Strategic Management (Deel 1 – theme 1 t.e.m. 5)
Prof. Dr Peter Verhezen
()
Teaching Assistant: Maarten Thys
()
Boek: Crafting and Executing Strategy: The Quest for Competitive Advantage
Strategic Management 2020 – 2021 © Marie Meyntjens 1
,Theme 1: What is strategy and why is it so important? ............................................................................................. 6
1. The concept of strategy .................................................................................................................................6
2. What is strategy about?.................................................................................................................................6
3. Strategy and competitors ..............................................................................................................................7
4. The quest for competitive advantage ...........................................................................................................8
5. Strategic approach choices ............................................................................................................................8
6. The evolving nature of an organization’s strategy ........................................................................................9
7. A company’s business model.........................................................................................................................9
7.1. Business model elements .........................................................................................................................9
8. A good strategy ........................................................................................................................................... 10
8.1. The basic framework: strategy as a link between the firm and its environment ................................. 11
8.2. Common elements in successful strategies .......................................................................................... 11
9. Strategic curve ............................................................................................................................................ 14
10. The J-curve .................................................................................................................................................. 15
Theme 2: Charting an organization’s direction: vision and mission, objectives and strategy ................................. 16
1. Purpose and strategy .................................................................................................................................. 16
2. Communicating the strategic vision/mission/values ................................................................................. 17
2.1. Vision ...................................................................................................................................................... 18
2.2. Mission ................................................................................................................................................... 19
3. Core values and identity ............................................................................................................................. 19
3.1. Stage 1 – linking vision and mission with core values ........................................................................... 19
3.2. Stage 2 – The two essential kinds of objectives to set .......................................................................... 21
3.3. Stage 3 – the strategy making hierarchy ............................................................................................... 21
3.4. Stage 4 – executing the strategy ........................................................................................................... 21
3.5. Stage 5 – evaluating performance and initiating corrective adjustments............................................ 22
4. The role of the board of directors in corporate governance ..................................................................... 22
5. Strategic leadership .................................................................................................................................... 25
Theme 2B: An industry or external analysis .............................................................................................................. 25
1. The components of an organization’s macro environment ...................................................................... 25
2. Attractiveness of the industries (exam question) ...................................................................................... 27
3. Analyzing the industry: 5 forces of Michael Porter .................................................................................... 31
3.1. The Five Competitive Forces (Michael Porter) ...................................................................................... 33
3.2. PEST Analysis of Industry ....................................................................................................................... 40
3.3. Does Industry matter? ........................................................................................................................... 42
4. Does industry matter? ................................................................................................................................ 45
5. Industry dynamics ....................................................................................................................................... 58
5.1. Ecosystems changing the strategic landscape ...................................................................................... 58
5.2. What is the essence of Strategic Thinking and Implementation? ........................................................ 59
Strategic Management 2020 – 2021 © Marie Meyntjens 2
,Theme 3: Internal Analysis & Competitive Advantage ............................................................................................. 66
1. Question 1: how well is the firm’s present strategy working? .................................................................. 66
1.1. Indicators of strategic success ............................................................................................................... 66
1.2. Key financial ratios ................................................................................................................................. 67
2. Question 2: what are the firm’s competitively important resources and capabilities? ............................ 69
2.1. The impact of resources and capabilities in firms ................................................................................. 69
goals and values ................................................................................................................................................ 69
purpose (see circles on p. 12 in SV) .................................................................................................................. 69
resources and capabilities ................................................................................................................................. 69
see above ........................................................................................................................................................... 69
structure and systems ....................................................................................................................................... 69
that support the resources and capabilities ..................................................................................................... 69
2.2. Types of organizational resources ......................................................................................................... 69
