Summary: strategic management
Topic 1: What is strategy?
What is strategy?
It raises allot of questions in terms of what is included in strategy
Often when asking executives what their strategy is they give a reply of ‘gnomes’.
As an organization they do things, and they think about outcomes but how do we get there? Strategy
is about connecting the dots.
Long-term Performance of Companies
Strategy is about the long-term performance of the companies.
Let’s think about airlines. Ryanair performed really well relative to their peers. They grew over the 30
years to become the largest airline. Other players entered, Spanair however they went out of business
after a few years.
Ryanair
In airlines, the capital gets stuck in the planes, which only make return when flying. Because of that,
Ryanair makes everything possible to turn the plane around as fast as possible because it is when the
plane is flying that they are making money. The important asset here is the plane, it only makes
returns when it is flying. Also, Ryanair is interesting because they have low prices. Everything they did
was optimizing the use of their planes and maximizing turnaround.
Some changes have been made since they first started their business: they used to operate in small
airports such as Charleroi. In those secondary airports, traffic was low, so they were able to land and
then take off almost right after because no one was in their way. It does not work that way in Brussels
or in Frankfurt because there is way more airlines in those main airports.
In the beginning, they were not even giving seat assignment: it resulted in the planes filling faster
(nowadays they do give seated assignments). Moreover, unlike Eurowings, they do not allow
connecting flights, so they do not have to wait for the luggage to be transferred or for a late plane to
arrive.
Ryanair has been performing very well for 20+ years now: despite the toughness of the airline
industry, it is one of the most profitable airlines in the world and it has been really hard for other
companies to replicate what Ryanair achieved. However, they have been facing trouble recently with
their move to more primary airports and thus becoming dependent on others, putting a lot of pressure
on people with their low-cost model. No matter how good their model is for money making, it is putting
pressure on other elements of the business, such as the staff.
Spanair, Air Berlin & WOW Air
Spanair wanted to make Barcelona's airport an intercontinental flights hub but went out of
business. They were aiming for business class services and VIP lounges (no frills airlines).
– Route policy? à everything to and from BCN (national, regional, and intercontinental)
– No frills airlines but business class service + VIP lounges
– Fleet
• Airbus (2 makes)
• Boeing (3 makes)
• McDonnell-Douglas (2 makes)
• Fokker (2 makes)
Many airlines try to enter the (low-cost) sector but most of them go out of business (Wow Air or Air
Berlin). Only a few are actually profitable and none of them is nearly as profitable as Ryanair.
1
,Brussels Airlines
In 2016, Brussels Airlines was becoming a low-cost airline. They decided to change things and let
consumers choose; they can pay more for more services or be ok with lower service and pay less.
De nieuwe commerciële strategie laat passagiers de keuze hoe ze willen reizen en voorziet ook in een
expansie van het netwerk... Chief Commercial Officer Lars Redeligx: “We combineren service én
scherpe prijzen…” Brussels Airlines Press Release 12/01/2016
à they combine service with good prices à what happened? Three years later Brussels airlines is
removed from eurowings and becomes part of Lufthansa.
Kodak and Fujifilm
Different companies can react differently to a same difficult situation in a hostile environment. Kodak
and Fujifilm were competitors until phones with digital cameras became popular. Kodak did not switch
fast enough to the digital technology, even though they had the first digital camera, went bankrupt and
ended up disappearing. Fujifilm did something different. They realized that films were not the future,
but they had the capability of working with chemical products and especially antioxidants, which are
used against skin ageing. They thus decided to move into the beauty care industry, where they have
been quite successful in terms of anti-ageing creams.
ð when you think about strategy long term is very critical. We talk about long term
survival and doing well.
Positioning within your Industry
Positioning matters!
Delhaize and colruyt
Delhaize and Colruyt have different positioning. Colruyt is focusing on low prices, as can be seen in all
their commercials, while Delhaize is trying to get out of that by focusing on quality but not without
trouble (it was merged with Albert Heijn so it has somewhat recovered). Delhaize is trying to
differentiate and take up a new position in the market, but retailing is mainly about pricing.
Facebook and LinkedIn
LinkedIn and Facebook are both social medias networks. However, Facebook focuses on friends and
family while LinkedIn focuses on the professional market. Although they are in the same business,
they have very different positioning.
Xior
Xior focuses on student housing. It is very unique to focus on such a market, but it is the result of a
strategic decision. Indeed, Xior saw the many potential advantages. Most real estate companies are
not that focused. However, it is working well as they even started expanding abroad.
ð We need to think about positioning within our industry.
Choosing your Target Market
Ducati and Harley Davidson
Different people buy each of these brands. It has to do with marketing and market segmentation
targeted at specific so-called typical customers.
