Business - Strategic Management

Business - Strategic Management

Hieu Dinh

Introduction

  • Overview of strategic management and its importance in business.

What is Strategy

Etymology of Strategy

  • Origin of the word "strategy":

    • Chinese characters: 战略 (Chiến lược), translating to combat, warfare, and overview.

Modern Business Definition

  • Reflection on the uncertain nature of strategy:

    • Quote: “lược” - “no definitive way to know if a strategy is right or wrong.”

Strategy vs. Uncertainty

Mega-uncertainties in Recent Years

  • Major events contributing to strategic uncertainty:

    • Covid-19 pandemic.

    • Ukraine vs. Russia conflict.

    • Emergence of ChatGPT.

    • Advances in solar energy.

Potential Future Uncertainties

  • Foreseen future uncertainties include:

    • Possibility of nuclear war in Europe.

    • Development of universal AI.

Under Uncertainty

  • Impact of uncertainty on strategy:

    • Intended strategy may not function, leading companies to adopt emergent strategies.

Importance of Strategic Knowledge for Students

  1. Identifying Employers:

    • Understanding which companies implement good strategies, leading to better job opportunities.

  2. Strategy Implementation Awareness:

    • Knowing one’s position in strategy implementation can influence career decisions.

  3. Transfer of Business Strategy Skills:

    • Skills learned in strategic management can enhance personal career management.

  4. Entrepreneurial Insight:

    • Knowledge of strategy can aid in developing business strategies early in one’s career.

Personal Credentials

  • Chief Strategy Officer experience in growing a market intelligence firm from 3 to 50 employees; now employing 150.

  • Significant revenue growth for AB InBev in Vietnam.

  • Consulting achievements in socio-economic development and consumer goods with BCG.

  • Educational Background: MBA from a globally recognized business school.

Development of Strategy

Structured Approach

  • Key components of strategic development:

    • Where to play (Địa lợi): Market selection.

    • How to do (Nhân hòa): Implementation methodology.

    • When to do it (Thiên thời): Timing of strategy execution.

Analysis in Strategic Development

External Analysis

  1. Macro Level Analysis: High-level developments beyond specific industries.

  2. Industry Analysis: Focused on factors specific to the industry and analyzing customers and competitors.

    • Importance of understanding customer segments and competitor strategies.

Macro Analysis Frameworks

  • Most commonly used frameworks:

    • PEST Analysis:

    • Political: Government regulations and legal frameworks affecting business.

    • Economic: Economic indicators impacting the company, including inflation and growth rates.

    • Social: Socio-economic influences shaping consumer behavior.

    • Technological: Impact of technology on product introduction.

    • PESTLE Analysis:

    • Includes additional environmental and legal factors.

Industry Analysis Framework

  • Most used framework: Porter's 5 Forces

    1. Threat of Substitutes: Customers' willingness to choose alternatives.

    2. Power of Suppliers: Supplier influence on price and availability.

    3. Intensity of Rivalry: Competitive dynamics within the industry.

    4. Power of Buyers: Buyer influence on price and demand.

    5. Barriers to Entry: Challenges new entrants face, such as brand loyalty and capital requirements.

Applied Techniques in Industry Analysis

  • Mapping the value chain and using customer segmentation to identify growth potential and low-competition segments.

  • Monitoring ecosystems in industries, particularly in Electric Vehicles (EVs), detailing the interconnected relationships between various players (OEMs, suppliers, etc.).

Internal Analysis

VRIO Framework

  • Assessing competitive advantage through:

    • Value: Is the resource valuable?

    • Rarity: Is it rare?

    • Imitability: Is it difficult to imitate?

    • Organization: Is the organization structured to exploit these resources?

Competitive Advantage Tiers

  • Outcomes based on VRIO results:

    • Competitive Disadvantage.

    • Competitive Parity.

    • Temporary Competitive Advantage.

    • Unused Competitive Advantage.

    • Long-term Competitive Advantage.

Strategic Options

Core Decisions

  • Each strategic option includes five integrated decisions regarding:

    • Market specifics

    • Product approach (e.g. new product development, exits)

    • Positioning strategies (product leadership, customer intimacy)

Combinations of Decisions

  • Different combinations yield specific strategic options for businesses, affecting market presence and product focus.

The BCG Matrix

  • A classic tool to analyze business units based on market growth and market share.

Translating Strategy into Functional Strategy

Alignment Across Levels

  • Companies build strategies at three levels:

    • Corporate Strategy: Overview of which businesses to be in and inter-linkages.

    • Business Strategy: Specific strategies for individual business units.

    • Functional Strategies: Aligning operational strategies with business goals (e.g., marketing, HR).

Route-to-Market Strategies

  • Various distribution and market access strategies, stressing the need for optimizing direct lines versus involving wholesalers or intermediaries.

Operations Objectives

  • Key operational goals include:

    • Increasing throughput by optimizing bottlenecks.

    • Consistent output within business expectations.

    • Waste reduction and efficiency improvement.

Conclusion

  • Encouragement to connect professionally and leverage strategic management knowledge for business success.