How can managers improve a firms customer value proposition and enhance differentiation?

What are the 6 key questions to evaluate a firm’s ability to compete successfully against market rival?

1. How well is the present strategy working?
2. What are the company’s most important resources & capabilities & can they give the company a sustainable advantage over competitors
3. Is the firm able to seize market opportunities & overcome external threats to its future well-being?
4. Are the company’s cost structure & value proposition competitive?
5. Overall, is the firm competitively stronger or weaker than key rivals?
6. What strategic issues & problems merit from-burner managerial attention?

How well is the present strategy working? P113

-evaluating the strategy in terms of financial performance & market standing
-the stronger overall performance, the less likely need for racial strategy changes
-the weaker a company’s performance and/or the faster changes in its external situation (PESTEL), the more its current strategy must be questioned

What are important resources/capabilities? P113

-resources are tangible/intangible
-capabilities either start w/its resources to look for related capabilities or looking for them w/i the firm’s different functional domains

Can the firm’s resources give sustainable advantage over competitors? P113

Answered by conducting the 4 tests of a resources Competitive power (the VRIN tests).
-If the firm;s resources/capabilities are VALUABLE/RARE, then the firm will have comp. advant. over market rivals.
-If r/c are hard to copy (inimitable), with no good substitutes (nonsubstitutable), then the firm may sustain this advantage even when active efforts by rivals try to overcome it.

-r/c = resources & capabilities
-adv. = advantage
-comp. = competitive
-SWOT = strengths, weaknesses, opportunities, threats
-imp = important
-VC = value Chain
-acti = activities

Can the firm seize the market opportunities & overcome external threats to its future? P113

A SWOT analysis must be performed
2 most important part of SWOT:
(1) drawing conclusions of what SWOT tells about the overall situation (2) acting on the conclusions to better match strategy to internal strengths/market opportunities, to correct imp. Internal weaknesses, defend against external threat

Strengths & competitive assets p113

Relevant bc they are mot logical/appealing BUILDING BLOCKS for strategy

Important bc they may represent VULNERABILITIES that nee correction

External opportunities & threats p113

Bc a good strategy necessarily aims to capture the firm’s most attractive opportunities and at defending against threats to its wellbeing

Are the firm’s COST STRUCTURE & VALUE PROPOSITION competitive? P113

Signs if a firm is strong or precarious p113

1. Is its Cost competitive with industry rivals?
2. How does the firm with rivals in Differentiation - how effectively does it deliver on Customer Value Proposition?

Value Chain analysis and Benchmarking p113

Essential tools to complete r/c analysis to determine:
-if a firm is performing certain functions and activities well
-are its Cost in line with competitors
-is the firm Differentiating to really enhance customer value
-does certain internal activities & business processes need improvement?
These ?s provide data on individual level activities that provide more objective evidence of whether individual r/c, or bundles of resources and linked activity set, are completely Superior

1. Resource and Capabilities Analysis
2. SWOT Analysis
3. Value Chain Analysis
4. Benchmarking
5. Competitive Strength Assessment
(All reveal firm’s competitiveness & help managers match their strategy to the firm’s particular circumstance

What moves has the firm taken recently to attract customers an improve its market position
(Has it cut prices, improve product design, adde new features, increased advertising, entered a new geographic market, merged with a competitor)?

3 best indicators of how well a firm’s strategy is working p84

(1) is the firm achieving its financial & strategic objectives?
(2) is its financial performance above the industry average?
(3) is it gaining customers & gaining market share?

SPECIFIC Indicators of how well the firm’s strategy is working p84-85

-Trends in company Sales and Earnings Growth
-trends in company Stock Price
-overall Financial Strength
-Customer Retention Rate
-Rate new customers are acquired
-evidence of improvement i internal processes like: defect rate, order fulfillment, delivery times, days of inventory, & employee productivity)

Strong overall performance p85

The STRONGER the firms overall performance, the more likely it has a Well-conceived, well-executed strategy

Weak overall performance p85

The weaker the firm’s financial performance & market standing, the more its current strategy must be questioned & more likely the nee for racial change

Sluggish financial performance p85

And second-rate market accomplishments almost always signal weak strategy, weak execution, or both

The firm’s overall resources and capabilities which are determinants of its competitiveness and ability to succeed in the marketplace

Resource & Capability Analysis p87

A powerful tool that managers use for sizing up the company’s competitive success in the marketplace. There is a 2-step process.

