Chapter 16 – Developing sustainable
strategies
“Strategy is a pattern in a stream of decisions”
The field of strategy making
Pag. 390
Asking yourself 4 questions.
Want: desire. Discuss how to set up a company. People saw a gap, opportunity or had a desire. We
want to do this, we have a desire.
Can: can we do it, what can we do, what resources do we have? People, HR, Knowledge, financial
resources.
Should: based on someone else idea. In this case the environment. What does the market desire.
What kind op competitors do you have.
Allowed: the ethical standards. How you do your business, what is normal. Forming new strategy,
you have to take these in account. Not only smart to do, but also required. Law and culture.
Basically to make a strategy
Competitive advantage
Pag. 393 - 397
Cost Leadership: try to minimize their costs. Focusing on limiting the product range, some branded
goods but have to pay for it. Try to focus on the costs.
Differentiation: bit opposite from cost leadership. Highlighting your uniqueness. Services, different
classes, more quality. Mostly more expensive.
Focus: applies a cost leadership or differentiation in a specific part. Specialized. Focus on a specific
market.
,Blue Ocean
Competition
Four mechanisms are used to erode or destroy competitive advantage.
Imitation: Apple. Other companies make products or open stores that look like a popular brand.
Almost the same, but then cheaper.
Substitution: Netflix. Product services are replaced by something else. The same function with the
same customer group is filled by a new substance or new technology.
Resource Mobilization: Headhunting. To destroy competitive advantage. Making sure you get the
talent from a different place. For example pouching the best employees from another company.
Resource Paralysis: Negative advertising. Happens a lot in politics. Don’t vote this… Making sure that
other companies are put in a negative daylight.
The Quest for Sustainability
Making sure you stay ahead of the competition.
Barriers to Entry: making sure other competitors don’t easily start up a company
1. Employing economies of scale
2. Product differentiation
3. Capital requirements
4. Switching costs: if change contract to another company, you have to pay a lot of extra
money. To prevent other companies to start.
5. Access to distribution channels
6. Property rights: makes sure that your design stays unique and other competitors cant use the
same design.
7. Government regulation and policies
Monitoring possible substitutes: look at that and make sure they are not going to develop.
Working on the competition: sometimes buying up companies.
Relationships with customers and competitive advantage
Challenges of strategic management for services
Pag 397
- Identification of added value carriers
- Managing intangible resources
- Value creation and value perception
- The role of technology
- Managing for continuity by creating sustainable competitive advantage
, Added Value Carriers
What is actually adding value to the product or service.
Strategies
Servitization: adding service to a product compartment. For example an insurance.
Productization: adding tangibles to a product or service. For example the interior of the office of the
insurance company.
Add value to the product. Coffee at Starbucks costs 40 cents, but you pay for the logo’s, the brand,
the packaging, etc. That’s why you pay 5 euros.
Nothing is for free!
Services are seen as free, but at the end someone is paying for it. Someone always needs to pay.
Anchor the services in the firm
Raise the uniqueness of the product component e.g. pharmacist. Pharmacist has a unique license to
mix medicine and to describe it to you.
Creating casual ambiguity, not knowing what you are really paying for e.g. real estate agent. Not
really sure what you’re paying for, it is a whole package. Cant really explain why you pay that.
Managing Intangible Resources
Intangible: Got hold of them
Resources: you still have them
Not only the stuff, but mostly the knowledge en people that you have.
Intangibles can create competitive advantage e.g. knowledge
Be careful of resource mobilization, 2 solutions:
- Raise dependency of personnel: negative competitive strategy. Can’t just move to another
competitor
- Make firms more attractive: positive one. People like to work there, want to stay there. They
enjoy going to their work.
