Strategic Consultancy – Strategic Management Master Tilburg University
Summary of webclips and slides
Foundations of strategy
Strategy
What is strategy = making and implementing vital decisions that are difficult to reverse (they are vital
because they can make or break the organization). It is aimed at increasing performance (not only
financial performance, can also be maximizing performance in eyes of the members). It takes place in
an environment that is characterized by high complexity and uncertainty (Competitors, suppliers,
customers – not able to exactly predict what they are going to do. It is about the rational use of
scarce resources
How do you design strategy -> model that can help = classical strategic management process
1) Formulate goals
- Mission statement; why we exist (what kind of customer needs do you want to satisfy)
- Values; what we believe in and how you want to behave (emphasize diversity and
inclusion)
- Vison; what do you want to be in the future
2) External analysis + internal analysis (SWOT)
3) Analysis is combined in confrontation matrix
- Take out the results of external (WO) and the internal analysis (TS) = TOWS / SWOT
matrix;
o SO = use strengths to exploit opportunities
o ST = use strengths to avoid threats
o WO = exploit opportunities to overcome weaknesses
o WT = minimize weaknesses and avoid threats
4) Formulate strategy
- Corporate level strategy = design portfolio of activities
- International strategy = why and how to become internationally active
- Business level strategy = how to compete in a given industry
- Functional strategy = strategy designed for specific areas (marketing / finance)
5) Implement strategy
- Entry & exit modes
- Change management
- Structure and controls
You can evaluate at certain points in
this model = classical strategic
management process -> in practice it does not happen in such a structured way. A more realistic
view of strategy design in practice
Your intended strategy is only implement years later and thus only then it becomes the realized
strategy this process is the deliberate strategy, but it is also possible that there are external factors
that influence the strategy and your intended strategy is not feasible anymore and thus it becomes a
unrealized strategy. Or there are new possibilities and these change the intended strategy but you
are still able to realize it, this is the emergent strategy
- Deliberate strategy = planned, it is formulated beforehand and subsequently executed
, - Emergent / spontaneous strategy = not formulated before, but pattern that can be
discerned afterwards in a series of decisions. It can be the driving force that will guide
the future decisions
o More flexible
o Work on opportunities that emerge
External analysis
Example of BESI (Dutch firm)
- Customers are semiconductor manufacturers, assembly subcontractors, and electronics
and industrial companies
- Supplier of semiconductor assembly and packaging equipment
- Share price increased tremendously, but the price dropped about 20 euros around FEB-18
= cause by;
o due to the international trade conflict between US and China -> investors do not
like this
o smartphone sales over the top, huge sales but are going to drop-off (BESI makes
the microprocesses)
o customer retracts order
external challenges to share price to drop, this can result in bankruptcy
for a firm
Firms can use tools to analyse the external environment, the external environment is build up from
different levels;
1) General environment = broad factors external to the firm that can have an impact on the
firm’s strategic decisions
o Demography, economy, society & culture, politics & law, ecology, technology
2) Industry = collection of firms that compete with each other, because the products or service
is similar to each other – the functionality for clients is comparable – or the firms use a
similar technology and thus the production process is comparable
3) Strategic group = subsets of firms within one industry, the subset emphasizes the same
strategic dimensions. The firms use a similar service level (high end dining, snackbars)
4) Competitor (lowest level in external analysis) = map the competitors based on market
commonality, resource similarity and thus able to predict competitive behaviour
Porter 5 forces is a tool to analyse the
external analysis. Defining the
industry is very important, but
difficult because;
o When defining too narrow = possible to define yourself as a monopolist
o When defining too broad = everyone is a competitor
, Challenges of the Porter 5 Forces;
- Defining industry is becoming more difficult, because technology is breaking down
industry barriers and thus is blurring the barriers – everything is connected by
technology. Especially for only service agents
- Many indicators to consider = much hard evidence is required, hard data is required and
thus all this information has to be processed. Outcome may be obsolete -> the model is
not dynamic = it is a snapshot of the industry and can be outdated very fast
Bargaining power of buyers / customers – challenges -> for instance with HEMA stores, the company
has HEMA-owned stores, it also has franchisees and thus franchised stores and also the online stores
that all cater the final customer. More players with more complicated linkages may be relevant
External factors can have a major impact on a firm – analysis to drive strategic decisions is vital.
