Text: Strategic Management: A Competitive Advantage Approach, 14/e

Chapter 1: The Nature of Strategic Management

Topic: Overview of Strategic Management
Learning Objectives:
1. Understand the benefits of strategic management.
2. Describe the benefits of good strategic management.
. Disc!ss ho" a firm ma# achieve s!stained competitive advantage.
Vieo Tit!e: $arb# %ar&er: 'e" (ent!re/)ntreprene!ria* Strateg#
Lin":
http://media.pearsoncmg.com/ph/streaming/bp/2+1/M,M-/Strat/Strat2+12.$arb#.(en
t!re.htm*
C!assroom #pp!ication: /nstr!ctors "i** find this video he*pf!* in the introd!ction of
basic strategic management concepts. A*tho!gh m!ch of the te0t disc!sses strategic
management from a corporate perspective, this video sho"s the importance of strategic
decision ma&ing as it re*ates to ne" vent!res. %roviding st!dents "ith s!ch &no"*edge
can he*p them to appreciate and better !nderstand the ro*e of the entreprene!rs in o!r
econom#.
S$nopsis
$arb# %ar&er is an innovative ne" e#e"ear brand so*d e0c*!sive on*ine. 1or ever# pair
of g*asses so*d, one is donated to those in need. -his video describes the strategic
approach to estab*ishing the ne" vent!re of $arb# %ar&er. 2# e*iminating the midd*e
man, this compan# is ab*e to se** e#e"ear for a fraction of the cost of other retai*ers.
%iscussion &uestions
1. Describe the strategic approach p!rs!ed b# $arb# %ar&er in se**ing e#e"ear.
Warby Parker sells their eyewear exclusively online. They have designed their strategy
to eliminate the middle man and sell directly to consumers. This significantly reduces
the mark-up on their eyewear thus also significantly reducing their retail prices.
2. $ho is the target mar&et for $arb# %ar&er and ho" do the# reach this mar&et3 /s this
the most appropriate strategic mar&et for this compan#3 $h# or "h# not3
!iven the bold vintage look of Warby Parker"s eyewear the current target market is
focused on the young demographic. The company doesn"t offer bifocals or progressive
lenses which would target the older demographic. Plus the fact that the products are sold
exclusively online also helps target a younger more tech savvy customer base.
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. 5o" is $arb# %ar&er6s strategic approach he*ping them to create a s!stained
competitive advantage3
Warby Parker has chosen a focused strategy. This approach helps them create a
sustainable competitive advantage due primarily to their uni#ue product offered at a low
price. $y eliminating the middle man Warby Parker manages to keep their costs lower
than those of their competitors. This cost advantage is not easily copied or duplicated.
This creates a competitive advantage for the company that is definitely sustainable over
time. They have developed production that allows them to provide eyewear at a lower
price and still make a profit. Their product retail and delivery methods also contribute to
their cost advantage. $y selling their products solely online they significantly reduce
their operation overhead costs.
&ui'
1. 5o" did the fo!nders of $arb# %ar&er origina**# start this compan#3
a. As part of a b!siness p*an competition "hi*e sti** in co**ege
b. -he# both had "or&ed for other e#e"ear companies and decided to go o!t on
their o"n.
c. -he b!siness "as inherited from fami*# members.
d. 'one of the above
Ans"er: a
)0p*anation: -he fo!nders of $arb# %ar&er started the compan# "hi*e sti** in co**ege.
-he# s!bmitted a b!siness p*an for the compan# as part of a co**ege competition.
2. 5o" does $arb# %ar&er !se techno*og# to he*p c!stomers p!rchase the prod!ct3
a. 2# creating c!stom made e#e"ear for each c!stomer.
b. -hro!gh the !se of virt!a* soft"are a**o"ing c!stomers to 7tr# on8 different
frames.
c. 2# inventing ne" e#e g*ass techno*og#.
d. -he# !se specia* soft"are to create bifoca*s and progressive *enses.
Ans"er: b
)0p*anation: $arb# %ar&er !ses techno*og# to a**o" c!stomers to 7tr# on8 different
frames. Since the prod!ct is so*d e0c*!sive*# on*ine, c!stomers needed some "a# to see
"hat different st#*es "o!*d *oo& *i&e on their faces. -he facia* recognition virt!a*
soft"are gives c!stomers this option.
. $hich of the fo**o"ing best describes the governance of $arb# %ar&er3
a. -here is no forma* governance str!ct!re.
b. -here is ver# *imited forma* governance str!ct!re 9i.e., on*# managers invo*ved:.
c. -here is a forma* governance str!ct!re inc*!ding a board of directors "ho ma&e
a** strategic decisions.
d. 'one of the above
Ans"er: c
)0p*anation: $arb# %ar&er has a forma* governance str!ct!re inc*!ding a board of
directors. A** fo!r fo!nders of the organi;ation serve on the board "hich ma&es a**
strategic decisions to ins!re that the compan#6s mission and vision are being met.
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4. -he t"o biggest cha**enges for $arb# %ar&er mentioned in the video are
a. "eb design and inventor# management.
b. hiring and "eb design.
c. hiring and inventor# management.
d. 'one of the above
Ans"er: c
)0p*anation: According to the video, the t"o biggest c!rrent cha**enges faced b# $arb#
%ar&er are maintaining eno!gh inventor# and hiring. /t is diffic!*t to find ta*ented peop*e
"ho fit the organi;ation6s !ni<!e c!*t!re. -he# are a tight &nit team that "or&s ver#
c*ose*# together. -his is important for profitabi*it#.
=. $arb# %ar&er has gro"n from one emp*o#ee to a*most .... emp*o#ees in its ver#
short histor#.
a. +
b. 1=
c. 1+
d. =+
Ans"er: a
)0p*anation: $arb# %ar&er has gro"n from one emp*o#ee to a*most + emp*o#ees in its
short histor#. And it contin!es to gro" at a ver# rapid pace based on the demand for the
prod!cts offered.

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