Strategie & Ondernemerschap Deel 1: What Is Strategy
DEEL 1: WHAT IS STRATEGY
Successful strategy
Clear and consistent long-term goals
o 3 determinants of a company’s value creation
Sales growth
Sales margin
Capital turnover (resource utilization)
o Bv. McDonald’s goals and strategy: focus on growing sales (sales growth) with same capacity
(capital turnover)
Good understanding of the competitive environment
o Good understanding of all the (potentially) important determinants of industry profitability
(average profitability of firms active in the industry)
o Positive as well as negative determinants
o Use of framework to determine industry structure and profitability
PEST (macro environmental: political, environmental, social, technological)
Porter 5 forces (industry rivalry, supplier power, substitutes, buyer power, threat of
entry)
o Industry analysis = exhaustive overview of factors affecting industry profitability
o ROE = return on equity, measure for profitability of a firm: net income / shareholders’ equity
Building and using the resources and capabilities to achieve objectives
o Competitive advantage if company creates more value than its competitors: lager difference
between the consumer’s willingness to pay and the average cost
o Critical to be in an industry in which you can obtain a competitive advantage, even if the
industry is not profitable for the average firm very often entrepreneurs are attracted to
profitable or “fashionable” industries (early internet startups, airlines) even in case their
company has no competitive advantage
o Competitive advantage: cost versus differentiation advantage relies on resources and
capabilities which are
Unique/scare
Relevant/valuable
Durable
Not transferable
Not replicable
Effective implementation
o Ultimate success of the firm depends on how the strategy is implemented: how the firm is
organised
o Intended strategy > emergent strategy > realized strategy
o Three key pillars of an organization
Structure
Systems
Culture
,Strategie & Ondernemerschap Deel 1: What Is Strategy
Strategic fit
o Strategy is consistent with
Internal environment
Resources and capabilities (bv. Corning in optical fiber vs. Kodak/Agfa in digital
imaging)
External environment
Bv. Nokia and the failure in smartphones
How to describe a strategy?
Strategy as positioning
o Where are we competing?
Product market scope
Geographical scope Competing for present
Vertical integration
o How are we competing?
What is our competitive advantage?
Strategy as direction
o What do we want to become and achieve?
Vision statement
(Why do we exist?) Competing for future
Performance goals
o How will we get there?
Growth modes: organic growth, M&A, alliances, R&D…
Strategic decisions
Key for long term success
o Where and how do we compete
Typically hard to reverse
o Commitment
o Size of investments, bv. Development Airbus 380
Provoke reaction from competitors (game theory)
Coordinating decisions necessary for coherence and consistency
Role of strategy in firm
Decision support
o Bounded rationality and
complex decision-making
o Act as an heuristic
Coordination and
communication device
o How to coordinate
decisions and actions of
all employees
o Identity and vision
Target
o Strategic intent
Renewal of strategy when:
Results are disappointing and not attributable to slowdown of market
, Strategie & Ondernemerschap Deel 1: What Is Strategy
Important changes take place in the market, by competitors, changes in technology…
o Bv. Competitive advantage is threatened if a new firm enters the market
Existing resources and capabilities are underutilized
o Bv. Can we use technology for different products? In different markets?
