MBA`s Guide to Corporate Strategy

MBA’s Guide to Corporate Strategy, Ben Hughes
START: What is the business problem to be analysed?
<<1. Issue at hand>>
Business
Where: Industry Competitiveness & Industry selection
Why: Discounted cash flows; Market to book ratio; ROI
Achieve competitive advantage
Diversification, Vertical integration, Mergers &Acquisitions, Strategic alliances,
Divestments, International expansion, Cross-unit resource allocation
Cost leadership/ Differentiation /
Focus
•Where shall we compete?
•How do we bring the value of the corporate structure?
•How do we grow?
•Hire the best people
•Find a niche
•Control distribution channels
<<2. Where to grow>>
Core competence refocus
Vertical Integration
Diversification
Geograph.
Outsourcing
Takeaways
Corporate
GEOGRAPHICAL EXPANSION
M&S
Methods & buildings non transferable, quality perception, no local knowledge
RELATED DIVERSIFICATION
DISNEY
(Cartoons to TV & theme parks)
VERTIGAL INTERGRATION
SOBOCE
Negotiation tool for bargaining with suppliers
GROWTH CHOICE
AOL/TIME WARNER
Alliance vs. Acquisition (Merger); Stock market reasons
ALIANCES
XEROX & FUJI
Complementary Alliance (Technology & Asian market knowledge)
Reversal of alliance due to Fuji faster learning (new competitor)
PARENTING
GRANDMET (DIEGO)
Sell where no value add; Property - > brand management dist drinks
STRATEGY HARMONY
AXA
Long integration & respect for local brands; independence but performance
Growth Strategy
Pro
Con
Vertical integration
-Market or hierarchical
- choice relates to
market not product (up
or down)
Internalise key ‘value adding’ or quality dependent activities
- Market problems: supplier uncertainty. incapacity or quality issues
- Barriers to entry
- Break supplier power
- Lower transactions costs (contracts, specific activities, hold ups)
Not in perfect
market
Geographical
- Offensive/Defensive
Corporate value add to other regions (evaluation of advantage in home
market required)
- further Econ of scale
Non Related Div
6-sigma culture; Ind. governance; financial investor (non perfect market)
Rel. Diversification
-Capacity
-Synergy/Commonality
-Parenting
-Brand across industries;
-Economies of Reach/range
-Competencies, Structure, methods, process, routines
Corporate Centre
+ Tangible; processes, rep. systems
+ Intangible; corporate reputation
-No experience/value added = ready for sale
- Corporate value added is not KSD
STRATEGIES: FOCUSSED, INNVOATION,
ALIGNMENT, FINANCIAL DISCIPLINE
<<The role of the board>>
<<Resources not controlled + information >>
M&S
Bus model repl
IND. SUPPORT
Fuji Xerox
Tech leverage
Linking synergies
<< 4. How to
govern>>
<<3. How to grow>>
Soboce
Partner Selection
Disney
Culture, Branding
Central services
Alliance issues
•Nature of alliance
•COPLMENTARY/ADDITIVE/JOINT DEV.
•Scope
•Parties needs/expectations
•Alliance management
•Results measurement
•Risks
Acquisition
Alliance
Internal Dev.
Value add n/a;
historical adv.
Market; path
dependency
+ control
+ fast
+ profit control
+ competitor
neutralisation
+ financial cost
+ resource sharing
+ reversible
+ lower risk
+ no info sharing
+ no culture issues
+ no transaction
costs
+ cost progressive
Judging value add
of each industry;
- costly & risky
- target in trouble
- culture issues
- mergers don’t exits
- learning process
(create competitor)
- change (decision)
management
-costs recoverable?
-long timescale
-change management
-ideas gen. Req.
START: What is the business to be analysed?
Ben Hughes 12/04 v0.1
1. Functional Strategies (Activity level,
manufacturing considerations etc )
<<1. Analyse the industry>>
New Entrants
Suppliers
Buyers
Substitutes
Rivalry
Factor
Economies of Scale
Brand Identity
Switching cost
Capital requirements
Distribution Access
Government
Growth/First Mover
Concentration
Switching cost
Substitutes
Proportion of
product cost
Bkwd/Frwd
Integration
Industry profitability
Concentration
Buyer Information
Switching Costs
Buyer Volume
Buyer Profits
Brand
Identity/Product
differentiation
Bkwd Integration
Price of Sub.
