Chapter 1: Strategic Management
Strategy
= A firm’s theory about how to gain competitive advantages.
• Based on a set of assumptions and hypothesis about the way competition in the industry is likely to
evolve, and how that evaluation can be exploited to earn a profit.
• Almost always a theory.
• Reduces mistakes by choosing a strategy carefully and systematically and to follow the strategic
management process
Strategic management process
= A sequential set of analyzes and choices that can increase the likelihood that a firm will choose a good
strategy, that is, a strategy that generates competitive advantages.
• Cost leadership
• Differentiation
External Business Level
Analysis Strategy
Strategic Strategy Competitive
Mission Objectives
Choice Implementation Advantage
Internal Where to compete? Mode of Entry?
Analysis
• Vertical Integration • (Strategic) Alliances
Corporate Level
Strategy • Diversification • Mergers &
• International Acquisitions
Figure 1.1 The strategic management process. • Going alone
1. Mission
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= A firm’s long-term purpose.
• What a firm aspires to be in the long run and what it wants to avoid in the meantime.
• Often written down in the form of mission statements.
• Some missions may not affect firm performance.
E.g. It often contains so many common elements that it does not influence behaviour throughout an
organization.
• Some missions can improve firm performance.
E.g. Firm’s whose sense of purpose and mission permeates all that they do (IBM and Disney.)
• Some missions can hurt firm performance
E.g. A firm whose mission only focuses in reference to personal values or without economic realities
facing the firm.
2. Objectives
= Specific measurable targets a firm can use to evaluate the extent to which it is realizing its mission
• High quality objectives
- Tightly connected to elements of a firm’s mission
- Relatively easy to measure and track over time
• Low-quality objectives
- Either do not exist or are not connected to elements of a firm’s mission
- Not quantitative, or are difficult to measure or difficult to track over time
3. External and internal analysis
• External analysis (Chapter 2)
= Identifies the critical threats and opportunities in its competitive environment
• Internal analysis (Chapter 3)
= Helps a firm identify its organizational strengths and weaknesses
4. Strategic choice
• Business-level strategies (Chapter 5)
= How to compete in the industry; Actions firms take to gain competitive advantages in a single
market or industry. The two most common are cost leadership (chapter 4) and product differentiation
(chapter 5)
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, • Corporate level strategies
= Where do we want to compete; Actions firms take to gain competitive advantages by operating in
multiple markets or industries simultaneously. Including horizontal expansion, vertical integration
strategies (chapter 6), diversification strategies (chapter 7 & 8),
5. Strategy implementation
= When a firm adopts organizational policies and practices that are consistent with its strategy
• A firm’s formal organizational structure
• A firm’s formal and informal management control systems
• A firm’s employee compensation policies
6. Competitive advantage
• A firm has competitive advantage if it is creating more economic value than its rivals. Economic value
is defined as the difference between the perceived customer benefits from purchasing a product or
service form a firm, and the total economic cost of developing and selling the product or service.
Competitive advantages can be temporary or sustained.
• Competitive parity exists when a firm creates the same economic value as its rivals.
• Competitive disadvantage exists when a firm creates less economic value than its rivals, and it can be
either temporary or sustained.
Figure 1.3 Types of Competitive Advantage
* Economic value
= The difference between the perceived benefits gained by a customer that purchases a firm’s products or
services and the full economic cost of these products or services.
Alternative models:
Points of departure (Sequel on classic process):
• Structure
• External analysis
• Internal analysis
Building pyramids (Strategy based on arguments)
You recommend a specific strategy and built a pyramid to make a more detailed explanation. So first of all you
tell something about the attractive environment, and afterwards you tell something about the resources and
capabilities.
Business model canvas (Osterwalder and Pigneur)
Ask how all the boxes are functioning. Is the content of the boxes aligned?
• Value Propositions; How it will attempt to create value for its customers.
• Key Activities; What key activities do our value propositions require?
• Key Resources; What key resources do our value propositions require?
• Key Partners; Who are your key suppliers? Which key resources are we acquiring there?
• Customer Relationships; What kind of relation do we have?
• Channels; Through which channels do we get reached or do we want to reach others?
• Customer Segments; For who are we creating value?
• Cost Structure; What are the most important costs?
• Revenue streams; For what value are customers willing to pay? How do we get paid?
