which are easy to those who are accustomed to do them, that
one who had never tried would find difficult.
“Pray, Ralph,” asked Arthur, “why has the young calf that thing full
of spikes round his mouth? See, he wants to suck the black cow, and
she will not let him. Cannot you take it off?”
“Oh no, master Arthur, it is time the calf should be weaned. He is
old enough now to eat grass, and we want the milk for the dairy; so
we put the spikes on him, and because of them, as they would hurt
her, the mother will not let him suck any more.”
“Is he to be killed?” inquired Charles.
“Not at present,” replied the old man. “Master means to keep him
to draw in the team.”
“To draw in the team!” said Charles with some surprise.
“Yes,” returned Ralph; “we have always a team of oxen. You may
see them ploughing in that field yonder; just there,” continued he,
pointing with his finger, “beyond the holly hedge.”
“I see them; I see them,” said Arthur. “Poor creatures! how slow
they go! Are not they tired, Ralph?” “No, sir,” replied Ralph, “they do
not move so quick as horses; but they are vastly stronger. And
though it is not always quite so easy to manage them, yet on the
whole they answer very well.”
Ralph had now finished milking: and taking the little boys into the
stable, he showed them a baby calf, as he called it, that was to be
sold to the butcher the next day.
Page 6.
The baby Calf.
London. Published by W. Darton Jun. Oct. 5, 1815.
“O you pretty little thing!” said Arthur. “Only look, Charles, at these
spots on its back. I should like to have it for my own. Why must it be
killed, pray?”
Ralph. To serve us for food, master Arthur. If we were to suffer all
the cattle to live, they would eat all the grass and corn that we could
grow; and then we should be starved, and you would not like that.
Arthur. No, I don’t want to starve; only I do not like to have things
killed.
At this moment Mr. Mansfield came into the stable.
“We were talking about this poor calf, grandpapa,” said Charles.
“Ralph says it is to be killed to-morrow to make veal. I am sorry for it;
it has such a pretty coat!”
“It cannot be helped, my dear,” replied his grandfather. “But when
it is dead, do you know what will be done with its pretty coat?” The
boys answering they did not, “It will be sold,” said he, “to the tanner,
who dresses the skins of cattle, or hides as they are called; and
when it is properly prepared, it makes that beautiful, smooth kind of
leather, that the large books you were looking at last night were
bound with. It is often prepared to write upon, and is then called
vellum. The skins of oxen and cows make a thick coarse leather,
such as the soles of our boots and shoes.”
“And what becomes of the hair?” asked Charles.
“After the hide has been soaked for a long time,” replied Mr.
Mansfield, “it comes off easily, and is put into that kind of mortar
which is used to plaster walls, in order to keep them from crumbling
and falling away. Did you never see in a white wall broken down in
part, a heap of short hairs, and here and there perhaps a little loose
piece of mortar hanging to them?”
Arthur said he had, but he did not know it was cow-hair; and
added, he could not have thought it could have been of any use.
“Every thing is of use, my dear,” said Mr. Mansfield. “I doubt if you
can name a part of the cow that will not turn to some account.”
“What the hoofs, grandpapa?” said Charles.
“Yes, Charles,” returned Mr. Mansfield. “The hoofs and the parings
of the skin, by being boiled down to a strong jelly, make the glue
which carpenters use to join things together.”
Arthur. The horns—Oh, I know what is done with the horns. I have
seen horn lanterns, and I have got a little box at home that mamma
says is made of horn.
Mr. Mansfield. Very well, Arthur. And you may have seen boxes,
and knife-handles, and combs, and many other things, made of the
bones of the ox. Even the dung is of some use. It is a good manure
for land; it is used in the process for bleaching linen; and poor
women pick it up when it is dry, and make fires of it, to save coals.
CHAPTER II.
The Dairy.
Mrs. Mansfield, hearing how much her little grandsons had been
pleased with the cows, after breakfast took them into the dairy, to
show them what was done with the milk which those useful animals
give in such large quantities. The dairy was a little room with a brick
floor, facing the north, and kept very cool, by means of a latticed
window that let in fresh air. It was necessary that it should be built in
that way, because heat soon turns milk sour. Round the room were
fixed a sort of trays lined with lead, which then were all filled with
milk.
“Grandmamma, what is to be done with this milk?” inquired Arthur.
“It is set for cream,” answered Mrs. Mansfield; “and the cream will
be made into butter.”
Charles. How is butter made, pray?
Grandmamma. Come here, and I will show you. The milk is
poured into these trays, which are not deep, but broad, so as to
cover a large space. When it has stood some time, the cream or
greasy part, which at first is mixed with the milk, rises to the top in
the manner you now see. Then it is skimmed off with this ladle, and
put into a pan by itself. This is done twice a-day; and when there is
cream enough, it is churned into butter.
Charles. Is there any churn here, grandmamma? Sister Kate has
got a plaything churn, but I never saw one fit for real use.