2-Step process of Resource and Capability Analysis p87-6

1. First identify the firm’s resources and capabilities
2. Examine them more closely to ascertain which are the most competitively important and if they can support a sustainable competitive advantage over rival firms *(this step involves applying the four tests of a resource’s Competitive Power)

Resources and capabilities

Are fundamental Building Blocks of Competitive strategy

A productive Input or Competitive Asset that is owned or controlled by the firm.
-some are higher quality than others
-some are more competitively valuable with more potential to give the firm a competitive advantage over rivals

-brand
-R&D (research & development
-value
-name recognition

-is Competence
-The capacity a firm perform some Internal Activity competently.
*they vary in form, quality and competitive importance & some are more valuable than others. E.g. brand management & marketing, employee management, training, driers in rapid growth

Organizational Capabilities p88

Are developed ad enabled through the deployment (movement) of the firm’s resources

Types (main categories) of company resources p88

1. Tangible
2. Intangible

-Most Easily identified
-can b touched (quantified)
1. Physical resources (manufacturing facilities, mineral resources,
2. Financial resources,
3. Technological resources {convention}
4. Organizational resources {communication&control system}

-Are harder to identify
-Are most important in firm’s competitive assets.
- have no material existence on their own, so they are embodied (manifested) in something material
1. Human assets & intellectual capital
2. Burns, company image & reputation
3. Relationship: alliances, joint ventures, partnerships
4. Company culture an incentive system

Examples of Tangible and Intangible resources p89

What’s included in the firm’s inventory, tangible or intangible? P90

It is not exactly HOW a resource is categorized that matters, but that all of the company’s different types of resources are included in the inventory

What’s the real purpose of using categories for tangible and intangible? P90

To ensure that none of a firm’s sources go unnoticed when sizing up the company’s competitive assets

Identifying Capabilities p90

-more complex and entities (thing) than resources
-harder to categorize
-all are knowledge-based, residing in people an in a company’s intellectual capital, or in organizational processes and systems, which embody tacit (understanding) knowledge

Two Approaches for identifying a firm’s capabilities systematically p90

1. A complete listing of the firm’s resources (these provide clues about types of capabilities they have) eg. fleet of trucks, RFID tracking technology, automated distribution centers, etc
2. A Functional approach which involve single department or organizational unit. [the problem w/ this approach is that many capabilities are Cross-functional]

Draw from a number of different kinds of resources and are multidimensional in nature
-come from effective collaboration among ppl w/different types of expertise and sometimes known as Resource Bundles

Cross-functional capabilities & other complex capabilities involving numerous linked & closely integrate competitive assets centered around one or more Cross-functional capabilities
-can sometimes pass the four tests of a resources’ Competitive Power even if resources are bundled together

Sustainable Competitive Advantage p91

Superior competitive assets that support competitive advantage and is proven durable despite rivals best efforts to overcome (copy) it

Four Tests of Resource’s Competitive Power p91

VRIN tests for sustainable competitive advantage (Valuable, Rare, Inimitable, and Non-substitutable)

Valuable Test & Rare Test p91

These first two tests of VRIN determine if a resource or capability can support a competitive advantage

Inimitable Test & Non-substitutable Test p91

These last two test of VRIN determine is the competitive advantage can be sustained

VRIN 1 -is the resource/capability competitively VALUABLE?

R/C mu be Directly Relevant to firm’s strategy, to make the firm a more effective competitor (if this is not capable, then r/c cannot pass this first test)
-an indicator is does it strengthen/improve the firm’s customer value proposition an/or profit Formula

VRIN 2 -is the r/c RARE - is it something rivals lack? p91

Conspired rare if it is held by only a small number of firms in an industry/specific competitive domain [remember it could be rare in undeveloped regions]

VRIN 3 -Is the r/c INIMITABLE -is it hard to copy?
P92

The more difficult/costly it is for others to imitate the r/c, the more likely it can also be a sustainable competitive advantage
-unique [great real-estate location, patent-protected technology, unusually talented/motivated labor force]
-when they’re built over time in ways that’s difficult to copy [a well-known brand name, mastery of complex technology]
-when they have financial outlays/large-scale operations that few industry’s can undertake [global network of dealers/distributors
-social complexity [culture, relationships, trust based]
-causal ambiguity [hard-to-disentangle nature of complex resources, eg. New drug discovery]

