international strategic management · ll dt ftti i.2 levels of strategies levels types of...
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International Strategic ManagementChapter: C
Prof. Dr. Christian Buer
Strategic management: Table of content
A. Fundamentals of strategic management B. Analysis and planning of business objectives and field of activitiesC. General Strategic Management Concepts D St t i A l i d Pl i I t tD. Strategic Analysis and Planning Instruments
2Prof. Dr. Michael Erner · International Strategic Management · SS 10
General Strategic Management Concepts
I O iI. OverviewII. Porter´s Strategies and Competitive Advantage III. Gilbert and StreibelIV C St d P tIV. Case Study PorterV. Ansoff‘s Product-Market Strategies
3By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
General Strategic Management Concepts
I O iI. Overview1. Strategies in the business context2. Levels of strategies3 St t i h3. Strategic approaches
II. Porter´s Strategies and Competitive Advantage III. Gilbert and StreibelIV C St d P tIV. Case Study PorterV. Ansoff‘s Product-Market Strategies
4By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
I.1 Strategies in the business contextSt t i i th b i t t 7 S tStrategies in the business context: 7-S concept.
Structure
Sh d
Strategy Systems
Shared values
Skills Style
Staffhard facts
soft facts
5By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Quoted after Bea/Haas (2005)
E l 7 S t f th ti M t hitI.1 Strategies in the business context
Structure
Example: 7-S-concept for the corporation Matsushita.
Strategy
Matrix organization Organizational innovations
Systems Own spart names
Own distribution channels Long-term partnerships with traders
Growth strategy (price cut) Imitation strategy(price cut, quality
i )
Comprehensive planning system Fully developed finance and
controlling system due to autonomy of divisions
Comprehensive information t
Super ordinate goalsincrease) systems Company as community of
employees and management Company as a mean to satisfy societal
needs/intellectual needs
SkillsStyle
Good employee relationsSkills Strong customer- and market
proximity
Staff
Good employee relations Cooperative leadership Acceptance times
Lifelong employment High meaning of HR
Comprehensive training and education Job rotation
Recommendation system
6By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Quoted after Macharzina/Wolf (2005)
L l d t f t t i
I.2 Levels of strategiesLevels and types of strategies.
Levels of the company as a source for the strategy level:
Corporate strategiesCorporate level
Business units strategiesBusiness units strategiesBusiness unit level
Functional units strategiesFunctional level strategiesFunctional level
7By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source:Corsten (1998)
L l d t f t t i
I.2 Levels of strategiesLevels and types of strategies.
Interaction of the three major strategy levels:.Corporation
Business unit1 Business unit 2
el 1
el 3
el 2
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el 3
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Prod
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Func P
Func D
Func
Func P
Func D
Func
Functional level strategy Corporate strategyBusiness unit strategy
8By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Macharzina/Wolf (2005)
L l d t f t t i
I.2 Levels of strategies
Levels Types of strategies
Levels and types of strategies.
yp g
Corporate level
Corporate strategy
Growth strategy Stabilization strategy Contraction strategyCorporate level
Business unit strategy
Product-market strategiesLocal, national and global strategies
Do-It-Yourself, cooperation and acquisition strategies
Business unit level
gy
Price leadership strategy Differentiation strategy Niche strategy
Functional level strategy
Functional levelSupply strategy
Production strategy
Distribution strategy
Finance strategy
Personnel strategy
Technology strategy
9By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Bea/Haas (2005)
Alt ti di t A ff P d t M k t M t i
I.3 Strategic approachesAlternatives according to Ansoff – Product-Market-Matrix
Markets
Products M0 M1, M2, M3…. Mn
Market penetration Market developmentP0
P1, P2, P3… PnProduct development Diversification
10By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
A ff Di ifi ti lt ti
I.3 Strategic approachesAnsoff – Diversification alternatives
Same area of
Same value
Same area of operations Different area of operations
Present business Horizontal diversification
Diff
Same value chain level
Conglomerate diversification
Different value chain
levelVertical
diversification
11By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Alt ti di t P t
I.3 Strategic approachesAlternatives according to Porter
Strategic advantage
Si l it (Q lit
Target object
Singularity (Quality, design etc.) Cost advantage
Differentiation Price leadershipIndustry wide
Concentration on core competenciesOne segment
12By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Alt ti t t i f i t ti li ti
I.3 Strategic approaches
Market entry
Alternative strategies of internationalization.
