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WHERE WE ARE NOW AND WHERE WE WANT TO BE STRATEGIC MANAGEMENT 2008 Dr Grażyna Leśniak-Łebkowska lebkowska@wemba.edu.pl , mobile: 0 602 237 064 Katedra Zarządzania w Gospodarce - SGH Karl von Clausevitz „ON WAR”:

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strategic management 2008

WHERE WE ARE NOW AND WHERE WE WANT TO BE

STRATEGIC MANAGEMENT2008

Dr Grażyna Leśniak-Łebkowska

lebkowska@wemba.edu.pl, mobile: 0 602 237 064

Katedra Zarządzania w Gospodarce - SGH

slide2
Karl von Clausevitz „ON WAR”:

IDEOLOGY: formulation and consolidation of main values ( freedom, justice, welfare, safety)

POLICY: undertaking complex ventures and their overall coordination following the ideology (tax reform,reducing unemployment, new foreign policy)

STRATEGY: combining activities into complex ventures aimed at implementation of political goals; an instrument of policy

TACTICS: ways of efficient use of resources in particular activity and context

SOME DEFINITIONS...

organizational strategy
ORGANIZATIONAL STRATEGY:
  • H.I.Ansoff: Controlling and shaping main relationships between organization and its environment
  • K.Ohmae The strategy is aimed at winning at the marketplace due to sustainable competitive advantage, as efficiently as possible. Corporate strategy means undertaking continuous actions necessary to build and sustain the cost effective competitive advantage appropriate to the competitive situation
  • Chandler Setting the long-term goals and objectives, creating conditions to organizational growth, choice of strategic options and allocating resources respectively
  • H. Mintzberg Self-determination: who we are and who we want to be
strategy as a process
STRATEGY AS A PROCESS

WHO WE WERE YESTERDAY

Past experience: success stories, crisis situations

WHO WE ARE TODAY

Strategic Analysis

Environment (outside – in))

Global (macro-) PESTE

Competitive (micro-) „5 forces”

External stakeholders

SWOT

KSF

(integrated)

Strategic capital of an organization

(inside-out)

Resources, architecture, capabilities

Internal stakeholders

WHO WE WANT TO BECOME TOMORROW

The choice of strategic options and shaping the strategy

Corporate level Business level Functional level

Mission, vision, strategic

goals and objectives,

markets, businesses,

Alliances, economics

Products/technologies

target segments

ways of competing

Resources,

core competences

capabilities

c’d

strategy process cont d
STRATEGY PROCESS CONT’D

PROPOSALS AND CONCEPTS OF STRATEGY

Scenarios of the future, strategic options

Criteria of evaluation Modelling

STRATEGIC OPTION TO BE IMPLEMENTED

(THE OUTCOME OF MULTIFACET NEGOTIATIONS)

OPERATIONAL PLANS

Objectives, tasks, budgets,KPIs, rewarding system

(contingency plans)

Ventures, projects, continuous processes

NECESSARY INTERNAL ADJUSTMENTS

(organizational structure, culture, IT, resources)

EXECUTION-CONTROL-MODIFICATIONS

(intended vs emerging strategy)

NEW CYCLE

strategy success
STRATEGY SUCCESS

EFFECTIVE IMPLEMENTATION

Simple, agreed,

long-term goals,

Determination

to succeed

Deep understanding

of the business

environment

Objective appraisal

of available

resources

Resources

in excess to

current operations

strategic management in turbulent field
STRATEGIC MANAGEMENT IN TURBULENT FIELD

COMPETITION

A

B

?

A

VISION

A

H. Mintzberg

stakeholders
STAKEHOLDERS
  • PEOPLE, INSTITUTIONS AND NATURAL ENVIRONMENT AFFECTED BY ORGANIZATIONAL ACTIVITY
  • EACH STAKEHOLDER IS BINDED WITH ORGANIZATION BY PARTICULAR STAKE INDICATING THE TYPE AND LEVEL OF EXPECTATIONS AND RISKS
  • INTERNAL STAKEHOLDERS: OWNERS, INVESTORS, SHAREHOLDERS, MANAGERS, EMPLOYEES, TRADE UNIONS
  • EXTERNAL STAKEHOLDERS: CUSTOMERS, SUPPLIERS, COMPETITORS, CREDITORS, STATE AND LOCAL AUTHORITIES, LOCAL AND INTERNATIONAL (RELATIVE) COMMUNITY,NGOs, NATURAL ENVIRONMENT SPOKESMEN, UNIVERSITIES ETC.
time horizon of strategy
TIME HORIZON OF STRATEGY
  • CORPORATE STRATEGY (IF) AIMED AT SUSTAINABLE DEVELOPMENT: LONG TERM WITH FOCUS ON COMPETITION OF THE FUTURE AND CREATION OF VALUE IN NEW SETTINGS
  • BUSINESS STRATEGY AIMED AT WINNING IN THE MARKETPLACE - 2-5 YEARS NEEDED TO ESTABLISH COMPETITIVE ADVANTAGE THROUGH STRATEGIC VENTURES REDUCING COSTS OR INCREASING DIFFERENTIATION OR INTEGRATING BOTH OF THEM
  • RELATIONSHIP STRATEGY: DEPENDS ON THE LINKS WITH DIVERSE STAKEHOLDERS, SOME OF THEM ARE STRATEGIC AND LAST LONG, OTHER ARE TEMPORARY AND SHORT TERM OR OCCASIONAL
  • TIME HORIZON UNDERGOES SYSTEMATIC SHORTENING DUE TO THE ACCELERATION OF CHANGES BUSINESSES HAVE TO RESPOND, INCREASE OF THEIR INNOVATIVENESS AND PROGRESS IN MANAGING COMPLEX VENTURES
some conclusions for strategic management
SOME CONCLUSIONS FOR STRATEGIC MANAGEMENT
  • ENVIRONMENT CREATES CHALLENGES PERCEIVED AS OPPORTUNITIES OR THREATS.
  • TO RESPOND PROPERLY ORGANIZATIONS HAVE TO MONITOR THE GLOBAL ENVIRONMENT WHERE THE FIRST SYMPTOMS OF CHANGE CAN BE TRACKED
  • ONLY SOME ORGANIZATIONS RESPOND IMMEDIATELY AND MODIFY THEIR STRATEGIES
  • THE REACTION OF OTHERS VARY IN TIME AND INTENSITY, SOME DO DOT RESPOND AT ALL. THE FIRST REASON IS THE LACK OF ADEQUATE RESOURCES. THE SECOND IS INERTIA.
  • INNOVATORS SET UP NEW RULES FOR COMPETITION. FOLLOWERS HAVE LESS TIME TO ADJUST AND LIMITED OPPORTUNITIES TO PROFIT FROM THE CHANGE.
  • STAKEHOLDERS MAY SUPPORT THE CHANGES OR OPPOSE IN CASE OF PERCEIVED CONFLICT OF INTERESTS, THUS CREATING NEW ADDITIONAL RISKS FOR ORGANIZATIONS ATTEMPTING AT SUCCESSFUL ADJUSTMENT.
  • ORGANIZATIONS ACTIVELY PERFORMING STRATEGIC ANALYSIS AND DESIGNING THEIR REACTIONS ARE BETTER PREPARED TO BUILD FLEXIBLE ARCHITECTURE OF RESOURCES, DEVELOP UNIQUE CAPABILITIES AS THE DIRECT SOURCE OF COMPETITIVE ADVANTAGE
slide11
NURTURING QUESTIONSBASED ON MICHAEL MISCHE „STRATEGIC RENEWAL. BECOMING A HIGH-PERFORMANCE ORGANIZATION” Prentice Hall 2000
  • What makes an organization great and what factors are influencing new competitive dynamics?
  • Why and how do certin companies consistently outperform their peers and the business community expectations?
  • Why is that having great high quality products and competitive prices no longer guarantees competitive advantage, breakthrough performance and extraordinary financial results?
  • How did once dominant companies fall from their lofty positions of industry dominance and investor infatuation?
  • What do high-performance organizations, irrespective of industry, have in common?
  • What are the warning signals of strategic performance decline, and can these declines be predicted and avoided?
  • THE QUESTIONS MAY BE SAME, BUT THE ANSWERS WILL BE DIFFERENT – ALBERT EINSTEIN
the challenge and value proposition
THE CHALLENGE AND VALUE PROPOSITION