Switching
costs
Propensity to
substitute
Industry Growth
Overcapacity
Product Diff/Brand Identity
Fixed & variable costs
Value added
Concentration (Market Shares)
Diversity of Competitors
Exit barriers
Switching costs
DF
Takeaways
Ind. Wide
Segment
Strategic Target
2.1 Generic strategies
DF – Differentiation
CL - Cost leadership
F - Focus
CL
F
Unique
Low Cost
Strategic Advantage
2.2 Value chain and integration analysis
Where is the value added? - Vital, Vital!
Backward Integration
Chrysler
Steel
Horizontal Integration
Forward Integration
Pepsi/Coke
-Industry structure and firm performance combined dictate performance
-Strategies are specific to industry features
7UP/Phillip Morris
-firms shape industry structure, dominant competitors reactions are key
-generic strategies need to be made context specific
Nouvelle Frontieres
-Cost leadership as a source of advantage & maintaining it
-Vertical integration can be good and bad
Matra Automobile
-high prices charged for differentiated products that are hard to imitate
-Different alliance types reflect the company aims
Wal-mart
-First Mover, pre-empts scarce resources in window of opportunity
-Quality of implementation, understanding competitor reactions are key
Domino’s Pizza
-Industries are mix of global/multi domestic
-Local adaptation must be paid for by global integration
Lyonnaise Dumez
-Beware company messages, synergy expected>potential>achieved
-Corporate Diversification does not create value, only synergy & growth
Fiat
Dealerships
Thus, what is extremely importance in war
Is to attack your enemies strategy (Sun-Tzu)
3. Corporate Strategies (What business
should I be in?)
BCG Portfolio Matrix
-Mckinsey
Parenting Advantage
- resource strategy
- valuation Pentagon
Share < 1
<<4. Recommendations/scenarios>>
Recommendation Review
•Nature of advantage (existing or expected) in each business
•Possible linkages between advantages in different businesses
•Imitability of advantage by competitors
•Competitors' counter-strategies
•Implementation recommendations in each business
<<3. Analyse the growth model>>
Anshoff Growth Matrix
Product
E.G. Apple Computers
Loose matrix structure for innovation
Differentiation - Propriety user friendly products
Sustainable competitive
Entrepreneurial (from founders)
Advantage
Creative and adaptable
•Rare or unique
Cutting edge technology
•Hard to imitate
Rewards innovation
•Not substitutable
Fun/Teamwork – goal of Computer in every home
•Valuable
Share > 1
Corporate Recommendations
-diversification, refocusing, integration, international expansion
- value creation potential of strategy
-M&As, alliances, spin-offs, asset divestitures required
-Investors' reactions
2.3 Resources - building blocks of sustainable advantage
The Seven S Model
Structure (Geographic, customer, technology focus)
Strategy (Actions taken by company)
Style (Company culture, limits or supports new strategy)
Staff (Including human resource system, ability to change)
Skills (technical skills, core competencies, capabilities)
Systems (gathering info, fin & man control)
Statement mission statement of superordinate intent
$$$
New
<<2. Analyse company positioning>>
2. Business Strategies (Competitive tactics,
Range of product in a market etc…)
Low (Gwth) High
Force
Expansion
(Product Dev.)
Unrelated
Diversification
Old
Business Strategy
Market
Penetration
Strategy
Related
Diversification
(Market Dev.)
Old
Market
New
Cas strategiques
START: What is the business problem to be analysed?
<<1. Issue at hand>>
Business
Where: Industry Competitiveness & Industry selection
Why: Discounted cash flows; Market to book ratio; ROI
Achieve competitive advantage
Diversification, Vertical integration, Mergers &Acquisitions, Strategic alliances,
Divestments, International expansion, Cross-unit resource allocation
Cost leadership/ Differentiation /
Focus
•Where shall we compete?
•How do we bring the value of the corporate structure?
•How do we grow?
•Hire the best people
•Find a niche
•Control distribution channels
<<2. Where to grow>>
Takeaways
Corporate
Mckinsey.com
Magna Health
•Les profiles des cients, ont-ils change?
•Entrentien avec tiers , fournisseurs etc…., pour etablir les normes du marche
•Foculise sur collaburatuers qui ont le comportement le moins desirible, pas tous
Bain.com
Grand dsitributeur Canadien
•Une gamme de produits plus restreinte
• Le taille moyenne de magasins
• Systeme de gesion: Franchise
Stategie informatique
Analyse d’entreprise – les aspects affaires
Question
Reponses possibles
L’entreprise est dans quelle marche
Finance, Autmotive….