Market entry and market penetrating strategies
Coordination strategies
Target market strategies
Allocation TimingAllocation strategies
Timing strategies
13By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Alt ti t t i f i t ti li ti
I.3 Strategic approachesAlternative strategies of internationalization.
Strategies of the international corporation
Market entry and marketpenetration strategies
Target market strategies
Timing strategies Allocation strategies
Coordination strategies
Export Market presencestrategy
Country specific Configurationstrategies:
Demand reducing coordination
Licensing Market selection strategy
First mover strategy
Centralization Outsourcingstrategy strategy
Franchising Marketsegmentation strategy
Follower strategy Decentralization Build up of superfluous resources
C t t f t i A t i P f D d iContract manufacturing Across countries Performancestrategies
Demand coveringcoordination:
Joint Venture Waterfall strategy Standardization Structural, technocratic,personnel oriented strategiesstrategies
Strategic Alliance … Sprinkler strategy Differentiation
14By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Source: Kutschker/Schmid (2008)
General Strategic Management Concepts
I O iI. OverviewII. Porter´s Strategies and Competitive Advantage III. Gilbert and StreibelIV C St d P tIV. Case Study PorterV. Ansoff‘s Product-Market Strategies
15By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
II. Porter‘s strategies and competitive advantagesB i t f titi t t i di t P tBasic concept of competitive strategies according to Porter
Cost advantageDifferentiation advantage
Strategy of aggressive cost leadership
Strategy of quality leadership/
Cost advantage
Total market coverage
Differentiation advantage
cost leadershipquality leadership/differentiation
Strategy of selectiveStrategy of selectiveS b k t
Concentration
Strategy of selective cost leadership
Strategy of selective quality leadership
Submarket coverage
16By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Porter, 1992
E l f titi t t i di t P tII. Porter‘s strategies and competitive advantagesExamples of competitive strategies according to Porter
Cost advantagePerformance advantage
Cost leadershipT t
Quality leadershipVW/Audi
Cost advantage
Total market coverage
Performance advantage
Toyota Nissan Honda
VW/AudiFordOpelMercedes-Benz
CostsDifferentiation
Mitsubishi
ConcentratedConcentrated Concentrated cost leadership
KIA Hyndai
Concentrated quality leadershipPorsche Rolls-RoyceS b k t
Focusing
Hyndai Suzuki
Rolls Royce Volvo
Submarket coverage
17By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Bruhn, 2001
St k i th iddl “ bl di t P tII. Porter‘s strategies and competitive advantages„Stuck in the middle“ problem according to Porter
Companies successful in the long-term
Big companies with high market share (cover nearly the entire market)
Small, specialized companies (cover market niches)
ROI
RelativeRelative market shareStuck in the
middle
Companies with mean market share run the risk to gain not enough profitability.