THE CHALLENGE:

TO BE A GREAT COMPANY TAKES SOMETHING MORETHAN JUST PRODUCTS, LOCATION, FINANCIAL PERFORMANCE, QUALITY, PRICES AND SIZE

THE VALUE PROPOSITION:

THE OBJECTIVES OF STRATEGY AND STRATEGIC CHANGE ARE TO CREATE AND SUSTAIN LONG-TERM HIGH-PERFORMANCE , COMPETITIVE AND ECONOMIC DOMINANCE

IT REQUIRES PERPETUUS ATTEMPTS TO BE THE BEST AND UNIQUE FOR YOUR CUSTOMERS, INVESTORS AND OTHER STAKEHOLDERS, TO COMPETE DIFFERENTLY!

the sources of value
THE SOURCES OF VALUE

COST AWARENESS

EFFICIENT MANAGEMENT OF ASSETS

INCREASE OF REVENUES

MANAGEMENT OF EXPECTATIONS

STRATEGIC PARADOX: (DELOITTE)

THE WINNING AND LOOSING COMPANIES ARE THOSE WHO ADOPTED RADICAL STRATEGIES BASED ON THE RIGHT OR WRONG SCENARIO

on changes sun tzu
ON CHANGES (SUN TZU)

CHANGE IS THE LAW OF LIFE, AND THOSE WHO LOOK ONLY TO THE PRESENT ARE CERTAIN TO MISS THE FUTURE

(J.F.KENNEDY, FRANKFURT, 1963)

KEY ISSUES TO UNDERSTAND THE NATURE OF ANY CHANGE:

  • HOW TO CHANGE
  • WHAT TO CHANGE
  • AT WHAT VELOCITY TO CHANGE
  • HOW TO EFFECTIVELY MANAGE AND SUCCESSFULY NAVIGATE CHANGE
  • KNOWING WHAT STATE AND QUALITIES TO CHANGE TO
  • DETERMINING THE ORGANIZATION’S CAPABILITY AND REQUIREMENTS TO CHANGE

TYPES OF CHANGE

  • INCREMENTAL (DISRUPTIVE, RADICAL)
  • TACTICAL (EVOLUTIONARY, MINOR)
  • SYSTEMIC TRANSFORMATION

OUTCOMES FOR STRATEGIC MANAGEMENT:

  • THREE OBJECTIVES-DRIVEN CHANGE : CREATION AND SUSTAINING HIGH PERFORMANCE, ACHIEVING A DEFINABLE GOAL OR CORRECTING A SPECIFIC PROBLEM, IMPROVING A COMPETITIVE POSITION
  • LEADERS COULD COMPETE MORE EFFECTIVELY WHEN FOCUS ON SOURCES OF CHANGE AND THE BEST USE ON THEIR OWN RESOURCESI
  • ONE CANNOT FORESEE THE FUTURE (P.DRUCKER)
  • FUTURE HAS TO BE INVENTED!
four certainties in competing nowadays
FOUR CERTAINTIES IN COMPETING NOWADAYS

FIRMS APPEAR AND DISAPPEAR THE AVERAGE STATISTICAL EXISTANCE OF A LARGE INDUSTRIAL COMPANY IS ABOUT 40 YEARS. THIS IS THE EQUIVALENT TO THE AVERAGE LIFESPAN OF THE NEANDERTALIAN MAN (M.MISCHE)

  • THE VELOCITY AT WHICH CHANGE OCCURS IS AT THE HIGHEST LEVEL THAT HAS EVER BEEN AND CONTINUES TO ACCELERATE AT HIGHER RATES EVERYDAY
  • THE LEVEL, SCOPE AND AND BREADH OF CHANGE ARE INCREASIBLY UNPREDICTABLE AND MORE SYSTEMIC, AFFECTING MORE AND MORE PEOPLE, ORGANIZATIONS AND SOCIETIES, PROCESSES AND TECHNOLOGIES
  • THE CLASSIC BOUNDARIES THAT ONCE DEMARKATED INDUSTRIES, ECONOMIES, MARKETS AND COUNTRIES ARE BECOMING INCREASINGLY BLURRED, POROUS, AND TRANSPARENT
  • THE HISTORICAL SOURCES OF COMPETITIVE ADVANTAGE AND METHODS OF FORMING STRATEGY HAVE BEEN LARGELY NEUTRALIZED OR SIGNIFICANTLY MITIGATED BY GLOBAL POLITICAL AND ECONOMIC CHANGES, RAPIDLY DEVELOPING TECHNOLOGIES AND CHANGING DEMOGRAPHICS
fundamental changes are driving new business dynamics
INDUSTRIAL MODEL 1900-1985

HORIZONTAL AND VERTICAL INTEGRATION

FIRST- MOVER ADVANTAGE

CRITICAL MASS AND ECONOMIES OF SCALE

COMPETING ON COST, PRICE AND LOCATION

SELL-IN/PUSH THROUGH MARKETING

INFORMATION IMPORTANTWELL-DEFINED INDUSTRY BOUNDARIES AND PREDICTABLE DYNAMICS

HIGH-PERFORMANCE MODEL 2000+

DISAGGREGATION, OUTSOURCING AND COLLABORATIVE PARTNERSHIPS

COMPETE ON SPEED, EXCELLENCE AND AGILITY

COMPETE ON PROCESS AND SERVICE

SELL-THROUGH/PUT THROUGH MARKETING (MAR-COM)

KNOWLEDGE IS STRATEGIC

INDUSTRY STRUCTURE IS BLURRED, UNCERTAINTY AND AMBIGUITY PREVAILS

(BLURR=SPEED X CONNECTIVITY X INTANGIBLES)

FUNDAMENTAL CHANGES ARE DRIVING NEW BUSINESS DYNAMICS
changes define new rules in strategic thinking
TRADITIONAL STRATEGIC PLANNING

IMITATE, SUBSTITUTE

COMPETITORS ARE RIVALSI

LEVERAGE SUPPLIERS FOR CONCESSIONS AND LOWER PRICES

CREATE VERTICALLY INTEGRATED STRUCTURES

ORGANIZE FOR SIZE AND EFFICIENCY

COMPETE FOR INDUSTRY POSITION/RELY ON SIZE AND BARRIERS TO ENTRY

REDUCE BARGAINING POWER OF CUSTOMERS

COMPETE ON PRICE AND LEAST COST

CREATE FUNCTIONAL SPECIALIZATION AND SEPARATION WITHIN ORGANIZATION

COMPETE FOR MAXIMUM MARKETSHARE WITHIN A WELL-DEFINED INDUSTRY

HIGH-PERFORMANCE STRATEGY FORMULATION

INNOVATE, COLLABORATE, COMPLEMENT

COMPETITORS CAN BE PARTNERS AND CO-OPETITORSI

ENGAGE SUPPLIERS AS COLLABORATORS

DISAGGREGATE AND FOCUS ON CORE COMPETENCIES AND SELECTIVELY OUTSOURCE

OPTIMIZE AGILITY AND ADAPTABILITY

CREATE A NEW INDUSTRY/DEFINE NEW RULES OF COMPETING

ENGAGE AND DELIGHT THE CUSTOMER

COMPETE ON VALUE

EMPHASIZE SELECTIVE ORGANIZATIONAL INTEGRATION OF FUNCTIONS AND PROCESSES

CREATE VIRTUAL MARKETPLACE ACROSS INDUSTRIES AND OPTIMIZE PROFIT POOLS

CHANGES DEFINE NEW RULES IN STRATEGIC THINKING
global environment analysis model peste
GLOBAL ENVIRONMENT ANALYSISMODEL „PESTE”

