Professional Documents
Culture Documents
Turkey Strategic Thinking
Turkey Strategic Thinking
Companies
COMPETING
COMPETING TO
TO BE
BE THE
THE COMPETING
COMPETING TO
TO BE
BE
BEST
BEST UNIQUE
UNIQUE
• Strategy as aspiration
– “Our strategy is to be #1 or #2…”
– “Our strategy is to grow at…”
– “Our strategy is to provide superior returns to our shareholders…”
• Strategy as vision
– “Our strategy is to best understand and satisfy our customers’ needs…”
– “…to advance technology for mankind…”
• Strategic thinking starts with setting proper financial goals for the
company
Superior
Superior Economic
Economic Shareholder
Shareholder Value
Value
Performance
Performance
Competitive
Competitive or
or
Business
Business Strategy
Strategy
Corporate
Corporate or
or Portfolio
Portfolio Strategy
Strategy
Relative
Relative Position
Position
Industry
Industry Within
Within the
the
Structure
Structure Industry
Industry
35%
31.6%
30%
27.8%
Return on 25% ROIC = Earnings before
Invested interest and taxes
Capital divided by invested
1993-2007 20% capital less excess cash
15%
13.6%
10.5%
10%
5%
0%
Revlon Paccar
Industry Average
Note: Excess cash is calculated by subtracting cash in excess of 10% of annual revenue.
Source: Compustat (2008), author’s analysis
20091017 – Turkcell (Strategy).ppt 8 Copyright 2009 © Professor Michael E. Porter
Understanding Industry Structure
Threat of Substitute
Products or Services
Threat of New
Entrants
Zero
Zero Sum
Sum Positive
Positive Sum
Sum
Competition
Competition Competition
Competition
Threat
Threat of
of Substitute
Substitute
Products
Products or
or
Services
Services
• Railroads
• Water transportation
Bargaining Rivalry
Rivalry Among
Among Bargaining
Bargaining Power
Power
Bargaining Power
Power
of Suppliers Existing
Existing of Buyers
of Buyers
of Suppliers
Competitors
Competitors
• Large independent • Heavy price • Large fleets
suppliers of engines competition on • Leasing companies
and drive train standardized models • Small fleets and owner
components operators
• Unionized labor
Threat
Threat of
of New
New
Entrants
Entrants
• Focus on owner-operators
• Premium price
Differentiation
(Higher Price)
Competitive
Competitive
Advantage
Advantage
Lower Cost
Firm Infrastructure
(e.g. Financing, Planning, Investor Relations)
Primary Activities
• Competing in a business involves performing a set of discrete
activities, in which competitive advantage resides
• Strategy is reflected in how activities in the value chain are
configured and linked together
20091017 – Turkcell (Strategy).ppt 14 Copyright 2009 © Professor Michael E. Porter
Achieving Superior Performance
Operational Effectiveness is Not Strategy
Operational Strategic
Effectiveness Positioning
What
What Which
Which
Customers?
Customers? Needs?
Needs?
What
What Relative
Relative
Price?
Price?
• Premium? Discount?
Strategic Tradeoffs
– Incompatible product or service features or attributes
– Differences in the value chain deliver a chosen value proposition
– Inconsistencies in image or reputation across positions
– Limits on organizational capacity to implement multiple ways of
competing simultaneously
IKEA
IKEA Typical
Typical Furniture
Furniture Retailer
Retailer
Product Product
• Low-priced, modular, ready-to-assemble • Higher priced, fully assembled products
designs
• No custom options • Customization of fabrics, colors, finishes,
and sizes
• Furniture design driven by cost, • Design driven by image, materials, varieties
manufacturing simplicity, and style
Wide
range of Global
styles team of
trend-
spotters
Very
Majority of Advanced
Little media frequent
production production
advertising product
in Europe machinery
changes
Extensive
use of
Prime store store sales
locations in data
high traffic Very
areas Tight
flexible
coordination
JIT delivery with 20 production
wholly-owned system
factories
• Reinvention and frequent shifts in direction are costly and confuse the
customer, the industry, and the organization
M
a
r
g
i
n
M
a
r
g
i
n
• Measure progress against the strategy using metrics that capture the
implications of the strategy for serving customers and performing particular
activities
• Sell the strategy and how to evaluate progress against the strategy to the
financial markets