Athenaeums and catholic schools
Both of these schools attract different people, even though both are state financed.
ð Not only positioning within your industry but also different targets when thinking about
strategy.
2
,Your Resources and Capabilities
Apple and Google
Apple and Google are both in the smartphone business. While Google makes money with advertising
and out of searches, Apple makes money mainly through the App Store, earning 30% of each
transaction, and to a lesser extent by selling hardware. They each look at the business from different
angles but compete in the same environment.
What is apple good at? Design, visuals, interface.
What is Google good at? Does it make sense for them to go into this business? They make money
with ads so why going into the phone business? Developing phones is smart because this is where
people will search on the search engine.
What about Apple? They are good at creating a system. They provide a user experience to customers.
They were the first to have point and click. User friendliness is part of Apple, and they created an
ecosystem around it. Apple and Google entered the system for very different reasons.
You can see on the statistics (graph on ppt) that most phones had Android which uses Google and
more than IOS which is Apple.
• What does the company expect for its LT return?
• How does it position itself in the industry?
• How does the company make choices?
• What is the target market?
• What are the resources and capabilities of Apple going into smartphones?
• What are the resources and capabilities of Google going into smartphones?
ð Just to point out that thinking about resources and capabilities are important. We need to
analyze this for different companies.
Competition and Market Entry
Amazon go
Amazon created its just-walk-out technology, allowing customers to shop rapidly and pay through an
app. In the ads, the focus is on the convenience and prices are never mentioned, unlike in Aldi or
Colruyt's ads. It is a ≠ shopping experience but it will probably be more expensive. It raises societal
questions about the need for less workers, as well as questions about privacy. Amazon has not been
clear about the technology, but it seems that the system will be taking pictures of customers to know
what they are putting in their bags. Big players are under pressure because of the arrival of such
competitors (Jumbo, Deliveroo), leading to considerable changes in the business.
• How is Amazon Go competing?
• How are competitors competing?
• What is the future of supermarkets going to look like?
ð All the supermarket players are really struggling. We need to think about how competition
really interacts.
Technology Convergence
Amazon VS Apple, Kindle VS iPad
Technology becomes really important. Amazon (biggest online store) just bought Whole Food (retailer)
while Apple is going into the car business by developing software.
• How is technology driving and impacting strategy?
• What is AI going to do to the different players?
• How can AI be integrated in strategic thinking and strategy in general?
3
, Irreversibility of Decisions
Boeing and Airbus
Airbus considered the future to be about bringing people to hubs, with big planes to fly between hubs,
and then bring them to smaller locations, with smaller planes to fly from hubs to other areas.
à Strategic decision: A380
Boeing considered the future to be about bringing people from point to point, with small, fast & efficient
planes.
à Strategic decision: Dreamliner (Boeing 787)
ð Strategic decisions cannot be changed overnight: it is about commitments, even though
that might restrict the company's movements in the future. Strategy has often to do with
irreversibly decisions à it’s hard to reverse decisions.
Sustainability?
Madonna versus Spice Girls, versus Psy, versus Justin Bieber
Madonna is a businesswoman. She is still around after all these years because she succeeded in
sustaining her business overtime by changing and evolving; unlike the Spice Girls, Psy, or Justin
Bieber (who is still around, but for how long?).
ð We need sustainable strategies.
Non-Market Strategies
Uber
Uber went public while being a new player and has been involved in lots of fights and disagreements
in many countries. Their mission has become a controversial topic, probably because regulations are
a political matter. The taxis have used decades of political contributions and influence to restrict
competition, reduce choice for consumers, and put a stranglehold on economic opportunity for drivers.
Uber was quite aggressive moving into some areas. Could it have it done differently? Should Uber go
head-to-head with the taxi business or be smarter in the way of tackling this issue? Uber had to think
about political strategies because they had to deal with regulations.
Airbnb
Airbnb is a new player that has caused issues in cities like Barcelona, where every apartment has
become up for tourist rental because it is more profitable, resulting in locals unable to afford living in
the center anymore. Although Airbnb is seen as a threat in many places, it is also an opportunity to
visit a city differently through a different experience.
ð Nonmarket strategies is about how to interact with other players like regulators.
Communities
Online gaming
On EVE, players have their own board and are invited to the board meetings of the company. Players
are customers who can influence what happens to the game and have a say on strategic decisions of
the company.
Nasa
The Nasa puts out problems they cannot solve themselves with a monetary reward, if someone was to
come up with a solution. They decided to use their community of suppliers to resolve issues. However,
it was a traumatic experience for them: as we know, the smartest people in the world already work for
them, so if they can't solve them, who will?