ENVIRONMENT

INTERNATIONAL

ECONOMIC

POLITICAL

HOME

SOCIAL

ECOLOGICAL

TECHNOLOGICAL

political and legal factors
POLITICAL AND LEGAL FACTORS
  • Political forces
  • Coalitions/oposition
  • Stability of governmental policies in particular areas
  • Political institutions /lobbying
  • Legal system and institutions
economic factors
ECONOMIC FACTORS
  • GDP level and growth dynamics
  • Economic cycles
  • Economic policy
  • Public debth
  • Economic instututions and infrastructure for business development
  • Investments rate
  • Consumption rate
  • Inflation rate
  • Labor productivi
  • Unemployment rate
  • Price/salary ratio/poverty
  • Currency exchange rates
  • Tax level
  • International competitiveness ratings
social factors
SOCIAL FACTORS
  • demography: population size, geographical spread, structure ( age, gender, education)
  • Ethnic diversity
  • Culture and lifestyle
  • Institutions and movements (trade unions, NGOs, strikes, actions)
  • Labor mobility
  • Attitude towards foreign investors
  • Social exclusion level
technological factors
TECHNOLOGICAL FACTORS
  • R&D investments in business
  • State investments in scientific research (primary, applied) and knowledge exchange
  • Institutions for technology development
  • Patents, trademarks, know-how
  • Technology transfers
  • Pace of adopting new technologies
  • Infrastructural platforms
environmental ecological factors
ENVIRONMENTAL (ECOLOGICAL) FACTORS
  • Environmental pollution level
  • Infrastructure for environmental protection and sustainable development enforcement
  • Natural resources reserves and their use
  • Ecosystems integrity and safety
  • Environmental impact on health
  • Knowledge and environmental awareness of citizens, customers, business, politicians, NGOs
  • Environmental legislation

?

breakthrough trends 2008

BREAKTHROUGH TRENDS2008

HSBC AND WORLD ECONOMIC FORUM

HBR POLSKA, LUTY 2008

Illustrative additional material to core course content

incoming p2p economy stan stalnaker international social portal hub culture
INCOMING P2P ECONOMYSTAN STALNAKERINTERNATIONAL SOCIAL PORTAL: HUB CULTURE
  • PEER TO PEER INFORMATION FLOWS
  • NEW MODELS OF MEDIA BUSINESS
  • BLOGS, PORTALS, YOU TUBE, SOFTWARE FOR EXCHANGING FILES, WIKIPEDIA…
  • NEW MODELS OF FINANCIAL SERVICES:
    • MICRO CREDITS FOR BUSINESS AND HOUSING GUARANTEED BY LOCAL SOCIETY (GRAMEEN BANK, FOUNDED BY MUHAMMAD YUNUS, LECTURER AT CHICAGO UNIVERSITY, BANGLADESH AS LOCATION: ENTREPRENEURSHIP, TRUST, SOLIDARITY)
    • DIGITAL NETWORKS AND MICRO CREDITS IN DEVELOPED COUNTRIES (KIVA.ORG, PROSPER.COM, LENDINGCLUB.COM)
    • EXPECTED FURTHER EROSION OF BANK MARGINS -MY SPACE TYPE OF NETWORKS?, PRIVATE CURRENCIES FOR EXCHANGE OF SERVICES? REPUTATION + SCALE EFFECT AS DETERMINANTS OF VALUE
    • MICRO ENERGY SYSTEMS, HYBRYD CARS, PRODUCERS/CONSUMERS, MICRO REVENUES
generation y model of work tamara j erickson
GENERATION Y MODEL OF WORKTAMARA J. ERICKSON
  • TASK NOT TIME- ASYNCHRONIC WORKING PREFERENCES AND HABITS (TIME, LOCATION)
  • REWARDING FOR RESULTS
  • YOUNG TALENTS, IT AND TECHNOLOGY NOT A PROBLEM, PLAN LESS, WORK FASTER, EASY ELECTRONIC COORDINATION (FAST ADJUSTMENTS), HATE NOMINATIVE TIME OF WORK AND REMUNERATION
  • VIRTUAL WORKPLACE (IBM, BIG CONSULTANTS, EXPERIMENTS AT BEST BUY-BOOSTED PRODUCTIVITY, RETENTION, BETTER FAMILY-FRIENDS RELATIONS)
doctors prescription for ceos dr jerome groopman
DOCTORS PRESCRIPTION FOR CEOsDR JEROME GROOPMAN
  • “TO ERRIS HUMAN”, 1999, INSTITUTE OF MEDICINE
  • HIGH RISK MANAGEMENT PRACTICES FROM BUSINESS TO MEDICINE
    • DOUBLED TAUGHER CONTROLLING PROCEDURES
    • ANALYSIS OF MISTAKES
  • WRONG DIAGNOSIS IS NOT A TECHNICAL BUT COGNITIVE PROBLEM
    • TEAM LEARNING ON MISTAKES
    • HEURISTICS: ANCHORING ERROR, AVAILABILITY ERROR, ATTRIBUTION ERROR
  • MODERATE TERRORISM LONGLASTING
    • PUBLIC HEALTH TOOLS:
    • ISOLATION OF SOURCES
    • CONSTRAINED DIFFUSION
    • PROTECTION OF POTENTIAL VICTIMS
understanding opposition michael sheenan bob clinton s advisor
UNDERSTANDING OPPOSITIONMICHAEL SHEENANBOB CLINTON’S ADVISOR
  • OPPOSITION IS NOT COMPETITION
    • UNDERSTANDING PROBLEM AND NEEDS OF CUSTOMERS
    • LEARNING FROM POLITICIANS
    • LOOK FOR OTHERS TO BE BLAMED (TOBACCO CAMPAIGNS FOR CLEAN AIR VS PROFIT-SEEKING DEVELOPERS INSTEAD OF SMOKING BAN)
    • UNDERSTAND, ADOPT, SHOW CONSEQUENCES AND LET CUSTOMERS DECIDE
board meetings john j medina
BOARD MEETINGSJOHN J. MEDINA
  • MORE AND MORE GYM FOR EVERYBODY TO IMPROVE PHYSICAL AND MENTAL CONDITION
  • PREVENTING DESEASES THAT AFFECT IMPORTANT DECISION MAKING IN BUSINESS
slide30
CHEATING AND CRIMEDAN ARIELY BEHAVIORAL ECONOMIST, MIT, AUTHOR OF “PREDICTABLY IRRATIONAL”, HARPER COLLINS, 2008
  • DISHONEST PEOPLE ACTIVELY LOOKING FOR OPPORTUNITY
  • HONEST PEOPLE USING OPPORTUNITY, IRRESISTIBLE TEMPTATION TO GAIN JUST A LITTLE BIT MORE, BUT WITH SELF LIMITATION
  • NON FINANCIAL EXCHANGE WITH FINANCIAL IMPACTS- CHEATING ON LARGE SCALE (ANTIDATING TRANSACTIONS FOR PURCHASING SHARES OPTIONS, FINANCIAL REPORTS FALSIFICATION, CORRUPTION, ENRON LIKE AFFAIRS)
  • CHEATING DIAGNOSTIC WITH FMRI (PAUL ROOT WOLPE, DANIEL LANGLEBEN)
  • CYBER CRIMES (SCOTT BERINATO)
community networks mark kuznicky eli singer jay goldman
COMMUNITY NETWORKSMARK KUZNICKY, ELI SINGER, JAY GOLDMAN
  • PLATFORMS FOR SOCIAL AND INFRASTRUCTURAL REFORMS (MULTI STAKEHOLDERS APPROACH), EG. TORONTO PUBLIC TRANSPORTATION SYSTEM
employees of 21st century john seely brown douglas thomas
EMPLOYEES OF 21ST CENTURYJOHN SEELY BROWN, DOUGLAS THOMAS
  • INTERNET GAMES PLAYERS FEATURES:
    • ORIENTED AT CHANGES IMPROVING THEIR SCORED POSITIONING
    • APPRECIATE DIVERSIFICATION
    • HAVE FUN IN LEARNING
    • ACTIVELY SEARCHING FOR NEW SOLUTIONS FOR PERCEIVED PROBLEMS
    • LIFE WITH ADRENALINE (ON THE VERGE)
second life business jane mcgonigal judith donath miclos sarvary jan chipchase
SECOND LIFE BUSINESSJANE McGONIGAL, JUDITH DONATH, MICLOS SARVARY, JAN CHIPCHASE
  • VIRTUAL, ALTERNATIVE REALITY GAME (ARG) AS NICHE MARKET
  • ARG AS A PROGRESSIVE MODEL FOR BUSINESS, PREDICTING NEEDS AND MOVES OF CLIENTS
  • AWATARS AND EXPRESSING EMOTIONS, RISKS OF DISCLOSURE
  • META WORLD: INTERNET AS DOMINATING INTERFACE FOR TRANSACTIONS
  • META DATA ON CONSUMER BEHAVIOR - PRIVACY
  • ELECTRONIC DEVICES AS SUBSTITUTES FOR PERSONAL RESPONSIBILITY
cities of the future and csr jaime lerner david vogel george pohle
CITIES OF THE FUTURE AND CSRJAIME LERNER,DAVID VOGEL, GEORGE POHLE
  • CAREFULLY PLANNED PROJECTS FOR SUSTAINABLE LIVING AND WORKING
  • NO CHAOTIC GROWTH
  • BUSINESS ROLE IN CONTRIBUTING TO SUCH CONCEPT
  • SOCIALLY RESPONSIBLE LOBBYING
  • CHINESE CITIES “ SECOND LEAGUE”
    • 300 CITIES TARGETED FOR FURTHER EXPANSION BY INTERNATIONAL INVESTORS
    • MAJOR CITIES WITH SATURATED MARKETS
    • 50% OF TOTAL CHINESE POPULATION
    • 66% OF GDP
islamic finance aamir rehman nazim ali
ISLAMIC FINANCEAAMIR REHMAN, NAZIM ALI
  • ISLAM LAW AS BASE FOR BANKING TRANSACTIONS
    • S&P: ASSETS OF $750 M
    • 25% OF POPULATION ARE MUSLIMS
    • FOREIGN TRANSACTIONS: EG FORD MOTOR CO SELLING ASTON MARTIN FOR $ 848 M (LBO)
    • LEADING FINANCIAL INSTITUTIONS CREATE DEPARTMENTS FOR ISLAM BASED TRANSACTIONS (ADVISORY PAGE: WWW.IFSB.ORG)
    • REVERSE IMPACT ON TRADITIONAL WESTERN BANKING PRODUCTS (ONE CANNOT PROFIT FROM UNETHICAL TRANSACTIONS)
experts michael mauboussin
EXPERTSMICHAEL MAUBOUSSIN
  • EXPERTS CAN NOT REPLACE MANAGEMENT AND EMPLOYEES IN THINKING
  • THEY ARE BETTER TRAINED FOR IDENTIFYING AND STRUCTURING PROBLEMS AS WELL AS FOR WIDE SEARCHING FOR SOLUTIONS
  • COMMUNICATION PLATFORMS AND SHARED KNOWLEDGE ARE VITAL TO EFFECTIVENESS
sustainable vs unsustainable trends in business garrett gruener alta partners ask com
SUSTAINABLE VS UNSUSTAINABLE TRENDS IN BUSINESSGARRETT GRUENER (ALTA PARTNERS, ASK.COM)
  • SUSTAINABLE TRENDS BASED ON RENEWABLE RESOURCES, MEETING THE NEEDS OF PRESENT GENERATION WITHOUT COMPROMISING THE NEEDS OF FUTURE GENERATIONS. IF SOMETHING IS BASED ONSUSTAINABLE FOUNDATIONS IT EXPLOITS OPPORTUNITIES THAT HAVE NO END AND BETTER CONTROLS THREATS (TERRORISM, INCREASE OF INFORMATION CAPACITY, PRODUCTIVITY OF AGRICULTURE, URBANIZATION)
  • UNSUSTAINABLE TREND = IMPOSSIBLE TO CONTINUE BECAUSE OF SHRINKING RESOURCES AND ADVERSE SOCIAL IMPACTS (CO2 EMISSIONS, BIODIVERSITY REDUCTION, RETIREMENT AGE EXTENDED, TRADE UNIONS ROLE)
analysing competition m porter s model of 5 forces 1979
ANALYSING COMPETITIONM. PORTER’S MODEL OF „5 FORCES” (1979)