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,Measuring competitive advantage
Measuring a competitive advantage can be done in two ways, by examining its account performance or by
examining its economic value
1. Accounting performance measures of competitive advantages
= A measure of a firm’s competitive advantage calculated by using information from the firm’s published profit
and loss and balance sheet statements. (blz. 36-37)
Accounting ratios
= Are simply numbers taken from a firm’s financial statements that are manipulated in ways that describe
various aspects of a firm’s performance.
1. Profit ratios How profitable is the organization. = Profit / …
2. Liquidity ratios Focus on the ability of a firm to meet its short-term financial obligations. = Assets / …
3. Leverage ratios Focus on the level of a firm’s financial flexibility, including its ability to obtain more debt. = Debt / …
4. Activity ratios Focus on the level of activity in a firm’s business. = Sales / …
These ratios that come out of the formula is being compared with the industry average. A firm can have an
above, average, or below accounting performance. When having an above average accounting performance,
the firm usually has a competitive advantage. When the firm is having an average accounting performance, it
has a parity. When the firm has below average accounting performance, it has a competitive disadvantage.
2. Economic performance measures of competitive advantages
Economic measures are looking at how much are investors willing to invest in your company, compared to how
profitable you are. They take into account the cost of debt and cost of equity with the WACC.
Cost of capital
= The rate of return that a firm promises to pay its suppliers of capital to induce them to invest in the firm.
It can sometimes be difficult to calculate a firm’s cost of capital, especially when it is privately held. That is, if
it has stock that is not traded on public stock markets or if it is a division of a larger company.
There are two broad categories of sources of capital:
1. Debt (debt * cost of debt)
• Capital from banks and bondholders
• Cost of debt is equal to the interest that a firm must pay its debt holders in order to induce those debt
holders to lend money to a firm.
2. Equity (equity * cost of equity)
• Capital from individuals and institutions that purchase a firm’s stock.
• Cost of equity is equal to the rate of return a firm must promise its equity holders in order to induce
these individuals and institutions to invest in a firm.
Weighted average cost of capital (WACC moet zo laag mogelijk zijn)
= The percentage of a firms’ total capital (debt * cost of debt)
+ firms total capital (equity * cost of equity)
WACC < ROA < Industry average ROA
WACC is lower than your ROA (Good, because the costs of your money are cheaper than what you make for it.)
ROI is lower than Industry average ROA (that is bad, because you get less money for it than you rivals.)
So you earn above normal economic performance, but below average accounting performance.
Relationship between economic and account performance measures:
The correlation between economic and accounting performance is that if a firm scores above average in
accounting, it often does also score above normal in economic performance. See image below:
However, below average accounting performance and above normal economic performance is possible,
because it as a very low cost of capital at a rate in excess of this cost, but still below industry average.
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,Emergent versus intended strategies
As shown on the figure below, often a company starts with an intended strategy. For example: Marriott. They
started with a few restaurants in Washington D.C., the managers noticed that at their restaurant near the
airport, often meals were sold to people who were going to fly. Therefore, they adjusted their strategy and
started to sell lunch packages to Eastern Airlines to be distributed during the flight.
Figure 1.6 Mintzberg’s analysis of the relationship between intended and realized strategies
Chapter 2: External environment
One of the critical determinants in the strategic management process is the threats and opportunities in a firms
competitive environment. If a firm understands these, they are one step closer to reaching a good strategy: A
good strategy is a strategy that leads to competitive advantage.
Trends in the external environment:
• Demands stakeholders:
• From serving the interests of various stakeholders via maximizing shareholder value
to people-planet-profit
• For example: McDonalds and their sold chicken. They have to keep into account what their
customers wants. WakkerDier made a special advertisement against the chicken they used, they
had to change.
• Globalization (?)
• Firms focus on core competences;
• Outsource activities internationally (For example HQ in one country, offices in different
countries);
• Increases vulnerability: Adapt the strategy of a firm to be less dependent/to become more
independent. For example Volkswagen, a Bosnian supplier stopped producing more suppliers
where it got so dependent and it had to stop its own delivery. When you have more suppliers you
become more independent, if one quits, you can rely on the other ones.
• Social and political backlash: because of globalization their jobs get outsourced and they vote for
Trump. Scary picture.
• Changing government regulation:
• Countries can offer benefits to companies to start their companies there. For example the
Netherlands can be very beneficial for taxes to let companies come to here. But this is not fair to
other countries that cannot offer this benefits, they will never be attractive for big firms and they
will not settle there.
