Corporate Strategy in Europe (Subject) / Basics of Strategy (Lesson)
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- Concept 1: WHAT IS STRATEGY? Who we are, what we do - "is a high level plan to achieve one or more goals under conditions of uncertainty." « Big » decisions about the.. present and future (long term)scope/boundaries structure fit with the environment (adaption?) resources values sources of competitive advantages of the firm ( differentiation?) Chandler: The determination of the basic long-term goals and objectives of an enterprise, and the adoption of a course of action and the allocation of resources necessary for carrying out these goals Andrews: The pattern of objectives, purposes or goals, and the major policies and plans for achieving these goals, stated in such a way as to define what business the company is in or should be in and the kind of company it should be
- Concept 1 WHY STRATEGY? There must be a core competency that can be a competitive advantage within the different business Where do we go? A firm cannot survive if it cannot adjust to changes of its environment => Position in the environment ADAPTION - ArcelorMittal How do we get there better than others? A firm cannot survive if its business model is not perceived as distinctive = (RESOURCES) DIFFERENTIATION - Carrefour Why do we want to go there? A firm cannot survive if it does not meet its stakeholders objectives => Purpose l LEGITIMACY - Altria
- Concept 2: KEY DRIVERS OF STRATEGY Resources - Which are my Sources of Competitive Advantages? Regional and global environment - What are the key success factors in my environment? Corporate Purpose = STRATEGY l emergent deliberate
- CONCEPT 3: CORPORATE RESOURCES 1. Physical Equipments and facilities, distribution channels, raw materials, inventory, land ArcelorMittal 2. Human/ Social Management, expertise, skills, employees, networks, stakeholders, reputation, McKinsey 3. Financial Cash, funding sources Deutsche Bank 4. Intellectual IP, DB, brands, secrets, software, aptitudes, know-how iBM
- CONCEPT 3: EXTERNAL ANALYSIS PESTEL - POLICY EVOLUTIONS l Comission policies on global warming, security of goods, unemplyment allocation - ECONOMICS l BRICS, Crisis and impacts, emerging economies, unemployment, productivity of lavour, GDP growth-rate - SOCIO-CULTURAL EVOLUTIONS l Aging, Obesity, Health, Population Growth Rate - TECHNOLOGY l ICT, GMO, Complements, R&D Expenses Requirement - LEGISLATION l tax rate, Mergers&Acquisition laws, accoutability reforms
- CONCEPT 5: EXAMPLES AND DEFINING CORPORATE STRATEGY Managing a portfolio of businesses in order to create value across the group in order to build a company that is worth sustainably more than its parts mergers & acquisitions divestment & closure centralization or specialization restructurinh allocation of resources investments coordination of processes
- CONCEPT 4: STRATEGIC VALUE CREATION LEVERS 1. Corporate Strategy WHERE can we (not) create value? WHICH core resources to configure/build 2. Business strategy 1. Positioning WHO is your customer? WHAT is the value you offer to the customer? WHEN should you start? 2. Value chain management HOW to mobilize resources to deliver the value to the customers?
- CONCEPT 6: DEFINING BUSINESS STRATEGY managing product/market and value chain opportunities for each operating unit better than competitors 1. PRODUCT/MARKET: Matrix Product/service offer vs. Markets (segments or needs 2. VALUE CHAINS l delivering and/or extracting value in an unconventional way 3. TIMING FIRST MOVER (offensive strategy) EARLY/FAST FOLLOWER competitive advantage based upon an innovation without being the first mover LATE ENTRANT Company having to react to an innovation affecting its industry (defensive)