18By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Porter, 1992
Q lit l d hi (Diff ti ti )II. Porter‘s strategies and competitive advantagesQuality leadership (Differentiation)
Become the leading company within the selected strategic business areaGoal
Measures Intensive market research to identify customer needs Ensure product and service quality Ensure product and service quality
Characteristic Expansion of the price policy options Classical brand image strategy High quality, constant price, ubiquity
19By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Bruhn, 2001
C t l d hiII. Porter‘s strategies and competitive advantagesCost leadership
Become biggest and most efficient company within selected strategic business area (market share as dominant objective)Goal
Thrown up market entry barriers (e.g. investment barrier) Control of distribution systemMeasures y Control of costs to achieve economies of scale
Aggressive price competition Lower product preferences of consumers Small product range
Characteristic
20By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Bruhn, 2001
P diti t i l t P t t t d tiII. Porter‘s strategies and competitive advantagesPrecondition to implement Porters strategy recommendation
Cost strategyDifferentiation strategy gy
Precondition: High market share (Learning curve
gy
Precondition: Exclusive reputation of the
effect) Cost advantages over the
competition (e.g. raw material)
company High-cost measures
- R&D Strong cost evaluation Efficient production plants (size) Exploit every possibility to reduce
- Product design- High quality of materials- Intensive customer care
costs:- Reduce spending level of R&D, service, sales
t ti
Intensive customer care Cost orientation Updating the brand management
representatives, communication
21By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Trommsdorff
C t ti k t i hII. Porter‘s strategies and competitive advantagesConcentration on market niche
Focus on profitable and special market nicheGoal
Focused innovation policy Invest into human capital and flexibility Strategic cooperation
Measures g p
Strategic market segmentation Individual offeringCharacteristic Individual offering Comprehensive expertise
C a acte st c
Precondition Decide whether to concentrate on market niche as cost or quality leader
22By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Bruhn, 2001
I li ti f P t t t ilII. Porter‘s strategies and competitive advantagesImplications of Porter to retail
Upper market Preferencet t
Boutiques(preference-buyer) strategy
upSpecialized shop
Department store
Mid-range market
uptradingdown
DiscounterPrice-quantity
strategyLower market(price-buyer)
23By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Trommsdorff
P t lt ti t t i i k ti iII. Porter‘s strategies and competitive advantagesPorters alternative strategies in marketing mix
Cost strategyDifferentiation strategy
Competitive advantage through cost orientation
(Minimum of quality and service)
Competitive advantage through uniqueness and fulfillment of
additional needs
Aggressive price competitionPolishing an image despite higher iprices
Brand-buyer Price-buyer
Above-average product quality Attractive packaging Image-oriented brand profiling
Average product quality Efficiently packaging No brandg p g
Personal sale / service High price
Less communication Cheap sales channels Low price
24By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Trommsdorff
P d f P t t t lt tiII. Porter‘s strategies and competitive advantagesPros and cons of Porters strategy alternatives
Cost strategyDifferentiation strategy
Pros Late market entry at price reduction (with
cost advantages) Protection from buying power customers
Pros Customer commitment to the brand Low price sensitivity of the customers Market entry barriers due to customer Protection from buying-power customers
Protection from powerful suppliers High market entry barriers Necessary scope at the appearance of
substitutes
Market entry barriers due to customer loyalty
Dealing with suppliers Low buying power of key customers
(cause of unique position) substitutes(cause of unique position)
Cons Cost reduction potential can be “learned”
Cons High pre-investment within product and
also by competitors Neglect of adaptation on market
requirements with strong concentration on costs
brand development Substantial price advantages of cost
leader (financial savings for customers more important than brand)
Compensation of price advantage with effortless cost increase
Above average profit margins attract competitors
Imitations decrease the visible advantage
25By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Trommsdorff
C iti t t t f P tII. Porter‘s strategies and competitive advantagesCritic on strategy concept of Porter
The strategy concept of porter basically includes a directed consumer strategy oriented on competitive advantages
The strategy concept is to limited for the wide range of competitive advantages
Companies can do on the one hand a cost oriented approach and on the other hand a quality oriented approach without being torn between two sides in this respect (outpacing strategy).