• Increasing technology (Most important trend)
• Data analysis; Example technology is Google: They invented a driverless car. Why is this a threat
for car companies? In the future they will have new direct competitors and they will have to
change their target market. Because of technology our current generation will not buy a car
anymore, this is also a threat. In the future we will be able to make one call by phone and a car
will show up in front of your house. Why? We don’t need a car 24/7. Also revenue will be
threatened. On the other hand there will be new business for companies that will rent the cars to
customers.
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,The frequency of environmental changes rises:
• From stability: Industry in which there are e.g. 8 competitors trying to sell their products to you.
• Via punctuated equilibrium: But than in a very short period you get a lot of M&A. There are bidding
wars etc. The market will start with 8 players, some of them will withdrawal from the market, after a
while you will only be with for example 2 larger players are left, the market will be stable.
• But in some situations you get to hypercompetition with no sustainable competitive advantage. At
the point of hyper competition, competitors will copy everything a firm does. Companies have to be
very flexible and be able to adapt and switch very quickly.
Catch22:
• Frequency and impact of environmental changes on the rise: the importance of external analysis
increases, but at the same time, the feasibility of external analysis decreases.
• We can only predict the future in a linear way (through extrapolation).
• ‘You’re dammed if you do, you’re dammed if you don’t. For companies: Feasibility external analysis
decreases: Importance external analysis increases. The importance of investigating the market is big,
for examples the hotels and AirBNB. If they do not investigate their market, threats and opportunities,
they will be bankrupt next year. *Core: the importance of external analyses increases, but the
feasibility decreases.
External analysis is relevant for strategy in several ways:
• Classical strategic management process: Opportunities and threats
• Externally driven strategy process (Different starting point): Analyze the industry, select an attractive
industry, develop a matching strategy, build required assets and implement strategy.
• Generic industry structures and strategic opportunities: Fragmented industry, emerging industry,
mature industry and declining industry (Will be explained later on page 9)
Several levels of external environment
Nested structure (competitor is part of a strategic group, strategic group is part of an industry etc.)
• General environment: Broad trends in the context within which a firm operates that can have an
impact on a firm’s strategic choices. MACRO. Consist out of the PESTLE. Trends outside of the industry
and outside of the firm. These trends are relevant of have an influence on more firms and more
industries.
• Industry: MESO, the five forces of porter. How to define an industry; Internal, take a look at the
production process (if they use the same or not) and external take a look at the fulfillment of the
customers needs. This is how you can define an industry and if there are actual different industries or
the same. For example Harlequin, single-title and series can actually been seen as the same industry.
• Strategic Group: A collection of firms in a particular industry emphasizing similar strategic dimensions
and using similar strategies:
• Competitor: MICRO environment, can be analyzed with the VRIO and BMC. Map competitors; Market
commonality or Resource similarity Predict competitive interaction.
Figure sheets General levels of external environment.
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,A. MACRO; The general environment: The six interrelated elements: (DESTEP)
Broad trends in the context within which a firm operates that can have an impact on a firm’s strategic choices.
• Demographic trends
The distribution of individuals in a society in terms of age, sex, income etc. It will help a firm to
determine their potential customers. For example: The baby boomers, they had a big impact on firms
strategies, and they still have. Understanding a population can help a firm to determine if their
product appeals to the customers and how many potential customers there are.
• Economic climate
The overall health of the economic systems within which a firm operates. When activity in an
economy is low, the economy is said to be in recession. When a recessions lasts for several years, we
call it a depression. The opposite is prosperity, where the activity is good and the unemployment low.
The changes between are what we call the business cycle.
• Specific international events
This includes events such as civil wars, political coups, terrorism etc. A famous example is the attack in
New York (9/11) which had also a big impact on business. It took more than five years to pay all the
insurance bills from the attack.
• Technological change
Technological innovation. Creates both opportunities as well threats for a firm. With technological
development firms can create new products and services. The threat can be that firms need to rethink
their technological strategy because the force is very strong.
• Cultural trends
Culture is the values, beliefs, and norms that guide behaviour in a society. For example, what is
acceptable and what not, what is fashionable and what not. Failures to understand cultures in
business can have a big impact on the ability of a firm to gain competitive advantage. Very important
for firms that operate in different countries (For example in China a white dress is related to a
funeral).
