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College aantekeningen Business Strategy and Data Analytics
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Business Strategy & Data AnalyticsLecture 1 – Introduction to Business Strategies – 30/01/2023
What is strategy? Strategy is about making choice; it’s about deliberately choosing to be
different (Porter 1996)
- Word origin
o Use resources
o Be effective
o Establish favorable position
- Elements of successful strategies
o Consistent and long-term goals
o Formulated based on analyses
o Effectively exploit resources
- Business environment has changed
o Less predictable environment
o Analytical reasoning
o Strategic positioning
Business strategy = an idea, a business concept, a plan. The search for a favorable
competitive positioning. A thoughtful plan by a company to produce desired outcomes in
the marketplace vis-à-vis customers channel members, and competitors.
Marketing strategy = a functional strategy aimed at customer value creation, market
orientation, segmentation, targeting, and positioning. Decisions that involve selling products
on the market. Other functional strategies in a firm include production strategy, financial
strategy, …
Different views of strategy (5P’s) that can be related to a strategic planning logic
Practical examples
ZARA
- Strategy
o New designs can reach the stores in 3 weeks
o If there is no demand for an item, ZARA simply discontinues productions
o Shorter lead times (production also in Europe)
o Higher production costs, but less advertising costs
Sometimes companies make wrong strategic choices
,Kodak
- Had difficulties adapting to the changing business circumstances
- Kodak invented the roll film and was a lead in the market
- Kodak did not capture the full potential of digital photography on time
- What did Fujifilm do different?
Fujifilm
- Photographic film industry
- Developed fully digital camera
- Film business failed Kodak bankrupt
- Cosmetics line
What strategy to pursue (new product development)?
- Strategy to develop a new product: two success
factors
1. Uniqueness
2. Relevance
Generic strategy = a general way of positioning a firm within an industry. Concentrate on
core elements of firms’ business-level strategies and avoid competing in the markets better
served by other generic strategies.
vs.
Glocal strategy of McDonald’s = global and local, global strategy adapted locally
- McDonald’s is the leading fast-food chain in the world operating in more than 100
countries
- Variety of services and product catering to the needs of consumers
- Standardization strategy = anywhere the company operates, it offers identical food
products such a McNuggets, Happy Meal or Filet-O-Fish
- Adaption strategy = McDonald’s adapts to the needs of the consumers as required
by the cultures of specific countries
Different events might act as a stimulator for a company to rethink its strategy
- International expansion
- Performance gap (e.g., unmet growth aspiration)
- Changes in ownership
- Anticipated trends (e.g., disruptive technologies)
- New CEO or executive leadership team
- Interventions from external stakeholders
- More unstable environment
- Mergers & acquisitions
Six principles describe the essentials of strategy for
company practice
1. Quest for competitive advantage. Strategy is
about gaining, sustaining, and renewing
competitive advantage to ensure superior
performance.
, Strategies competitive advantage superior performance
o Differentiation
o Cost minimization
2. Fit of markets and resources. Strategy is about creating a dynamic fit between the
company and its environment.
Market-based view of strategy (outside-in) + resource-based view of strategy (inside-
out) = dynamic perspective on markets and resources for competitive survival
3. Being different and making choices. Strategy is about being different and choosing
what to do and what not to do.
4. Path to a destination. Strategy pursues the achievement of a desired long-term
aspiration – it is a means to an end.
5. Consistency in behavior. Strategy is consistency
in behavior, whether intended (deliberate) or
not intended (emergent)
6. Multiple level and theme alignment. Strategy is the symphony that results from
multiple areas and strategic themes in an organization
, There are different ways for measuring a company’s performance
- Economic value
- Accounting performance (profitability)
- Economic performance and shareholder value
- Corporate sustainability performance
Strategic decision making
Two models of thinking in the brain are the cognitive foundations for any kind of decision
making
1. Intuitive thinking: automatic, unconscious, quick, implicit, emotional, effortless
2. Reflective thinking: controlled, conscious, slow, explicit, logical, effortful
Why not just use managerial intuition?
- People (and managers are people too) are poor at learning from experience
- People have poor intuitive sense for the value of information relative to the risk
- People have limited ability to process information and make decisions
o Availability bias
o Overconfidence
o Confirmation bias
Simplifying strategic decisions. Most decisions in life rely on simplifying strategies or rules of
thumb (heuristics), not on the rational model.
- Heuristics are helpful in strategic management as they provide time-pressured
professionals with a simple way of dealing with a complex world
- Sometimes, however, heuristics lead to severe and systematic errors in decision
making (people are typically unaware that they rely on heuristics)
- Left unchecked, these subconscious cognitive biases undermine important strategic
decision making
Characteristics of strategic and operational decision-making situations
Strategic decisions Operational decisions
Focus Direction (‘’what?’’) Efficiency (‘’how?’’)
Time horizon Long-term Short-term
Impact Company-wide, holistic Subarea, partial
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