STRATEGISCH MANAGEMENT
Professor Bruno Cassiman
KU Leuven
Master Handelsingenieur in de Beleidsinformatica
Rik Teugels
,TABLE OF CONTENTS
0 Syllabus: .......................................................................................................................................... 4
1 Introduction: what is Strategy? ...................................................................................................... 5
1.1 What is Strategy?................................................................................................................... 5
1.1.1 Definition ........................................................................................................................... 5
1.1.2 Choice of a Future ............................................................................................................. 6
1.1.3 Characteristics ................................................................................................................... 6
1.1.4 Which decisions are Strategic? ......................................................................................... 6
1.1.5 Who does what for strategic decision-making?................................................................ 7
1.2 Mandatory Readings.............................................................................................................. 7
1.2.1 CR01: Strategy and the Business Landscape ..................................................................... 7
1.2.2 CR02: Porter – What is Strategy? ...................................................................................... 8
1.2.3 CR03: Collis & Rukstad – Can You Say What Your Strategy Is? ......................................... 8
2 Value Creation & Value Capture ................................................................................................... 10
2.1 Fundamental questions ....................................................................................................... 10
2.1.1 Is value created by the business?.................................................................................... 10
2.1.2 Is value captured by the business (relative to the capital invested)? ............................. 10
2.1.3 Is value captured sustained by the business (relative to the capital invested)? ............ 12
2.2 Mandatory Readings............................................................................................................ 13
2.2.1 CR04: Branderburger Stuart ............................................................................................ 13
2.2.2 CR05: Koller – Chapter 3 ................................................................................................. 13
2.2.3 CR05: Koller – Chapter 5 ................................................................................................. 14
2.2.4 CR05: Koller – Chapter 6 ................................................................................................. 14
3 The Competitive Landscape .......................................................................................................... 15
3.1 Industry Attractiveness........................................................................................................ 15
3.2 Porter’s 5-Forces Model ...................................................................................................... 15
3.3 Mandatory Readings............................................................................................................ 17
3.3.1 CR06: Strategy and the Business Landscape ................................................................... 17
3.3.2 CR07: Porter – The Five Competitive Forces that Shape Strategy .................................. 17
4 Building Competitive Advantage................................................................................................... 19
4.1 Defining Competitive Advantage......................................................................................... 19
4.2 Types of Competitive Advantage......................................................................................... 19
4.3 Key Questions for Strategy .................................................................................................. 19
4.4 Define the Scope of your Business ...................................................................................... 20
4.4.1 Product & Customer Scope: Customer Specialization Focus .......................................... 20
1
, 4.4.2 Product & Customer Scope: Product Specialization Focus ............................................. 20
4.4.3 Product & Customer & Geographical Scope: Geographic Specialization Focus ............. 21
4.4.4 Product & Customer & Geographical Scope: Niche Focus .............................................. 21
4.4.5 Where you play ............................................................................................................... 21
4.5 Select the Activity set of your Business ............................................................................... 21
4.5.1 Catalog the firm’s analysis .............................................................................................. 21
4.5.2 Examine costs associated with activity ........................................................................... 23
4.5.3 Analyze how each activity generates WTP and try to understand differences in WTP .. 24
4.5.4 Consider changes in activities to widen the wedge between Costs and WTP ................ 24
4.6 Assemble the needed Resources and develop the key Capabilities ................................... 24
4.7 Set up the Business Model to link Value Creation and Value Capture and create a Virtuous
Cycle 26
4.8 Mandatory Readings............................................................................................................ 26
4.8.1 CR08: Strategy and the Business Landscape ................................................................... 26
4.8.2 CR09: Competing on Resources ...................................................................................... 26
4.8.3 CR10: Grant – Analyzing Resources and Capabilities ...................................................... 27
5 Sustaining Competitive Advantage ............................................................................................... 30
5.1 Understand the Sustainability of your Competitive Advantage .......................................... 30
5.1.1 Imitation .......................................................................................................................... 30
5.1.2 Substitution ..................................................................................................................... 31
5.1.3 Holdup ............................................................................................................................. 31
5.1.4 Slack................................................................................................................................. 32
5.2 Test your Strategy................................................................................................................ 32
5.2.1 Internal consistency – coherence ................................................................................... 32
5.2.2 External consistency – coherence ................................................................................... 32
