152 CHAPTER 5 Competitive Advantage, Firm Performance, and Business Models
greatly about the success or failure of their recent ad campaign, the general manager
cares most about the performance implications of the ad campaign at the business unit
level for which she has profit-and-loss responsibility. Metrics that aggregate upward
and reflect overall firm and corporate performance are most useful to assess the effectiveness
of a firm’s competitive strategy.
■ Both quantitative and qualitative performance dimensions matter in judging how
effective a firm’s strategy is. Those who focus on only one metric will risk being blindsided
by poor performance on another. Rather, managers need to rely on a more holistic
perspective when assessing firm performance, measuring different dimensions over
different time periods.
■ A firm’s business model is critical to achieving a competitive advantage. How a firm
does business is as important as what it does.
This concludes our discussion of competitive advantage, firm performance, and business
models as well as Part 1—strategy analysis—of the AFI framework. In Part 2, we
turn our attention to the next steps in the AFI framework—strategy formulation. In Chapters
6 and 7, we focus on business strategy: How should the firm compete (cost leadership,
differentiation, or integration)? In Chapters 8 and 9, we study corporate strategy:
Where should the firm compete (industry, markets, and geography)? Chapter 10, which
concludes Part 2, looks at global strategy: How and where (local, regional, national, and
international) should the firm compete around the world?
CCHAPTERCASE 5 presents a firm profitability analysis
for Apple and BlackBerry in fiscal year 2012. Although
the analysis presented therein allows us to answer the
two key questions we set out to accomplish (accurately
assess firm performance and compare it to competitors),
keep in mind that this is a static analysis. It covers
only one fiscal year. We basically take a snapshot of a
moving target. To obtain a more complete picture, managers
need to engage in a dynamic analysis, repeating
this over a number of years. This will allow managers to
identify when and where things went wrong (in the case
for BlackBerry) and how to get back on track.
152 CHAPTER 5 Competitive Advantage, Firm Performance, and Business Modelsgreatly about the success or failure of their recent ad campaign, the general managercares most about the performance implications of the ad campaign at the business unitlevel for which she has profit-and-loss responsibility. Metrics that aggregate upwardand reflect overall firm and corporate performance are most useful to assess the effectivenessof a firm’s competitive strategy.■ Both quantitative and qualitative performance dimensions matter in judging howeffective a firm’s strategy is. Those who focus on only one metric will risk being blindsidedby poor performance on another. Rather, managers need to rely on a more holisticperspective when assessing firm performance, measuring different dimensions overdifferent time periods.■ A firm’s business model is critical to achieving a competitive advantage. How a firmdoes business is as important as what it does.This concludes our discussion of competitive advantage, firm performance, and businessmodels as well as Part 1—strategy analysis—of the AFI framework. In Part 2, weturn our attention to the next steps in the AFI framework—strategy formulation. In Chapters6 and 7, we focus on business strategy: How should the firm compete (cost leadership,differentiation, or integration)? In Chapters 8 and 9, we study corporate strategy:Where should the firm compete (industry, markets, and geography)? Chapter 10, whichconcludes Part 2, looks at global strategy: How and where (local, regional, national, andinternational) should the firm compete around the world?CCHAPTERCASE 5 presents a firm profitability analysisfor Apple and BlackBerry in fiscal year 2012. Althoughthe analysis presented therein allows us to answer thetwo key questions we set out to accomplish (accuratelyassess firm performance and compare it to competitors),keep in mind that this is a static analysis. It coversonly one fiscal year. We basically take a snapshot of amoving target. To obtain a more complete picture, managersneed to engage in a dynamic analysis, repeatingthis over a number of years. This will allow managers toidentify when and where things went wrong (in the casefor BlackBerry) and how to get back on track.
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