Slides99 Strategy & Organization

Young Executive Programme 99 I NTRODUCTION TO S TRATEGY presented by Julien PITTON 2nd November

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],W HY S TRATEGY ?

INVESTMENT BANKING: THE INVESTOR POINT OF VIEW ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],BANKERS INVESTORS

THE FUND MANAGERS : What are there looking at !?! ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],FUND MANAGERS (1)

THE FUND MANAGERS : What are there looking at !?! ,[object Object],[object Object],[object Object],[object Object],FUND MANAGERS (2)

THE FUND MANAGERS : What are there looking at !?! FUND MANAGERS (3) VERY Important Fairly Important Quality of Management Track Record and EPS Growth Quality of Earnings Corporate Strategy Relative Price Product/Brand Strengths Quality of Accounting and Disclosure Practices Communication with Investors Balance Sheet Market Share Industry Prospects Net Asset Backing Level of Borrowing Relative Yield Research Coverage Dividend Record 0 10 20 30 40 50 60 70 80 90 100 93 91 93 86 63 96 79 79 76 74 77 37 37 21 32 21

Strategy & Management ,[object Object],[object Object],[object Object],Strategy is about finding a way to succeed and then doing it.

[object Object],[object Object],[object Object],Strategy & Management What we will not do” is at least as important as “what we will do”

Strategy & Management “ Frontier” Lower Cost Differentiate Moving [A] to the frontier (“ operational excellence ”) vs taking[B] a position (“ strategic choice ”) [A] [B] You cannot be all things to all people

[object Object],[object Object],[object Object],Strategy & Management Capabilities : Ability to acquire and deploy resources to solve classes of problems and create value !

[object Object],[object Object],[object Object],Strategy & Management You succeed only if you get to keep some of the value created

[object Object],[object Object],[object Object],[object Object],Strategy & Management Ingredients in the PIE In trying for a bigger piece, you could reduce the size of the total pie !

[object Object],[object Object],[object Object],[object Object],Strategy & Management Non-Market Issues: The 4 I’s Affect the size of the PIE and/or Affect its division?

[object Object],[object Object],[object Object],[object Object],[object Object],Strategy & Management Culture: Set of beliefs that we share about why we are doing this!

Determinants of Performance Strategy Resources Capabilities Position Environment PIE Competitors Customers Suppliers Complementors Government Social ... Organisation People Features Activities PERFORMANCE Strategy & Management

General Management ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Strategy & Management

General Management ,[object Object],[object Object],[object Object],Performance is the result of the fit between the actions and the strategic context in which they are taken. Strategy & Management

[object Object],[object Object],[object Object],General Management Strategy & Management The choices a firm makes about how it acquires and deploys its assets are the main way in which it influences its performance. This is what the firm ultimately controls!

[object Object],[object Object],[object Object],[object Object],General Management Strategy & Management In small firms, the ultimate responsibility for strategy typically rests with the senior general management. The “top down” view can be of only limited applicability to a multi-business enterprise.

Perspectives ,[object Object],[object Object],[object Object],Strategy & Management A declaration by top management that the firm will change does not make change happen.

Conclusion ,[object Object],[object Object],[object Object],Strategy & Management

[object Object],[object Object],[object Object],Thinking vs Planning Life is larger than our categories. Real strategic change requires inventing new categories, not rearranging old ones.

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Thinking vs Planning

[object Object],[object Object],[object Object],[object Object],[object Object],Thinking vs Planning

[object Object],[object Object],Thinking vs Planning No tradeoffs means no need for choice, no need for strategy. Any good idea could and would be quickly imitated. Performance would once again depend wholly on operational effectiveness.

Leadership & Intent Leardership is the ability to elicite extraordinary performance from ordinary people

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Leadership & Intent

[object Object],[object Object],[object Object],Leadership & Intent The essence of strategy lies in creating tomorrow’s competitive advantages faster than competitors mimic the ones you possess today.

[object Object],[object Object],[object Object],Leadership & Intent Competitive suicide - pursuing both differentiation and cost - is exactly what many competitors strive for.

[object Object],[object Object],[object Object],Leadership & Intent

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Business Strategy Useful complements to strategy but generally different from and very imperfect substitutes for strategy.