4
Topic 1: What is strategy?
What is strategy?
It raises allot of questions in terms of what is included in strategy
Often when asking executives what their strategy is they give a reply of ‘gnomes’.
As an organization they do things, and they think about outcomes but how do we get there? Strategy
is about connecting the dots.
Long-term Performance of Companies
Strategy is about the long-term performance of the companies.
Let’s think about airlines. Ryanair performed really well relative to their peers. They grew over the 30
years to become the largest airline. Other players entered, Spanair however they went out of business
after a few years.
Ryanair
In airlines, the capital gets stuck in the planes, which only make return when flying. Because of that,
Ryanair makes everything possible to turn the plane around as fast as possible because it is when the
plane is flying that they are making money. The important asset here is the plane, it only makes
returns when it is flying. Also, Ryanair is interesting because they have low prices. Everything they did
was optimizing the use of their planes and maximizing turnaround.
Some changes have been made since they first started their business: they used to operate in small
airports such as Charleroi. In those secondary airports, traffic was low, so they were able to land and
then take off almost right after because no one was in their way. It does not work that way in Brussels
or in Frankfurt because there is way more airlines in those main airports.
In the beginning, they were not even giving seat assignment: it resulted in the planes filling faster
(nowadays they do give seated assignments). Moreover, unlike Eurowings, they do not allow
connecting flights, so they do not have to wait for the luggage to be transferred or for a late plane to
arrive.
Ryanair has been performing very well for 20+ years now: despite the toughness of the airline
industry, it is one of the most profitable airlines in the world and it has been really hard for other
companies to replicate what Ryanair achieved. However, they have been facing trouble recently with
their move to more primary airports and thus becoming dependent on others, putting a lot of pressure
on people with their low-cost model. No matter how good their model is for money making, it is putting
pressure on other elements of the business, such as the staff.
Spanair, Air Berlin & WOW Air
Spanair wanted to make Barcelona's airport an intercontinental flights hub but went out of
business. They were aiming for business class services and VIP lounges (no frills airlines).
– Route policy? à everything to and from BCN (national, regional, and intercontinental)
– No frills airlines but business class service + VIP lounges
– Fleet
• Airbus (2 makes)
• Boeing (3 makes)
• McDonnell-Douglas (2 makes)
• Fokker (2 makes)
Many airlines try to enter the (low-cost) sector but most of them go out of business (Wow Air or Air
Berlin). Only a few are actually profitable and none of them is nearly as profitable as Ryanair.
1
,Brussels Airlines
In 2016, Brussels Airlines was becoming a low-cost airline. They decided to change things and let
consumers choose; they can pay more for more services or be ok with lower service and pay less.
De nieuwe commerciële strategie laat passagiers de keuze hoe ze willen reizen en voorziet ook in een
expansie van het netwerk... Chief Commercial Officer Lars Redeligx: “We combineren service én
scherpe prijzen…” Brussels Airlines Press Release 12/01/2016
à they combine service with good prices à what happened? Three years later Brussels airlines is
removed from eurowings and becomes part of Lufthansa.
Kodak and Fujifilm
Different companies can react differently to a same difficult situation in a hostile environment. Kodak
and Fujifilm were competitors until phones with digital cameras became popular. Kodak did not switch
fast enough to the digital technology, even though they had the first digital camera, went bankrupt and
ended up disappearing. Fujifilm did something different. They realized that films were not the future,
but they had the capability of working with chemical products and especially antioxidants, which are
used against skin ageing. They thus decided to move into the beauty care industry, where they have
been quite successful in terms of anti-ageing creams.
ð when you think about strategy long term is very critical. We talk about long term
survival and doing well.
Positioning within your Industry
Positioning matters!
Delhaize and colruyt
Delhaize and Colruyt have different positioning. Colruyt is focusing on low prices, as can be seen in all
their commercials, while Delhaize is trying to get out of that by focusing on quality but not without
trouble (it was merged with Albert Heijn so it has somewhat recovered). Delhaize is trying to
differentiate and take up a new position in the market, but retailing is mainly about pricing.
Facebook and LinkedIn
LinkedIn and Facebook are both social medias networks. However, Facebook focuses on friends and
family while LinkedIn focuses on the professional market. Although they are in the same business,
they have very different positioning.
Xior
Xior focuses on student housing. It is very unique to focus on such a market, but it is the result of a
strategic decision. Indeed, Xior saw the many potential advantages. Most real estate companies are
not that focused. However, it is working well as they even started expanding abroad.
ð We need to think about positioning within our industry.
Choosing your Target Market
Ducati and Harley Davidson
Different people buy each of these brands. It has to do with marketing and market segmentation
targeted at specific so-called typical customers.
