Second cycle of Training of Trainers
“The Strategy Cycle”
SNKE: Panos Papantonopoulos, DIPL ENG,MA, MBA
Tashkent, Uzbekistan
07 November 2014
This project is financed by the
European Union
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The project is implemented by a
European Profiles S.A. led consortium
The Strategy dimensions
Strategy process = The way strategies come about.
(The flow of strategy activities)
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How is made, analyzed, conceived, formulated, implemented, changed , controlled.
Who is involved
When the activities take place
Strategy Content= The product of a strategy process
(The result of strategy activities)
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What is the Strategy for the company and its units
Strategy context= The circumstances under which strategy process
and content are determined (Conditions surrounding strategy activities)
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Where are the strategy process and content incorporated (which firm and environment?)
This project is financed by the
European Union
2
The project is implemented by a
European Profiles S.A. led consortium
The Classic Business Strategy process……..
Classic Modern Business Strategy is assuming a linear strategy process :I11. 1.
111. Strategic Analysis
1a_External : Customer segment analysis, Customer Motivation, Needs Gaps…..
1b_External: Competitors: Existing and Potential entrants Identified - Analyzed for their S/W…..
1c_Extermal: Actual & Potential Market sizes, growth/profitability/costs, Distribution, Trends…. 1d_External :
Environmental trends, uncertainty, scenarios for uncertainties identified…
1e_Internal: Financial, Sales, Other performance, Business Portfolio, Determinants of options….
112. Alternative Strategies Formulation
2a_Sustainable Competitive Advantage (SCA), Synergies, Strategic Vision and Opportunism
2b_SCA through Differentiation along quality, branding, …
2c_SCA through Low Cost, Focus on Niche Markets …..
2d_ Strategic Positioning/Leadership through quality, value, pioneering, product/segment focus
2e_Growth Strategies via Penetration, Product/Market expansion, Vertical Integration up-down
2f_Related and Unrelated Diversification and strategies for declining markets…..
3_Organizational Implementation
This project is financed by the
European Union
3
The project is implemented by a
European Profiles S.A. led consortium
……..is in our days increasingly debated
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Firms are not, cannot and probably must not follow such a rational and integrative
process they are on-going concerns….
Strategic Thinking is more Intuitive and less rational: it perceives S/W and
envisions O/T and applies more imagination and judgment than analysis and logic
Firms cannot apply such linear steps as above (1-2-3) . Strategies are formed
incrementally , are messier and occur at small iterate steps…
Strategies are not comprehensive and companies are not entirely re-designed.
Different parts are under different pressures and have different abilities to
change….
In conclusion –it is argued today- that strategies and strategic change occur
gradually and are fragmented with limited rationality and loose coordination…
Researchers and practitioners of Strategy agree that each strategy process is
unique
This project is financed by the
European Union
4
The project is implemented by a
European Profiles S.A. led consortium
STRATEGY IS USED AT DIFFERENT INDUSTRY LEVELS AND
DEALS WITH DIFFERENT ORGANIZATIONAL ISSUES
ORGANIZATION LEVEL
AGGREGATION LEVEL
At a network level…
Deals with inter-firm relations
known as alliances, partnerships,
communities of practice.
At the Corporate level…
Deals with the corporate
Configuration of its Business
Units (businesses we are in etc)
At the Business level…
At the functional level …
This project is financed by the
European Union
Deals with the
Synergies//Integration/Coordination
among its BU Departments
so that to secure
Competitive Advantage(s)
Deals with the Synergies/
/Integration / Coordination within
each Department’s Functional
Services so that to Harvest
Competitive Advantages
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The project is implemented by a
European Profiles S.A. led consortium
We shall cover mostly with Business Level Strategies stly
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In the SMEs and start-ups context, as a rule we do not deal with Corporations holding
various independent Companies under their umbrella.
Exceptions and examples of “Micro-Corporative” structures do exist in the SME sector,
but the mass of SMEs is mostly concerned with Strategic Market Planning and Strategy
Concepts and Tools that apply at the illustrated Business and Functional Levels.