5.2.3 Dynamic consistency ....................................................................................................... 33
5.3 Mandatory Readings............................................................................................................ 33
5.3.1 CR011 Strategy and the Business Landscape – Sustaining Superior Performance ......... 33
6 Putting it all Together: Testing your Strategic Thinking................................................................ 35
6.1 Mandatory Readings............................................................................................................ 35
6.1.1 CR12: Bradley – Have You Tested Your Strategy Lately? ................................................ 35
6.1.2 CR13: Why do so many strategies fail? – Collis............................................................... 35
7 Corporate Strategy ........................................................................................................................ 37
7.1 Corporate Strategy .............................................................................................................. 37
7.1.1 Building your Portfolio of Businesses and Defining your model for Corporate Advantage
38
2
, 7.1.2 Designing your Group and Organizing for Corporate Advantage ................................... 40
7.2 Conclusion ........................................................................................................................... 41
7.3 Mandatory Readings............................................................................................................ 41
7.3.1 CR14: Strategy and the Business Landscape – Choosing Corporate Scope .................... 41
7.3.2 CR15: Collis – Creating Corporate Advantage ................................................................. 43
8 Diversification Strategy ................................................................................................................. 44
9 Governance and Corporate Social Responsibility ......................................................................... 45
9.1 Mandatory Readings............................................................................................................ 45
9.1.1 CR17: The Social Responsibility of Business Is to Increase Its Profits ............................. 45
9.1.2 CR18: Porter – Creating Shared Value ............................................................................ 45
10 Strategy Process ............................................................................................................................ 47
10.1 Formulation and Execution ................................................................................................. 47
10.2 Management System ........................................................................................................... 47
10.3 Challenges/Baises in dealing with Execution ...................................................................... 47
10.3.1 Biases in Decision Making ........................................................................................... 47
10.3.2 Think about your Network .......................................................................................... 48
10.4 Mandatory Readings............................................................................................................ 48
10.4.1 CR19: Kaplan – Mastering the Management System ................................................. 48
11 Conclusion ..................................................................................................................................... 51
11.1 Drivers of Enterprise Value .................................................................................................. 51
3
Professor Bruno Cassiman
KU Leuven
Master Handelsingenieur in de Beleidsinformatica
Rik Teugels
,TABLE OF CONTENTS
0 Syllabus: .......................................................................................................................................... 4
1 Introduction: what is Strategy? ...................................................................................................... 5
1.1 What is Strategy?................................................................................................................... 5
1.1.1 Definition ........................................................................................................................... 5
1.1.2 Choice of a Future ............................................................................................................. 6
1.1.3 Characteristics ................................................................................................................... 6
1.1.4 Which decisions are Strategic? ......................................................................................... 6
1.1.5 Who does what for strategic decision-making?................................................................ 7
1.2 Mandatory Readings.............................................................................................................. 7
1.2.1 CR01: Strategy and the Business Landscape ..................................................................... 7
1.2.2 CR02: Porter – What is Strategy? ...................................................................................... 8
1.2.3 CR03: Collis & Rukstad – Can You Say What Your Strategy Is? ......................................... 8
2 Value Creation & Value Capture ................................................................................................... 10
2.1 Fundamental questions ....................................................................................................... 10
2.1.1 Is value created by the business?.................................................................................... 10
2.1.2 Is value captured by the business (relative to the capital invested)? ............................. 10
2.1.3 Is value captured sustained by the business (relative to the capital invested)? ............ 12
2.2 Mandatory Readings............................................................................................................ 13
2.2.1 CR04: Branderburger Stuart ............................................................................................ 13
2.2.2 CR05: Koller – Chapter 3 ................................................................................................. 13
2.2.3 CR05: Koller – Chapter 5 ................................................................................................. 14
2.2.4 CR05: Koller – Chapter 6 ................................................................................................. 14
3 The Competitive Landscape .......................................................................................................... 15
3.1 Industry Attractiveness........................................................................................................ 15
3.2 Porter’s 5-Forces Model ...................................................................................................... 15
3.3 Mandatory Readings............................................................................................................ 17
3.3.1 CR06: Strategy and the Business Landscape ................................................................... 17
3.3.2 CR07: Porter – The Five Competitive Forces that Shape Strategy .................................. 17