VRIN 4: Is the r/c NONSUBSTITUTABLE? P92

Is it invulnerable to the threat of substitution from different types of r/c?
-resources can be sustainable only when resource substitutes are not on the horizon

Competitively Superior p92

The firm’s true strategic assets
-to pass the last 2 tests, resource must be superior in the face of competition
[the key is to look at other firms r/c being developed and make yours superior to serve the same function]

Very few firms have r/c that can pass all four tests, but the ones that do enjoy a sustainable competitive advantage with greater profit potential [eg Costco]

Resources and Capabilities can depreciate

If they are managed with benign neglect
-disruptive changes in technology
-customer preference changes
-distribution channel changes
-Competitive factors changes
[turning diamonds to rust]

Dynamic challenges for managers p93

1. Attending to the ongoing modification of existing competitive assets
2. Carefully looking for opportunities to develop totally new kinds of capabilities

Ongoing capacity of a company to modify its exiting r/c or create new ones

Dynamic capabilities Role p93

-recalibrate/upgrade/refresh/renew your most valuable r/c
-improve existing r/c incrementally [Toyota & BMW]
-add new r/c to competitive asset portfolio [Bristol-Meyers]

INTERNAL
-provides basis for designing a strategy that capitalizes the firms’ STRNGTHS
-overcome it WEAKNESSES
-aims at capturing the firm’s best OPPORTUNITIES
-defends against competitive & macro-environmental THREATS

A simple, but powerful tool for sizing up a company’s strengths & weaknesses, its market opportunities, and the external threats to its well-being

Identifying Internal Strengths p94

-represents assets
-Something a firm is good at doing or an attribute that enhances (improves) its competitiveness in the marketplace.
-depends on quality of r/c
-allow managers to assess the quality objectively
-the firm’s SKILL LEVEL in performing key pieces like: supply chain management, R&D, production, distribution, sales and marketing, customer service
-just because it suffered on the first try doesn’t mean it can’t perform the activity better than other companies [see book]

Competence p95
(True capability)

An activity a firm has learned to perform with PROFICIENCY.
-When proficiency [skill] goes from barely able to perform to the point of being able to perform it Consistently well & at acceptable cost

Distinctive Competence p95

A capability tat enables a firm to perform a particular SET of activities better that rivals

An activity a firm performs proficiently & that is also CENTRAL to its strategy & competitive success
-distinctive
-more competitively valuable strength than a Competence because its key role and contribution to the firm’s market success and profitability (eg. Band management, design and marketing, developing, producing & marketing an item)

Strengths & Weaknesses p95

-Strengths represent its Competitive Assets
-Weaknesses are shortcomings that constitute competitive liabilities

Identifying Weaknesses & Competitive Deficiency p95

Represents competitive liabilities and puts the firm at an disadvantage. Can relate to:
(1)inferior or unproven skills, expertise/intellectual capital in competitive important areas
(2)deficiencies in important physical, organizational,/intangible assets
(3)missing or inferior capabilities in key areas

Identifying market OPPORTUNITIES p95

-big factor in shaping firm’s strategy
-don’t have to chase all opportunities
-opportunities can be plentiful or scarce
-fleeting or lasting
-can range from wildly attractive to marginally interesting
-new emerging/fast-changing markets can offer “golden opportunities” but hard for managers to look in “the foggy future”

as the fog clears, golden opportunities are nearly always seized quickly-company’s have been waiting, staying alert with market reconnaissance (research) and preparing to capitalize using a lot of resources to use when the time comes

Unusually attractive market opportunities comes sporadically, after long periods of calm

May be more predictable than mature markets.
-makes emerging opportunities easier for managers to detect

Evaluating a firm’s market opportunities p97

Managers must guard against viewing every industry opportunity as a company opportunity.
Relevant opportunities match up well with the firm’s:
-competitive assets,
-offer best prospects for growth/profit
-present the most potential for competitive advantage

-external environment threats to profit/competitive well-being due to:
[emerging cheaper/better technologies, low-cost entrants, burdensome new regulations, unfavorable demographic shifts, political upheaval in foreign markets where the firm is located]

-May pose moderate adversity,
-may make the situation look tenuous (weak)
-market shocks can birth “sudden-death”

What does SWOT listings reveal? P97

Two most important rats to SWOT:
1- drawing conclusions about the firm’s overall situation
2-translating these conclusions into strategic actions to:
-better match the firm’s strategy to internal strengths an market opportunities
-correct important weaknesses
-defend against external threats

final piece of SWOT analysis p98

-translate diagnosis into actions to improve strategy/business prospects
*a firm’s internal strengths should always serve as basis of its strategy- and heavy rely on the firm’s best competitive assets (the soundest route) to attracting customers & competing successfully against rivals

Strategies that have heavy elands on weak areas or have unproven competencies should be AVOIDED!