Dynamic aspects of strategy adaptation are not focused by Porter
26By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Bruhn, 2001
General Strategic Management Concepts
I O iI. OverviewII. Porter´s Strategies and Competetive Advantage III. Gilbert und StreibelIV C St d P tIV. Case Study PorterV. Ansoff‘s Produkt-Marktstrategien
27By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
III. Gilbert and StreibelTh t i t t h b Gilb t d St ib lThe outpacing strategy approach by Gilbert and Streibel
High product b fit
Improve the manu-facturing process
Overtakebenefit facturing process
Introduce a Product standard differentiation
First supplier
Low productioncosts
Second supplier (Follower)
28By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Gilbert/ Strebel, 1987
General Strategic Management Concepts
I O iI. OverviewII. Porter´s Strategies and Competetive Advantage III. Gilbert und StreibelIV C St d P tIV. Case Study PorterV. Ansoff‘s Produkt-Marktstrategien
29By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
IV. Case study PorterC t d t l d hi 1 AldiCase study cost leadership 1: Aldi
1. companyp y
2. philosophy & implementation of cost leadership
3. key figures3. key figures
4. conclusion
5 sources5. sources
30By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 1: AldiALDI NORD d ALDI SÜDALDI – NORD and ALDI SÜD
1913 Foundation of the family company
1960 Foundation of the both legally
independent companies ALDI -NORD and ALDI – SÜDO a d SÜ
31By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 1: AldiALDI NORD d ALDI SÜDALDI – NORD and ALDI SÜD
Food trade
Field of business Discount principal 700 articles in product range Focus on label products
International leading brand within the area of food trade Three out of four households in Germany buy at ALDI
Market position Three out of four households in Germany buy at ALDI Number 1 of the ten top-brands in Germany
(Markenwertstudie Young & Rubicam, 2000)( g )
International
Around 6000 stores world-wide ALDI Nord runs stores in Belgium, Netherland, Luxemburg,
F S i P t l d D kInternationalpresence
France, Spain, Portugal and Denmark ALDI Süd runs stores in Austria, Great Britain, Ireland,
USA, Australia, Switzerland and Slovenia
32By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 1: AldiTh hil h f ALDI & i l t ti f t l d hiThe philosophy of ALDI & implementation of cost leadership
Focus on the essentials!
t ibl
Focus on the essentials!
Concentrated range of goods
strong, responsible management
Rationalized l t
high quality label products in case
uncompromising
sales system label products in case of brand products
quality
33By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 1: AldiObj tiObjectives
Lowest price
Lowest costs
High quality
34By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 1: AldiP iti i t t t i f P tPosition in strategy matrix of Porter
Cost advantagePerformance advantage
Strategy of aggressive cost leadership
Strategy of quality leadership
Cost advantage
Total market coverage
Performance advantage
cost leadershipquality leadership
Strategy of selectiveStrategy of selectiveS b k t
Concentration
Strategy of selective cost leadership
Strategy of selective quality leadership
Submarket coverage
35By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 1: AldiR li ti f t l d hiRealization of cost leadership
World wide purchase
Long term contracts with suppliers
C t ff ti t t ti Cost-effective transportation
Tightened product ranges
Cost-effective location and decoration of sales area
36By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 1: AldiM k t h f d t d GMarket share food trade Germany
37By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 1: AldiC l iConclusion
Simplicityp y
Detailed quality checks
Decentralization
WaiveWaive
38By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 1: AldiSSources
www.wikipedia.dep
www.aldi.de
www.suedeutsche.de
www.zeit.dewww.zeit.de
39By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
C t d t l d hi 2 R iIV. Case study PorterCase study cost leadership 2: Ryanair
1. companyp y
2. philosophy & implementation of cost leadership
