strategic mgt ch 17

8/6/2019 Strategic Mgt Ch 17

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VLEKHO-HONIM

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Str ategy

Dr. Annick Van Rossem

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Content

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I. Introduction

Ch. 1 The concept of strategy

II. Tools of strategy analysisAnalysis of Industry &

competition

Analysis of the firm

Ch. 3 Industry analysis: the

fundamentals

Ch 2. Goa ls, values and performance

Ch. 5 Resources and capabilities

Ch. 4 Further topics in industry and

competitive analysis

Ch. 6 Organisation structure and

management systems

III. The analysis of competitive advantage

Ch. 7 The nature and sources of competitive advantageCh. 8 Cost advantage Ch.9 Differentiation advantage

IV. Business strategies in different industry contextsCh. 10 Industry

evolution and strategic

change

Ch. 11 T echnology

based industry and the

management of

innovation

Ch. 12 Competitive

advantage in mature

industries

V. C orporate strategyCh. 13 Vertical

integration and the

scope o f the firm

CH. 14 Global strategies

and MCN

Ch. 15 Diversification

strategy

Ch. 16 M anaging themulti business

corporation

Ch. 17 C urrent trends instrategic management



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Strategy

Effective implementation

Simple, consistent,

Long term goals

Objective understanding/appraisal of resources

and exploiting them

Understanding of the(competitive)

environment



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Change is the current key

Burst of dot.com (2000)

Enron scandals and collapse**

9/11- Terrorism(Bombay, London, Madrid)

Rapid industrialization of China IT development in India

World wide financial bank and economic crisis

Climate change

Oil spills Crisis of Euro (Greece, Spain)

Third industrial revolution!



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Influence for strategy?



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Influence for strategy?

Volatility and unpredictability of the

technological, economic and political

environments

=> L-T but we Need flexibility and

responsiveness

Eg. Rapid industrialization of China & IT development in

India => outsourcing

Convergence of Technology

=> Operating in changing markets

=> New thinking about strategy, responsibility of

the firm and the role of management



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The 3rd industrial revolution

The first

Great Britain (end 18 th century)

Mechanization of production

The second

US (end 19 th century)

Rise of corporation and telephones, automobiles and

electrical power



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The 3rd industrial revolution

The third

World wide (late 1990¶s

Knowledge revolution

Digitalization, new communication media (internet)=> new industries

Deregulation free trade (more competition)

Old industries destroyed (car, classic telephony, classic

music industry.. )

Dissolution of barriers of entry

� Easy to copy

� Not always high capital investments needed



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Societal pressures



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Societal pressures

Societal fit

You must go for«..

Social legitimacy: the firms ability toprosper depends also on acceptance

among customers and other stakeholders

such as investors to fund, government..



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Pyramid of Caroll: how far do we have to

go?

Bvb. No fiscal fraude

common good appraoch

Economic vision

Proft maximization is goal of the firm :



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Societal pressures: reactions

Corporate governance (more important) Reaction against Enron, and high level of executive compensation*

More info toward public and shareholders

BOD (co-ordination with«)

Audit

CSR business embrace responsibility for the impact of its activities on the

environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused businesses wouldproactively promote the public interest by encouraging community growth anddevelopment, and voluntarily eliminating practices that harm the public sphere,regardless of legality.

Sustainaibility:

Sustainable development does not focus solely on environmental issues. In 1987, the United Nations released the Brundtland Report, which defines

sustainable development as 'development which meets the needs of the presentwithout compromising the ability of future generations to meet their own needs



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Consequences of Societal Pressure

Missions and visions must be adapted

Cost cutting

Marketing and BrandingDiversity of Workforce

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Decline of the public corporation

Companies do not want to be listed on the Stock

Exchange«

Why the decline? Response to scandels(Enron), they don¶t want

to follow all the rules

Companies prefer to follow codes

Of ethics

Of corporate governance

Due to high regulatory burden on public companies

Response to scandals and social pressures Retreat behind the greater anonymity afforded by private

ownership



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New directions in strategic thinking



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Beyond shareholder value

Due to quest for more shareholder value

=> scandals, artificially manipulating

financial statements

Hence 2 reactions

Back to basics(Next Slide)

Accessing more complex and difficult sources

of competitive advantage



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Back to basics Healthy skepticism over the dot.com mania (Another reason for

the Economic Crisis). Reason why strategy has becomeimportant today again.

Healthy Financials Real strategies again!

Using tools to analyse

Looking at resources and capabilities

Exploiting opportunities offered by the external environment

Many mergers and acquisitions in order to have the economiesof scales

Focus on complementarity of management

A particular management practice will fail, if all others are notadjusted

Head for the fitted ³configuration´



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Accessing more complex and difficult

sources of competitive advantage� New business models

� Dynamic capabilities� New business models ± flexible organizational

structure� The learning organization

� Network organization e.g. Nike and Benneton� Google¶s e.g. Team and projects

� Exploration (invented, creative) vs. exploitation (use

what¶s invented, controlled)

� More empowerment, self regulation



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Beyond shareholder value***

New forms of business models ± flexibleorganizational structure - Basic ideas***

� Simple rules

� Empowerment� Less layers� Horizontal linkages ± voluntary collaborations

between people and business nits� Teams (changing)� Knowledge management

� Different organization forms of different Bu¶s� Eg; marketing and R&D more organic than Production

� Agreement on output (performance) rather than onprocesses



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Consequences of Economic Crisis

Lower Demand for commoditiessuch as oil

and energy and food

Water is becoming scarce and will becomeexpensive

Do you think prices wil drop?

Prices will go up of our basic needs

Invest in Resource productivity

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Globalization is under fire

No frontal attack

Increased protectionism

Immigration stops to protect national labour

But: due to aging, people in the west

In emerging markets people with diplomas will

still be coming to the west

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No-one trusts American, UK, Russian and Irish

Companies

They need to invest into CSR

There is also a bigger role for the government.

Why? e.g Stimulus Plan

Gov has installed many rules for e.g. protecting Labour

Government can become a customer for companies

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US, Japan and Europe consumption is

slowing down.

Why?Older people consume less

Households saving

Could Asia could become the new big spender?

Lessons learned

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Lessons learned

Focus some need onto aging people

Shift to the taste of Asia

Look for good partnerships in AsiaPrepare for lower growth of Consumption

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Asia is Growing?

Not only as a market

Also as Supplier (TATA)

They have knowledge, tech, and the leapfrogging

Western Companies

Set-up barriers for entry so that the don¶t enter the

market

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strategic mgt ch 17

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