Business System Level strategies involve Inter-departmental cooperation/coordination
in order to secure a“(Sustainable)Competitive Advantage” and to reach an attractive
“Value Offer” through its coordinated “Value Chain of Activities”
Functional Level Strategies (i.e. Department al Strategies) that deal with strategies to
harvest the “Competitive Advantage” shall be only very partially covered here and shall
be reviewed again in the Marketing Planning presentation.
This project is financed by the
European Union
6
The project is implemented by a
European Profiles S.A. led consortium
PRELIMINARY BASICS
1. COMPONENTS OF A BUSINESS SYSTEM
This project is financed by the
European Union
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The project is implemented by a
European Profiles S.A. led consortium
PRELIMINARY BASICS
2. TYPES OF A BUSINESS RESOURCES
As an introduction to our
today’s navigation in the
Notion of strategy, let us
examine some useful
preliminary basics:
• Tangible Resources
• Intangible resources
This project is financed by the
European Union
8
The project is implemented by a
European Profiles S.A. led consortium
PRELIMINARY BASICS
3. ALTERNATIVE INDUSTRY CATEGORIZATIONS
As an introduction to our
today’s navigation in the
Notion of strategy, let us
examine some useful
Preliminary basics:
Business Categorizations
UpstreamDownstream
Primary
Secondary
Tertiary
This project is financed by the
European Union
9
The project is implemented by a
European Profiles S.A. led consortium
PRELIMINARY BASICS
4. ALTERNATIVE MARKET CATEGORIZATIONS
As an introduction to our
today’s navigation in the
notion of strategy, let us
examine some useful
Preliminary basics:
Market Categorizations
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Segmentation Categories
(Indirect & Direct)
Segmentation Criteria
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Broad market Definition
Narrow Market Definition
This project is financed by the
European Union
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The project is implemented by a
European Profiles S.A. led consortium
DEFINE AND SELECT BUSINESSES
Business is a domain where
producers and Customers
meet.. So business is defined
In both industry/market terms.
Typically a business is narrower
than the entire industry and the
Set of markets served.
Companies are focusing
by selecting a few businesses
and re-focusing within the selected
ones
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European Union
11
The project is implemented by a
European Profiles S.A. led consortium
DETERMINE COMPETITIVE SCOPE
Positioning within a
business (where to
compete and how to
compete)
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Determine your
product/market
combination within the
business, i.e. your
Competitive Scope
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Find ways to beat Rivals
and win Customers, for your
Product Offering, equals to
developing Competitive
Advantage
This project is financed by the
European Union
12
The project is implemented by a
European Profiles S.A. led consortium
ROADS TO COMPETITIVE ADVANTAGE
TWO PERSPECTIVES ON SHAPING THE BUSINESS
SYSTEM
• The Outside -in
perspective:
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Firm’s’ Strategies should
always take their
environment as their
starting point.
Accent is on T/O analysis
Positioning and Branding are
Strategic priorities
• The Inside-out
perspective
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Firms’ Strategies to be based
on its S?W analysis
Build up a strong Resource
Base!
This project is financed by the
European Union
13
The project is implemented by a
European Profiles S.A. led consortium
A. ACTIVITY SYSTEMS AND PORTER’S
GENERIC VALUE CHAIN (1985)
Activity System: is a
set of value-creation
interlinked and
coordinated activity
processes that lead to
the supply of
Product/Service
Offerings .