2.3. Identifying capabilities ........................................................................................................................... 70
2.4. Putting resource and capability analysis to work: a practical guide ..................................................... 70
3. Question 3: is the firm able to take advantage of market opportunities and overcome external threats
to its external well-being? ..................................................................................................................................... 74
3.1. SWOT-analysis ........................................................................................................................................ 74
3.2. 7-S model of MC Kinsey ......................................................................................................................... 75
3.3. VRIO-framework .................................................................................................................................... 76
4. (Question 6) What strategic issues and problems merit prioritized managerial attention? .................... 77
5. Question 4: are the firm’s prices and costs competitive with those of key rivals, and does it have an
appealing customer value proposition? ............................................................................................................... 79
5.1. Value Chian ............................................................................................................................................ 80
5.2. Benchmarking ........................................................................................................................................ 81
6. Summary: a framework for analyzing resources and capabilities ............................................................. 82
7. Capabilities > resources: a case .................................................................................................................. 83
Theme 4: Competitive advantage through positioning ............................................................................................ 88
1. Positioning strategy: introduction .............................................................................................................. 88
1.1. Positioning adopting to existing structure ............................................................................................ 88
1.2. Determining competitive scope ............................................................................................................ 89
1.3. Competitive advantage based on 3 value disciplines (Treacy & Wiersema, 1995) .............................. 89
1.4. Competitive advantage through positioning (Michael Porter) ............................................................. 90
1.5. Competitive strategy as positioning (M. Porter) – important! ............................................................. 91
Strategic Management 2020 – 2021 © Marie Meyntjens 3
, 2. Positioning through (1) low cost – cost leadership .................................................................................... 94
2.1. Low-cost provider strategies ................................................................................................................. 94
2.2. Cost drivers ............................................................................................................................................ 95
2.3. Revamping the value chain system to lower costs ............................................................................... 98
2.4. When a low-cost provider strategy works best .................................................................................... 98
2.5. Pitfalls of a low-cost provider strategy .................................................................................................. 99
3. Positioning through (2) differentiation ...................................................................................................... 99
3.1. Broad differentiation strategies ............................................................................................................ 99
3.2. Uniqueness (differentiation) drivers ................................................................................................... 100
3.3. When a differentiation strategy works best........................................................................................ 101
3.4. Pitfalls of a differentiation strategy ..................................................................................................... 102
3.5. Successful competitive strategies are resource-based ....................................................................... 102
4. Gaining competitive advantage ................................................................................................................ 103
4.1. Important contributors to strategy (research) .................................................................................... 103
4.2. Overview strategies – competitive advantage .................................................................................... 103
4.3. Position improving strategies creating a competitive advantage....................................................... 105
4.4. Same thing, different words ................................................................................................................ 106
4.5. Competitive advantage: creating value and capturing value ............................................................. 108
4.6. Segmentation ....................................................................................................................................... 109
5. Cases on positioning ................................................................................................................................. 112
5.1. Case: Zara ............................................................................................................................................. 112
5.2. Case: Victoria’s Secret.......................................................................................................................... 121
5.3. Case: Renova ........................................................................................................................................ 123
6. Reinterpreting ‘positioning’: addressing the supply and demand side ................................................... 124
6.1. Value proposition and value chain activities ....................................................................................... 124
6.2. Competitive advantage ........................................................................................................................ 126
7. Positioning taking advantage of Supply & Demand Networks (Case: Ikea)............................................. 132
7.1. IKEA’s activity map ............................................................................................................................... 132
7.2. Structural Components and Dynamic Interactions of a Network Strategy ........................................ 133
7.3. IKEA and its Industrial Network ........................................................................................................... 133
7.4. Ikea’s ladder model: for supplier interactions and IT/logistics capabilities (routine cooperation) ... 134
7.5. The Network of Resources combined in ‘Printed/Veneer’ Project (ad hoc/project cooperation) .... 135
8. Business model evolution and business model innovation ..................................................................... 136
8.1. Strategy & innovation .......................................................................................................................... 136
8.2. New markets created through innovation .......................................................................................... 136
Strategic Management 2020 – 2021 © Marie Meyntjens 4
