Strategic Management
Week 1
,Key insights
Lecture 1: External analysis
Strategy:
Dictionary definition: a detailed plan for achieving success in situations such as war,
politics, industry, or support, or the skill of planning for such situations.
Porter’s definition: Strategy is the creation of a unique and valuable position, involving a
different set of activities.
Volberda: A strategy is an integrated and coordinated set of commitments, (decisions),
and actions, designed to exploit and develop core competencies and gain a competitive
advantage.
Competitive advantage:
A firm has a competitive advantage when it implements a strategy competitors are unable
to duplicate or find too costly to try to imitate it.
Operational effectiveness:
Performing activities better — that is, faster, or with fewer inputs and defects — than rivals.
Is often confused with strategy, but strategy involves choosing to perform different
activities than rivals or the same activities in different ways. It's about establishing a
unique position in the marketplace, creating a distinct value proposition for customers.
Value proposition:
A company’s promise to customers on the unique value they can expect to receive if they
choose to purchase their products or services. It's about how a company's products or
services create value for customers (used in marketing).
Strategic positioning:
Attempts to achieve sustainable competitive advantage by preserving what is distinctive
about a company. Performing different activities from rivals, or performing similar
activities in different ways.
Strategic positioning, which includes variety-based, needs-based, and access-based
positioning, is not mutually exclusive because in many cases, a holistic approach to market
segmentation involves considering variety, needs, and access simultaneously. This
comprehensive view enables a more tailored and effective market strategy.
Variety-Based Positioning (focuses on a type product/service):
Focuses on the specific types of products or services that a business offers. It's about
specializing in a selected range of offerings rather than offering a little bit of everything.
Idea: Greater expertise, higher quality, and stronger brand recognition in that specific area.
,Needs-Based Positioning (customers):
Serving most or all needs of a particular group of customers (segment).
Access-Based Positioning:
Is about reaching customers who are accessible in different ways, like through location,
convenience, or a distinctive mode of delivery.
In today’s highly competitive and dynamic markets, strategic positioning is NOT enough in
itself in the long term, unless a unique combination of activities is created! These can be
imitated by rivals in the long-term.
• Trade-offs naturally emerge.
• Strategy is about combining activities.
• Activity fit is important! (how different operations or activities within a business are
aligned and coordinated to support the company's overall strategy).
• Activities are reminders of the strategy.
• Strategy without activities is just a statement!
Managers should configure activities in such ways that they are integrally related and
can’t be imitated without significant trade-offs.
Two underlying models:
I/O (Industrial organisation) model:
Focuses on understanding the competitive forces (Porter's 5 forces) within an industry
and how these forces affect the competitive environment and, consequently, the
strategies that firms should adopt.
Assumptions: Relatively homogeneous resources. Resources are mobile (easily traded /
acquired / moved), rational decision-making, firm strategies are similar in nature.
(Explore (innovation))
, Resource-based view (RBV)
Assumptions: Heterogeneous firm resources, immobile resources, rational decision-
making.
(Exploit (efficiency))
With the RBV, a core idea is that for resources to provide a sustained competitive
advantage, they should be valuable, rare, inimitable, and non-substitutable (VRIN). The
Week 1
,Key insights
Lecture 1: External analysis
Strategy:
Dictionary definition: a detailed plan for achieving success in situations such as war,
politics, industry, or support, or the skill of planning for such situations.
Porter’s definition: Strategy is the creation of a unique and valuable position, involving a
different set of activities.
Volberda: A strategy is an integrated and coordinated set of commitments, (decisions),
and actions, designed to exploit and develop core competencies and gain a competitive
advantage.
Competitive advantage:
A firm has a competitive advantage when it implements a strategy competitors are unable
to duplicate or find too costly to try to imitate it.
Operational effectiveness:
Performing activities better — that is, faster, or with fewer inputs and defects — than rivals.
Is often confused with strategy, but strategy involves choosing to perform different
activities than rivals or the same activities in different ways. It's about establishing a
unique position in the marketplace, creating a distinct value proposition for customers.
Value proposition:
A company’s promise to customers on the unique value they can expect to receive if they
choose to purchase their products or services. It's about how a company's products or
services create value for customers (used in marketing).
Strategic positioning:
Attempts to achieve sustainable competitive advantage by preserving what is distinctive
about a company. Performing different activities from rivals, or performing similar
activities in different ways.
Strategic positioning, which includes variety-based, needs-based, and access-based
positioning, is not mutually exclusive because in many cases, a holistic approach to market
segmentation involves considering variety, needs, and access simultaneously. This
comprehensive view enables a more tailored and effective market strategy.
Variety-Based Positioning (focuses on a type product/service):
Focuses on the specific types of products or services that a business offers. It's about
specializing in a selected range of offerings rather than offering a little bit of everything.
Idea: Greater expertise, higher quality, and stronger brand recognition in that specific area.
,Needs-Based Positioning (customers):
Serving most or all needs of a particular group of customers (segment).
Access-Based Positioning:
Is about reaching customers who are accessible in different ways, like through location,
convenience, or a distinctive mode of delivery.
In today’s highly competitive and dynamic markets, strategic positioning is NOT enough in
itself in the long term, unless a unique combination of activities is created! These can be
imitated by rivals in the long-term.
• Trade-offs naturally emerge.
• Strategy is about combining activities.
• Activity fit is important! (how different operations or activities within a business are
aligned and coordinated to support the company's overall strategy).
• Activities are reminders of the strategy.
• Strategy without activities is just a statement!
Managers should configure activities in such ways that they are integrally related and
can’t be imitated without significant trade-offs.
Two underlying models:
I/O (Industrial organisation) model:
Focuses on understanding the competitive forces (Porter's 5 forces) within an industry
and how these forces affect the competitive environment and, consequently, the
strategies that firms should adopt.
Assumptions: Relatively homogeneous resources. Resources are mobile (easily traded /
acquired / moved), rational decision-making, firm strategies are similar in nature.
(Explore (innovation))
, Resource-based view (RBV)
Assumptions: Heterogeneous firm resources, immobile resources, rational decision-
making.
(Exploit (efficiency))
With the RBV, a core idea is that for resources to provide a sustained competitive
advantage, they should be valuable, rare, inimitable, and non-substitutable (VRIN). The