3. key figures3. key figures
4. conclusion
5 sources5. sources
40By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 2: RyanairR iRyanair
1985 founded by the Irish business man Dr. Tony Ryan
History Since 1993 Michael O'Leary leads the company with
a „No-Frills“-strategy 1997 expansion to continental Europe 2003 takeover of BUZZ
Stock company out of Ireland
Factsp y
Main base: Airport London Stansted 320 routes between 19 European countries
41By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 2: RyanairTh R i hil h & i l t ti f t l d hiThe Ryanair philosophy & implementation of cost leadership
„No-Frills“-strategy
Low price + low additional value
42By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 2: RyanairR li ti f t l d hiRealization of cost leadership
Airplane Minimized comfort
Aircraft fleet Almost only Boing 737-800
Di t ith B i
Airplane Fast cleaning and time savings
Aircraft fleet Discounts with Boeing
Air fields Not at main airports Fast reloading speedFast reloading speed
Service Snacks and drinks for additional money Additional profit
Personal Out of countries with lower employee on-costs Outsourcing of several services
R d i f l Reduction of personal costs
43By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 2: RyanairR li ti f t l d hiRealization of cost leadership
Pricing Strictly to demand situation
Sales No tourist offices
M i l h l I t t
Pricing Average: 38 €/ticket
Sales Main sales channel: Internet
Communication Aggressive advertising
44By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 2: RyanairMi h l O‘LMicheal O‘Leary
45By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 2: RyanairK fiKey figures
Sales volume:…………..1,07 bill. EuroEmployees: 2300 Employees:………...……2300 Travel:…………………….23 mill. passengers Fleet:………………………>100 jets of type Boeing Main competitors:
Easy Jet Air Berlin
Market share in European Low-cost-market(number of passengers)
Market share:………..27,3%
xx
46By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 2: RyanairC l iConclusion
LCC meets customers i trequirements
On time, few
Trends in prices and profit marginseasyJet and Ryanair
Average price
flight cancellations
Compete on the European
Average price
flight market
Annual growthgof approx. 25 %
15Net profit Ryanair Net profit easyJet
Cost leadership strategy successful
47By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study cost leadership 2: Ryanair… Trends in prices and profit margins
easyJet and Ryanair
A iAverage price
Average price
48By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Quelle: …
Net profit Ryanair Net profit easyJet
Case study cost leadership 2: RyanairSSources
http://www.ryanair.com/site/DE/about.php
http://de.wikipedia.org/wiki/Ryanair
49By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
C t d Diff ti ti 1 L fthIV. Case study PorterCase study Differentiation 1: Lufthansa
1. Lufthansa's strategic business unitsg
2. Philosophy & Implementation of differentiation strategy of Lufthansa
3. Key figures
4. Conclusion
5. Sources
50By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 1: LufthansaSt t i b i itStrategic business units
Lufthansa Lufthansa Systems
LSG Sky Chefs Formerly
Thomas Cook AG
Passage
Geschäft
LufthansaTechnik
Lufthansa Cargo
51By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 1: LufthansaPhil h & i l t ti f diff ti ti t t f L fthPhilosophy & implementation of differentiation strategy of Lufthansa
Source of competition
Costs Uniqueness
Broad Umfassende K t füh Differen-
Market
target market
Kostenführer-schaft zierung
coverage
Narrowtarget
Konzentration auf Schwerpunktetarget
marketSchwerpunkte
52By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 1: LufthansaPhil h & i l t ti f diff ti ti t t f L fthPhilosophy & implementation of differentiation strategy of Lufthansa
Quality Innovation Reliability and safety
Products
• Service on Board
• FlyNet, broadband-Internet
• Sensors at the airplane
• Classes
53By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 1: LufthansaPhil h & i l t ti f diff ti ti t t f L fthPhilosophy & implementation of differentiation strategy of Lufthansa