Because these
activities are designed
to be coordinated and
interlinked, it is
referred as the
“Value Chain”
This project is financed by the
European Union
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The project is implemented by a
European Profiles S.A. led consortium
2. RESOURCE BASE TYPES OF COMPETIVE
ADVANTAGE
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European Union
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The project is implemented by a
European Profiles S.A. led consortium
PORTER’S ELEMENTS
OF THE INDUSTRY STRUCTURE
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European Union
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The project is implemented by a
European Profiles S.A. led consortium
PORTER’S THREE GENERIC STRATEGIES
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European Union
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The project is implemented by a
European Profiles S.A. led consortium
PORTER’S RISKS OF THE GENERIC STRATEGIES
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European Union
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The project is implemented by a
European Profiles S.A. led consortium
DRIVERS OF INDUSTRY DEVELOPMENT
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European Union
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The project is implemented by a
European Profiles S.A. led consortium
DAY’S CLASSIFICATION OF A FIRM’S
CAPABLITIES
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European Union
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The project is implemented by a
European Profiles S.A. led consortium
ORDER FULLFILMENT PROCESS
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European Union
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The project is implemented by a
European Profiles S.A. led consortium
RELATION BETWEEN SWOT ANALYSIS AND THE RESOURSE BASED / INDUSTRY ATTRACTIVENESS MODELS
This project is financed by the
European Union
22
The project is implemented by a
European Profiles S.A. led consortium
CORPORATE LEVEL STRATEGY ANALYSIS
THE BCG MATRIX &GE BUSINESS SCREEN
PORTFOLIO ANALYSIS MODELS
This project is financed by the
European Union
23
The project is implemented by a
European Profiles S.A. led consortium
CORPORATE LEVEL STRATEGY ANALYSIS
THE BUSINESS PORTFOLIO MODEL
COMBINED WITH THE BCG MATRIX MODEL
This project is financed by the
European Union
24
The project is implemented by a
European Profiles S.A. led consortium
CORPORATE LEVEL STRATEGY ANALYSIS
LINKING SYNERGY OPPORTUNITIES TO THE
PRESENT SYNERGY APPROACH
This project is financed by the
European Union
25
The project is implemented by a
European Profiles S.A. led consortium
STRATEGY AT THE NETWORKING LEVEL
TYPES AND EXAMPLES OF COLLABORATIVE
ARRANGEMENTS
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European Union
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The project is implemented by a
European Profiles S.A. led consortium
STRATEGY AT THE NETWORKING LEVEL
EXAMPLES OF CORE AND NETWORK
ACTIVITIES OF “CENTRAL” FIRMS
This project is financed by the
European Union
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The project is implemented by a
European Profiles S.A. led consortium
WHAT IS THE ROLE OF AN ALLIANCE
FUNCTION AND HOW IT CREATES VALUE
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European Union
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The project is implemented by a
European Profiles S.A. led consortium
Tools to use across the alliance life-cycle
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European Union
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The project is implemented by a
European Profiles S.A. led consortium
The technology adoption life-cycle and technology-enabled
market development model
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European Union
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The project is implemented by a
European Profiles S.A. led consortium
EARLY MARKET VALUE CHAIN – BOWLING ALLEY VALUE CHAIN
TOPNADO VALUE CHAIN –
MAIN STREET VALUE CHAIN
This project is financed by the
European Union
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The project is implemented by a
European Profiles S.A. led consortium
COMPARISON OF MARKET STATES
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European Union
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The project is implemented by a
European Profiles S.A. led consortium
RED OCEAN VS BLUE OCEAN STRATEGY
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European Union
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The project is implemented by a
European Profiles S.A. led consortium
INTERNATIONAL GROWTH OPTIONS
This project is financed by the
European Union
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The project is implemented by a
European Profiles S.A. led consortium
• Selected Key Bibliography
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Kenishi OMAHE (McKinsey): The Mind of the Strategist, Business Planning for Competitive Advantage” ,
McGaw Hill 1982, Penguin Books 1988
Derek ABELL/John Hammond: “Strategic Market Planning:” , Prentice Hall, 1979
Derek ABELL: ‘Defining the Business: The starting point of strategic planning ” , Prentice Hall, 1980
Derek ABELL: “Managing with Dual Strategies” The Free Press 1993
David AAKER: “Developing Business Strategies “ John Wiley & Sons 2001
Bob DE VIT & Ron MEYER: “ Strategy”, South-Western 2010
Michael PORTER: “Competitve Strategy” Free Press 1985
This project is financed by the
European Union
35
The project is implemented by a
European Profiles S.A. led consortium