corporate strategic management - poslovna škola · 2020. 6. 15. · strategic corporate management...

Focus Corporate strategic management

© Alexander Rosegger

Strategic management

Strategic Corporate Management

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Why strategic initiatives often fail...


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The concept of strategy

§  The concept of strategy “stratēgía” has its roots in the Greek words “stratos” (army) and “agos” (leader) – “the art of a general”

§  in military concept a strategy is “the employment of battles to gain the end a war” (high level plan to reach goal under conditions of uncertainty)

§  1960s: Development of the Harvard concept and introduction into business administration as a phased model based on analysis

§  Strategy involves very fundamental, goal oriented corporate decisions in order to guarantee the viability and intrinsic value of the company

à outwards perspective: to strengthen market position à inwards perspective: to strengthen internal competences

Strategic management basics


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Corporate strategy


As a process strategy comprises the understanding of the current situation, the creation of a future position and a definition of a path that leads the company towards a successful future


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Strategic vs. operational management

Criterion Strategic management Operational management

Objective Long-term success Short-term success

Task Retaining and establishing sources of profit

Achieving operating profit

Instruments Environmental and corporate analysis, various options

Very specific instruments depending on department

Types of information External and internal, also qualitative information

Internal, quantifiable information

Level of complexity High Medium to high

Time frame Medium ot long term (5-10 years)

Short to medium term

Decision-making authority Wide-ranging authority Limited scope for decision making


“Effectiveness” “Efficiency”


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Strategy Process steps



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Strategy process outcome – “Strategy house”


Source: Haake, Seiler, p.9


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Types and relation of strategies

Corporate strategy •  Product-market strategies •  Local, national, international and global strategies •  Autonomy, cooperation and integration strategies •  Stabilisation strategies •  Disposal strategies

Market strategy (strategic business units) •  Cost leadership strategy •  Differentiation strategy •  Niche strategy

Functional strategy •  Procurement strategies •  Production strategies, market strategies •  Financing strategies, HR strategies •  Technology strategies

Senior management/board of directors

Division/ strategic business unit

Departments


Fundament. market & product decisions

Positioning decisions

Supporting decisions


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Strategic business areas


Features: §  distinct purpose on the market §  strategic autonomy from other SBUs §  ability to achieve relative competitive

advantages §  clearly defined external competitors §  certain level stability and minimum size

of market segment


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Theory input

Practical transfer

Linking theory and practice


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Strategy preparation


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Strategic Management

Having a brilliant strategic goal in first place might be helpful...



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Example of strategic goals of a grain mill



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Corporate philosophy statement



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Alternative Vision …


Vision & Mission


16 Strategy preparation

Vision & Mission


17 Strategic approaches - resource-based

Maybe not such an effective mission statement ...

Vision & Mission


18 Strategy preparation

Vision & Mission


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Objectives in a strategic construct



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Strategic analysis


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Strategic Analysis Process

§  Mission & Vision (see also chapter initiative and preparation) to figure status quo of role and purpose of company and future “big picture”

§  Environmental analysis to get a broad picture of trends, economic, technological, political, industry environment à full knowledge of competitive environment

§  Corporative analysis to identify corporate business segments, positioning, core competencies à objective evaluation of resources

§  SWOT analysis to determine strengths and weaknesses of a company in context of market chances and threats

§  Portfolio analysis & benefit profiles to show interrelation of product / company & market in terms of relative positioning à identify latent or open potentials for benefit in market, environment or company

Strategic analysis


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Market-based vs. resources-based strategy approach

Market-based view §  Focus: industry attractiveness

(external factors) §  Starting point: current and future

market requirements §  Resources can be increased/

decreased as required §  Main proponent: Michael Porter §  Tools: PESTEL, 5 forces model

Resource-based view §  Focus: Internal resource base

(internal factors) §  Starting point: core competences §  Focus on and develop strengths

identified as core competences §  Main proponents: Hamel/Prahalad §  Tools: life cycle, learning curve,

core competencies

In practice it has become clear that both perspectives are important and their use depends on the situation in question.

Strategic analysis

“Outside- in” perspective “Inside- out” perspective


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Relationship between environmental and corporate analysis

!Source: Becker, Fallgater (2002), p.64 Strategic analysis

•  Analysis of core competences

•  Analysis of value chain

•  Market & environ-mental analysis

•  Industry & stake- holder analysis

Tools Tools

SWOT

Portfolio Analysis


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Environmental analysis – market-view based approach

Source: Reisinger/ Gattringer, p.55

Strategic analysis


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Strategic analysis of environment and market

§  Environment: PESTEL §  Politics: political framework, labour market, trade unions, trade laws, etc. §  Economy: GDP, purchase power, economic outlook, exchange rates, inflation

§  Society: trends, consumer behaviour, life styles, education, demographics, etc. §  Technology: innovation status, new technologies, changes and effects, etc. §  Ecology: awareness, behaviour, energy prices, recycling, climate change §  Legal situation: finance-, tax-, corporate laws, EU regulations, etc.