Prof. Dr Peter Verhezen
()
Teaching Assistant: Maarten Thys
()
Boek: Crafting and Executing Strategy: The Quest for Competitive Advantage
Strategic Management 2020 – 2021 © Marie Meyntjens 1
,Theme 1: What is strategy and why is it so important? ............................................................................................. 6
1. The concept of strategy .................................................................................................................................6
2. What is strategy about?.................................................................................................................................6
3. Strategy and competitors ..............................................................................................................................7
4. The quest for competitive advantage ...........................................................................................................8
5. Strategic approach choices ............................................................................................................................8
6. The evolving nature of an organization’s strategy ........................................................................................9
7. A company’s business model.........................................................................................................................9
7.1. Business model elements .........................................................................................................................9
8. A good strategy ........................................................................................................................................... 10
8.1. The basic framework: strategy as a link between the firm and its environment ................................. 11
8.2. Common elements in successful strategies .......................................................................................... 11
9. Strategic curve ............................................................................................................................................ 14
10. The J-curve .................................................................................................................................................. 15
Theme 2: Charting an organization’s direction: vision and mission, objectives and strategy ................................. 16
1. Purpose and strategy .................................................................................................................................. 16
2. Communicating the strategic vision/mission/values ................................................................................. 17
2.1. Vision ...................................................................................................................................................... 18
2.2. Mission ................................................................................................................................................... 19
3. Core values and identity ............................................................................................................................. 19
3.1. Stage 1 – linking vision and mission with core values ........................................................................... 19
3.2. Stage 2 – The two essential kinds of objectives to set .......................................................................... 21
3.3. Stage 3 – the strategy making hierarchy ............................................................................................... 21
3.4. Stage 4 – executing the strategy ........................................................................................................... 21
3.5. Stage 5 – evaluating performance and initiating corrective adjustments............................................ 22
4. The role of the board of directors in corporate governance ..................................................................... 22
5. Strategic leadership .................................................................................................................................... 25
Theme 2B: An industry or external analysis .............................................................................................................. 25
1. The components of an organization’s macro environment ...................................................................... 25
2. Attractiveness of the industries (exam question) ...................................................................................... 27
3. Analyzing the industry: 5 forces of Michael Porter .................................................................................... 31
3.1. The Five Competitive Forces (Michael Porter) ...................................................................................... 33
3.2. PEST Analysis of Industry ....................................................................................................................... 40
3.3. Does Industry matter? ........................................................................................................................... 42
4. Does industry matter? ................................................................................................................................ 45
5. Industry dynamics ....................................................................................................................................... 58
5.1. Ecosystems changing the strategic landscape ...................................................................................... 58
5.2. What is the essence of Strategic Thinking and Implementation? ........................................................ 59
Strategic Management 2020 – 2021 © Marie Meyntjens 2
,Theme 3: Internal Analysis & Competitive Advantage ............................................................................................. 66
1. Question 1: how well is the firm’s present strategy working? .................................................................. 66
1.1. Indicators of strategic success ............................................................................................................... 66
1.2. Key financial ratios ................................................................................................................................. 67
2. Question 2: what are the firm’s competitively important resources and capabilities? ............................ 69
2.1. The impact of resources and capabilities in firms ................................................................................. 69
goals and values ................................................................................................................................................ 69
purpose (see circles on p. 12 in SV) .................................................................................................................. 69
resources and capabilities ................................................................................................................................. 69
see above ........................................................................................................................................................... 69
structure and systems ....................................................................................................................................... 69
that support the resources and capabilities ..................................................................................................... 69
2.2. Types of organizational resources ......................................................................................................... 69
2.3. Identifying capabilities ........................................................................................................................... 70
