F1 Strategic management

WHAT IS STRATEGY?

“A plan to attack” Peter Pan

“The match an organization makes between its internal resources and skills...and the
opportunities and risks created by its external environment” Hofer and Schendel, 1978

“The determination of the long-run goals and objectives of an enterprise, and the adoption of
courses of action and the allocation of resources necessary for carrying out these goals”
Alfred Chandler

“A strategy delineates a territory in which a company seeks to be unique.” Michael Porter

Strategy: A plan, method, or series of action designed to achive a specific goal or effect.
Porter: Where and how to compete (doing things better is about operations

WHAT COMPANIES DEFINE STRATEGY

 To be a low-cost provider
 Pursue a global strategy
 Integrate a set of regional acquisitions
 Always be a first mover
 Move from industry one to industry two
 ...

WHAT IS STRATEGY?

The firm STRATEGY The Environment

 Goals, values Competition
 Resources, capabilities Customers
 Structures, systems Suppliers

CORPORATE & BUSINESS STRATEGY

Corporate strategy concerns the overall decisions on a corporate level: Which industry,
Diversification Vertical and horizontal integration
 Mergers and acquisitions
 Resource allocation (WHERE should we
compete)

Business strategy concerns how a firm competes in

a certain industry or market:
 Cost versus differentiation
 Focus (HOW should we compete)

EXAMPLE COCA-COLA
Corporate strategy (where)
 The soft drinks industry
 Geographically all over the world
 Vertical scope: product development, brand management, concentrate manufacture
and distribution

Business strategy (how)

 Differentiation, mass distribution, branding and good relations to local bottlers

STRATEGIC MANAGEMENT
Strategy as decision support
It constrains the amount of alternatives and provides a rule of thumb
Strategy as a coordination device
Helps to communicate and direct the firm
Strategy as target
Helps to set goals and look forward

THE ROLE of ANALYSIS

Strategy Analysis
 Improves decision process, but doesn’t give answers
 Assist us to identify and understand the main issues
 Helps us to manage complexity
 Can enhance flexibility and innovation by support learning

THE GOAL?
Shareholders vs. Stakeholders
 Environment?
 How to calculate profits?
 Missions & visions

Other organizations than business firms?

VALUE: CREATE and CAPTURE

Consumers
Production
Trade and Transaction
Value added = Sales revenue – cost of input
= Sales revenue – (Wages/salaries +
interest + rent + royalities/license fees +
taxes + dividends + Retained profits)

According to Economics
What consumers are willing to pay
 Walk away price
 Consumer surplus
Price discrimination
 Value based pricing

VALUE DRIVERS PERFORMANCE