College of Administrative and Financial Sciences
MGT325: Management of Technology
Assignment 2
Deadline: 03/04/2021 @ 23:59
Course Name: Management of Technology
Student’s Name:
Course Code: MGT-325
Student’s ID Number:
Semester: II
CRN:
Academic Year: 2020-2021
For Instructor’s Use only
Instructor’s Name:
Students’ Grade: Marks Obtained/Out of
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
• All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
• Submissions without this cover page will NOT be accepted.
Course Learning Outcomes-Covered
➢ Demonstrate a solid understanding of the concepts and models for making strategies
to face challenges and improve the performance of technology based enterprises. (Lo
1.2)
Assignment 2
Marks: 5
‘Tesla and its flamboyant, and sometimes erratic, innovator Elon Musk have turned the more than
a century old industry upside down in a mere 16 years. Traditional automakers are ill prepared to
compete in today's software-centered world. Unlike nimble Tesla, they are big, bureaucratic, slow
to respond to customers, dependent on providing customer financing for unit sales growth, and
culturally different from a software company. Tesla's speed in innovation in the market for highend vehicles is more like a Google or an Amazon than an automaker. And its soaring market
valuation is a clear sign to all automakers that they'll need to develop more innovative, Tesla-like
business models in order to survive.’
Harvard Business Review. February 28, 2020
As per your Textbook ‘Tesla's cars had rapidly attracted a large and loyal fan base, and sales were growing at an impressive
rate. However, designing and launching multiple major car platforms while building a large-scale
battery company, a network of charging stations, and operating Solar City was a lot for a company to
take on in its first fifteen years. This left some analysts scratching their heads. Was Tesla trying to do too
much too quickly?’
Students are requested to read Chapter 6 Defining the Organization’s Strategic Direction of their
textbooks. With the conceptual knowledge from Chapter 6 and your own research, answer the following
questions.
Q1- How would you characterize competition in the Auto Industry?
(1Mark) (200 -300 words)
Q2- What do you think are Tesla’s core competencies? Does it have any sources of sustainable
competitive advantage?
(2Marks) (300 -500 words)
Q3- What do you think Tesla’s (or Elon Musk’s) strategic intent is?
(2Mark) (300 -500 words)
Support your answer with valid points from the Textbook and other references.
NOTE: It is mandatory for the students to mention their references, sources and support
each answer with at least 2 peer reviewed journal.
STRATEGIC MANAGEMENT OF
Technological
Innovation
Sixth Edition
Melissa A. Schilling
©2020 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
Chapter 6
Defining the Organization's Strategic
Direction
6-2
©2020 McGraw-Hill Education
Tesla, Inc. in 2018
Tesla was founded in 2003 by Martin Eberhard, an entrepreneur who wanted to
create a faster, sexier electric car. In 2004, Elon Musk agreed to fund the
company and became Chairman of the Board. A few years later Eberhard left
and Musk became CEO.
In 2018, Tesla had grown into a company with almost $12 billion in annual
revenues that produced multiple car models, owned Solar City, produced energy
storage systems (for example, Powerwall) and solar roofs.
The company’s expansion into multiple product lines and rapid production
capacity expansion created large capital requirements for the firm.
Tesla missed several of its production goals in early 2018 causing investors to be
concerned, but at the end of 2018 posted its first annual profit.
Tesla’s cars had rapidly attracted a large and loyal fan base and sales were
growing at an impressive rate. But was Tesla trying to do too much too quickly?
6-3
©2020 McGraw-Hill Education
Reinventing Hotels: citizenM
Discussion Questions
1.
What were Musk’s and Eberhard’s goals in founding Tesla?
2.
How would you characterize competition in the auto industry?
3.
What do you think are Tesla’s core competencies? Does it have any
sources of sustainable competitive advantage?
4.
What is your assessment of Tesla’s moves into (a) mass-market cars, (b)
batteries (car batteries and Powerwall), (c) solar panels? Please consider
both the motivation for the moves, and the opportunities and challenges
for Tesla to compete in these businesses.
5.
Do you think Tesla will be profitable in all of these businesses? Why or
why not?
6.
What do you think Tesla’s (or Elon Musk’s) strategic intent is?
6-4
©2020 McGraw-Hill Education
Overview
A coherent technological innovation strategy leverages
the firm’s existing competitive position and provides
direction for future development of the firm.
Formulating this strategy requires:
• Appraising the firm’s environment.
• Appraising the firm’s strengths, weaknesses, competitive
advantages, and core competencies.
• Articulating an ambitious strategic intent.
6-5
©2020 McGraw-Hill Education
Assessing the Firm’s Current Position
1
External Analysis.
• Two common methods are Porter’s Five-Force Model and
Stakeholder Analysis.
• Porter’s Five-Force Model.
1. Degree of existing rivalry. Determined by number of firms, relative
size, degree of differentiation between firms, demand conditions, exit
barriers.
2. Threat of potential entrants. Determined by attractiveness of
industry, height of entry barriers (for example, start-up costs, brand
loyalty, regulation, etc.).
3. Bargaining power of suppliers. Determined by number of suppliers
and their degree of differentiation, the portion of a firm’s inputs
obtained from a particular supplier, the portion of a supplier ’s sales
sold to a particular firm, switching costs, and potential for vertical
integration.