RISK OF NEW ENTRIES

INTRA-INDUSTRY RIVALRY

BARGAINING POWER OF SUPPLIERS

BARGAINING POWER OF BUYERS

THREAT OF SUBSTITUTES

competitors are
COMPETITORS ARE:
  • FIRMS OFFERING SIMILAR PRODUCTS/SERVICES TO THE SAME TARGET GROUP OF CUSTOMERS ON SIMILAR CONDITIONS. THEY COMPETE DIRECTLY WITHIN THE SAME STRATEGIC GROUP
  • FIRMS OFFERING SIMILAR PRODUCTS/SERVICES (DIFFERENT PARAMETRES) TO DIFFERENT TARGET GROUP OF CUSTOMERS. THEY BELONG TO SEPARATE STRATEGIC GROUPS
  • FIRMS SATISFYING THE SAME TYPE OF NEED (SUBSTITUTES)
  • FIRMS COMPETING FOR THE SAME CATHEGORY OF CUSTOMER EXPENDITURES (E.G ENTERTAINMENT, EDUCATION, HEALTH, BASIC NEEDS...)

STRATEGIES OF PRESENT AND POTENTIAL COMPETITORS WILL LEAD TO DEVASTATING RIVALRY IF BASED ON SIMILAR CHOICES OF PRODUCTS, CUSTOMERS AND COMPETITIVE ADVANTAGE

strategic groups map
STRATEGIC GROUPS MAP

IDENTYFYING INTRA-INDUSTRY STRATEGIC GROUPS :

  • SELECTING MAJOR PARAMETERS OF COMPETITION

(E.G.: PRICE, QUALITY, MARKET SCOPE, SERVICE ACCESSIBILITY, SALES FORCE, SPECIALIZATION RANGE, BRANDS POWER, LEVEL OF VERTICAL INTEGRATION)

  • EVALUATING EVERY COMPANY POSITION AGAINST SELECTED (TWO) PARAMETERS
  • DESIGNING THE STRATEGY MAP CONSISTING OF COMPANIES BELONGING TO IDENTIFIED HOMOGENOUS GROUPS OF COMPETITORS
intensity of competition depends on
INTENSITY OF COMPETITION DEPENDS ON:
  • RELATIVE MARKET CONCENTRATION OF BUYERS AND SUPPLIERS
  • INDUSTRY GROWTH
  • DIFFERENTIATION POTENTIAL
  • BARRIERS OF ENTRY
  • RADICAL INCREASE IN PRODUCTION CAPACITY
bargaining power of suppliers vs buyers
BARGAINING POWER OF SUPPLIERS VS BUYERS
  • DEPENDS ON THEIR MARKETS RELATIVE CONCENTRATION RATIO
  • CONTRIBUTION OF SUPPLIER IN CREATION OF BUYER’S POSITION (IMPACT ON PROFITS, QUALITY, UNIQUENESS)
  • SWITCHING COST OF SUPPLIER CHANGE
  • ABILITY TO INTEGRATE BACK AND FORTH AND TO TAKEOVER THE BUSINESS OF FORMER PARTNER
threat of substitutes increases when
THREAT OF SUBSTITUTES INCREASES WHEN:
  • INDUSTRY IS ATTRACTIVE
  • ENTRY BARRIERS ARE LOW
  • ESTABLISHED INCUMBENTS ARE NOT ABLE TO IMPOSE RESTRICTIONS AND REFRAIN COMPETITORS FROM MAKING INROADS
risk of new entries
RISK OF NEW ENTRIES

NEW ENTRANTS ARE:

  • FIRMS WITH ESTABLISHED POSITION IN THE INDUSTRY BUT ON OTHER GEOGRAPHICAL MARKETS (E. GLOBAL COMPANIES)
  • START-UPS
  • LOCAL DIVERSYFYING COMPANIES

THREAT OF ENTRY INCREASES WHEN:

  • MARKET IS ATTRACTIVE
  • ENTERING COMPANIES CAN EASILY BUILD FAVOURABLE COMPETITIVE POSITION
  • START-UPS HAVE UNIQUE, BREAKTHROUGH VALUE PROPOSITION
  • ENTRY BARRIERS ARE LOW
company mobility barriers
ENTRY BARRIERS

