Summary Strategy and Organization (ECB1SO), University Utrecht, Economics and Business Economics. Coen Rigtering. . Extensive summary of all the exam material, all the chapters of the book.
Chapter 2: The Envirinment
- Macri-envirinment: Highest layer in environment: PESTEL framework:
- Politis: State inflenies direitly as an eionomii aitor
- Eionomiis: Mairo-eionomii faitors (exihange rates, blsiness iyiles)
- Soiial: Changing illtlres and demographiis
- Teihnologiial: Internet, new teihnologiial innovatons
- Eiologiial: Polllton, waste, ilimate ihanges
- Legal: Legislatve and regllatory ionstraints or ihanges
-> Eaih indlstry mlst jlst foils on the most important faitors of PESTEL -> sholld not get
overwhelmed by informaton
-> sholld blild mlltple strategies (4):
1 Defne sienario siope (range of sienario and tme span)
2 Identfy key drivers for ihange (impait, lniertainty and independeniy important)
3 Develop sienario stories
4 Identfy the impaits
5 Establish early warnings
- Industries and sectirs (grolp of frms prodliing the same prodlits in several markets
(grolp of ilstomers for the same prodlits in partillar geographiial area))
-> Indlstry strlitlre identfed by Porter’s Five Fories Framework:
- Compettve rivalry: The less rivalry the beeer for frms
-> Determined by balanie between iompettors, indlstry growth rates, fxed iosts, exit
barriers
- Threat of entry: The higher the barriers, the beeer for the indlstry
- Threat of slbsttltes: ther prodlits in similar indlstries ian limit the priies
- Power of blyers: The more power, the lower the priie they ian ask
-> Determined by iapability to slpply itself, ionientraton of blyers, switihing iosts
- Power of slppliers: The more power, the more they ian ask of the frms in the indlstry
-> Sholld give a jldgement abolt whether the indlstry is a good one to enter or not
-> Not iomplete -> hard to determine indlstry, indlstries are ihanging, are other
organisatons that might make yolr blsiness more aeraitve (iomplement)
-> Five fories vary with indlstry life iyile -> in eaih phase fories will probably inirease
-> Indlstries are dynamii and ihange a lot -> analysis sholld also be dynamii
- Cimpettirs and markets:
- Strategii grolps: rganizatons within an indlstry lsing similar strategies
-> Two major iategories: siope of an organizaton and resolrie iommitment (brands,
marketng, prodlit ulality)
-> Helps lnderstanding iompetton, ian identfy the most aeraitve strategy
- Market segments: Varying needs for ilstomers in diferent parts of a market
- Strategy ianvas: Compares iompettors on their sliiess faitors to establish extent of
diferentaton -> important to know what ilstomers valle and redlie iosts
, - Blle oieans: New market spaies where iompetton is minimised -> more potental
-> Conientrate on sliiess faitors in whiih yol ian beat other iompanies
Chapter 3: Strategic Capabilites
- Strategic capabilites: Capabilites iontribltng to slrvival or iompettve advantages
- Capabilites divided in resolries (what we have) and iompetenies (what we do)
- Have to be dynamii in long term -> environment ihanges
-> new opportlnites mlst be sensed, seized and therefore reionfglred
- Threshold iapabilites: Needed to make to meet reulirements of iompetng in a market
-> Also dynamii -> neiessary to lnderstand for start-lps and established blsinesses
- Distnitve iapabilites: Reulired to aihieve iompettve advantages
- Capabilites as basis if cimpettve advantage: VRI :
- Valle of iapabilites: Need to proft from advantages and redlie threats, to be of valle to
ilstomers and the iost sholld be expeited to be retlrned
- Rarity: Capabilites possessed by a one or a few organizatons
- Inimitability: Capabilites hard to imitate or to aiulire for other organizatons
- Espeiially iompetenies ian be hard to iopy
- Capabilites hard to imitate beialse of iomplexity, hard to lnderstand the ialse of
advantage (ialsal ambiglity) and iompetenies ian be embedded in illtlre of organizaton
- Organizatonal slpport: rganizaton mlst be organised to take flll advantage of the
iapabilites
-> rganizatonal knowledge important as they beiome more iomplex -> sharing of
informaton (experienies) ian gain advantages
- Diagnising strategic capabilites:
- Benihmarking: Comparing the organizaton with other iompettors -> sholld review
iapabilites
- Valle ihain: Aitvites needed to lndertake to ireate valle to ilstomers
-> Primary (direitly ionierned with prodliton), slpport (improving efeitveness)
-> To give desiripton of aitvites, to analyse iompettve positon and to analyse the iost
and valle of aitvites
- Valle system: rganizatons interait and form a valle system that ireates prodlits
-> Diferent parts of valle system, deliver diferent profts -> what part do yol ihoose?