Tailor-made products for the customers
First Class Business Class Economy Class
• First Class Terminal
• Jet
• seating comfort • Flights for 99€
54By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 1: LufthansaK fiKey figures
2006in Mill €
R 18 065
2005 in Mill €
16 965
Percentage
+6 5Revenue 18.065
Operating profit 577
16.965
383
+6,5
+50,7
Investments 1.829 1.783 +2,6
Employees (end of the year) 92.303 90.673 +1,8
Earnings per share 0,99 0,94 +5,3
55By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 1: LufthansaK fiKey figures
Airlines Customers (in thousand)Rank
1 A i Ai li 91 5701 American Airlines 91.570
2 Delta Airlines 86.783
3 United Airlines 71 2363 United Airlines 71.236
4 Northwest Airlines 56.429
5 J Ai li 51 7365 Japan Airlines 51.736
6 Lufthansa 48.268
7 All Nippon Airways 46 4507 All Nippon Airways 46.450
8 Air France 45.393
9 US Airways 42 4009 US Airways 42.400
10 Continental 40.584
56By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 1: LufthansaSSources
www.lufthansa.com mckinse dewww.mckinsey.de
http://www.org-portal.org/portal/artikelhttp://konzern.lufthansa.com/de/ htt // l fth fi i l dhttp://www.lufthansa-financials.de http://www.lufthansacityline.com/de/http://www.stern.de
//http://www.iata.de
57By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
C t d Diff ti ti 2 A lIV. Case study PorterCase study Differentiation 2: Apple
1. The company „Apple“p y pp
2. Philosophy and implementation of differentiation strategy
3. Facts3. Facts
4. Sources
58By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 2: AppleA lApple
Apple Computer Inc computer company with headquarter in USA Apple Computer Inc. – computer company with headquarter in USA
Products: Computer, consumer electronics, operating systems and ftuser software
Around 14.800 full-time employees
Revenue: 3,7 Bill USD (4. Quarter 2005 world-wide)
P fit 430 Mill USD (4 Q t 2005 ld id ) Profit: 430 Mill USD (4. Quarter 2005 world-wide)
59By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 2: AppleMil tMilestones
iPodiPodclassic
1G1 3G2G 4G 5G 6G
iPodmini/nano
2G1G 1G 2G 3G
iPodshuffle
1G 2G
iPod
20022001 20042003 2005 2006 2007
touch1G
60By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 2: AppleS lSales
20
22
Mill. Units sold
1
16
18
20
1G 5G 1G
10
12
14
1G 4G
4
6
81G1
1st iPod launched in
October 2001
0
2
2007200620052004200320022001
October 2001
61By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 2: AppleP iti iPositioning
Uniqueness on customers point of
view Cost advantage
Differen-zierung
Cost leadership
Across the industryzierung leadership industry
FocusOne segment
62By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 2: AppleObj ti f diff ti ti t tObjectives of differentiation strategy
Offering
Mp3
Offering
Market leaderMp3 Market leader
PCPC
Target groupPrivatecustomers
Businesscustomers
g g p
63By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 2: AppleM k t hMarket share
Extraordinary market share (1/2)Extraordinary market share (1/2)
40 %Absolute amount (2005) world-wide:
iPodMP3
64By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 2: AppleF t f diff ti tiFeatures for differentiation
Unique User interface is patented
xx
Uniquedesign Design makes the iPod to the
iPod
Continuous adaptation
at competitors iPod continued to develop Handy with iPod design
65By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 2: AppleF t f diff ti tiFeatures for differentiation
High qualityHigh quality
Company image
Brand imageBrand image
DesignPatience
4
EquipmentAccessories
DesignMemory
Competitors
iPod
BrandPrice
66By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 2: AppleM f diff ti tiMeasures for differentiation
Customer loyalty Design
Ease of use
67By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 2: AppleP d f diff ti tiPros and cons of differentiation
Pros
Customer loyalty
Cons
Imitation
Low price sensitivity
Uniqueness Price advantage of
other providers
68By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 2: AppleO tl kOutlook
Product within the maturity phase – Relaunch?
Challenge Mobile phone market iPhones?Challenge Mobile phone market – iPhones?
