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Summary Strategic Management: Competitiveness and Globalization
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This is a summary of the course Strategic Management - how to achieve a competitive advantage and above average return.
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Strategic ManagementLesson 1
What makes the difference between a successful business and the one that fails.
- Choice of business model / strategy
- Where they choose to compete, in which industry / market
- Who they compete against
o Examples:
Apple – failing in the beginning. Changed strategy and got successful
MySpace – doing well, chose wrong strategy and became unsuccessful
Whom competing against: airlines have a lot of competitors.
Tenerife, sky-team train their on the highest mountain in Spain. The trainer, he
changes its strategy. Started training in November and not in January. They
took the whole team and not just the best riders. They just did two races to
practice. And went on two high altitude training camps instead of one. The
manager of the team did something different compared to other teams. They
also looked at how swimmers train, and took their training materials as well
into their training. Through this they won.
- How do we keep sustainable competitive advantage?
o How do we things better?
o How do we sustain that advantage over our competitors
- How do we sustain a good business model? How do we work together and not separate of
each other (department silos)
- How do we create superior performance?
Competitive Advantage:
A firm has a competitive advantage when it implements a strategy competitors are unable to
duplicate/copy or find too costly to try to imitate
- temporary:
o Not costly to imitate [quickly imitate]
- Sustainable:
o Too costly to imitate
o Consumer trends mean continued market demand
o Consistantly = Over long term organized appropriately
Bloody Ocean – hyper competitive. So many companies who sell the same products. They fight for
the same demand.
There are no boundaries to water. We are a global economy = if Manchester and Barcelona decide
that they need fans in China. They know that Chinese fans are not as loyal as local fans and they will
switch very rapid to another team, for ex. Barcelona if Manchester loses.
Technology change = it changes all the time. 10 years ago we read the paper, now we read the
paper via the ipad or computer.
There are two models to analyse the industry. Both want superior return. They have different view
points. One needs both of these views.
1. Industrial Organization Model – external
a. What are the opportunities and trends?
2. Resource based model – internal
a. Where are we good at?
b. It is a model that sees resources as key to superior firm performance. If a resource
exhibits VRIO attributes, the resource enables the firm to gain and sustain competitive
advantage.”
,Use the SWOT and
TOWS to then use the internal and external strengths and opportunities to choose the best strategic
strategy / pathway.
Ex. Skyteam. The manager of the team looked at everyone he works with. His suppliers, his team
riders (portfolio) and do they match, who are my partners?, where are my costs?, how am I going to
make revenue?.
He took the BUSINESS MODEL CANVAS.
All the compartments need to strive for the same goals. They need to have the same strategy. Has the
manager really selected the right customers? What is the value that we deliver to those specific
customers? How do we deliver this value? How do we keep those customers? How do we keep them
loyal? Key activities, who do we produce this value or deliver. Cost structure - How do we keep our
cost low? Revenue streams - How do we make sure we don’t just have one revenue stream but more.
Sponsorship money, etc. Resources – what is our location? How do we deliver constant value? Do we
need partners for this? External partners?
Ex. Google. They wanted to earn money from advertisement. We are going to do sth different. The
focused on how many times the advertisement was looked at. Google wanted a better revenue stream
and a far better relationship with our customers so chose a different strategy. They only charged
advertisement for clicks. This is how Google makes its money.
Ex. Dell. Changing the way of how the industry works. First company that sold computers customised
online and not just through stores.
Ex. Circus de Soleil. Total different business model. It is not just a cirques.
A strategic managers fits together models to become unique / different from its rivals and competitors.
Superior performance and sustained : look at numbers. How can I tell that it is a good company?
Look at the financial figures. Look at profitability, return on investment and profit growth. Is my margin
growing on a yearly basis?
Calculate:
Profitability: RIOC profit / capital that I invested
Profit growth: net profit in a % growth in year to year
Short term vs long term vision
Lots of companies look at the short term but don’t last very long.
1. Analysis stage: Fist look at the strategic Inputs: which are internal and external analysis
(SWOT, confrontation matrix).
, 2. Formulation stage: Then we look at the formulation of the strategy, which strategies are we
using at the corporate level and business level and the functional level.
3. Implementation stage: After we formulated the strategy, this is our implementation stage.
Difference between marketing and strategic management:
Marketing: cultivating customers, most focus on customer. It is strategic.
Strategic Management: who totality of the business model and sustaining competitive advantage.
Multi division vs single division - SBU
SBU = The business unit refers to an
organization that markets a set of
related products to a clearly defined
group of customers.
Corporate level = The corporate
level is where top management
directs overall strategy for the entire
organization.
Business level = The business unit
level is the level at which business
unit managers set the direction for
their products and markets.
Functional level = The functional
level is where groups of specialists
actually create value for the
organization.
Ex. Squash city. One business but offers different products. The business is at corporate level. There
are different strategies for different products. Group lessons, squash areas, sauna. There are different
managers for these products. This company is a single division.
Ex. Philips is a multiple division company, at corporate level. He has diverse strategic units. They
operate from each other. They all make their own revenue. Split up in different SBU’s
- Lighting
o Consumer lighting, industrial lighting
- TV
- Health
o Body-scanner, MRI scanner
In strategic management we focus on corporate and business level. Look at the difference
between strategies and tactics
Strategies: setting the direction, deciding the course. Are we going left or right? Doing the right things /
making the right choices.
Tactics: if we decide to take the right path, how are we going to walk it?
Ex. ISMB. Jaap is the director. He needs to discover strategies. Via the LOI one can get an online
education in sport manager. Jaap has to find a strategy to successfully compete against LOI. LOI -
cheaper and online. How does ISMB compete against LOI’s positives.
A strategic manager has to find a strategy to beat the rivals.
Ex. Squash City. Resources: location, right next to central station. There are flexible membership
packages. These two resources beat his rivals.
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