strat mang

Cost Leadership

Products Aimed at the Mainstream

Mainstream product

sells across multiple segments

Cost Leadership requirements

Constant Effort to reduce costs

Cost reductions in Building

scale-efficient facilities

Cost reductions in tight control

of production costs and overhead

Cost reductions in minimizing

costs of sales, r&D and service

Cost reductions in state of the art

manufacturing facilities

Cost reductions in monitoring costs

of activities provided by outsides

cost reductions in simplification

of processes

Differentiation

Products Aimed at Specific Market Segments

Differentiation requirements

constant effort to differentiate products

Differentiation in developing

new systems and processes

Differentiation in Shapin

perceptions through advertising

differentiation in quality

focus

differentiation in capability

in R&D

differentiation in maximizing human resource

contributions through low turnover and high motivation

Effectiveness with Differentiation grows

out of emphasis on value chain activities

Apple

Design and innovation

Steinway pianos

raw materials and workmanship

Mercedes Benz

technology and workmanship

Intel

technology superiority

Caterpillar

service buyers’ needs quickly anywhere in the world

Perceptions should not be

assumed, and they can definitely be shaped!

the firm must deliver products or services that are unique in ways

that are perceived by and valued by customers.

Key questions of corporate strategy 1

what business should the corporation be in

Key questions of corporate strategy 2

how should the corporate office manage the array of business units

Corporate Strategy adds value by

making the whole add up to more than the sum of the parts

Making corporate strategy work

better than others, strategic assets needed, leapfrog, asset separation, position in market, learned for divers

Making corporate strategy work

better than others, strategic assets needed, leapfrog, asset separation, position in market, learned for divers,

Making corporate strategy work question 1

what can our company do better than any of its competitors in its current market

Making corporate strategy work question 1 what can our company do better than any of its competitors in its current market

it is critical for firms to identify strategic assets ie. Unique and unassailable competitive strengths

Blue Circle Industries, a British cement company diversified into

real estate, bricks, waste management, gas stoves, bathtubs, lawnmowers

BCI failed to answer the relevant question

what are the company’s strategic assets, and how can we best use them

Boddington Group UK

sold their brewery and bought resort hotels, restaurants and nursing homes and retained the pubs

Boddington Group Uk focused on

strategic assets and produced enormous shareholder value

Making corporate strategy work question 2

what strategic assets do we need in order to succeed in the new market

Making corporate strategy work question 2 what strategic assets do we need in order to succeed in the new market

Many firms assume that because they have some of the strategic assets required that their diversification strategy will succeed, but the firm usually must have all of them

Making corporate strategy work question 3

can we catch up or leapfrog competitors at their own game?

Making corporate strategy work question 3 can we catch up or leapfrog competitors at their own game

if we lack one or more critical factors for success in the new market, can we purchase them, develop them or render them unnecessary by changing the rules of the industry. Can we do that at a reasonable cost

Making corporate strategy work question 4

will diversification separate strategic assets that need to be kept together

Making corporate strategy work question 4 will diversification separate strategic assets that need to be kept together

companies sometimes assume they can break up clusters of competencies or skills that can only work together

Making corporate strategy work question 5

will we be simply a player in the new market or will we emerge a winner

Making corporate strategy work question 5 will we be simply a player in the new market or will we emerge a winner

remember the acid test if a firm is to achieve a sustainable competitive advantage, its strategic assets must be valuable rare costly and non substitutable

Making corporate strategy work question 6

what can our company learn by diversifying and are we sufficiently organized to learn it

Question 6 further questions 1

what will we learn that will lead to other new business opportunities

Question 6 further question 2

what will we learn that can be applied to out existing business

Question 6 further question 3

are we organized to transfer learning across different functions and divisions

Making corporate strategy work

better than others, strategic assets needed, leapfrog, asset separation, position in market, learned for divers,