©2020 McGraw-Hill Education
6-6
Assessing the Firm’s Current Position
2
4.
Bargaining power of buyers. Determined by number of buyers, the firm’s
degree of differentiation, the portion of a firm’s inputs sold to a
particular buyer, the portion of a buyer’s purchases bought from a
particular firm, switching costs, and potential for vertical integration.
5.
Threat of substitutes. Determined by number of potential substitutes,
their closeness in function and relative price.
6.
Recently Porter has acknowledged the role of complements. Must
consider:
a) how important complements are in the industry.
b) whether complements are differentially available for the products of
various rivals (impacting the attractiveness of their goods), and.
c) who captures the value offered by the complements.
6-7
©2020 McGraw-Hill Education
Assessing the Firm’s Current Position
3
Five-Force Model
Source: Michael Porter,
Competitive Strategy:
Techniques for Analyzing
Industries and Competitors.
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6-8
Assessing the Firm’s Current Position
4
Stakeholder Analysis.
1. Who are the
stakeholders?
2. What does each
stakeholder want?
3. What resources do
they contribute to
the organization?
4. What claims are they
likely to make on the
organization?
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6-9
Assessing the Firm’s Current Position
5
Internal Analysis.
1. Identify the firm’s strengths and weaknesses. Helpful to
consider each element of value chain.
Source: Michael Porter,
Competitive Advantage:
Creating and Sustaining
Superior Performance.
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6-10
Assessing the Firm’s Current Position
6
2. Assess which strengths have potential to be
sustainable competitive advantage.
•
•
•
•
Rare
Valuable
Durable
Inimitable
Competitive
Advantage
Sustainable
Competitive
Advantage
Resources are difficult (or impossible) to imitate when
they are:
•
•
•
•
Tacit
Path dependent
Socially complex
Causally ambiguous
6-11
©2020 McGraw-Hill Education
Identifying Core Competencies and
Capabilities
1
Core Competencies: A set of integrated and
harmonized abilities that distinguish the firm in the
marketplace.
• Competencies typically combine multiple kinds of abilities.
• Several core competencies may underlie a business unit.
• Several business units may draw from same competency.
• Core competencies should:
• Be a significant source of competitive differentiation.
• Cover a range of businesses.
• Be hard for competitors to imitate.
6-12
©2020 McGraw-Hill Education
Identifying Core Competencies and
Capabilities
2
Source: C. K. Prahalad
and G. Hamel, “The
Core Competence of
the Corporation,”
Harvard Business
Review, May–June
1990.
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6-13
Risk of Core Rigidities
When firms excel at an activity, they can become over
committed to it and rigid.
• Incentives and culture may reward current competencies
while thwarting development of new competencies.
• Dynamic capabilities are competencies that enable the firm
to quickly respond to change.
• For example, firm may develop a set of abilities that enable it to
rapidly deploy new product development teams for a new
opportunity; firm may develop competency in working with alliance
partners to gain needed resources quickly.
6-14
©2020 McGraw-Hill Education
Strategic Intent
Strategic Intent.
•
A long-term goal that is ambitious, builds upon and stretches firm’s core
competencies, and draws from all levels of the organization.
• Typically looks 10 to 20 years ahead, establishes clear milestones.
• Firm should identify resources and capabilities needed to close gap between
strategic intent and current position.
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6-15
Research Brief: Blue Ocean Strategy
1
Red Ocean Strategy
Blue Ocean Strategy
Compete in existing market space
Create uncontested market space
Beat the competition
Make the competition irrelevant
Exploit existing demand
Create and capture new demand
Make the value-cost trade-off
Break the value-cost trade-off
Align the whole system of a firm’s
activities with its strategic choice
of differentiation or low cost.
Align the whole system of a firm’s
activities in pursuit of
differentiation and low cost.
Adapted from Kim, W.C. & Mauborgne, R. 2005. Blue ocean strategy.
Boston: Harvard Business School Press.
6-16
©2020 McGraw-Hill Education
Research Brief: Blue Ocean Strategy
2
Managers can challenge the industry industry’s strategic logic by
asking the following four questions:
1.
Which of the factors that
the industry takes for
granted should be
eliminated?
2.
Which factors should be
reduced well below the
industry’s standard?
Which factors should be
raised well above the
industry’s standard?
3.
4.
Which factors should be
created that the industry
has never offered.
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6-17
Theory In Action
The Balanced Scorecard.
•
Kaplan and Norton argue
that effective
performance
measurement should
incorporate:
• Financial perspective.
• Customer perspective.
• Internal perspective.
• Innovation and learning.
Source: R. Kaplan and D. Norto,
“Putting the Balanced Scorecard to
Work,” Harvard Business Review,
September–October 1993.
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6-18
Discussion Questions
1.
What is the difference between a strength, a competitive advantage, and
a sustainable competitive advantage?
2.
What makes an ability (or set of abilities) a core competency?
3.
Why is it necessary to perform an external and internal analysis before
the firm can identify its true core competencies?
4.
Pick a company you are familiar with. Can you identify some of its core
competencies?
5.
How is the idea of “strategic intent” different from models of strategy
that emphasize achieving a fit between the firm’s strategies and its
current strengths, weaknesses, opportunities and threats (SWOT)?
6.
Can a strategic intent be too ambitious?
6-19
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