• Legal and political conditions
The laws and the legal system’s impact on business, together with the general nature of the
relationship between government and business. We can divide 5 different indicators for judging this
component: Deregulation, Educational policies, Labor laws, Taxation laws, Antitrust laws
(Ezelsbruggetje: DELTA)
B. MESO: Industry: ‘Set of companies producing similar products or services using similar technologies’
• Similar functionality for clients (This is how you define your competitors); For example beer and water
do not have the same functionality.
• Similar production process
• Industry refers to an economic activity, not only manufacturing. Banking is also an industry. (Do not
confuse with the term ‘market’). The market contains the firm and producers who deliver similar
products with similar technology.)
The industry definition is vital in the first steps of the external analysis because:
Industry definition Too narrow Too broad
To which force do other players All other players are potential All other players are direct competitors
belong? entrants or substitutes
What is your company’s position? Your company is a monopolist Your company is a powerless price taker
Example: Heineken (the beer industry) Trappist beers (too narrow) beverages (too broad).
The industry definition is a matter of judgment.
The Structure Conduct Performance Model (SCP model):
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,Purpose of the SCP model: To determine if competition was developing and what industries should be
regulated to increase the competition. Strategists turned the model around and use it to analyze the industry
environment, identify industries with limited competition and how the competition in an industry can be
reduced.
*Important: The number and size of competitors. When you have many small competitors, collusions will be
difficult and this will be negative for returns and revenue. When the industry consists out of a few large
competitors, it will be easier for firms to start a cartel which will lead to higher company returns.
The link: For example in some industries a firm can only gain competitive parity, in this setting, the industry
structure completely determines both firm conduct and long-run firm performance
Relationship between the five forces and the SCP model
Type of competition Attributes Examples Expected firm performance
Perfect competition Large number of firms, Stock market Competitive parity
Homogeneous product, Crude oil
Low-cost entry and exit
Monopolistic Large number of firms, Toothpaste Competitive advantage
competition Heterogeneous products, Shampoo
Low-cost entry and exit Golf balls
Oligopoly Small number of firms, U.S. Steel Competitive advantage
Homogeneous products U.S. Breakfast cereal
Costly entry and exit
Monopoly One firm Home mail delivery Competitive advantage
Costly entry
Porter’s Famous Five-Forces model:
1. Threat of new entrants:
New competitors are firms that have either recently started operating in an industry or that threaten to begin
soon. Barriers to entry are attributes of an industry’s structure that increase the cost of entry. The threat of
new competition depends on the existence and ‘height’ of barriers to entry:
• Economies of scale: When the firm’s cost lower when the production increases. This can act as a
barrier to entry for new competitors. Diseconomies of scale: Exist when a firm’s costs rise as a
function of its volume of production. When a firm’s volume of production increases, costs of
production will fall. But at some point the production volume will be so big that costs will start to rise
again (Diseconomies of scale).
• Product differentiation: Means that existing firms possess brand identification and customer loyalty
that potential new competitors do not. They serve as a barrier to entry because new competitors not
only have to absorb the standard costs associated with starting production but also have to absorb the
costs associated with overcoming incumbent firm’s differentiation advantages.
• Cost advantages independent of scale Incumbent firms may have a whole range of cost advantages,
independent of economies of scale., compared to new competitors. Examples of cost advantages:
• Proprietary Technology: (Secret or patented) gives incumbent firms important cost advantages
over potential entrants. Potential new competitors are forced to create their own substitute
technology or take the risk to copy from the other firm. The cost of developing this technology
might act as a barrier to entry.
• Managerial know-how: When incumbent firms have taken for granted knowledge, skills and
information that take years to develop and that is not possessed by potential new competitors.
The cost of developing this know-how can act as a barrier to entry.
• Favorable access to raw materials: When incumbent firms have low-cost access to critical raw
materials not enjoyed by potential new competitors Cost disadvantages.
• Learning-curve cost advantages: When the cumulative volume of production of incumbent firms
gives them cost advantages not enjoyed by potential new competitors.
• Governmental regulation of entry Governments may decide to increase the cost of entry into an
industry. This occurs most frequently when a firm operates as a government monopoly.
*Note: Entry barriers do not mean no firms will enter, barriers to entry are only temporary advantage.
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,2. Threat among existing firms (Rivalry):
A second environmental threat comes from the intensity of competition among a firm’s direct competitors.
Direct competition threatens firms by reducing their economic profits. For example: intense advertising
campaigns. Attributes of an industry that increase the threat of direct competition:
• Number and size of direct competitors; High threat when there is a large number of competing firms
that are roughly the same size.