20 percent of merges and acquisitions

are successful

60 percent of mergers and acquisitions are disappointing

20 percent of mergers and acquisitions are clear

failures

Problem 1 with M&A

integration difficulties

Problem 2 with M&A

inadequate evaluation of target

Problem 3 with M&A

Large or extraordinary debt

Problem 4 with M&A

Inability to achieve synergy

Problem 5 with M&A

Too much diversification

Problem 6 with M&A

Managers overly focused on acquisitions

Problem 7 with M&A

Too large

Downsizing

a reduction in the number of a firms employees and sometimes in the number of operating units

Downscoping

the use of divestiture, spin-offs or some means of eliminating businesses unrelated to the firms core business

Three Kinds of companies - rule

makes, takers, and breakers

Rule makers

the incumbents that built the industry

Rule takers

the companies that pay homage to the industrial lords

Rule breakers

the industrial disruptors

Rule makers examples

ford, united airlines, IBM, Macy’s

Rule takers examples

Kia, Jc penny

Rule breakers examples

southwest, Charles schwab, dell

10 principles of planned disruptions

conventional doesn’t work, subversive, top of bottle, every company, change isn’t the problem, involvement. Not about IQ, TD and BUp, costly to others, end from begin

10 principles of planned disruptions

conventional doesn’t work, subversive, top of bottle, every company, change isn’t the problem, involvement. Not about IQ, TD and BUp, costly to others, end from begin

Principles of planned disruption 1

Conventional; strategic planning isn’t likely to identify disruptive opportunity

Principle 1 – Calendar driven

exploration

Principle 1 – Ritualistic

inquisitive

Principle 1 – Reductionist

expansive

Principle 1 – extrapolative

prescient

Principle 1 – Positioning

inventing

Principle 1 – elitist

inclusive

Principle 1 – easy

demanding

Principles of planned disruption 2

lead other to be subversive

Principles of planned disruption 2 lead other to be subversive – disruptors

can look past industry conventions

Principles of planned disruption 2 lead other to be subversive – identify the 10 or 20

most fundamental beliefs of industry incumbents – ask what opportunities present themselves when you relax those beliefs

Principles of planned disruption 2 lead other to be subversive to break

riles is to redefine the industry

Principles of planned disruption 3

the bottleneck to disruption is usually at the top of the bottle

Principles of planned disruption 3 the bottleneck to disruption is usually at the top of the bottle – strategic orthodoxy

has some very powerful defenders, senior managers who have the most to lose

Principles of planned disruption 4

disruptors exist in every company

Principles of planned disruption 4 disruptors exist in every company - even successful

companies have pro-change employees

Principles of planned disruption 4 disruptors exist in every company – look for people

who strain against the bit of industry orthodoxy

Principles of planned disruption 4 disruptors exist in every company – let disruptors challenge

your company from within, or they will challenge it from without

Principles of planned disruption 5

change is not the problem engagement is

Principles of planned disruption 5 change is not the problem engagement is – imposed change

is fear inducing change

Principles of planned disruption 5 change is not the problem engagement is – engage disruptors

in a dialogue about the future

Principles of planned disruption 6

plan disruption by involving others

Principles of planned disruption 6 plan disruption by involving others – senior managers

tend to share the same ideas

Principles of planned disruption 6 plan disruption by involving others – under represented group

young people, people at geographic periphery, newcomers

Principles of planned disruption 7

Smart disruption is not about IQ

Principles of planned disruption 7 Smart disruption is not about IQ – look at world

through a new lens

Principles of planned disruption 8

top-down and bottom-up are not the alternatives.

Principles of planned disruption 9

Disruption can be more costly to some companies than others

Principles of planned disruption 9 Disruption can be more costly to some companies than others

depends on industry and assets

Principles of planned disruption 10

With disruption you cant see the end from the beginning

Principles of planned disruption 10 With disruption you cant see the end from the beginning

surprise conclusions, uncertainty as adventure of strategic exploration