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Strategic Management
, Sixth Edition
Charles W. L. Hill, University of Washington
Gareth R. Jones, Texas A&M University
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Chapter Summaries
Chapter 4: Building Competitive Advantage Through Functional-Level Strategy
- A company can increase efficiency through a number of steps: exploiting economies
of scale and learning effects, adopting flexible manufacturing technologies,
reducing customer defection rates, implementing just-in-time systems, getting the R&D function to design products that are easy to manufacture, upgrading the
skills of employees through training, introducing self-managing teams, linking
pay to performance, building a companywide commitment to efficiency through strong leadership, and designing structures that
facilitate cooperation among different functions in pursuit of efficiency goals.
- Superior quality can help a company lower its costs and differentiate its product and charge a premium price.
- Achieving superior quality demands an organization-wide commitment to quality
and a clear focus on the customer. It also requires metrics to measure quality
goals and incentives that emphasize quality, input from employees regarding ways in which quality
can be improved, a methodology for tracing defects to their source and correcting
the problems that produce them, rationalization of the company's supply base, cooperation with the suppliers that remain to implement total quality management programs, products
that are designed for ease of manufacturing, and substantial cooperation
among functions.
- The failure rate of new-product introductions is high due to factors such as uncertainty, poor commercialization, poor positioning
strategy, slow cycle time, and technological myopia.
- To achieve superior innovation, a company must build skills in basic and
applied research; design good processes for managing development projects; and achieve
close integration between the different functions of the company, primarily
through the adoption of cross-functional product development teams and partly
parallel development processes.
- To achieve superior responsiveness to customers often requires that the company
achieve superior efficiency, quality, and innovation.
- To achieve superior responsiveness to customers, a company needs to give customers what they want when they want it. It must
ensure a strong customer focus, which can be attained through leadership;
train employees to think like customers and bring customers into the company
through superior market research; customize the product to the unique needs of individual customers or
customer groups; and respond quickly to customer demands.
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