The higher a firm’s cost are: p99

The higher a company’s costs are above those of close rivals, the more competitively vulnerable the company becomes

The greater the amount of customer value that a company can offer profitably relative to close rivals, the less competitively vulnerable the company becomes.

value provided to the customer depends on:
-how well a customer’s needs are met for the price paid. -How well customer needs are met depends on the perceived quality of a product or service as well as on other, more tangible attributes. *The greater the amount of customer value that the company can offer profitably compared to its rivals, the less vulnerable it will be to competitive attack.

Maintaining competitive edge p99

it can deliver the same amount of value with lower expenditures (or more value at the same cost), it will maintain a competitive edge.

Value Chain Analysis and Benchmarking p99

TWO TOOLS TO measure:
The greater the amount of customer value that a company can offer profitably relative to close rivals, the less competitively vulnerable the company becomes.

All the various activities that a company performs internally combine to form a value chain.
-the underlying intent of a company’s activities is ultimately to create value for buyers.
-A company’s value chain identifies the primary activities and related support activities that create customer value.

Value Chains 2 categories p99

1. Primary activities
2. Support activities

Creates value for customers

Facilitates & enhance the performance of PRIMARY ACTIVITIES

Primary and Support Activities chart p99

Value Chain’s Value-Creating activities p100

-ideal tool for examining the workings of a company’s customer value proposition and business model.
-looks at its cost structure & abilities to lower cost
-reveals firm’s activities to enhance Differentiation and support higher prices (service/marketing/profit margin)
-
-

Essence of a Sound Business Model p101

A company’s profit formula in addition to its customer value proposition

Comparing the VC of rival firms p101

VC Analysis makes it possible to chomp are rivals:
-activity by activity
-deliver value to customers
-even simple comparisons of how Activities of rivals’ value chains differ can reveal competitive differences

Primary & Secondary Activities p101

-identify major components of a firm’s internal cost structure
-

Combined costs of a firm’s value chain of primary & support activities define its internal cost structure

Cost-competitiveness p101

Depends not only on the costs of internal performance activities (its own value chain) but it also depends on suppliers & distribution channel allies value chains

Shows if the firm’s overall cost position is relative to rivals is Favorable or Unfavorable

Role of Value Chain & Benchmarking p101

Are to develop data to compare a firms costs activity by activity against the costs of key rivals
-to learn which internal activities are a source of cost advantage or disadvantage

Activity-based costing p101

Evaluates a firm’s cost-competitiveness
-determines the costs of performing each value chain activity
-cost estimates are needed for each broad category for primary/support activities

Value Chain System (vertical chain) p103

Embedded in a larger system of activities that includes the value chain such as:
-suppliers
-wholesale distributors
-retailers
(allies that assist in getting it product/service to end users)

Value chain attributes p103

-product quality (enhance differentiation and is important to customer value proposition/profit)
-suppliers VC (relevant bc they are activities that incur costs in delivering inputs)
-distribution channel [(1)costs/margins of distributors/retailers price consumer pays, (2)sales volume/customer satisfaction

* Consequence of assessing a firm’s competitiveness p103

Entails scrutinizing the nature an costs of value chain activities throughout the entire value chain system for delivering its products/services to end-use customers

A tool for assessing if the costs and effectiveness of a firm’s value chain activities are in line
-it identifies the best means of performing an activity & to emulate (imitate) those best practices

A potent tool for improving a companys own Internal Activities that is based on learning how other firms perform them & borrowing their “best practice”
-it compares how different firms (inside/outside the industry) perform various value-chain acti
-how materials are purchased, inventoried, assembled, how fast rival get new products to the market, customer orders filled & shipped,

A method of performing an activity that consistently livers superior results compared to other approaches

Best practice qualified p104

-Is a legitimate best practice
-must have been employed by at least one enterprise & shown to be consistently more effective in lowering costs, improving quality/performance, shortening time requirements, enhancing safety, or achieve other highly positive operating outcome
*I other words: it identify a PATH to operating excellence with respect to value Chain activities