[object Object],[object Object],[object Object],[object Object],Business Strategy Strategy contains the core argument for why and how the firm will succeed.

[object Object],[object Object],[object Object],[object Object],Business Strategy Four broad criteria for evaluating strategy are: A strategy that fails to meet one or more of these criteria is strongly suspect.

[object Object],[object Object],[object Object],[object Object],[object Object],Business Strategy Top management may believe that its strategy is so “unique” that every competitor would copy it, if only they knew it!

[object Object],[object Object],[object Object],Business Strategy A vision is not always necessary for strategy It is never sufficient

[object Object],[object Object],[object Object],[object Object],To Compete ! Less focused companies must do far more than simply tweak existing processes to gain this advantage.

` ,[object Object],[object Object],[object Object],[object Object],Competing on Capabilities To Compete ! Strategic advantages built on capabilities are easier to transfer geographically than more traditional competitive advantages.

` ,[object Object],[object Object],[object Object],[object Object],[object Object],Competing on Capabilities To Compete ! Capabilities-driven companies conceive the organisation as a gigantic loop that begins with identifying the needs of the customer and ends with satisfying them.

[object Object],[object Object],[object Object],[object Object],To Organise The boundaries of the firm and the nature and intensity of incentives (explicit and implicit, objective and subjective, financial and intrinsic) are major determinants of the location on the frontier.

Trade-off Initiative Co-operation More entrepreneurial More co-operative To Organise

Disaggregated Firm Initiative Co-operation Market/entrepreneurial Firm Classic Bureaucracy To Organise

Organisational Learning ,[object Object],[object Object],[object Object],To Organise There exists a trade-off between devoting resources to long term learning benefits and short-term operating efficiency benefits

Behavioural Objectives of Design Architecture Processes/Routines Culture (Capability-based) Sustainable Competitive Advantage Initiative Co-operation Learning To Organise

Dynamics ,[object Object],Scope (Capability- based) Sustainable Competitive Advantage Goals & Basis for Profitability I MPLEMENT A S TRATEGY Architecture Processes / Routines Culture I NITIATIVE C O-OPERATION L EARNING D RIVES Implies & Drives Implies & Drives R ESOURCES C APABILITIES P OSITION To Organise D RIVES

Strategic Dissonance ,[object Object],[object Object],[object Object],Advantage & Change The most fundamental and least readily visible source of strategic dissonance derives from the divergence between the changing basis of competition in the industry and the firm’s distinctive competencies, the latter becoming less relevant for competitive advantage.

[object Object],[object Object],[object Object],Strategic Dissonance Advantage & Change When spring comes, snow melts first at the periphery!

Strategic Dissonance Advantage & Change GROWTH TIME S TRATEGIC I NFLEXION P OINT “ SIP” C OMPETITIVE A DVANTAGE P ERIOD “ CAP”

[object Object],[object Object],[object Object],[object Object],Strategic Dissonance: Don’t dismiss it Advantage & Change Diversion often involves major acquisitions unrelated to the core business that faces a SIP.

[object Object],[object Object],[object Object],Globalisation How global is their industry and how global should their business strategy be?

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Globalisation A business that has a fully globalised strategy would make maximum use of each of the five global strategy levers.

[object Object],[object Object],[object Object],[object Object],Globalisation Briefly, a multilocal strategy treats competition in each country or region on a stand alone basis, while a global strategy takes an integrated approach across countries and regions.

Benefits and Costs of Globalisation Global Organisation Factors Industry Globalisation Drivers Global Strategy Levers The Globalisation Triangle Globalisation

The Globalisation Forces GOVERNMENT DRIVERS Globalisation MARKET DRIVERS COMPETITIVE DRIVERS COST DRIVERS INDUSTRY GLOBALISATION POTENTIAL

[object Object],[object Object],[object Object],Market participation Products & services Activity location In multilocal In a global Countries are selected on the basis of their stand-alone potential in terms of revenues and profits . The products and services offered in each country are tailored to local needs . All or most of the value chain is reproduced in every country . Globalisation

ABILITY TO DEVELOP AND IMPLEMENT GLOBAL STRATEGY ORGANISATION STRUCTURE PEOPLE MANAGEMENT PROCESSES Management and Organisation Factors Affecting Global Strategy CULTURE Globalisation

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