EXMGSC 2007

Strategic Management
The 20 Basic Concepts of Strategic
Management

Guido Siebiera

EXMGSC 2007

20 Concepts

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Guido Siebiera

Link Firm - Environment

Stakeholders
Strategy as a Process
Mission Statement
BS: Boundaries of the Firm
BS: Market Segments
BS: Competitive Strategies
Five Forces
Core Competencies
Value Equation

11.
12.
13.
14.
15.
16.
17.
18.
19.
20.

PEST Analysis
Scenarios
Competitor Analysis: Costs
Competitor Analysis: Benefits
R&C Audit
Swot Framework
Strategic Moves: Directions
Strategic Moves: Methods
Value Innovation
Strategic Feedback Loop

EXMGSC 2007

1. Strategy as a link between

the firm and its environment

Industry
Environment

Firm

Goals and Values

Resources and
Capabilities
Structure and Systems

Strategy

Competitors
Customers
Suppliers

Grant 2002, pp. 15

Guido Siebiera

EXMGSC 2007

2. Stakeholders

Freeman, R.E. 1984,

Strategic Management:
A stakeholder approach.
Boston: Pitman.

Guido Siebiera

EXMGSC 2007

3. Strategic Planning as a Process

Objectives / Values

Basic Strategy

Strategic Analysis

Strategic Moves

Guido Siebiera

EXMGSC 2007

4. Mission Statement

How do we intend to win in this business?

1981 1995:

The most competitive enterprise in the world by being No. 1 or No. 2 in every market

Make choices about people, investments and other resources.

Balance the possible and the impossible.

Guido Siebiera

Welch 2005

EXMGSC 2007

5. Basic Strategy:
Boundaries of the Firm
Raw Material

Step Before
Related
Product

Product

Related
Product

Next Step

End Consumer

Guido Siebiera

EXMGSC 2007

6. Basic Strategy:
Market Segments

Market Segment
A market segment is composed of a group of buyers who share common characteristics, needs, purchasing behavior,
or consumption patterns.

Demographic segmentation: based on variables such as age, sex, family size, income, occupation, or religion
Geographic segmentation: to form different geographic units (residents of the metropolitan area)
Psychographic segmentation: based on social class, lifestyle, or personality characteristics
Behavioral segmentation: based on knowledge, attitude, uses, or response to a service

Guido Siebiera

EXMGSC 2007

Cost Leadership

Differentiation

The Company has lower costs

than its competitors.

The products of the company have

specific characteristics..

Target

Entire market

7. Basic Strategy:
Porters Competitive Strategies

Market segment

Focus
The company is concentrating its efforts on market niches.

Low costs

Guido Siebiera

Strategic Advantage

Uniqueness

EXMGSC 2007

8. Porters Five Forces

New Entrants
Threat of New
Entrants

Bargaining Power
of Suppliers
Competitors
Suppliers

Customers

Jockeying for position

among current competitors

Bargaining Power
of Customers

Threat of Substitute
Products or Services
Substitutes
Porter 1997

Guido Siebiera

EXMGSC 2007

9. Core Competencies

provide access to a wide variety of

markets.
should make a significant contribution
to the perceived customer benefits of the
end product.
should be difficult for competitors to
imitate.

Hamel, Prahalad 1990

Guido Siebiera

EXMGSC 2007

10. Value Equation

Value is the difference between the benefits enjoyed by a firms customers and its cost
of production.

V = B-C
A firm in a competitive market can earn profit only if it creates more value than its
rivals.

Dranove, Marciano 2005

Guido Siebiera

EXMGSC 2007

11. PEST Analysis

Guido Siebiera

olitical / Legal

conomic

ocial

echnological

EXMGSC 2007

12. Scenarios
Scenarios are attempts to describe in some detail a hypothetical sequence of events that could lead plausibly
to the situation envisaged.
Some scenarios may explore and emphasize an element of a larger problem, such as a crisis.
Other scenarios can be used to produce, perhaps in impressionistic tones, the future development of the
world as a whole, a culture, a nation, or some group or class.

Guido Siebiera

EXMGSC 2007

13. Competitor Analysis: Costs

Cost Comparison Scorecard

Cost Driver

Importance

Relative Position

Cost Driver Score

1=high; 5=low

1=most preferred; 5=least

preferred

Importance x Relative Position

Economies of Scale
Economies of Scope
Learning Economies
Capacity Utilization
Wages
Labor Efficiency
Materials Purchasing Costs
Materials Efficiency
Others
Overall Position

Dranove, Marciano 2005

Guido Siebiera

EXMGSC 2007

14. Competitor Analysis: Benefits

Kim, Mauborgne 2002

Guido Siebiera

EXMGSC 2007

15. R&C Audit

Resource/
Capability

Is it
Scarce?

Is it
Mobile?

Is it
Scopable?

The Disney brand

Yes

No

Yes

Skilled animators

Partially

Partially

No

Marketing team

No

Yes

N/A

Actors

No

Yes

N/A

Stories

No

Yes

N/A

Dranove, Marciano 2005

Guido Siebiera

EXMGSC 2007

16. SWOT Framework

Guido Siebiera

EXMGSC 2007

17. Strategic Moves: Directions

What

Offering/
Boundaries

How?
Strategic Analysis

Market Segments

Today

Who?
Competitive
Strategy

Guido Siebiera

EXMGSC 2007

18. Strategic Moves: Methods

Internal Development

Mergers & Acquisitions

Alliances

Guido Siebiera

Internal development is where strategies are developed by building on and developing

an organizations own capabilities.

Acquisition is where strategies are developed by taking over ownership of another

organization.

A alliance is where two ore more organizations share resources and activities to pursue
a strategy.

Johnson/Scholes 2005

EXMGSC 2007

19. Value Innovation

Outpacing Strategy
Hybrid Strategy

Cost Leadership

Combination Strategy

Differentiation

Lean Differentiators
Breaking Compromises

Strategic Innovation
Blue Ocean Strategy

Guido Siebiera

EXMGSC 2007

20. Strategic Feedback Loop

Changes

Basic Strategy

Strategic Analysis

Execution

Strategic Moves

Objectives / Values

Guido Siebiera

EXMGSC 2007