Revenus totals
< 100,000,000, > 3 milliards
Nombre de l’utilisateurs
1-100, > 1000
Nombre de collaborateurs
1-1000, >10,000
Elelements de prendre en compte
Renseignements requises
Les limites du marche
Nombre de clients potential et
actual. Gamme de Produits. Le
msrche est-il en croissance?
Budget pour le mise en oeuvre
<250,000€, >3,000,000€
Les competences cles d’entrprise
Ce systeme est partie d’une marche
stategique ou un opportunite
tactical?
Temps pour le mise en oeuvre
Moins que 3 mois, plus qu’un an
Lieu de l’operation
Europe, Etats Unis, Asie
Le governance d’enterprise, et les
processus de managment
Qui est responsable
Soution pour plusiers langues
Oui/Non
Les functions souhaites
Le competences du personnel
L’habitude de utiliser informatique
et competences en general
Centre d’appel, service en le champ; Automation de
la force de vente; Workflow; planification et
établissement du programme…………
Les usilateurs sont ou?
Distrubue dans beacoups endroits, Sur le champ,
Plusiers pays, Chez les clients
Qu’est-ce qu’il y a deja
Rien, Systeme patromnial, Plusiers Systemes pour
intergration, Un autre fourniseur
Analyse des aspects techniques
Question
Reponses possibles
Elelements de prendre en compte
Renseignements requises
Securite
Les donnes sont sensibles, Il sera acces au web
Les limites du marche
Nombre de clients potential et
actual. Gamme de Produits.
Performance
Le system veut tranasfer les images?
Le reseau intern a quelle largeur de bande
Les competences du syteme
Disponible dans quel resaux?
Perfromance necissaire?
Fiabilite et disponibite?
Quelle plate-formes sont deja
ne place?
Voir procaine page (mainframe, unix, sun, linux…)
Le basse de donnes en place
Voir procaine page (db2, oracle,…)
Governance informatique
Les reposabilties pour les systemes
Les technologies utilise dans
l’entreprise
Voir procaine page (J2EE, .NET,)
Infrastructure
Material, Logiciel, Infrastructure de
communications
Les besoins technologiques
Development des systemes
Conception des systemes, processus
pour mise en oeuvre le strtegie
Les personel informatqiue
Que sont les competences des
personel informatiques?
Integration avec autres produits
Acces publique au internet ou access sur le champ
Processus automatique et workflow
On peut externaliser le systeme?
Il y a un client richer ou client tres petite
On peut voir le source.
Decisions informatiques
Webservices
J2EE
servlets
EJB
JVM
jsp
.net
DLL,
ActiveX
CLR
C#,C++,J#
+ plus integre avec bon utils
+ pas besoin d’instalation des autre
produits
+ integration avec le desktop, MS
office et sql base de donnes
- trop des standars
XML
HTTP
Python
COBOL
Cold fusion
Com, Com+, EJB v1, VB, MTS
+ pas besoin d’instalation des autre
produits
+ integration avec le desktop, MS office
et sql, et bon utils
- pas tres vite ni avec bon extensibilite
- on est fixe avec le mircrosoft platform
Base de donnes
Application servers
BEA
Weblogic
Web services
SOAP,UDDI,
WDSL
SOAP
IBM
Webspere
DB2
Sql
Message Layers
Sybase
Oracle
SOAP
ORACLE
MySql
Operation Systems
-pas beaucoup des logiciels disponisbles
-- instilation complex
- pas beacoup de documentation ou formation
-- pas tres facile a utiliser
-- pas support ou responsibilite
-- pas support pour tous les materiels
+ gratuit
+ efficace et stable
+ bon reliabilite et securite
+ evolution rapide (ouvert)
+ peut utiliser materiel moins cher
+ bon logiciels disponsibles
-Integration avec autres systemes
-Bon reactivite a corrections
Linux
Unix
Linux
Novell
Windows NT,..c
IBM Maniframe
IBM AS400
Hardware
+ SB automation de vente, service de champ et
de rapport d'associé
+ SB nombre de clients et experience (qualite
de donnes etc…)
+ SB Pharmaceutiques, telecom, fabrication de
haut technologie et services financiers
- SB TCO eleve (achat, mise en oeuvre et
maintenance)
+ SAP cycle de vie de client
+ SAP support pour langues, devises
+ SAP le soutien de traitent et accomplissent
+ SAP industries de fabrication et de
construction
- MBS crm Pas choix de technologie
- MBS pas tres bon extensibilite
SAP
Siebel
Peoplesoft
Oracle
MBS CRM