Benchmarking the costs p105

Benchmarking the costs of a firm’s activities against rivals provides hard evidence of whether a company is cost-competitive

Value chains Competitive Advantage p108

Performing VC activities w/capabilities that permit the firm to either:
-outmatch rivals on differentiation or
-beat them on costs
Will give the firm a competitive advantage

Front-burner management attention p114

-zeros in on strategic issues/problems that prevent company success
-include industry analysis, resource analysis, and value chain analysis
-develop a “priority list” of issues to e resolved, then come up with strategy & specific actions to take

Value chain representation p104

Tough part of benchmarking p105

-how to gain access to information about other firms practices/costs (not whether to do it is not the tough part)

How to get rivals Benchmarks p105

-(1)published reports, trade groups, research firms, (2)field trips/tours to facility, (3) consulting organizations [these org. Gather benchmark data, etc. w/o identifying the firms names

Options for remedying a cost or value is disadvantage p105

1. Improving internally performed value chain activities
2. Improving Supplier-Related VC activities
3. Improving Value Chain Activities of Distribution Partners

Improving a firms internal performed Value Chain Activities p105

-implement best practice throughout firm (for high cost activities)
-redesign the product and/or some of its components (eliminate high-cost or get faster/more economical manufacturer/assembly
-relocate high-cost activities to geographic areas to be performed cheaper
-outsource activities to lower-cost vendors/contractors
-

Delivered-cost Benchmarking for cement in fluctuations
(5 parts) p106

1. Fixed-bin
2. Variable-bin (fixed and variable are hardest to estimate)
3. Freight-to-terminal (logistics cost, easier to estimate)
4. Terminal operating (smallest fraction)
5. Freight-to-customer costs

To improve effectiveness of firm’s customer value prop & improve differentiation p106

1. Adopt best practices for quality, marketing, & customer service
2. Reallocate resources to activities that address buyers’ most important purchase criteria
3. Adopt new technologies that spur innovation design, & enhance creativity

To improve Supplier-Related Value Chain Activities p107

-By pressuring suppliers for lower prices
- switching to lower-priced substitute inputs
-collaborating closely with suppliers to intifada mutual cost-saving opportunities
-enhance customer value prop. Thru supplier relationships by: (choosing/retaining suppliers who meet higher-quality standards, providing quality-based incentives to suppliers, integrating suppliers into the design process)

Improving value chain activities of DISTRIBUTION PARTNERS p107

1. Pressure distributors, dealers, other allies to reduce their cost/markups
2. Collaborate with them to identify win-win opportunities to reduce cost
3. Change to more economical distribution strategy (switch to cheaper distribution channel like selling direct via the Internet or integrating into company-owned retail outlets)

To enhance Differentiation thru activities at forward end of value chain p107

1. Engage in cooperative advertising/promotions with forward allies
2. Create exclusive arrangements with downstream sellers/or use other mechanisms to increase incentives
3. Create/enforce standards for downstream activities/assisting in training channel partners in business practices

How to translate proficient performance of value chain activity into COMPETITIVE ADVANTAGE p107

A firms first rate job of managing VCA relative to competitors stands a good chance of profiting from competitive advantage by offering one or both ways
1. Contribute to greater efficiency/lower cost relative to competitors
2. Can provide a basis for differentiation, so clients re willing to pay relatively more for its goos/services

What a cost-based competitive advantage requires p108

-Determined manager efforts to be cost-efficient in performing VCA (ongoing/persistent & involve all VCAs)
-goal is to be continuous cost reduction (not on and off)
-must have differentiation (status, design,etc)

How VCA relate to Resources & Capabilities-108

Capacity initiate ACTION
* VCA initiates the ACTION
ACTIVITIES are “where the rubber hits the road”
Engaging in VCA includes drawing on specific firm resources/capabilities that underlie/enable the activity
RC are both valuable &rare

Competitive Superiority p108

When assets are deployed into VCA
-can only be assessed after deployment

Performing VCA with Capabilities p108

That permit the firm to either Outmatch rivals on differentiation or Beat them on costs will give the firm a competitive advantage

How to tell if the company Competitively Stronger or Weaker than key rivals p109

2 questions must be answered:
1. How does the company rank relative to competitors on each important factors the determine market success?
2. Does the firm have a NET competitive advantage or disadvantage versus major competitors? (See card 120 for an easy to use method to answer these questions)

CARD 120 easy-to-use method to answer quantitative-strength ratings p109

Industry and Competitive Analysis reveals p109

Reveals key success factors and competitive forces that separate industry winners from losers

Benchmarking data and scouting key competitors reveals p109

Provide a basis for judging the competitive strength of rivals on factors like: COST, KEY PROUCT ATTRIBUTES, CUSTOMER SERVICE, IMAGE/REPUTATION, FINANCIAL STRENGTH, TECHNOLOGICAL SKILLS, DISTRIBUTION CAPABILITY, ETC.

