Strategic management
Week 1
Strategy = a detailed plan for achieving success in situations such as war, politics, industry, or
support, or the skill of planning for such situations
Porter (1996): strategy is the creation of unique and valuable position, involving a different
set of activities
Volberda (2011): strategy is an integrated and coordinated set of commitments and actions
designed to exploit (and develop) core competencies and gain a competitive advantage
Strategy is about combining activities. Strategy without activities is just a statement
A firm has a competitive advantage when it implements a strategy competitors are unable to
duplicate or find too costly to try to imitate it
Above average returns = returns in excess of what an investor expects to earn from other
investments with a similar amount of risk
Operational effectiveness = performing activities better (faster, with fewer inputs and defects) than
rivals. Increasing by:
Outsourcing
Reducing the number of defects
Business process reengineering or change management
Toyota
Operational effectiveness is not strategy. it is necessary but not sufficient. It can be imitated.
Differentiation and positioning is done by strategy.
strategic positioning = attempts to achieve sustainable competitive advantage by preserving what is
distinctive about a company. Performing different activities than rivals, or performing similar
activities in different ways.
Sources:
Product-focused (variety-based) ik ga alleen handsanitiser maken en dan goed.
Customer-need focused (needs-based) gericht op mensen. Lululemon athletica is gericht
op mensen die van yoga houden en maken kleding maar ook yoga matten.
Access-focused (access-based) een expertise bouwen. Denk aan bol.com
Strategic management process = the full set of commitments, decisions and actions required for a
firm to achieve strategic competitiveness and above-average returns.
3 main parts: inputs, formulation, implementation.
Daartussen: competitive advantage, feedback, mission
Two underlying models:
1. Industrial organization I/O model (economic model) = external environment is the primary
determinant of succesful strategic choice/competitive advantage
--> is about finding attractive industries (markets)
--> assumptions: resources are mobile, rational decisionmaking, firm strategies are similar in
nature
, porter’s five forces, general environment analysis, PESTEL
2. Resource-based view RBV = internal characteristics are the primary determinants
--> assumptions: heterogenous firm resources, immobile resources, rational decision-making
which resources/capabilities are the ones that create a sustainable competitive
advantage? Which criteria do those resources/capabilities have to fulfill?
VRIN model, value chain analysis
We can identify opportunities and threats (in the external environment of a firm) by analyzing the
macro environment and industry environment of the organization
General environment analysis = identifying forces in the macro environment that are beyond a firm’s
control.
--> political and legal factors (taxation), economic factors (interest rates), socio-cultural factors
(workforce diversity), technological (speed of change), demographic (population, age, ethnic
change), global (political events), environmental (pollution)
PESTEL: political, economic, social, technological, environment, legal
Scenario planning (in macro environment):
Industry = a group of firms/businesses that are active with the same/similar products in the same
market
Coca Cola’s industry is a beverage industry
Industry environment = industry structure, profitability.
Industry analysis.
Porter’s five forces Model (external analysis): assessing industry characteristics, structure, and
attractiveness.
Industry-level analysis, not firm level gaat over bedrijven die in dezelfde dingen handelen
1. Degree of rivalry key aspect = (risk of) price competition: rivalry high when:
- large number of competitors
- low switching costs (for customers)
- slow rate of industry growth
- high exit barriers (for company to leave the industry)
2. Supplier (zoals Boeing voor alle airlines) power. high when:
- concentration (of suppliers)
, - importance of the input
- high switching costs (for companies in the industry)
- forward integration
3. Buyer power. High when:
- concentration (of buyers)
- low product differentiation
- low switching costs (for buyer to go to other company)
- backward integration: when a firm concentrates on tasks at the beginning of the value
chain, buyer power is higher because the firm needs to sell to the buyer because it doesn’t
own it itself.
4. Risk of new entrants (in the industry)
- time and costs of entry
- economies of scale
- technology protection
- switching costs
5. Risk of substitutes (any product that can satisfy the same demand as the products of the
focal industry). High when:
- better price/quality ratio
- low switching costs (for customer)
all risks are low Industry is attractive. If not, improve position or leave the industry
Week 2
Examining internal drivers of strategy
Resources = inputs to firm’s product/services
Barney 1991: all assets, capabilities, organizational processes, firm attributes, info, knowledge etc
controlled by a firm that enable the firm to conceive of and implement strategies that improve its
efficiency and effectiveness
- tangible resources = physical attributes. Visible, quantified
capital, land, buildings, plant, equipment, supplies