COMPETITIVE

ECONOMIES OF SCALE/LOW AVERAGE COSTS

LACK OF ACCESS TO DISTRIBUTION CHANNELS

HIGH TECHNICAL STANDARDS AND QUALITY

BUREAUCRATIC

CUSTOMS

LICENCES, PERMITS, HYGENIC ATESTS

SPECIFIC REQUIREMENTS OF ADJUSTMENT TO LOCAL MARKET (LANGUAGE, SAFETY)

EXIT BARRIERS

ECONOMIC

LIQUIDATION COSTS

DIFFICULTIES IN SELLING OUT UNATTRACTIVE ASSETS

SOCIO-POLITICAL

TRADE UNIONS PRESSURES TO SUSTAIN EMPLOYMENT

LOCAL GOVERNMENTS PRESSURES

EMPLOYEES PROTESTS

COMPANY MOBILITY BARRIERS
mobility barriers and industry profitability questionable
MOBILITY BARRIERS AND INDUSTRY PROFITABILITY(QUESTIONABLE)

LOW

REVENUES LOW AND UNCERTAIN

REVENUES LOW AND CERTAIN

BARRIERS OF ENTRY

HIGH

REVENUES HIGH AND STABLE

REVENUES HIGH AND UNSTABLE

LOW

HIGH

BARRIERS OF EXIT

scenario planning in strategy
SCENARIO PLANNING IN STRATEGY

SURPRISE SCENARIO

STRATEGIC ANALYSIS

RANGE OF MONITORED FACTS, TRENDS, BEHAVIORS…

MOST LIKELY SCENARIO

PESIMISTIC SCENARIO

OPTIMISTIC

SCENARIO

STRATEGIC PLAN

OPTIMISTIC VERSION

STRATEGIC PLAN

PESIMISTIC VERSION

STRATEGIC PLAN

BASIC VERSION

CRISIS: THE NECESSITY TO RE-ANALYSE AND RETHINK THE PLAN FROM SCRATCH

sources of profitability
SOURCES OF PROFITABILITY

CORPORATE STRATEGY

INDUSTRY ATTRACTIVENESS

STRATEGIA KORPORACJI

Where we should compete?

PRZEWAGA KONKURENCYJNA

COMPETITIVE ADVANTAGE

OUTSTANDING PROFITABILITY

BUSINESS STRATEGY

Business model: how we earn money?

How we should compete?

AVAILABLE RESOURCES

FUNCTIONAL STRATEGY

How we acquire and use?

key success factors
KEY SUCCESS FACTORS

GENERAL PREMISES FOR SUCCESS

DELIVERING PRODUCT OR SERVICE THE CUSTOMER WANTS TO PAY THE PRICE HIGHER THAN COSTS OF PRODUCTION AND DISTRIBUTION

DELIVERING PRODUCTS AND SERVICES WHICH AT LEAST SOME CUSTOMERS PREFER TO BUY FROM US THAN FROM OUR COMPETITORS

ABILITY TO OVERCOME COMPETITION

WHO ARE COMPETITORS

WHAT STRUCTURAL FORCES DRIVE COMPETITION

WHAT ARE COMPETITIVE PARAMETERS HOW STRONG IS COMPETION

HOW TO CREATE COMPETITIVE ADVANTAGE

CUSTOMERS ANALYSIS: WHO ARE OUR CLIENTS AND HOW MAKE PURCHASING DECISIONS

KEY SUCCESS FACTORS

R.GRANT

industry attractiveness measures
INDUSTRY ATTRACTIVENESS MEASURES
  • MARKET SIZE > 1 billion (USD) 5

0,5-0,8 3

<0,3 1

  • MARKET GROWTH RATE >15% 5

7-11% 3

<2% 1

  • MARKET PROFITABILITY >13% 5

2-6% 3

<1% 1

  • MARKET CONCENTRATION RATIO

1-2 COMPANIES TOTAL MARKET SHARE 90% 1

5-7 COMPANIES TOTAL MARKET SHARE 50% 3

ANY COMPANY ATTAINS 15 % OF MKT SHARE 5

Kwoka research findings (USA): if 4 companies attain together 75% of mkt share, any other company can have profits over avarage

M.ROMANOWSKA

key success factors alongside industry life cycle
KEY SUCCESS FACTORS ALONGSIDE INDUSTRY LIFE CYCLE

STAGE

S

D

M

D

MARKET SHARE

COMPETITIVE POSITION

BRANDS RECOGNITION

REPUTATION

VISIBILITY

CORPORATE IDENTITY

PROFITABILITY OF RESOURCES

VALUE FOR MONEY

COSTS

INNOVATIVE

PRODUCT

PATENT

TECHNOLOGY

KSF

M.ROMANOWSKA

slide53

THE MERGER ENDGAMES S-CURVEbased on research sample of 29 thousand companiesCR3=market share of three largest companies of the total marketHHi = Hirschman-Herfindahl Index: the sum of the squared market shares of all companies is greater than 90%, the axis logaritmically plotted.

For all industries it takes apx. 25 years to commence, deconsolidate, consolidate and balance out!

Speed consolidation does not differ much across industries!

In the history: shipyards: 4 000 years to enter the phase of ballance&alliance, over 100 years for automotive industry to reach the end of scale stage, more 10-13 to reach the next one.

4 discrete stages on the way to inevitable global consolidation
4 discrete stages on the way to inevitable global consolidation
  • OPENING (little or no market concentration, first consolidations. Newly deregulated, start-up, spin-off subsidaries.
  • SCALEsize begins to matter, major players emerge and lead consolidation.Concentration ratio in some industries may reach 45%
  • FOCUSsuccessful players extend their core businesses, exchange or eliminate secondary units, continue to aggressively outgrow the competition
  • BALLANCE AND ALLIANCE few players dominate, consolidation up to 90%, industry titans reign, from tobacco to automotive companies and engine producers. Large companies may form alliances with other giants to challenge the further growth
resource based approach to strategy
IN CASE OF MARKET TURBULENCE STRATEGY PLANNING IS SAFER WHEN BASED ON OWN RESOURCES THAN ON UNPREDICTABLE MARKET

RESOURCES AND CAPABILITIES ARE MAIN FOUNDATIONS OF PROFITABILITY

LEARNING ORGANIZATIONS IMPROVE THEIR ARCHITECTURE AND USE OF RESOURCES

RESOURCE BASEDAPPROACH TO STRATEGY
resources as base of high profitability
RESOURCES AS BASE OF HIGH PROFITABILITY

PATENTS

BRANDS

RETORTIONS

ATRAKCYJNOŚĆ SEKTORA

ENTRY BARRIERS

MONOPOLIZATION

MARKET SHARE

RATE OF PROFITS OVER AVARAGE

VERTICAL INTEGRATION

SIZE AND SCOPE

ASSETS

LEAN PROCESS TECHNOLOGIES

PLANT SIZE

CHEAP INPUTS

COST ADVANTAGE

COMPETITIVE ADVANTAGE

BRANDS

PRODUCT DIFFERENTIATION TECHNOLOGIES

MARKETING

DIFFERENTIATION ADVANTAGE

R.GRANT

resources as base of competitive advantage
RESOURCES AS BASE OF COMPETITIVE ADVANTAGE

COMPETITIVE ADVANTAGE

INDUSTRY KSF

STRATEGY

DISTINCTIVE CAPABILITIES

RESOURCES

INTANGIBLE

TECHNOLOGY

REPUTATION

CULTURE

PATENTS

BRANDS

TRADE MARKS

TANGIBLE

FINANCIAL

REAL ESTATE

LAND

FACILITIES

STOCK OF PRODUCTS

AND RAW MATERIALS

HUMAN

HIGHLY SPECIALIZED CAPABILITIES

KNOWLEDGE AND EMOTIONAL INTELLIGENCE

COMMUNICATION

INTERACTIONS AND LEARNING

MOTIVATION AND ASPIRATIONS

resources based process of building competitive advantages
RESOURCES BASED PROCESS OF BUILDING COMPETITIVE ADVANTAGES

IMPACT ON COMPANY DEPENDENT FROM ITS RESOURCES

EXTERNAL SOURCES OF CHANGE:

DEMAND, TECHNOLOGIES, REGULATIONS, INFRASTRUCTURAL INVESTMENTS... (PESTE)

SOME COMPANIES FASTER AND MORE EFFECTIVELY EXPLOIT CHANGE POTENTIAL

ONLY THE FASTEST AND THE MOST EFFICIENT REACTING TO CHANGE COMPANIES OR INITIATING CHANGE COMPANIES ARE BUILDING COMPETITIVE ADVANTAGES!