69By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 2: AppleRRevenue
apple
13.930
12.000
14.000
16.000$ first iPod
7.970
5 7506.205
8.2798.000
10.000
enue
in M
ill U
S-$
10/2001
5.360 5.750
2.000
4.000
6.000
Rev
e
02000 2001 2002 2003 2004 2005
Year
70By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
Case study Differentiation 2: AppleSSources
http://www.fscklog.com/ipod/index.htmlhttp://de.wikipedia.org p p ghttp://www.heise.dehttp://ipodlife.de/http://www.ipod-fun.de/ p phttp://de.wikipedia.org/wiki/IPod#Geschichtehttp://www.hardwarecrew.com/http://www.fscklog.com/2006/01/macs liefern nu.htmlhttp://www.fscklog.com/2006/01/macs_liefern_nu.html http://www.mactechnews.dehttp://img.mediamarkt.de/images/http://www mediaonline de/http://www.mediaonline.de/
71By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
General Strategic Management Concepts
I O iI. OverviewII. Porter´s Strategies and Competetive Advantage III. Gilbert und StreibelIV C St d P tIV. Case Study PorterV. Ansoff‘s Product-Marcet Strategies
72By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12
V. Ansoff‘s product-market strategiesA ff‘ d t k t t iAnsoff‘s product-market-matrix
M k tMarket
old new
Market Marketold
Marketpenetration
Marketdevelopment
duct
newProduct
developmentDiversification
Prod
development
73By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Ansoff, 1966
A ff k t t ti MarketMarket
V. Ansoff‘s product-market strategiesAnsoff – market penetration
R i th d t f i ti t
Marketdevelopment
Marketpenetration
old
newold
Marketdevelopment
Marketpenetration
old
newold
Prod
uct
Raise the product usage of existing customers Improvement/Adaptation of product quality Additional benefit/value (Service, emotional positioning) Improvement of distribution
DiversificationProduct
developmentnew Diversification
Productdevelopment
new
P
p Intensify the communication Price differentiation
Gain new customers in existing marketsg Poach customers of competitors Recruit customers out of not yet targeted segments e.g:
– Enhance the productNew sales arguments/better information– New sales arguments/better information
– Price adjustment on level of competitors
Evaluation Low opportunities to expand (expect in other markets) Low opportunities to expand (expect in other markets) high degree of safety No enlargement of resources needed
74By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Trommsdorff
A ff P d t d l t / di ifi ti MarketMarket
V. Ansoff‘s product-market strategiesAnsoff – Product development / diversification
P d t difi ti
Marketdevelopment
Marketpenetration
old
newold
Marketdevelopment
Marketpenetration
old
newold
Prod
uct
Product modification Additional value due to service extension Extend products with individual functions Adjustment of the product to changing needs of existing customers
DiversificationProduct
developmentnew Diversification
Productdevelopment
new
P
j p g g g– E.g. design, packaging, compatibility
Product innovation Technical product innovationp
– Application of new technologies– Systems instead of components– Diverse innovation strategy decisions
Mental product innovation Mental product innovation– Repositioning– New positioning (relaunch)
EvaluationEvaluation Greatest possible expansion High risk: Uncertainty in evaluation of market chances, especially with
new consumer segmentsHigh investments in new product development launch and
75By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Trommsdorff
High investments in new product development, launch and acquisitions needed
A ff k t d l t MarketMarket
V. Ansoff‘s product-market strategiesAnsoff – market development
N
Marketdevelopment
Marketpenetration
old
newold
Marketdevelopment
Marketpenetration
old
newold
Prod
uct
New purposes Solving new problems with existing product
– Enhancement of product suitability– Creation of new application fields
DiversificationProduct
developmentnew Diversification
Productdevelopment
new
P
– Creation of new application fields – Positioning of product to solve other problems
New usersN k t New market areas
– regional– national– internationalinternational
Open new market segments (market segmentation)– Cultivation of currently neglected market segments
EvaluationEvaluation Extended expansion possibilities Aggravated risk, uncertainty in market chances within new segments Investments into enhanced capacities for market cultivation, product
76By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Trommsdorff
Investments into enhanced capacities for market cultivation, product adaptation needed