Top management is replaced
Shareholders want a different strategy
New opportunities arise and substantial investments need to be made
History of strategy
Military strategy
Business strategy
o Corporate planning
Long term development of the firm
Macro-economic forecast
Goals and objective for products and business areas
Guiding diversification strategies in the 1960’s
o Strategic management
Increased competition, economic shocks
Focus on competition, a company’s position in an environment, industry analysis
(Sustainable) competitive advantage
Focus op concurrentie, bedrijfsanalyse and positie in omgeving
o Resource based view
Shift form industry analysis to sources of profits within the firm
Focus on internal resources and capabilities as sources of competitive advantage
Focusshift van industrie naar middelen (interne analyse)
o Dynamic capabilities
Continuous change, relentless innovation and competition
Shift from sustainable competitive advantage to ability to create successive temporary
advantages
Ability to reconfigure resources and capabilities to address changing environment
Stroomversnelling in innovatie, nieuwe producten sneller in de markt + meer buitenlandse
bedrijven in markt (snelle veranderingen)
DEEL 1: WHAT IS STRATEGY
Successful strategy
Clear and consistent long-term goals
o 3 determinants of a company’s value creation
Sales growth
Sales margin
Capital turnover (resource utilization)
o Bv. McDonald’s goals and strategy: focus on growing sales (sales growth) with same capacity
(capital turnover)
Good understanding of the competitive environment
o Good understanding of all the (potentially) important determinants of industry profitability
(average profitability of firms active in the industry)
o Positive as well as negative determinants
o Use of framework to determine industry structure and profitability
PEST (macro environmental: political, environmental, social, technological)
Porter 5 forces (industry rivalry, supplier power, substitutes, buyer power, threat of
entry)
o Industry analysis = exhaustive overview of factors affecting industry profitability
o ROE = return on equity, measure for profitability of a firm: net income / shareholders’ equity
Building and using the resources and capabilities to achieve objectives
o Competitive advantage if company creates more value than its competitors: lager difference
between the consumer’s willingness to pay and the average cost
o Critical to be in an industry in which you can obtain a competitive advantage, even if the
industry is not profitable for the average firm very often entrepreneurs are attracted to
profitable or “fashionable” industries (early internet startups, airlines) even in case their
company has no competitive advantage
o Competitive advantage: cost versus differentiation advantage relies on resources and
capabilities which are
Unique/scare
Relevant/valuable
Durable
Not transferable
Not replicable
Effective implementation
o Ultimate success of the firm depends on how the strategy is implemented: how the firm is
organised
o Intended strategy > emergent strategy > realized strategy
o Three key pillars of an organization
Structure
Systems
Culture
,Strategie & Ondernemerschap Deel 1: What Is Strategy
Strategic fit
o Strategy is consistent with
Internal environment
Resources and capabilities (bv. Corning in optical fiber vs. Kodak/Agfa in digital
imaging)
External environment
Bv. Nokia and the failure in smartphones
How to describe a strategy?
Strategy as positioning
o Where are we competing?
Product market scope
Geographical scope Competing for present
Vertical integration
o How are we competing?
What is our competitive advantage?
Strategy as direction
o What do we want to become and achieve?
Vision statement
(Why do we exist?) Competing for future
Performance goals
o How will we get there?
Growth modes: organic growth, M&A, alliances, R&D…
Strategic decisions
Key for long term success
o Where and how do we compete
Typically hard to reverse
o Commitment
o Size of investments, bv. Development Airbus 380
Provoke reaction from competitors (game theory)
Coordinating decisions necessary for coherence and consistency
Role of strategy in firm
Decision support
o Bounded rationality and
complex decision-making
o Act as an heuristic
Coordination and
communication device
o How to coordinate
decisions and actions of
all employees
o Identity and vision
Target
o Strategic intent
Renewal of strategy when:
Results are disappointing and not attributable to slowdown of market
, Strategie & Ondernemerschap Deel 1: What Is Strategy
Important changes take place in the market, by competitors, changes in technology…
o Bv. Competitive advantage is threatened if a new firm enters the market
Existing resources and capabilities are underutilized
o Bv. Can we use technology for different products? In different markets?
Top management is replaced
Shareholders want a different strategy
New opportunities arise and substantial investments need to be made
History of strategy
Military strategy
Business strategy
o Corporate planning
Long term development of the firm
Macro-economic forecast
Goals and objective for products and business areas
Guiding diversification strategies in the 1960’s
o Strategic management
Increased competition, economic shocks
Focus on competition, a company’s position in an environment, industry analysis
(Sustainable) competitive advantage
Focus op concurrentie, bedrijfsanalyse and positie in omgeving
o Resource based view
Shift form industry analysis to sources of profits within the firm
Focus on internal resources and capabilities as sources of competitive advantage
Focusshift van industrie naar middelen (interne analyse)
o Dynamic capabilities
Continuous change, relentless innovation and competition
Shift from sustainable competitive advantage to ability to create successive temporary
advantages
Ability to reconfigure resources and capabilities to address changing environment
Stroomversnelling in innovatie, nieuwe producten sneller in de markt + meer buitenlandse
bedrijven in markt (snelle veranderingen)