Resource & Capability Analysis reveals p109

Which competitive factors are important, given the external situation, & whether the firm’ competitive advantage are sustainable

SWOT analysis provide p109

A more comprehensive/forward-looking picture of the firm’s overall situation

5 Steps to doing a competitive strength assessment p109

1. List industry’s key success factors/other telling measures of competitive strength or weakness (list 6-10)
2. Assign weights to each measure of competitive strength based on their perceived importance (sum must add up to 1)
3. Calculate weighted strength ratings by scoring each competitor on each strength measure (1-10 scale where 1 is weak) the multiply the assigned rating by the assigned weight
4. The sum of weighted strength ratings on each factor to get overall measure of comp. strength for each firm being rate
5. To use the overall strength ratings to draw conclusions about the size and extent of the firm’s NET competitive advantage or disadvantage and to take specific note of areas of strength and weakness

Overall competitive strength score p110

Indicate how all the different strength measures ad up-whether the firm is at a NET overall competitive advantage or disadvantage
-The higher overall weighted strength rating, the stronger its overall competitiveness vs rivals
-the bigger the gap between the firm’s overall weighted rating/scores of LOWER-RATE RIVALS, the greater it is implied NET Competitive Advantage
-the bigger difference between the firm’s overall rating/scores of HIGHER-RATE RIVALS, the greater it implied a NET Competitive Disadvantage

STRATEGIC implications of competitive assessments p111

Provide guidelines for designing wise offensive and defensive strategies
-a competitively astute (smart) company should utilize the strength scores in deciding what strategic moves to make

Company’s Competitive Strength Scores p111

Pinpoint its strengths and weaknesses against rivals and point directly to the kinds of offensive and defensive actions it can use to exploit its competitive strengths and reduce its competitive vulnerabilities

Offensive moves tip: p111

When a company has important competitive strengths in areas one or more rivals are weak, it makes sense to consider Offensive Moves to exploit rival’s competitive weaknesses

Defensive moves tip: p111

When a company has important competitive weaknesses in areas where one or more rivals are stronghold, it makes sense to consider Defensive Moves to curtail its vulnerability

What strategic issues/problem merit Front-Burner managerial attention? P112

The final & most important step
To zero in on exactly what strategic issues firm managers nee to:
-address
-and resolve in order for the firm to be more financially/competitively successful in the Years Ahead
This step involves drawing on results of industry analysis & evaluations of internal situation to get a clear fix on:(1)what strategic/competitive challenges confront the firm, (2)which shortcoming need fixing, (3)what specific problem merits manager “front-burner” attention

Pinpointing specific issues p112

Let managers Sets the agenda for deciding what actions to take next to improve the firm’s performance/business outlook

Must contain:
-ways to deal with all strategic issues/obstacles that stand in the way of the firm’s financial/competitive success in the years ahead

Issues/problems to decide:
-HOW to stave off market challenges from new foreign rivals,
-HOW to combat rival price discounting
-HOW to reduce firm’s high costs
-HOW to sustain firms present rate of growth in light of buyer demand
-WHETHER to reposition firm/move to a different strategic group
-WHAT to do about growing buyer interest in substitute products
-WHAT to do to combat aging demographics of the firm’s base

Priority list always centers on p112

-how to
-what to do about
-whether to
The purpose of the list is to identify specific issues/problems that managers nee to address, not to figure out what specific actions to take. (This comes later during crafting strategies & choosing among alternatives)

If priority list problems are relatively MINOR p112

This suggests the firm’s strategy is most likely on track/reasonably well matched to the firm’s overall situation-managers seldom née to go much past fine-tuning the present strategy

If priority list problems are Serious p112

This indicates the present strategy is Not well suited for the road ahead and that crafting a better strategy needs to be at the top of managers action agenda

How does value chain enhance customer value?

Which of the following are things that management must do to maintain the value of the company's resources and capabilities?

How can value chain analysis be improved?

How value chain analysis can improve the profitability of a company?