Athenaeums and catholic schools
Both of these schools attract different people, even though both are state financed.
ð Not only positioning within your industry but also different targets when thinking about
strategy.
2
,Your Resources and Capabilities
Apple and Google
Apple and Google are both in the smartphone business. While Google makes money with advertising
and out of searches, Apple makes money mainly through the App Store, earning 30% of each
transaction, and to a lesser extent by selling hardware. They each look at the business from different
angles but compete in the same environment.
What is apple good at? Design, visuals, interface.
What is Google good at? Does it make sense for them to go into this business? They make money
with ads so why going into the phone business? Developing phones is smart because this is where
people will search on the search engine.
What about Apple? They are good at creating a system. They provide a user experience to customers.
They were the first to have point and click. User friendliness is part of Apple, and they created an
ecosystem around it. Apple and Google entered the system for very different reasons.
You can see on the statistics (graph on ppt) that most phones had Android which uses Google and
more than IOS which is Apple.
• What does the company expect for its LT return?
• How does it position itself in the industry?
• How does the company make choices?
• What is the target market?
• What are the resources and capabilities of Apple going into smartphones?
• What are the resources and capabilities of Google going into smartphones?
ð Just to point out that thinking about resources and capabilities are important. We need to
analyze this for different companies.
Competition and Market Entry
Amazon go
Amazon created its just-walk-out technology, allowing customers to shop rapidly and pay through an
app. In the ads, the focus is on the convenience and prices are never mentioned, unlike in Aldi or
Colruyt's ads. It is a ≠ shopping experience but it will probably be more expensive. It raises societal
questions about the need for less workers, as well as questions about privacy. Amazon has not been
clear about the technology, but it seems that the system will be taking pictures of customers to know
what they are putting in their bags. Big players are under pressure because of the arrival of such
competitors (Jumbo, Deliveroo), leading to considerable changes in the business.
• How is Amazon Go competing?
• How are competitors competing?
• What is the future of supermarkets going to look like?
ð All the supermarket players are really struggling. We need to think about how competition
really interacts.
Technology Convergence
Amazon VS Apple, Kindle VS iPad
Technology becomes really important. Amazon (biggest online store) just bought Whole Food (retailer)
while Apple is going into the car business by developing software.
• How is technology driving and impacting strategy?
• What is AI going to do to the different players?
• How can AI be integrated in strategic thinking and strategy in general?
3
, Irreversibility of Decisions
Boeing and Airbus
Airbus considered the future to be about bringing people to hubs, with big planes to fly between hubs,
and then bring them to smaller locations, with smaller planes to fly from hubs to other areas.
à Strategic decision: A380
Boeing considered the future to be about bringing people from point to point, with small, fast & efficient
planes.
à Strategic decision: Dreamliner (Boeing 787)
ð Strategic decisions cannot be changed overnight: it is about commitments, even though
that might restrict the company's movements in the future. Strategy has often to do with
irreversibly decisions à it’s hard to reverse decisions.
Sustainability?
Madonna versus Spice Girls, versus Psy, versus Justin Bieber
Madonna is a businesswoman. She is still around after all these years because she succeeded in
sustaining her business overtime by changing and evolving; unlike the Spice Girls, Psy, or Justin
Bieber (who is still around, but for how long?).
ð We need sustainable strategies.
Non-Market Strategies
Uber
Uber went public while being a new player and has been involved in lots of fights and disagreements
in many countries. Their mission has become a controversial topic, probably because regulations are
a political matter. The taxis have used decades of political contributions and influence to restrict
competition, reduce choice for consumers, and put a stranglehold on economic opportunity for drivers.
Uber was quite aggressive moving into some areas. Could it have it done differently? Should Uber go
head-to-head with the taxi business or be smarter in the way of tackling this issue? Uber had to think
about political strategies because they had to deal with regulations.
Airbnb
Airbnb is a new player that has caused issues in cities like Barcelona, where every apartment has
become up for tourist rental because it is more profitable, resulting in locals unable to afford living in
the center anymore. Although Airbnb is seen as a threat in many places, it is also an opportunity to
visit a city differently through a different experience.
ð Nonmarket strategies is about how to interact with other players like regulators.
Communities
Online gaming
On EVE, players have their own board and are invited to the board meetings of the company. Players
are customers who can influence what happens to the game and have a say on strategic decisions of
the company.
Nasa
The Nasa puts out problems they cannot solve themselves with a monetary reward, if someone was to
come up with a solution. They decided to use their community of suppliers to resolve issues. However,
it was a traumatic experience for them: as we know, the smartest people in the world already work for
them, so if they can't solve them, who will?
4