INTERNAL SOURCES OF CHANGE:

NEW IDEAS, KNOWLEDGE, SKILLS, RESOURCES, AMBITIONS, PROPENSITY TO CHANGE AND DISSATISFACTION WITH STATUS QUO

SOME COMPANIES ARE MORE CLEVER IN INTRODUCING CHANGES (FLEXIBILITY, CREATIVITY, LOWER RESISTANCE)

basic types of competitive advantages
BASIC TYPES OF COMPETITIVE ADVANTAGES

HIGHER PRICE FOR PRODUCT UNIQUENESS

SIMILAR PRODUCT FOR LOWER PRICE

COST ADVANTAGE

DIFFERENTIATION ADVANTAGE

INTEGRATED ADVANTAGES

competitive advantages
Competitive advantages

Clients expect integrated benefites from both types of competitive advantages: reasonable cost and unique value- all in one solution

Large companies: integrated supply chains and FMS (CAD/CAM = CIM)

SMEs: niche strategies

„Stuck in the middle” unable to build competitive advantage

strategies of building competitive advantages
COST LEADERSHIP

ELEMENTS OF STRATEGY

- cost-effective scale of production and distribution

- design for low cost

- tight control of overheads and R&D

- avoiding marginal transactions

- standardization, automation, lean processes

- learning and experience effects

- low cost inputs, favourable location, ownership of supply resources, bargaining power, alliances with suppliers

RESOURCES AND ORGANIZATIONAL REQUIREMENTS

-access to capital

- process engineering

- effective controlling systems

- specialization

- motivational systems linked with productivity measures

- effective use of capacity

- efficient management

DIFFERENTIATION

ELEMENTS OF STRATEGY

- isolating a segment and building position

- focus on brand, communication, customization, building status

- high quality reputation

- distinguished design

-accompanying services creating impression of pleasure, comfort, care, luxury, uniqueness)

RESOURCES AND ORGANIZATIONAL REQUIREMENTS

- strong marketing skills

-innovative products, engineering capabilities to implement modifications, creative background

-strong interfunctional coordination in building value to customers

STRATEGIES OF BUILDING COMPETITIVE ADVANTAGES
building differentiation advantages
Building differentiation advantages
  • Segment isolation
  • Diagnosing the type of product needed and way of client evaluation of its quality
  • Differentiating observable goods (quality assessed at purchase): clients learning, supplier switching costs, saving on advertisments)
  • Differentiating experience goods (quality assessed after purchase): reputation, brand power, company credibility
  • Differentiating communication goods, such as press, radio, TV, telecommunication, other network media: relative customer base and its propensity to buy diversified network based products: the stronger communication effect, the higher the price proportional to value to clients
differentiating observable goods
Differentiating observable goods

Basic assumption: becoming low cost supplier (not manufacturer!) Total cost for customer is lower than in case of low manufacturers (customization) although the price paid at purchase may be higher. VALUE FOR MONEY CONCEPT

Product should have all features client expects and prefers

Price should reflect the premium for added value (over the standard) through differentiation

Differentiation should be adjusted to segment specification

Strategy of differentiating observable goods:

  • Select the targeted segment and assure the consistency between product features and client preferences
  • Select the intended product position and identify the set of features for differentiation and level of differentiation
  • Estimate benefits from differentiation vs costs of differentiation
slide64

Differentiation of observable goods c’d

PRODUCT PRICE

TOTAL COST FOR CLIENT

Client costs

Searching

Learning the value of product

Switching costs

Risk of wrong choice

Maintainance and repairs

Disposal

Manufacturer value added

Engineering

Labour

Marketing

Distribution

Administration

...

Raw materials

capacity for differentiation of companies investigated by pricewaterhousecoopers
Capacity for differentiation (%of companies investigated by PricewaterhouseCoopers)

LOW COST

25%

TIME ADVANTAGE

40%

RELIABILITY

TIME TO MARKET WITH INNOVATIONS

45%

FLEXIBILITY

SERVICE LEVEL

60%

ENHANCED CUSTOMER EXPECTATIONS

ŹRÓDŁO: PricewaterhouseCoopers

consolidating competitive advantages
THREAT OF IMITATIONS DEFENSIVE MECHANISMSCONSOLIDATING COMPETITIVE ADVANTAGES

CONCENTRATION ON VISIBLE QUALITY DIFFERENCES

IDENTIFYING IMITATION

SIGNALLING INTENTS OF DEFENDING COMPETITIVE POSITION

INVESTING IN UNUSED OPPORTUNITIES

ATTRACTIVENESS OF IMITATION

DIAGNOSING OF ENDANGERED SOURCES OF COMPETITIVE ADVANTAGE

BASING ADVANTAGE ON MULTIPLE SOURCES CREATING IMPRESSION OF DIFFICULT ARCHITECTURE TO IMITATE

INNOVATIONS!!!

BASING ADVANTAGE ON NON MOBILE RESOURCES HARDLY IMITABLE

ACQUIREING OF RESOURCES BY IMITATOR

innovative strategies
INNOVATIVE STRATEGIES
  • ARE TYPICAL FOR NEW ENTERING COMPANIES WHICH AVOID CONFRONTATION WITH INCUMBENTS AND RATHER BUILD NEW BUSINESS MODELS AND VALUE PROPOSITIONS (LIKE IKEA IN FURNITURE INDUSTRY)
  • INDISPENSIBLE FOR COMPANIES REORIENTING THEIR SYSTEMS TOWARDS BETTER INTEGRATION OF CONFLICTING GOALS (LIKE TOYOTA: LOW COST, HIGH QUALITY, LEAN PRODUCTION, CUSTOMIZATION OF PRODUCTS TO CUSTOMERS NEEDS)
  • ALWAYS DEPLOYED WHEN RECONFIGURING SUPPLY CHAINS FOCUSING ON CORE COMPETENCES AND INTEGRATING SUPPLY CHAINS WITHIN NEW NETWORK OF PARTNERS (LIKE NIKE, BENETTON, SOUTHWESTERN AIRLINES)
competitive advantage of nations porter s
COMPETITIVE ADVANTAGE OF NATIONS (Porter’s)
  • Extends traditional theory of comparative advantage
  • Competitive advantages always relate to companies. The role of the country of origin is to create the relative base for competition
  • Sustainability of competitive advantage depends from dynamic factors: innovativeness an development of resources and skills
  • Critical role of a country is in its influence on innovation dynamics and capacity
porter diamond
PORTER’ DIAMOND

RESOURCE

FACTORS

RELATIONSHIPS AND SUPPORTING INDUSTRIES

DEMAND FACTORS

STRATEGY STRUCTURE RIVALRY

interpretation
INTERPRETATION
  • RESOURCES: highly specialised resources created in a country due to antropogenic capital are more important than local raw materials (only some of them are strategic)
  • RELATIONSHIPS AND SUPPORTING INDUSTRIES: competitive advantages are more likely to happen in clusters than in disperssed markets (semiconductors, computers, software)
  • DEMAND: local customers requireing more from local companies create pressure for quality and innovativeness that help towards international success
  • STRATEGY, STRUCTURE AND RIVALRY: these three factors fuel innovations and continuous development
international integration of companies
INTERNATIONAL INTEGRATION OF COMPANIES

COOPERATION LEVEL

MERGER

INTEGRATION

HIERARCHY

BRANCH

TAKEOVER

JOINT VENTURE

FRANCHISING

LEASING

SOURCING

ASSEMBLY

TECHNICAL AID

BUY-BACK TRANSACTIONS

EKSPORT

TRANSAKCJE RYNKOWE

CHANGES IN MANAGEMENT

RISK, CONTROL LEVEL

Wg J. Cygler

modes of entering foreign markets r grant
Modes of entering foreign markets( R. Grant)

TRANSACTIONS

DIRECT INVESTMENTS

Export:

Short- term transactions

Joint venture

Branch 100% ownership

Only marketing and distribution

Full integration

Only

marketing and

distribution

Full integration

Export:

Long-term transactions

Export:

With foreign agent or distributor

Licence for technologies.know how and trademarks

Franchising

driving forces for globalization
Driving forces for globalization

GLOBALIZATION OF CLIENTS

GLOBALIZATION OF COMPETITORS

31%

16%

10%

REDUCED TRADE BARRIERS

27%

NEW CLIENTS FROM EMERGING MARKETS

8%

8%

TECHNOLOGY PROGRESS

ENHANCED CUSTOMER INTEREST

FACTORS RELATED TO CUSTOMERS: 66%!

m porter s value chain as an instrument of analysing and building competitive advantages
M.Porter’s value chainas an instrument of analysing and building competitive advantages

Basic operations

INBOUND LOGISTICS

OUTBOUNDLOGISTICS

R&D Production Marketing&sales added services

Enterprise Resources management

IT System

Human Resources

Management

Company Infrastructure

Supporting activities

swot analysis
SWOT ANALYSIS

STRENGTHS

WEAKNESSES

THREATS

OPPORTUNITIES

slide76
EVALUATING COMPANY STRATEGIC POSITION WITH KEY SUCCESS FACTORS METHOD(COMPETITIVE PROFILES OF BENCHMARKING COMPANIES)

SCORES

FIRM A

FIRM B

company values and mission statement
COMPANY VALUES AND MISSION STATEMENT
  • ROLE OF VALUES IN COMPANY STRATEGIC MANAGEMEN:
  • REDUCE THE CHOICE OF WAYS OF BUILDING VALUE FOR STAKEHOLDERS (TO ACCEPTABLE ONES)
  • STRENGTHEB THE EFFECTIVENESS OF COMPETITIVE ADVANTAGES THROUGH CLARIFYING THE STRATEGIC INTENT, CONSENSUS AND HUMAN RESOURCES COMMITMENT
  • MISSION:
  • IS THE BASE OF STRATEGY (STARTING POINT AND POINT OF REFERENCE IN CRITICAL MOMENTS)
  • IS A FIRM DECLARATION WHAT COMPANY INTENDS TO ACHIEVE AND HOW WANTS TO BEHAVE IN RELATION TO IMPORTANT STAKEHOLDERS

UNIQUENESS

PRODUCTS

SERVICES

NEEDS

KLIENCI

CLIENTS

value net
VALUE NET

CLIENTS

COMPETITORS

COMPLEMENTARY OFFERS

FIRM

SUPPLIERS

strategic expansion axes
STRATEGIC EXPANSION AXES
  • GEOGRAPHICAL SCOPE OF MARKET
  • NUMBER OF SERVED SEGMENTS
  • SCOPE OF DIVERSIFICATIO
  • LEVEL OF PRODUCT DIFFERENTIATION (CATHEGORIES)
  • TECHNOLOGY DIVERSIFICATION
  • CHANNELS OF DISTRIBUTION DIVERSIFICATION
  • LEVEL OF INWARD AND BACKWARD VERTICAL INTEGRATION
  • DISTINCTIVE CAPABILITIES AND COMPETENCES
strategic behavior corresponding with assumed strategy
STRATEGIC BEHAVIOR CORRESPONDING WITH ASSUMED STRATEGY

MARKET PENETRATION

INTENSIFY CONSUMPTION OF EXISTING CLIENTS (MORE AND MORE OFTEN)

GAINING NEW CLIENTS THROUGH BREAKING THEIR LOYALTY TOWARD FORMER SUPPLIERS

GAINING NEW CLIENTS NOT BUYING THE PRODUCT/SERVICE BEFORE

MARKET DEVELOPMENT

NEW GEOGRAPHICAL MARKETS

NEW ALTERNATIVE MARKETS

NEW SEGMENTS

PRODUCT DEVELOPMENT

NEW FEATURES, FUNCTIONALITY AND APPLICATIONS

BROADER CHOICE WITHIN A CATHEGORY

NEW MODELS

DIVERSIFICATION

HORIZONTAL (BROADER RANGE OF PRODUCTS BY BUSINESS LINES)

VERTICAL (INWARD OR BACKWARD – MORE OPERATIONS WITHIN A CONCERN)

LATERAL (CONGLOMERATE)

types of strategy and strategic positions ph kotler
TYPES OF STRATEGY AND STRATEGIC POSITIONS(PH.KOTLER)

STRATEGIES

MARKET LEADER

MARKET PRETENDER

MARKET FOLLOWERS

MARKET SPECIALISTS

leader
LEADER
  • GOAL: to maintain strategic position nr 1
  • ACTIVITIES:

-finding ways to increase the overall demand

- sustaining present market share

-increasing market share by taking over clients from competitors or buying out competitors

pretender
PRETENDER
  • GOAL: to icrease market share and reduce distance to the leader
  • ACTIVITIES:

- atacking lider (investments, marketing, newproducts...)

- taking over similar companies or integrating them to challenge the leader)

- integration with foreign partner with substantioal capital (win-win)

follower
FOLLOWER
  • GOAL: To attain attractive position imitating innovative strategies of successful companies
  • ACTIVITIES:

- analysing sources of success of underperforming companies (entrepreneurial judo)

- Imitation with cost rationalization, some product developments and avoiding of mistakes made by original company

specialist
SPECIALIST
  • GOAL leadership in segment or uniqueness in some aspects of activity
  • SPECIALIZATION (MASTRING) IN:

- type of client

- specific client

- selected geographical market

- selected group of products

- selected product features (design, quality, retro...)

- customized delivery upon request and specification

- specific services

market niche
MARKET NICHE
  • Selecting a segment and servicing them better than others are able to do
  • Niche should be sufficient to be profitable and enabling growth but not to large or fast growing to discourage larger competitors
  • Offering a unique product, service and relationship to build reputation and loyalty enabling the defence against competitors with „deeper pockets”
types of strategies m porter
TYPES OF STRATEGIES M.PORTER

SOURCE OF COMPETITIVE ADVANTAGE

LOW COST DIFFERENTIATION

INDUSTRY SCALE

COST LEADERSHIP

STRATEGY

DIFFERENTIATION

STRATEGY

SEGMENT SCALE

CONCENTRATION (NICHE) STRATEGY

diversification strategy
DIVERSIFICATION STRATEGY

REALLOCATING COMPANY RESOURCES TO ENTER NEW MARKETS, TECHNOLOGIES OR VENTURES THROUGH INVESTING IN PRODUCTS/MARKETS/TECHNOLOGIES PORTFOLIOS.

EACH ONE REQUIRES SEPARATE ADJUSTMENTS TO KEY SUCCESS FACTORS WHAT MAKES MANAGEMENT MORE COMPLEX

DECLARED AIMS: REDUCTION OF RISKS, INCREASE OF REVENUE SOURCE, BETTER USE OF COMPANY RESOURCES, GAINING NEW CAPABILITIES AND COMPETITIVE ADVANTAGES, COSTS REDUCTION, CROSS SELLING, MARKET POWER INCREASE, ECONOMIES OF SCOPE...

