Business & Corporate Strategy Flashcards
(56 cards)
1
Q
Strategic choices
A
- Corporate Level
- Business Level
2
Q
Business Level
A
- Choices on the Business Level : Defines How a business is active in its environment
- Central questions:
- How should a business compete?
- What is the unique selling proposition (USP) of the business?
3
Q
Generic Strategy Types
A
- Differentiation
- Cost Leadership
- Differentiation focus
- Cost focus
4
Q
Differentiation (Industry wide - Perceived uniqueness)
A
- Performance/Quality
- Uniqueness
5
Q
Cost leadership (Industry wide - Low cost position)
A
- Price / Costs
- Standardized Product
6
Q
Differentiation focus (Segment specific - Perceived uniqueness)
A
Are there specific customer needs that are not satisfied so far?
7
Q
Cost focus (Segment specific - Low cost position)
A
Are there specific customer needs that can be satisfied more efficiently?
8
Q
The U-curve according to Porter: Classic strategic management view
A
Don’t get stuck in the middle –> between Differentiation and Cost leadership
9
Q
Michael Porter – Generic strategies
A
–> Dual strategies entail contradictory investments and organizational processes
–> impossible to sustain a dual strategy for a longer period of time
10
Q
Singapore Airline’s view
A
Taoist philosophy
11
Q
Taoist philosophy
A
- Opposing insights present the full picture
- Development of policies to manage both sides
12
Q
Hybrid competitive strategies (dynamic environments)
A
- Demanding
- Allowing
13
Q
Demanding
A
- Globalization
- VUCA world
- Digitalization
- New Players
14
Q
Allowing
A
- Management innovation (e.g Total Quality Management)
- New business models (e.g Internet retailling)
- Structural separation
15
Q
Different forms of hybrid strategies
A
- Sequential hybrid strategy
- Multi-local hybrid strategy
- Simultaneous hybrid strategy
16
Q
Sequential hybrid strategy
A
Cost leadership –> Differentiation –> Cost leadership
17
Q
Multi-local hybrid strategy
A
Cost leadership –> Different locations <– Differentiation
18
Q
Simultaneous hybrid strategy
A
Cost leadership <— simultaneously –> Differentiation
19
Q
Digitalization and the new era of competition
A
- We need open data to change the world
- Data is the new oil
- Software is eating the world
20
Q
The Internet continues to evolve
A
New disruptive digital technologies
will continue to emerge, companies
must meet this challenge and adapt
their strategies
21
Q
The new age of digital competition: competing on scale
A
- Traditional rules of business may no longer apply… entering the era of platform strategy
- Competing based on scale (leveraging network effects) & bundling complementary products and services
22
Q
Facebook Platform
A
Side 1 : Users
Side 2 : Advertisers
Side 3 : Applications
Side 4 : Platform partners
23
Q
From thinking “products” to thinking “platforms”: 4 setps
A
- Choose your market sides
- Solve the chicken or egg problem
- Design your business model
- Establish and enforce ecosystem rules
24
Q
Choose your market sides
A
- Who should or should not
participate? - Attract third-party innovators
who develop complementary
products and services
25
Solve the chicken-or-egg problem
- Provide stand-alone value for
one side (“coring”) or subsidize
- Help accelerate third-party
innovations
26
Design your business model
- Increasing customers’
willingness to pay for platform
- Portion of the sale of
complementary products/services sold
27
Establish and enforce ecosystem
rules
- Who can connect & innovate
(openness of interfaces)
- Ensure quality of
complements / decide on
whether to compete
- Pursue the overall good of
the ecosystem
28
Strategy and responsibility
- Strategy work does not happen in “(value) free spaces”
- Companies are part of the society
- For a progressive development, both need each other
--> 3 rings:
1. Biosphere
2. Society
3. Economy
29
Different concepts related to strategy & responsibility
1. Corporate Governance
2. Corporate Citizenship
3. Corporate Philanthropy
4. Corporate Social Responsibility
5. Corporate Sustainability
30
Corporate Governance
idea : Prevent abuse of power within the organization to protect shareholders
example : Prevention of accounting fraud,
corruption (e.g.: Enron)
31
Corporate Citizenship
idea : Company engages in protection and support of social, civil and political rights
example : Support of gay rights (e.g.: in
Tennessee anti-gay laws)
32
Corporate Philanthropy
idea : Funding initiatives that contribute to health, education, or protection of the environment outside the business
example : Gates Foundation funds cancer
research
33
Corporate Social Responsibility
idea : Voluntary activities that contribute to health, education, protection of the environment
example : Offering fathers paid time off for
parental leave beyond legal minimum
34
Corporate Sustainability
idea : A new management paradigm under which firms achieve competitive advantage through business activities that are
consistent with sustainable development
example : Rügenwalder Mühle implements
climate-friendly “vegan & vegetarian”
strategy
35
Sustainable development meets the needs of..
the present without compromising the ability of future generations to meet their own needs
36
What is the role of business in society? Edward Freeman
Businesses […] should create value for
customers, suppliers, employees,
communities, and financiers.