Mrs. Mansfield pointed to a large barrel fixed on a stand, with a
winch handle to turn it, and told him that was the churn. Charles was
surprised, and said it was not at all like his sister’s.
Grandmamma. Perhaps not. Sometimes they are made like a pail,
with a long stick to pull up and down; but these I have give less
trouble, and, I believe, are now common.
Page 14.
The Dairy.
London. Published by W. Darton Junʳ. Oct. 5, 1815.
Arthur. Well, grandmamma, how is this used?
Grandmamma. The cream is put in through that little square door,
which is then shut quite close; and when the churn has been turned
a good while, it is changed into butter.
Charles. So then butter is nothing but cream shaken about? I
should like to see it made.
Grandmamma. You cannot see it now, my dear, because Rose
churned yesterday. But I will give you a little cream in a phial: and
you may shake it till you make it into butter.
Arthur. Oh, can we make it so? I should like it very much indeed, if
you please, ma’am.
Mrs. Mansfield fetched a phial, and the two boys amused
themselves a long time with their experiment. But they found that
with all their pains they could not turn the whole into butter; their
grandmamma told them there was always some waste; that it was
called buttermilk, and given to the pigs.
Arthur and Charles, quite proud of their success, went to look for
Rose, that they might tell her they could make butter as well as she.
They found her in the dairy, where their attention was drawn to a
new circumstance. Rose was standing before a large tub, full of a
white substance rather thicker than jelly, which she was very
diligently employed in breaking.
They forgot the butter they had intended to boast of, and both
began to ask a variety of questions, which she answered with great
good humour.
Both the Boys. What is that for? What are you doing now, Rose?
Rose. Making cheese.
Charles. Making cheese? Well, since I have been at my
grandpapa’s, I have seen things I never saw before.
Arthur. But how do you make it, Rose? What have you got there?
Rose. Curd.
Arthur. What is curd?
Rose. It is made from milk, master Arthur. When the cream is
taken off, we take the milk and mix it with rennet, and then—
Arthur. Rennet! What is that?
Rose. A sour juice that is made by boiling a part of the inside of a
calf. We put a little rennet to the milk, which makes it part into curds
and whey. This thick white part is the curd, and the thin watery part is
called whey.
Arthur. Is that the whey people take for a cold?
Rose. No. That kind of whey is made with wine instead of rennet;
but the curd parts just in the same manner as this.
Charles. I will ask our Sally to let me look at it the next time she
makes whey. But why do you break it?
Rose. That there may be no lumps. Wait a little, if you please, and
you shall see how I go on.
She then took a large round bag made of coarse cloth, into which
she put all the curd, and pressed it with very heavy weights in order
to squeeze out as much of the whey as she could. This done, she
turned it out of the bag into a vat which has holes like a cullender,
and, leaving it to drain, then told them the cheese was finished.
“I did not know,” said Charles, “it was so easy to make cheese. But
what is the rind, pray?”
“’Tis the same as the rest,” replied Rose; “only, being left to the air,
it grows hard in time.” Then leading them into another room, she
showed them a great number of cheeses; some were still soft,
having been lately made; others, that had been longer kept, were
grown quite hard.
“What is the whey good for?’ asked Charles, as they came back
through the dairy.
“We give it to the pigs,” said Rose.
“So then,” said Arthur to himself as he walked away, “butter and
cheese are both made from milk; but the butter is the greasy part,
and the cheese is the curdy.”
“Yes, master Arthur,” said Rose, “you are right, for that is our way
of making butter and cheese in this country: but in many places,
where richer cheese is made, they use the milk without skimming off
the cream; and to make good cream cheese, the cream only is used
when skimmed from the milk.”
CHAPTER III.
The Pigs.
When dinner-time came, it happened that there were brought to

table some custards and gooseberry tarts, of which Charles was
tempted to eat very greedily. He had already been twice helped, and
the servant was going to carry away the remainder of a tart that had
been left in the dish, when Charles, not satisfied whilst any
remained, stopped him, and once more filled his plate with it.
The footman stared; and his grandpapa and grandmamma looked
at him with surprise, but said nothing.
In the evening Mr. Mansfield led his grandsons into the yard, just
at the time his man was giving the pigs their supper. Arthur and
Charles were diverted at the eagerness with which the whole family
squeaked and grunted over their food, which they devoured with the
utmost haste, treading one over another as they scrambled for a
share.
“O grandpapa,” exclaimed Charles, “how droll it is to see the pigs
eat! Look there! look there! One has got a cabbage leaf, and another
wants it. Now it has got it away, and it eats it as fast as ever it can.
And now it is come for more. I dare say they will soon empty the
trough.”
“Perhaps so,” replied his grandpapa, smiling. “Pigs are as fond of
cabbage leaves and bean stalks, as little boys are of gooseberry
pie.”
Charles blushed.
“Hey, Charles!” continued he, putting his hand upon his head so as
to look full in his face, “this is not the first time to-day I thought I had
a pig for my companion. Do you know any body that ate voraciously,
and at last emptied the dish?”

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