  • THREE ACID TESTS FOR DIVERSIFICATION (M.PORTER):
  • ATTRACTIVENESS TEST
  • ENTRY COSTS TEST
  • BETTER-OFF TEST (COMPETITIVE ADVANTAGE DUE TO SYNERGY)
five types of company specialization scopes
FIVE TYPES OF COMPANY SPECIALIZATION SCOPES

:

  • SINGLE BUSINESS (95-100% revenues from 1 product)
  • SPECIALIZED COMPANY ( 75% revenues from main product, the rest from technologically binded by-products)
  • DIVERSIFIED COMPANY

-TECHNOLOGY BINDED DIVERSIFICATION (diverse proportions of revenues from products based on the same type of technology, like rubber, woven)

- MARKET BINDED DIVERSIFICATION (company uses its market position to offer complementary products or separate ones but using umbrella brands (like tobacco and outfits)

- CONGLOMERATE DIVERSIFICATION (product portfolio selected on the base of profits without any connections)

synergies in diversification
SYNERGIES IN DIVERSIFICATION

SYNERGYDUE TO TWO TYPES OF

CONNECTIONS:

Operational ties – diverse businesses share the same resources (distribution channels, production facilities, office, brands, R&D)

Operational synergies won’t be reported if costs of jointly used resources administration prevail benefits from economies of scope

Strategic ties – integrated management systems on corporate level, shared functions, centres of excellence, application centres)

portfolio management
PORTFOLIO MANAGEMENT
  • BCG MATRIX
  • MCKINSEY MATRIX

(FOR GE)

  • HOFERA (ADL) MATRIX
bcg matrix
BCG MATRIX

QUESTION TAG

STAR

HIGH

REVENUES: LOW, GROWING, UNCERTAIN

CF: NEGATIVE

STRATEGY: ANALIZE OPPORTUNITIES FOR GROWTH TO STAR POSITION OR DECLINE TO DOG POSITION

REVENUES: HIGH, STABLE

CF: NEUTRAL

STRATEGY: INWEST IN GROWTH

YEARLY RATE OF MARKET GROWTH IN %

MILKING COW

DOG

LOW

REVENUES: HIGH, STABLE

CF: HIGH, STABLE

STRATEGY: HARVEST PREVIOUS INVESTMENTS

REVENUES: LOW, UNCERTAIN

CF: NEUTRAL OR NEGATIVE

STRATEGY: WITHDRAW

HIGH

LOW

RELATIVE MARKET SHARE

mckinsey matrix
MCKINSEY MATRIX

MARKET ATTRACTIVENESS

HIGH

ANALIZE

WITHDRAW

INVEST

AVERAGE

LOW

COMPETITIVE POSITION

STRONG

AVERAGE

WEAK

industry life cycle matrix hofer
INDUSTRY LIFE CYCLE MATRIX ( HOFER)

PHASE OF CYCLE

A

C

START

B

DEVELOPMENT

D

F

MATURING

E

MATURITY

G

H

DECLINING

STRONG

AVERAGE

WEAK

CIRCLES ILLUSTRATE THE PROPORTIONAL SHARE OF SBU IN A COMPANY PORTFOLIO

PARTS OF CIRCLES ILLUSTRATE THE COMPANY SHARE OF MARKET IN PRODUCT SALES

COMPETITIVE POSITION

adl matrix
ADL MATRIX

STADIUM OF INDUSTRY MATURITY

COMPETITIVE POSITION

START

GROWTH

MATURITY

DECLINE

DOMINATING

STRONG

ADVANTAGEOUS

DISADVANTAGEOUS

MARGINAL

adl matrix97
ADL MATRIX

STADIUM OF INDUSTRY MATURITY

START

GROWTH

MATURITY

DECLINE

COMPETITIVE POSITION

DOMINANT

SUCCESS

STRONG

ADVANTAGEOUS

DISADVANTAGEOUS

MARGINAL

FAILURE

technology portfolio
TECHNOLOGY PORTFOLIO

BASE TECHNOLOGY

commonly accessible and widely used, low competitive value

KEY TECHNOLOGY

highly competitive, innovative and mastered by leaders (BAT), usually protected and then licenced to achieve high ROI through scale before competitors imitate

EXPERIMENTAL TECHNOLOGY

based on R&D but not stable yet and still engaging capital and efforts, strongly protected, may turn into key technologies in case of success

EMBRIONIC TECHNOLOGIES the initial ideas of how to move from primary to applied research, first step toward innovation

technology portfolio99
TECHNOLOGY PORTFOLIO

TECHNOLOGY ATTRACTIVENESS

HIGH

AVERAGE

LOW

MASTERY IN TECHNOLOGY

LOW

AVERAGE

HIGH

technology and strategy
TECHNOLOGY AND STRATEGY

PCOMPETITIVE POSITION

STRONG

AVERAGE

WEAK

TECHNOLOGY POSITION

STRONG

WEAK

AVERAGE

evolution of technologies
EVOLUTION OF TECHNOLOGIES

EVOLUTION TRACK

Selectively withdraw

Develop and systematically control

base

Selectively invest

key

investigate

eksperimental

embrionic

TIME

types of organizational growth
INTERNAL

EXTERNAL

TYPES OF ORGANIZATIONAL GROWTH

FIRM DOES NOT INCREASE CAPACITY BUT INCREASES PRODUCTIVITY OF EXISTING ONES

Reallocates capital internally

M&A

Strategic alliances

FIRM INVESTS

Profits, newly acquired capital and credits

in:

Present business expansion

New ventures

when external growth path
WHEN EXTERNAL GROWTH PATH
  • Industry overinvested
  • Maturity
  • Globalization race
  • Entering new unknown industry or market
  • Entry barriers too high for one company but market attractive
when internal growth path
WHEN INTERNAL GROWTH PATH
  • In young industries
  • Differentiation strategy adopting enterprise
  • Company with strong closed culture
  • Company knows well new industry or market
  • Company doesn’t have sufficient capital at once
mergermania
„MERGERMANIA”
  • 20-ties horizontal concentration
  • 50-ties vertical concentration
  • 60-ties conglomerative growth (diversification)
  • 80-ties strategic reorientaion towards core competencies
  • 90-ties regional integration, Triad markets, internationalization
  • 2000+ globalization, diversification around value creation, regional clusters, international networks...
execution three interactive processes
EXECUTIONTHREE INTERACTIVE PROCESSES

STRATEGIC

OPERATIONAL

HUMAN

balanced scorecard bsc

Balanced Scorecard (BSC)

AS AN EXAMPLE OF FORMALIZED INTEGRATED METHOD OF STRATEGY PLANNING AND EXECUTION

bsc r kaplan d norton the strategy focused organization hbsp 2001

BSCR.Kaplan, D.Norton „The Strategy Focused Organization” HBSP, 2001

5 PRINCIPLES OF BUILDING A COMPANY FOCUSED ON EFFECTIVE STRATEGY IMPLEMENTATION:

Translate strategy onto operations

Adjust organization to strategy

Make strategy every day work of every employee

Convert strategy into continuous process

Mobilize to changes through strong and effective leadership

bsc background
BSC background

NEED: How to measure the organizational ability to successfully compete in a knowledge based economy and with the use of intangible resources which become key success factors

Financial measures didn’t reflect processes of failure/success in shareholders value creation if KSF were: competences, motivation, data bases use, IT technologies, flexible manufacturing systems, customers loyalty, building close relationshps, gaining public acceptance for ventures

In the process of developing instruments to measure performance in information era it appeared that major problem was in effective implementation of innovative strategies

In 1999 Fortune outstanding CEOs assessed 70-90% failures caused by fatal implementation not the wrong vision

slide110
BSC

Cover financial and non financial issues

I. Perspectives

II. Strategic goals

Cover everything what should be attained

III. Measures

Indicate how to control

and measure progress

IV. Initiatives

projects and ventures

aimed at

strategy implementation

client perspective kpis
Client perspectiveKPIs
  • Market share
  • New clients
  • Clients loyalty
  • Clients satisfaction level
  • Clients profitability

OOOOOOOOOOOOOOOOOO

OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

internal processes perspective in value creation
Internal processes perspective in value creation

INNOVATION

OPERATIONS

Identified customer need

NEED

SATISFIED

PROJECT

SALES

SERVICE

DEVELOPMENT

PRODUCTION

SUPPLY CHAIN

TIME-TO-MARKET

  • INTERNAL PROCESSES
  • 1. INNOVATION PROCESS: PRODUCT DEVELOPMENT
  • 2. OPERATIONAL PROCESS: MANUFACTURING
  • MARKETING
  • AFTER SALE SERVICE
key employee indicators
KEY EMPLOYEE INDICATORS
  • MEATRICS:
  • COMPETENCES
  • LOYALTY
  • PROFITABILITY
  • CONTEXT:
  • COMPETENCES
  • TECHNOLOGY
  • INFRASTRUCTURE
  • CLIMATE
strategy and bsc
Strategy and BSC

Strategic anaysis

Strategic planning

Strategic planning

Strategic plan

System BSC

Businesslan

Strategy Map

converting

strategy

into goals

and activities

BSC of firm

Project management

BSC areas

Investments, projects

BSC units.

Budgeting and reporting

Operational plans

Operational

planning

Budgets of units

Budget of company

MIS and reporting system

Monitorowanie

i rozliczanie

Motivatinal system