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WINNING STRATEGIES AT THE BUSINESS AND CORPORATE LEVEL

PROF. DR. KURT VERWEIRE

© Vlerick Business School

CONTENT

2

Introduction: What is strategy? And why does it matter?Vlerick Strategy Formulation FrameworkFrom Competitive Advantage to Corporate Strategy

Winning Strategies at Business and Corporate Level

WHAT IS STRATEGY? AND WHY DOES IT MATTER?

OF ALL THE CONCEPTS IN MANAGEMENT, STRATEGY IS THE ONE THAT ATTRACTS MOST ATTENTION ANDGENERATES THE MOST CONTROVERSY. ALMOST EVERYONE AGREES THAT IT IS IMPORTANT. ALMOST NO ONE AGREES ON WHAT IT IS…

(PROF. DR. JOAN MAGRETTA)


WHAT IS STRATEGY?

5 Winning Strategies at Business and Corporate Level


WHY IS STRATEGY SO DIFFICULT?


Ambition

• Vision (BHAGs)• Specific targets

Identity

• Core business• Fundamentalpurpose

Strategic actions

Strategic analysis

• Industry analysis• Marketplace trends• Environmental forecasts• Competitor analysis• Assessment of internalstrengths, weaknesses, resources

Source: Hambrick & Fredrickson (2001)

Strategy

Set of choiceson where and

how to compete


STRATEGY TODAY HAS BECOME MORE COMPLEX


Source: Baghai, White & Coley (1999)

Horizon 1Exploit the core

Horizon 2Expand into adjacencies

Horizon 3Initiate radical transformation

Value

Time

VLERICK STRATEGY FORMULATION FRAMEWORK


A WINNING VS MEDIOCRE STRATEGY

Strategy is about making choicesBeing ‘all things to all people’ is a recipe for strategic mediocrity and below-average performance [Porter, 1980]After all, the essence of strategy always has been, and always will be, choice [Anthony, Gilbert & Johnson, 2017]

Strategy is about being uniqueThe essence of strategy is choosing to perform activities differently than rivals do [Porter, 1996]The prime source of competitive advantage: You earnmoney by being different from your competitors in a manner that lets you serve your core customers betterand more profitably [Zook, 2012]



VLERICK STRATEGY FORMULATION FRAMEWORK


Competitive theme

Competitive arena

Whom do we serve? What do we provide?

What is our value proposition?

What is our operating model?


WHOM DO WE SERVE?

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1. Who are they?

2. How big are both segments?

3. What will we do to discourage bad customers to come to us?

4. How will we improve our offering to our best customers?



WHAT DO WE PROVIDE?

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Best quality

Good enough

Sp

ecia

list G

eneralist



WHAT IS OUR VALUE PROPOSITION?

The five attributes of all commercial transactions:

Product: Goods and/or services purchased

Price: Cost of goods and/or services

Access: How easy consumers obtain and usegoods

Service: What is done extra before, during, and after the sale

Connectivity: How consumers feel aboutthemselves as a result of goods and/or services


Source: Crawford & Mathews (2001)

Consumer relevancyframework




Level Access Connectivity Price Product Service

Consumer seeks the company

Turn my hassle into a positive experience.

Establish intimacy with me by doing something no one else can.

Be my price agent; let me trust you to make my purchases.

Inspire me with an assortment of excellent products I didn’t know about.

Provide me with a solution, take my problems away.

Consumer prefers the company

Make the whole interaction reliable and convenient for me.

Care about my needs and me.

Be fair andconsistent in your low pricing (this does not necessarily mean lowest price).

Offer continuously high-quality and well-performing products.

Educate me when I encounter a product or a situation I don’t understand.

Consumer accepts the company

Make it easy for me to find what I need.

Respect me, treat me like a human being.

Keep the prices honest; don’t jack them up or offer big savings when there are none.

Be credible in your product and service offerings.

Accommodate me; bend over backward some-times to show me you care.

Consumer underworld

Block my way, hassle me, keep me waiting, make it hard for me to get in and out.

Dehumanize me; disrespect me; ignore my needs.

Be inconsistent, unclear, or misleading in your pricing.

Offer me poor-quality merchandise and services that I can’t use.

Give me an experience I’d just as soon forget; give me a reason to tell my friends to stay away.




Source: Crawford & Mathews (2001) A 5-4-3-3-3 profile is optimal.



Product

Price

Access

Service

Connectivity



WHAT IS OUR OPERATING MODEL?



COMPETITIVE THEME


Best price

Best access

Best product

Best service

Best connectivity

OperationalExcellence

ProductLeadership

Customer Intimacy

FROM COMPETITIVE ADVANTAGE TO CORPORATE STRATEGY


A CORPORATION: EXAMPLE



CORPORATE LEVEL STRATEGY

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Formulation = Portfolio strategy: Shaping the portfolioWhat is a group level strategy beyond a collection of business units?

Implementation = Managing the portfolio How to manage the group of businesses?

Organizational designPerformance management and controlSynergy exploitation(De)centralizationMethod of growth



THREE CORPORATE MODELS


Portfolio management

Synergymanagement

Parentaldevelopment

Who we are “We are aninvestment company”

“We lead a collectionof related businesses”

“We are the managers of the business”

What we want “We want yourresults”

“We want to knowwhat you will do”

“We want to beclosely involved in running the business”

Corporate logic Value creation at SBU level limited

Manage synergisticbenefits in the corporate portfolio

Employ corporate capabilities to addvalue to the business

Strategic requirements

• Acquire assets• Divest assets• Low strategic role in SBU

• Identification of synergyopportunities

• Appropriateintervention of the corporate parent

• Developing strong core

• Grow by replicatingyou coredifferentiators in new contexts

Corporate design and control

• Financial control• More focus on decentralization

• Strategic control• Corporate staff as integrators

• Collaborative SBUs

• Strategic planning• More focus on centralization andcoordination

THANK YOU!

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