introduction to strategy · introduction: do smarter strategic choices! • competitive advantages...
TRANSCRIPT
Introduction: do smarter strategic choices!
• Competitive advantages are based on – product and/or – process
• “Sustainable competitive advantages” are challenged due to
• Globalisation • Technology development • Deregulation
• Consequence: strategy development is challenged
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Implications
«Unless today’s established corporations learn to reinvent themselves and their industries, much of the new wealth will be created by newcomers.» Gary Hamel (1997)
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Strategy for the incumbents - stay on track or turn before it’s too late
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Strategy for the entrepreneurs: new customers, new needs and new solutions
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Different focus in different contexts
• SMB: growth • Large, multinational: complexity • Professional partnership: individualism • Non governmental organisation: strong values • Public sector: the political dimension
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Introduction – focus and process
• Two typical starting points for strategic choice – Visionary front runner (proactive)à e.g. Google – Copy of competitors (reactive) à e.g. Microsoft
• Ideally an analytical, sequential process: Internal analysis External analysis
Strategy alternatives
Evaluation - Realism - Feasibility - Accept
Implementation
(But this is not always the situation!)
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Task: ”strategic”
• What makes a choice ”strategic”?
• What are the key success factors for an effective strategy process?
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Introduction (ctd.)
• What choices are really ”strategic”?
• What are the threats against a good strategy process? – External: complexity and information access – Internal: guts and time pressure
”Long term planning” - Lang term - Irreversible - Resource allocation - Risky
“Important” - Involves top management - Urgent - Limited information flow - Involves consultants
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What is Strategy?
• Origin-Greek word (strategos)-art of the general – Sun Tzu, Chinese military strategist in 500 B.C.
– Modern-day application to business and competition dates to the 1960s
• Plan versus Action - strategy is “explicit, rigorous formal planning” versus “a set of flexible, goal-oriented actions”
• Strategy as Theory-how to compete successfully Ø Firms have both intended and emergent strategies Ø One firm’s strategies may not work in all situations
Ø Past success does not guarantee future success
Ø It is often difficult to change strategy
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Fundamental Questions in Strategy
• Why do firms differ? Ø Cultural differences between Western firms and Japanese
companies
Ø Networks of relationships have powerful effect
• How do firms behave? Ø Industry-based view - focus on competitive forces within an
industry that impact all firms
Ø Resource-based (capabilities) view - focus on internal strengths and weaknesses, firm specific resources and capabilities
Ø Institution-based view - focus on government and societal forces
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Global Strategy and Globalization at a Crossroads
• Three Defining Events - have brought corporate social responsibility, ethics, and governance to the forefront of strategic decisions Ø Anti-globalization protests
- lost jobs, downward pressure on wages for unskilled labor, environmental destruction
Ø Terrorist attacks - 9/11, Madrid, London
Ø Corporate governance crisis - industrial financial crisis, U.S. scandals, EU
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The “Strategy Tripod” Three Leading Perspectives on Strategy
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Starting point: “where are we?” (aka SWOT)
Strengths
Weaknesses
Opportunities
Threaths
Internal analysis External analysis
Resource based models of competitive advantage
Environmental models of competitive advantage
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Environmental model…
Michael Porter’s five forces give us an idea of how to analyze competition…
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Resource-based model…
- Firm Resource Heterogenity
- Firm Resource Immobility
Value Rareness Imperfect Imitability Non-Substitutability
Sustained Competitive Advantage
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Institution based Considerations
In additon to the resource based and industry based considerations, we need to address both the formal and informal institutions…
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Institution based considerations
• Institutions affect business decisions by signalling what behaviour that is acceptable (Peng 2009)
• The institutional framework consists of – The formal institutions, e.g. political laws and rules, and
economic contracts – The informal institutions are the social norms for behaviour in a
society that are fundamental for cultural and ethical conditions
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Music streaming is the future It creates an optimal user experience – a fun one!
• Access to a library of ALL music in the world – ever recorded • Fixed-fee rental model - no need to own music • Users explores new music in a totally different way – no need to decide to
buy a track or album • Accessible from all connected devices – PC, mobile, TV, home stereos,++ • Offline-mode – play music when not online • Sharing of music online gets a new dimension
More people will play more music than ever before
Task
How do you predict that the music industry will develop in the next three to five years?
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Music will become interactive and multimedia
When music meets the interactive screens, music will become an interactive multimedia experience: • Music videos • More multimedia content; images, interactive presentations,++ • Background info: bios, lyrics, etc • Interaction between artist and their fans • Live concerts and simultaneous music listening • Ticketing
Task
The concept “business model” is frequently used in strategy processes. What is a “business model”?
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Task: “everything gets free, and (some) people are loosing their jobs”
• Dagbladet is in “dire straits” – Dagbladet is loosing readers and revenues
from advertisers at an increasing speed – Digital content is becoming increasingly
popular among consumers, but Dagbladets revenues from digital content are small
• Do a “SWOT” for Dagbladet – At least 5 Ss, Ws, Os and Ts – Prioritize down to 2 of each
• Suggest two-three strategic directions Dagbladet could follow towards 2016
– Offensive – Defensive – (Realistic)
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