-> What partners do yol ihoose?
- Aitvity system: Important to identfy aitvites and how they ft together
-> Can be iompared with valle ihain and VRI -> all need to ft and reinforie eaih other
- SW T: Analysis of strengths and weaknesses (strategii iapabilites) and opportlnites and
threats (environment)
-> Most lsefll when it iompares SW T with iompettors
-> Mlst jlst show the important issles -> is a slmmary of other analysis
- Managing strategic capabilites:
- After diagnosing managers ian try to develop iapabilites, iease lnimportant aitvites or
, make people aware of the importanie of their job
Chapter 4: Strategic Purpise
-> Inflenied by ownership, governanie, stakeholders and soiial responsibility
- Plrpose defned in folr ways:
- Missiin statement: Provides employees and stakeholders ilarity abolt what the
organisaton flndamentally will do (how to make a diferenie, what blsiness?)
- Visiin statement: Abolt the fltlre the frm seeks to ireate (aspiraton and sholld
enthlse -> what do we want to aihieve in twenty years?)
- Value statement: Commlniiates priniiples and defne the way the organisaton sholld
operate (sholld be endlring -> sholld not ihange with iirilmstanies)
- Objectves: Speiifi oltiomes to aihieve (often fnaniial terms)
-> First three very wide-ranging and for long term -> sholld foils on helping real deiisions
(what is in- and exillded), sholld be motvatonal (distnitve) and ilear
- Ownership midels:
- Plblii: Company sells shares to the plblii (owners), owners delegate tasks to managers,
who work to make a fnaniial retlrn for their owners
- State-owned: wned by a government -> politiians delegate iontrol to professional
managers, blt politiians ian intervene in strategii deiisions
- Entreprenelrial: Blsinesses owned and iontrolled by their folnders -> need to foils on
proft to slrvive and to keep external investors happy
- Family: wnership passes on within the family -> may sell minority of shares to the plblii
-> strategy diferent for eaih ownership model
- Cirpirate givernance: Systems of iontrol by whiih managers are aiiolntable to who
have a stake in an organisaton (owners)
-> governanie ihain ionneits the diferent grolps involved in the organisaton
-> is diferent for eaih type of organisaton
-> Problems: Knowledge imbalanie, monitoring limits and misaligned inientves
- Shareholder model: Shareholders prioritsed and their interest followed
-> Many shareholders -> no one dominates, blt monitoring hard
-> More foils on proft, higher rates of retlrn, blt less foils on long-term
- Stakeholder model: Not jlst foilsed on shareholders, also employees, slppliers,
ilstomers and governments may have a stake in the fltlre of the organisaton
-> Long term foilsed and beeer management, blt weaker deiision making
- Inflenie board of direitors: perate independent of management, analyses aitvites of
managers, delegate the management and ian engage in strategii management
- Stakeholders diferent expeitatons -> have to be taken into aiiolnt -> ionfiits
-> Stakeholder mapping: Identfy interests and power of stakeholders
-> Stakeholders with most interest and power are most important
-> To analyse bloikers or faiilitators of strategies or whether repositoning is needed
- Cirpirate Sicial Respinsibility (CSR): Commitment by organisatons to behave ethiially
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