• Industry growth; high threat when slow growth.
• Product differentiation; High treat when there is a lack of product differentiation.
• Incremental capacity additions; High threat when capacity is added in large increments.
3. Threat from substitutes:
Substitutes meet approximately the same customer needs, but do so in different ways. Substitutes are playing
an increasingly important role in reducing the profit potential in a variety of industries. Important factors are
pricing, quality of substitutes and the buyer switching costs. An example of a substitute for an umbrella is a
raincoat, the raincoat is not a direct competitor, a direct competitor is a firm that also produces umbrella’s.
• Pricing of substitutes; High threat when price of substitutes is low
• Quality of substitutes; High threat when quality of substitutes is high
• Buyer switching costs; high threat when buyer-switching costs are low, because than customers can
easily change from your product to another product.
4. Bargaining power suppliers:
Suppliers can threaten the performance of firms in an industry by increasing the price of their supplies or by
reducing the quality of those supplies. Another important factor for firms is the quantity of suppliers in the
market. Indicators of the threat of supplier leverage in an industry:
• Number of suppliers; High threat when industry is dominated by small number (Apple, Microsoft)
• Differentiation of suppliers; High threat when suppliers sell unique or highly differentiated products.
• Availability of substitutes; High when suppliers are not threatened by substitutes (Google with
Android)
• Threat of forward vertical integration; High threat when suppliers threaten forward vertical
integration. Suppliers cease to be suppliers only and become suppliers and rivals.
• Importance of industry as customer; High threat when firms are not important as a customer for the
supplier. E.g. steel companies are not that concerned about losing one small construction company.
5. Bargaining power buyers:
Customers are always important, but the threat of buyers influence depends on the number and size of an
industry’s customers. Indicators of the threat of buyer’s influence in an industry:
• Number of buyers; High threat when number of buyers is small.
• Product differentiation; High threat when products sold to buyers are undifferentiated and standard.
• Percentage of buyer costs; High threat when products sold to buyers are significant percentage of a
buyer’s final costs.
• Profitability of buyers; High threat when buyers are not earning significant economic profits.
• Threat of backward vertical integration; High threat when buyers threaten backward vertical
integration. Because than they are not only a buyer, but also a rival.
*Note: Buying power looks at the power of the individual buyer. For example Ryanair: As a single
person you have no influence at all if you stop buying tickets from their company.
** Think critically; “How big are you as a customer for the entire slice of the pie. If your main customer
buys 20% of your products, than he has a lot of power. But if everyone has 0.05% than they have no
power.”
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,Four very common generic industry structures and their opportunities:
The four generic industry structures are closely linked to the growth stage of the industry lifecycle. For the
exam you need to be able to give a list of the characteristics as mentioned in the table. Underneath de table, a
more detailed explanation is given for more understanding.
Growth Stage
Characteristics Opportunity
industry structure
Emerging Industry • New industry based on break through technology First mover advantages:
(Emerging phase) or product. • Technology.
• No product standard has been reached. • Locking-up assets.
• No dominant firm has emerged. • Creating switching costs.
• New customers come form non-consumption not
from competitors.
Fragmented • Large number of small firms. Consolidation:
Industry • No dominant firms. • Buy competitors.
(Growth phase)* • No dominant technology. • Build market power.
• Commodity type products. • Exploit economies of scale.
• Low barriers of entry.
• Few, if any, economies of scale.
Mature Industry • Slowing growth in demand. • Refine current products.
(Mature phase) • Technology standard exists. • Improve service.
• Increasing international competition. • Process innovation.
• Industry-wide profits declining.
• Industry exit is beginning.
Declining Industry • Industry sale have sustained pattern of decline. • Market leadership.
(Declining phase) • Some well-established firms have exited. • Niche.
• Firms have stopped investing in maintenance. • Harvest.
• Divest.
* The growth market has usually a fragmented industry structure. However, the fragmented industry structure
is not always within the growth phase, it can just be a lot of small firms without growth. “A dog is an animal,
but not all animals are dogs” For example the clothing market has a fragmented industry structure, but is more
within the mature phase than within the growth phase.
1. Emerging industry:
Emerging industries are newly created or newly re-created industries formed by technological
innovations, changes in demand, the emergence of new customer needs etc.