§  Industry: development, purchasing, changes in supply chain, substitutes §  Competition: competitive offers, positioning, strategies, strengths &

weaknesses, USP, pricing policy, competencies §  Customers: existing, potential target groups, purchase behaviour, needs §  Distribution partners: distribution channels, concentration, cooperation

Strategic analysis


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Industry analysis: “Porter’s Five Forces” model

Source: Porter (1989), p.26

Strategic analysis


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Industry analysis: Example “Porter’s Five Forces” model

Example US car industry

Strategic analysis


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Costumer analysis

Source: Reisinger/ Gattringer, p.67

Strategic analysis


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Theory input

Practical transfer



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§  Resources are assets or inputs owned by a company which are used to provide goods or services We can differentiate between

-  tangible resources -  intangible resources -  internal and external financial resources

§  Competences are organisational capabilities used to coordinate and achieve corporate objectives (know- how, capabilities, attitude, skills)

§  Core competences are unique resources and capabilities which have strategic importance and lead to sustainable competitive advantages

Corporate analysis – resources-based view approach definitions

Strategic analysis


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Importance of corporate core competences for long-term success

Source: Prahalad / Hamel

Strategic analysis

Consolidation of market-view and resources- based approaches - SWOT


32 Strategic analysis


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SWOT analysis: basic strategies

Generic strategies: S-O strategies: using strengths to exploit opportunities

W-O strategies: overcoming weaknesses to exploit opportunities S-T strategies: using strengths to deal with threats W-T strategies: minimising weaknesses to avoid threats

Compared to the main

competitors

Strengths Opportunities

Weaknesses Threats

Strategic analysis


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Portfolio analysis: competitive positioning and basic strategies

Strategic analysis


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Theory input

Practical transfer



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Strategy development


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Developing a strategy

Developing a strategy might be easy...



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Principles for strategic development

§  Make use of environmental and market chances to exploit new potential benefits (e.g. organic and fair trade products)

§  Replication of successful business areas to learn from what runs well for multiplication (e.g. McDonald´s ad campaigns)

§  Differentiation to identify specific uniqueness to differentiate from competitors (e.g. branding policy)

§  Efficiency to ensure high productivity and competitive cost structure in comparison to competitors (e.g. by benchmarking)



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Strategic Principles for development

§  Timing to implement strategy at the right moment (e.g. market maturity)

§  Concentration of efforts to focus resources on few areas (e.g. products, segments, functions)

§  Utilize strengths and synergies to identify own strengths and to consolidate different activities (e.g. cross- and up selling)

§  Synchronize goals with resources and minimize risks to align available means to strategic goals and minimize risks (e.g. introduce complementary brands)

§  Motivate employees and engage leaders to ensure the goal is clear and everybody pulls into the same direction


Developing strategies: Strategy system


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!

Source: Becker, Fallgater, p.110

•  Growth- •  Retention- •  Withdrawal- Strategies •  Competitive- •  Resources- •  Value chain-

Strategies


Types of Strategy

Growth strategies: Ansoff - Matrix


41 Strategy development

Example: Ansoff - Matrix



Competitive strategies: Porter´s generic strategy


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Source: Kunesch (2003), p.220


Market niche

Higher customer value

Cost optimization

Example: Porter´s generic strategy



US- food retail industry


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Resources strategy: Core competences portfolio

Source: Reisinger/Gattringer, p 98



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Theory input

Practical transfer



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Strategy implementation


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Implementing strategies

Developing a strategy might be easy... Implementing one is definitely not!



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Implementing strategies – operationalization criteria

§  Specification and fine- tuning of functional strategies in accord with corporate and/or business area strategies

§  Determination of way and method of realization: by merger & acquisitions, strategic alliances, own resources, disinvestment etc.

§  Operational planning of actions & activities: set goals and detailed action plan for each functional strategy (planning horizon, priorities)

§  Allocation of relevant resources & budgeting (financial resources, manpower)

§  Efficient project organisation (project team & leadership) coordination and monitoring (deviations)

§  Information & communication (!)


Implementing strategies: organisational framework


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…finally strategy management is all about good communication!!



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Strategy work-shop case:

§  Local Austrian retail chain, family business founded in 1971 §  Optics, photo & processing, hearing care, mobile telecom §  160 stores, 1500 employees, gross turnover 260 mill. € (2016) §  Highest goal is absolute customer satisfaction §  Competencies: Local supply, customer service, innovation, medical care

expertise, price & quality ratio

corporate strategic management - poslovna škola · 2020. 6. 15. · strategic corporate management...

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