Strategic Management – Key Learning Points

Class number one – November 14th

● When talking about strategic we’re talking about future and it is very important to
have clarity of purpose.

● In strategy it is more important the why and not the how. The how is something to be
dealt with in another area such as sales, marketing, human resources, operational,
and others.

● Strategy is more subjective, debatable, abstract, qualitative, than implementation

(that is more about doing things). Implementation is more about “now”, strategy is
more about “tomorrow”.

● We can only judge a strategy as wrong or right after its implementation and result,
never in the moment it is taken. Just like we can conclude from the 0.2€ vs 1€
experiment, there is no right or wrong strategic decisions. They can just be
qualified as well-thought, well-prepared or with god or bad results.

Strategic decisions are about:

- The long-term direction of an organization
- The scope of an organization’s activities
- Gaining advantage over competitors
- Addressing changes in the business environment
- Building on resources and competences (capability)
- Values and expectations of stakeholders

Therefore, they are likely to:

- Be complex in nature
- Be made in situations of uncertainty
- Affect operation decisions
- Requires an integrated approach (both inside and outside the organization)
- Involve considerable changes

● There two very important questions to answer every time we are facing a strategic
decision:

1- Who am I? / What do I stand for?

2- Where am I going? / Why?
The question 1 is related with strategic position (a more statically perspective) and
englobes 4 group of tools:
- Strategic context
- Capabilities
- Culture
- Purpose
The question 2 is related with strategic purpose (a more dynamic and with movement
perspective) and comprehends 5 group of tools:
- Corporate strategies
- Business strategies
- Internationalization/Globalization
- Innovation
- Mergers & Acquisitions

● Are there limits for strategies?

Strategic decisions have constraints, mostly resources (ex: time, money, people, and
environment). But the main goal of strategy is to get around these constraints and try to
“control the uncontrollable”, by controlling the variables that can be controlled.
Regarding limits, we can only think of legal and ethic limits. However law is not really a limit,
but is for sure something that we should keep in mind. So, the only real limit is ethics.
However ethics is subjective and depends on people’s own personal judgment. Also it varies
throughout time and space, so it is difficult to know what should be acceptable or not.
Examples:
Sony videos regarding the e-commerce launch in the US in 2000 (kidnapping of Santa
Claus).
Commercials: Princess and the frog, car Accident, “fuck” song.
 ● Strategic process can be defined in a long run concerning 3 horizons of time.
It is important to have a balanced approach along the different horizons.

H1: In the first one our main concern is to defend, protect and consolidate.
H2: In the second one we should expand and develop, this is, go further.
H3: In the third and last one we should start “seeding”, creating options (all the options have
a value, so, creating an option is creating value).

We should keep in mind that the timeline depends on the business we operate, but in almost
every case these horizons of time are shortening due to the acceleration of knowledge.

Strategic Position - Context

There are 4 tools to understand the context (where we are?)
○ Megatrends/General trends
○ Microtrends/Closer trends
○ Industry
○ Competitors

● 1st tool includes mega trends:

VUCA – Volatility, Uncertain, Complexity and Ambiguity
VUCA is an acronym that describes the world where we live.
What should be our answer as a company?
To Volatility: Reliability
To Uncertain: Trustworthy
To Complexity: Simple / direct
To Ambiguity: Understandable
 ● 2nd tool consist of closest trends:
PESTEL analysis - Politics, Economy, Social, Technology, Environment, Legal
For this analysis it is really important to be well informed about the world that surround us.
And because of this we all should have a routine to get informed.

Since always richness is directly linked with languages. E.g.: Egyptians many centuries
ago; nowadays the US, they are actually so rich because they are the ones who manage
better the binary code language at Silicon Valley.

● 3rd tool is related with industry (we are going to analyze in the next class)
Industry choice is very important.

On average, it is better to be an average player in a successful industry than the best player
in an irrelevant industry.

● 4th tool is related with how company stands for in terms of competitors.

In the competitors level we should have a wide view by considering products that may have
very different characteristics, and that at a first sight don't appear to be real competitors.

We can define 4 levels of competitors, regarding characteristics and needs.

- C1: The ones who serve more or less the same needs and have the same
characteristics.
- C2: The ones who serve more or less the same needs but have some different main
characteristics.
- C3: The ones who can solve some of the same needs but with totally different
characteristics.
- C4: The ones who serve totally different needs and present totally different
characteristics, however they are taken into account when considering buying a
product.

Needs Characteristics Examples

C1 Same Same Opel corsa
C2 Same Approximately the same (can Zoe; Fiat 500; Audi
be slightly better or slightly
worst)
C3 Approximately the same Totally different Video Calls; Messaging;
(can be slightly better or Motorcycle; Uber; Public
slightly worst) transports
C4 Totally different Totally different Vacation; Education;
Children
We don’t consider C2 as much as we consider C1 when buying an Opel Corsa, but we may.
C4 level has totally different needs, totally different characteristics, but these competitors are
also considered when choosing the Opel Corsa, in our example. For instance, the 3 most
important competitors when buying a car are: vacation, paying for studies, having children.

Presence VS Service

Presence = Service -> old days

Presence ≠ Service -> nowadays

A couple of years ago we had to be present to be served. E.g.: You had to go to the bank to
create an account. But nowadays most of the times you don’t need to be present to be
served.