First-mover advantages: These are advantages that come to firms that make important strategic and
technological decisions early in the development of an industry. In emerging industries, many of the
rules of the game and standards have yet to be established. For a firm you can create rules and
standard that is beneficial for your firm.
• Technological leadership strategy: Firms that make early investments in particular
technologies in an industry are implementing this strategy. 1) Advantage is that firms that
implemented first may obtain low-cost position based on their greater volume of production
and 2) Advantage is that firms that make early investments in a technology may obtain
patent protections that enhance their performance.
• Locking-up assets: Resources required to successfully compete in an industry. Firms that are
able to tie up strategically valuable resources in an industry before their full value is widely
understood can gain sustained competitive advantage.
• Create switching costs: Customer-switching costs exist when customers make investments in
order to use a firm’s particular products of services. These investments make it harder to
begin purchasing at other firms for customers. For example: Using Android or IOS.
Disadvantage: Emerging industries are characterized by uncertainty. It may not be all clear what right
decisions are and for firm’s flexibility is one of the most important factors that they need.
2. Fragmented industry:
Fragmented industries are industries in which a large number of small or medium-sized firms operate
and no small set of firms has dominant market share, or creates dominant technologies (For example
the Retailing, fabrics and commercial printing).
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, Opportunities: Consolidation strategy: To consolidate the industry into a smaller number of firms.
Result: Firms that are successful in implementing this can become industry leaders and obtain benefits
from this kind of effort.
3. Mature industry:
Mature industries are industries that have passed both the emerging and the growth phases of
industry growth. Characterized by 1) Slowing growth in demand. 2) Development of experience repeat
customers. 3) Slowdown in increase production capacity. 4) Slowdown introduction of new products.
5) Increase of international competition. 6) Overall reduction in profitability.
• Refining current products: Innovation in these industries focus on extending and improving
current products and technologies. For example McDonalds introduced healthy and more adult
oriented food to complement their kid-friendly menu. This movement has helped restore the
profitability.
• Emphasis on service: Emphasis on service means that a firm is able to develop a reputation for
high quality of customer service. The firm may be able to obtain superior performance even
though its products are not highly differentiated. (Focus op service, consumenten komen bij jou
voor service en niet direct voor het productaanbod)
• Process innovation: A firm’s processes are the activities it engages in to design, produce, and sell
its products or services. Process innovation is a firm’s effort to refine and improve its current
process. Over time product innovation becomes less important (this is important in emerge
stage) and process innovations becomes more important in mature stage. Process innovation is
mainly designed to reduce manufacturing costs, increase product quality and streamline
management. In mature industries firms can often gain an advantage by manufacturing the same
product as competitors but at a lower cost.
4. Declining industry:
A declining industry is an industry that has experienced an absolute decline in unit sales over a
sustained period of time. Firms in a declining industry face more threats than opportunities. Rivalry is
likely to be very high, as is the threat of buyers, suppliers and substitutes. But firms do have
opportunities they can exploit:
• Market Leadership:
An industry in decline is often characterized by overcapacity in manufacturing and distribution.
Firms will have to endure a significant shakeout period until overcapacity is reduced. In this
industry, most important of these is that a firm must establish itself as a market leader in the
pre-shakeout industry, by becoming the firm with the largest market share. The leader’s
objective should be to try to facilitate the exit of firms that are not likely to survive a shakeout,
thereby obtaining a more favorable competitive environment as quick as possible.
• Market Niche:
A niche strategy in a declining industry reduces its scope of operations and focuses on narrow
segments of the declining industry. If only a few firms choose a particular niche, then these firms
may have a favorable competitive setting, even though the industry as a whole is facing shrinking
demand.
*Overeenkomst leadership en niche strategie: Beide willen in de decline markt blijven ondanks dat
hij dus zo dalende is.
• Harvest:
Firms pursuing a harvest strategy do not expect to remain in the industry over the long term.
Instead, they engage in a long, systematic, phased withdrawal, extracting as much value as
possible during this period. Firms can implement this strategy by reducing the range of products
they sell, distribution, eliminating less profitable customers etc.
• Divestment:
Like a harvest strategy, the objective of divestment is to extract a firm from a declining industry.
Unlike harvest, divestment occurs quickly, often soon after a pattern of decline has been
established. Divestment can also be used when an industry is not in decline but when a firm
wants to focus on remaining operations or to raise capital.
*Overeenkomst harvest en divestment. Beide willen NIET in de decline markt blijven.
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