Possible to perform external analysis at different levels of the environment and for every level there
is a different model available, but application of these tools in practice is challenging. Resources and
capabilities can allow for a CA even when you do face challenges
Internal analysis
Construction industry is very booming and is growing, but still some companies still go bankrupt like
‘Bouwgroup Moonen” due to the fact that their prices where charged below the actual costs -> it is
an attractive environment, but still companies fail
When looking at smartphone industry, it looks very attractive but the internal competition within this
industry is fierce and many companies are struggling to survive for instance LG has a negative profit
for years. But Apple on the other hand has a very good share price in an unattractive industry, it is
able to absorb almost all the profits that are present in the industry
How to find out about internal factors and how they do or don’t create CA = resource-based-view
(RBV) = firms are a bundle of heterogenous and immobile resources and capabilities
Resources = tangible and intangible assets that a firm controls and that it can use to conceive and
implement its strategies -> the things a firm has
Capabilities = subset of a firm’s resources, and are tangible and intangible assets that enable a firm
to take full advantage of the resources it controls -> the things a firm can do with the resources
Types of resources & capabilities
1) Financial
- Cash / equity / debt
2) Physical
- Plant & equipment
- Computer hardware & software
- Geographic location
3) Human
- Training / experience / judgement / intelligence
- Relationships of managers and workers
4) Organizational
- Structure
- Systems for planning, control and coordination
- Informal relations
- Culture and reputation
Summary of webclips and slides
Foundations of strategy
Strategy
What is strategy = making and implementing vital decisions that are difficult to reverse (they are vital
because they can make or break the organization). It is aimed at increasing performance (not only
financial performance, can also be maximizing performance in eyes of the members). It takes place in
an environment that is characterized by high complexity and uncertainty (Competitors, suppliers,
customers – not able to exactly predict what they are going to do. It is about the rational use of
scarce resources
How do you design strategy -> model that can help = classical strategic management process
1) Formulate goals
- Mission statement; why we exist (what kind of customer needs do you want to satisfy)
- Values; what we believe in and how you want to behave (emphasize diversity and
inclusion)
- Vison; what do you want to be in the future
2) External analysis + internal analysis (SWOT)
3) Analysis is combined in confrontation matrix
- Take out the results of external (WO) and the internal analysis (TS) = TOWS / SWOT
matrix;
o SO = use strengths to exploit opportunities
o ST = use strengths to avoid threats
o WO = exploit opportunities to overcome weaknesses
o WT = minimize weaknesses and avoid threats
4) Formulate strategy
- Corporate level strategy = design portfolio of activities
- International strategy = why and how to become internationally active
- Business level strategy = how to compete in a given industry
- Functional strategy = strategy designed for specific areas (marketing / finance)
5) Implement strategy
- Entry & exit modes
- Change management
- Structure and controls
You can evaluate at certain points in
this model = classical strategic
management process -> in practice it does not happen in such a structured way. A more realistic
view of strategy design in practice
Your intended strategy is only implement years later and thus only then it becomes the realized
strategy this process is the deliberate strategy, but it is also possible that there are external factors
that influence the strategy and your intended strategy is not feasible anymore and thus it becomes a
unrealized strategy. Or there are new possibilities and these change the intended strategy but you
are still able to realize it, this is the emergent strategy
- Deliberate strategy = planned, it is formulated beforehand and subsequently executed
, - Emergent / spontaneous strategy = not formulated before, but pattern that can be
discerned afterwards in a series of decisions. It can be the driving force that will guide
the future decisions
o More flexible
o Work on opportunities that emerge
External analysis
Example of BESI (Dutch firm)
- Customers are semiconductor manufacturers, assembly subcontractors, and electronics
and industrial companies
- Supplier of semiconductor assembly and packaging equipment
- Share price increased tremendously, but the price dropped about 20 euros around FEB-18
= cause by;
o due to the international trade conflict between US and China -> investors do not
like this
o smartphone sales over the top, huge sales but are going to drop-off (BESI makes
the microprocesses)
o customer retracts order
external challenges to share price to drop, this can result in bankruptcy
for a firm
Firms can use tools to analyse the external environment, the external environment is build up from
different levels;
1) General environment = broad factors external to the firm that can have an impact on the
firm’s strategic decisions
o Demography, economy, society & culture, politics & law, ecology, technology
2) Industry = collection of firms that compete with each other, because the products or service
is similar to each other – the functionality for clients is comparable – or the firms use a
similar technology and thus the production process is comparable
3) Strategic group = subsets of firms within one industry, the subset emphasizes the same
strategic dimensions. The firms use a similar service level (high end dining, snackbars)
4) Competitor (lowest level in external analysis) = map the competitors based on market
commonality, resource similarity and thus able to predict competitive behaviour
Porter 5 forces is a tool to analyse the
external analysis. Defining the
industry is very important, but
difficult because;
o When defining too narrow = possible to define yourself as a monopolist
o When defining too broad = everyone is a competitor
, Challenges of the Porter 5 Forces;
- Defining industry is becoming more difficult, because technology is breaking down
industry barriers and thus is blurring the barriers – everything is connected by
technology. Especially for only service agents
- Many indicators to consider = much hard evidence is required, hard data is required and
thus all this information has to be processed. Outcome may be obsolete -> the model is
not dynamic = it is a snapshot of the industry and can be outdated very fast
Bargaining power of buyers / customers – challenges -> for instance with HEMA stores, the company
has HEMA-owned stores, it also has franchisees and thus franchised stores and also the online stores
that all cater the final customer. More players with more complicated linkages may be relevant
External factors can have a major impact on a firm – analysis to drive strategic decisions is vital.
Possible to perform external analysis at different levels of the environment and for every level there
is a different model available, but application of these tools in practice is challenging. Resources and
capabilities can allow for a CA even when you do face challenges
Internal analysis
Construction industry is very booming and is growing, but still some companies still go bankrupt like
‘Bouwgroup Moonen” due to the fact that their prices where charged below the actual costs -> it is
an attractive environment, but still companies fail
When looking at smartphone industry, it looks very attractive but the internal competition within this
industry is fierce and many companies are struggling to survive for instance LG has a negative profit
for years. But Apple on the other hand has a very good share price in an unattractive industry, it is
able to absorb almost all the profits that are present in the industry
How to find out about internal factors and how they do or don’t create CA = resource-based-view
(RBV) = firms are a bundle of heterogenous and immobile resources and capabilities
Resources = tangible and intangible assets that a firm controls and that it can use to conceive and
implement its strategies -> the things a firm has
Capabilities = subset of a firm’s resources, and are tangible and intangible assets that enable a firm
to take full advantage of the resources it controls -> the things a firm can do with the resources
Types of resources & capabilities
1) Financial
- Cash / equity / debt
2) Physical
- Plant & equipment
- Computer hardware & software
- Geographic location
3) Human
- Training / experience / judgement / intelligence
- Relationships of managers and workers
4) Organizational
- Structure
- Systems for planning, control and coordination
- Informal relations
- Culture and reputation