4 Building Competitive Advantage................................................................................................... 19
4.1 Defining Competitive Advantage......................................................................................... 19
4.2 Types of Competitive Advantage......................................................................................... 19
4.3 Key Questions for Strategy .................................................................................................. 19
4.4 Define the Scope of your Business ...................................................................................... 20
4.4.1 Product & Customer Scope: Customer Specialization Focus .......................................... 20
1
, 4.4.2 Product & Customer Scope: Product Specialization Focus ............................................. 20
4.4.3 Product & Customer & Geographical Scope: Geographic Specialization Focus ............. 21
4.4.4 Product & Customer & Geographical Scope: Niche Focus .............................................. 21
4.4.5 Where you play ............................................................................................................... 21
4.5 Select the Activity set of your Business ............................................................................... 21
4.5.1 Catalog the firm’s analysis .............................................................................................. 21
4.5.2 Examine costs associated with activity ........................................................................... 23
4.5.3 Analyze how each activity generates WTP and try to understand differences in WTP .. 24
4.5.4 Consider changes in activities to widen the wedge between Costs and WTP ................ 24
4.6 Assemble the needed Resources and develop the key Capabilities ................................... 24
4.7 Set up the Business Model to link Value Creation and Value Capture and create a Virtuous
Cycle 26
4.8 Mandatory Readings............................................................................................................ 26
4.8.1 CR08: Strategy and the Business Landscape ................................................................... 26
4.8.2 CR09: Competing on Resources ...................................................................................... 26
4.8.3 CR10: Grant – Analyzing Resources and Capabilities ...................................................... 27
5 Sustaining Competitive Advantage ............................................................................................... 30
5.1 Understand the Sustainability of your Competitive Advantage .......................................... 30
5.1.1 Imitation .......................................................................................................................... 30
5.1.2 Substitution ..................................................................................................................... 31
5.1.3 Holdup ............................................................................................................................. 31
5.1.4 Slack................................................................................................................................. 32
5.2 Test your Strategy................................................................................................................ 32
5.2.1 Internal consistency – coherence ................................................................................... 32
5.2.2 External consistency – coherence ................................................................................... 32
5.2.3 Dynamic consistency ....................................................................................................... 33
5.3 Mandatory Readings............................................................................................................ 33
5.3.1 CR011 Strategy and the Business Landscape – Sustaining Superior Performance ......... 33
6 Putting it all Together: Testing your Strategic Thinking................................................................ 35
6.1 Mandatory Readings............................................................................................................ 35
6.1.1 CR12: Bradley – Have You Tested Your Strategy Lately? ................................................ 35
6.1.2 CR13: Why do so many strategies fail? – Collis............................................................... 35
7 Corporate Strategy ........................................................................................................................ 37
7.1 Corporate Strategy .............................................................................................................. 37
7.1.1 Building your Portfolio of Businesses and Defining your model for Corporate Advantage
38
2
, 7.1.2 Designing your Group and Organizing for Corporate Advantage ................................... 40
7.2 Conclusion ........................................................................................................................... 41
7.3 Mandatory Readings............................................................................................................ 41
7.3.1 CR14: Strategy and the Business Landscape – Choosing Corporate Scope .................... 41
7.3.2 CR15: Collis – Creating Corporate Advantage ................................................................. 43
8 Diversification Strategy ................................................................................................................. 44
9 Governance and Corporate Social Responsibility ......................................................................... 45
9.1 Mandatory Readings............................................................................................................ 45
9.1.1 CR17: The Social Responsibility of Business Is to Increase Its Profits ............................. 45
9.1.2 CR18: Porter – Creating Shared Value ............................................................................ 45
10 Strategy Process ............................................................................................................................ 47
10.1 Formulation and Execution ................................................................................................. 47
10.2 Management System ........................................................................................................... 47
10.3 Challenges/Baises in dealing with Execution ...................................................................... 47
10.3.1 Biases in Decision Making ........................................................................................... 47
10.3.2 Think about your Network .......................................................................................... 48
10.4 Mandatory Readings............................................................................................................ 48
10.4.1 CR19: Kaplan – Mastering the Management System ................................................. 48
11 Conclusion ..................................................................................................................................... 51
11.1 Drivers of Enterprise Value .................................................................................................. 51
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