37
Stakeholder theory (business in society) Edward Freeman
- If a firm creates value for its stakeholders, it will create value for its shareholders
- Managers have a duty to balance the shareholders (financial) interest against other stakeholders’ interests
38
What is the role of business in society? Milton Friedman
There is one and only one social responsibility of business—to use its resources and engage in activities
designed to increase its profits
39
Shareholder theory (role of business in society) Milton Friedman
- Firms engaging in social development will waste wealth, ultimately negatively affecting society in the long-run.
- Social development is best in the hand of governments.
- Managers have a duty to maximize shareholder value
40
«Corporate Parenting»: Different basic attitudes
- What can daughters do for their mother?
("Delivering profits")
- What can the mother do to increase the value of her daughters? (what they couldn't do on their own)
--> value adding activities
--> Competitive advantages at and through the corporate level
41
From Corporate Discount to Corporate Surplus
- Value destroying activities --> corporate discount
- Value adding activities --> corporate surplus
42
The Quality of Corporate Management
25 % --> Corporate Discount of at least 49 %
Mean --> Corporate Discount of 6 %
25 % --> Corporate Surplus of at least 34 %
- On average, diversified companies destroy value, and one in four companies destroys value quite significantly
- Good corporate management allows you to differentiate yourself from the competition of corporates
43
Three generic types of corporate strategy
1. The portfolio manager
2. The parental developer
3. The synergy manager
44
Different types of synergies
1. Operational synergies
2. Market power synergies
3. Management synergies
4. Financial synergies
voir page 56
45
Diversification Strategies: which businesses should the corporate invest in?
- Markets/ Products & Services existing : Market penetration
- New Markets / Products & Services existing: Market development
- Markets existing / Products & Services new: New products and services
Markets new/Product & Services new : Conglomerate diversification
46
How to manage the corporate portfolio: The BCG matrix
page 64
47
Possibilities to restructure the portfolio
Growth :
-Organic growth / Business model transformation
- Strategic Alliances
- M&A
Desinvestement :
- Liquidation
- Carveout (IPO(
- Spin off
- Sales (Trade Sale)
48
Advantages BCG Matrix
- Visualization of the various requirements of a portfolio
- Overview of financing requirements
- Stars can sink
- Disciplining for managers
49
Disadvantages of the BCG Matrix
- Vague definitions
- Assumptions about the capital market
- Unkind to animals
- Ignores commercial linkages & the dynamic environment
50
Criteria Strategic Business Unit
- No/little overlap with other Bus
- Authority over resources & strategies
- P&L strategies (profit and losses)
- Decision autonomy
--> at the level of strategic business unit that we see the competitive advantage
51
A Corporate Discount at ABB?
ABB's structure is too complex. This
makes management - regardless of how
good the management is - extremely difficult
and explains ABB's poorer performance in
recent years compared to its competitors.
--> Large conglomerates are bureaucratic,
slow and ineffective.
52
ABB Selling its Power Grid Division: Potential Pro
- Reducing complexity and getting rid of bureaucratic inefficiencies
- In line with leveraging digital transformation
- Innovation and renewal
53
ABB Selling its Power Grid Division : Potential Con’s
- Abandoning core resources and competences
- Potential synergies can no longer be captured (e.g. between infrastructure and digital solutions)
- Change will require culture transformation (which is difficult)
54
How can a corporate center generate value (Value-adding activities)?
- Visions
- Synergies
- Coaching
- Provide central services and resources (e.g financial management, purchasing, etc)
- Intervention
55
How can a corporate center generate destroy added value? Value-destroying activities
- Causing additional management cost
- Increasing bureaucratic complexity
- Concealment of financial performance
56
Hidden Champions : 3 characteristics
- Be among top 3 players (market share) in a global niche market
- Have revenues below 5 billion EUR
- Remain largely inconspicuous to the public