2.4. Putting resource and capability analysis to work: a practical guide ..................................................... 70
3. Question 3: is the firm able to take advantage of market opportunities and overcome external threats
to its external well-being? ..................................................................................................................................... 74
3.1. SWOT-analysis ........................................................................................................................................ 74
3.2. 7-S model of MC Kinsey ......................................................................................................................... 75
3.3. VRIO-framework .................................................................................................................................... 76
4. (Question 6) What strategic issues and problems merit prioritized managerial attention? .................... 77
5. Question 4: are the firm’s prices and costs competitive with those of key rivals, and does it have an
appealing customer value proposition? ............................................................................................................... 79
5.1. Value Chian ............................................................................................................................................ 80
5.2. Benchmarking ........................................................................................................................................ 81
6. Summary: a framework for analyzing resources and capabilities ............................................................. 82
7. Capabilities > resources: a case .................................................................................................................. 83
Theme 4: Competitive advantage through positioning ............................................................................................ 88
1. Positioning strategy: introduction .............................................................................................................. 88
1.1. Positioning adopting to existing structure ............................................................................................ 88
1.2. Determining competitive scope ............................................................................................................ 89
1.3. Competitive advantage based on 3 value disciplines (Treacy & Wiersema, 1995) .............................. 89
1.4. Competitive advantage through positioning (Michael Porter) ............................................................. 90
1.5. Competitive strategy as positioning (M. Porter) – important! ............................................................. 91
Strategic Management 2020 – 2021 © Marie Meyntjens 3
, 2. Positioning through (1) low cost – cost leadership .................................................................................... 94
2.1. Low-cost provider strategies ................................................................................................................. 94
2.2. Cost drivers ............................................................................................................................................ 95
2.3. Revamping the value chain system to lower costs ............................................................................... 98
2.4. When a low-cost provider strategy works best .................................................................................... 98
2.5. Pitfalls of a low-cost provider strategy .................................................................................................. 99
3. Positioning through (2) differentiation ...................................................................................................... 99
3.1. Broad differentiation strategies ............................................................................................................ 99
3.2. Uniqueness (differentiation) drivers ................................................................................................... 100
3.3. When a differentiation strategy works best........................................................................................ 101
3.4. Pitfalls of a differentiation strategy ..................................................................................................... 102
3.5. Successful competitive strategies are resource-based ....................................................................... 102
4. Gaining competitive advantage ................................................................................................................ 103
4.1. Important contributors to strategy (research) .................................................................................... 103
4.2. Overview strategies – competitive advantage .................................................................................... 103
4.3. Position improving strategies creating a competitive advantage....................................................... 105
4.4. Same thing, different words ................................................................................................................ 106
4.5. Competitive advantage: creating value and capturing value ............................................................. 108
4.6. Segmentation ....................................................................................................................................... 109
5. Cases on positioning ................................................................................................................................. 112
5.1. Case: Zara ............................................................................................................................................. 112
5.2. Case: Victoria’s Secret.......................................................................................................................... 121
5.3. Case: Renova ........................................................................................................................................ 123
6. Reinterpreting ‘positioning’: addressing the supply and demand side ................................................... 124
6.1. Value proposition and value chain activities ....................................................................................... 124
6.2. Competitive advantage ........................................................................................................................ 126
7. Positioning taking advantage of Supply & Demand Networks (Case: Ikea)............................................. 132
7.1. IKEA’s activity map ............................................................................................................................... 132
7.2. Structural Components and Dynamic Interactions of a Network Strategy ........................................ 133
7.3. IKEA and its Industrial Network ........................................................................................................... 133
7.4. Ikea’s ladder model: for supplier interactions and IT/logistics capabilities (routine cooperation) ... 134
7.5. The Network of Resources combined in ‘Printed/Veneer’ Project (ad hoc/project cooperation) .... 135
8. Business model evolution and business model innovation ..................................................................... 136
8.1. Strategy & innovation .......................................................................................................................... 136
8.2. New markets created through innovation .......................................................................................... 136
Strategic Management 2020 – 2021 © Marie Meyntjens 4
