Strategy Course Summary PDF

Course Outline Introduction to Strategy Analysis Frameworks: PESTEL, SWOT, & Business Models Porter’s Five Forces (plus one) Business Model Framework Value Chain & Business Ecosystems Innovation Strategies Strategy Rules, Core Competencies, & Competitive Advantage Gr...

Course Outline Introduction to Strategy Analysis Frameworks: PESTEL, SWOT, & Business Models Porter’s Five Forces (plus one) Business Model Framework Value Chain & Business Ecosystems Innovation Strategies Strategy Rules, Core Competencies, & Competitive Advantage Growth, Expansion, & Diversification Global Strategy Sustainability Platform Strategies Future of Work & Strategy © 2025 Dr. Elizabeth J. Altman Course Outline: Case Roadmap Topic Case Porter’s Five Forces (Plus One) Cola Wars Continue Business Model Framework Netflix Value Systems & Value Chains Spotify (2024 Update) Competitive Advantage Apple Inc. in 2023 Global Strategy Ferrari Sustainability On © 2025 Dr. Elizabeth J. Altman  What Is Competitive Strategy? A strategy is an integrated set of choices which positions a firm in an industry so as to generate superior financial returns over the long run (Source: Prof. Ramon Casadesus-Masanell, 2017) © 2025 Dr. Elizabeth J. Altman What Is Competitive Strategy? Trade-offs A strategy is an integrated set of choices which positions a firm in an industry What’s an industry today? so as to generate superior financial returns - Consolidation over the long run - New Markets - Not always industry-based Other goals What’s the long run? - Sustainability - Do people want to build - Purpose for long term? - Mission-driven - Other exit strategies? - Stakeholder management © 2025 Dr. Elizabeth J. Altman  PESTEL Analysis Political Economic Great framework for considering context in Social which an organization is working – industry or otherwise Technological Helps you think beyond Environmental the basics Legal (Source: Braun & Latham, 2014, “Mastering Strategy”) Industry Change Model (ICM) Core Activities Not Threatened Threatened Threatened Radical Change Creative Change Core Assets Threatened Intermediary Progressive Not Change Change (Source: Braun & Latham, 2014, “Mastering Strategy”)  Basic SWOT Analysis – Clearer and Simpler Internal Strengths Weaknesses External Opportunities Threats Great starting point for a strategic analysis Helpful to get a discussion going among team members Be sure to move beyond it though – Need more dynamism  SWOT Analysis Strengths and Weaknesses are internal (firm-specific) factors. Opportunities and Threats are external (environmental/competitive) factors. Strengths Weaknesses Opportunities Pursue opportunities Overcome and establish weaknesses to take leadership advantage Use strengths to Minimize Threats reduce weaknesses and vulnerabilities reduce or avoid threats (Source: Braun & Latham, 2014, “Mastering Strategy”)  Porter’s Generic Strategies Competitive Advantage Low Cost Product Uniqueness Cost Leadership Differentiator Competitive Scope Broad Volume over Uniqueness; Create higher average unit prices by providing Lower average unit cost greater value; via greater efficiency Perceived quality = $$$ SITM Narrow Focused Cost Focused Differentiator Leadership Be the low-cost provider in Customer loyalty by targeting a narrow market a particular niche market segment Pay attention to differentiator vs. cost leadership (Source: Braun & Latham, 2014, “Mastering Strategy”)  Business Model Framework Value Proposition Resources Profit Formula Processes (Source: Johnson, Christensen, Kagermann, “Reinventing Your Business Model”, HBR, December 1, 2008) © 2025 Dr. Elizabeth J. Altman  Business Model Framework Value Proposition Resources A product that helps customers People, technology, products, do more effectively, facilities, equipment, brands, conveniently, and affordably a and case required to deliver job that they have been trying the value proposition to the to do targeted customers Profit Formula Processes Assets and fixed cost Ways of working together to structure, and the margins and address recurrent tasks in a velocity required to cover them consistent way: training, development, manufacturing, budgeting, planning, etc. (Source: Johnson, Christensen, Kagermann, “Reinventing Your Business Model”, HBR, December 1, 2008) © 2025 Dr. Elizabeth J. Altman  Porter’s Five Forces + One Threat of Entry Buyer Power Supplier Power Substitution Threat Rivals (direct competitors) (Plus One: Complementors) What is the difference between a rival and a new entrant? What is the difference between a rival and a substitute? Supplier sells to the central firm – it is not the central firm in the industry. (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”)  Conceptually speaking… Five forces are specific to each industry’s structures and characteristics. The weaker the forces collectively, the better the opportunity for superior performance and profitability. Strategist’s job = lessen forces and/or increase protection (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Five Forces – Threat of Entry/Barriers to Entry How hard or easy is it to get into this industry? Economies of scale Economies of scope Product differentiation Capital requirements Cost disadvantages independent of size Access to distribution channels Government policy Competitor reaction (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Five Forces – Threat of Entry/Barriers to Entry Economies of scale: a decrease in the per unit cost of production as a result of producing large numbers of the good. Economies of scope: cheaper to produce a wider range of products rather than specialize in just a handful of products due to existing distribution channels, common storage and production facilities, etc. * Existing economies of scale and scope decrease entry/increase barrier. (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Five Forces – Threat of Entry/Barriers to Entry Product differentiation: new entrants have to overcome product diversity, brand identification and customer loyalty. *More product differentiation increases barriers. (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Five Forces – Substitution Threat Extent of different products & services that satisfy similar needs 1. Product for a different product substitution 2. Generic substitution 3. Do-without substitutions 4. Channel substitutes *More substitutes increase substitution threat (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Five Forces – Rivalry Rivalry increases when… 1. Industry growth is slow 2. Product differentiation and switching costs are low 3. Fixed costs are high 4. Product is perishable 5. Exit barriers are high 6. Diversity of generic strategies is high (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  START HERE: How hard or easy is it to get into this business? (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Hydro Flask 21 oz. Standard Mouth Insulated Bottle with Sport Cap $35.95 (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”)  Strategy DNA (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Value Chain The interdependent activities by which a firm organizes itself to effectively and efficiently bring its product or service to the customer. (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Value Chain Analysis A way to understand those interdependent activities and how they can be structured and managed to lead to competitive advantage. (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Value Chain Analysis Differentiator: Revenue – Cost = Profit Margin Cost Leader: Revenue – Cost = Profit Margin (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Value Chain Value Chain – Value System operatio outboun marketin inbound service ns d g Suppliers Firm Channel Buyers (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Vertical Integration: Make or Buy Decisions Suppliers Firm Channel Buyers Upstream Downstream (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Vertical Integration 1. Tesla relies on company-owned stores to sell its cars: forward 2. An orange grower manufacturers, packages and sells juice: forward 3. Delta Airlines buys an oil refinery: backward (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Pros and Cons of Vertical Integration BENEFITS DRAWBACKS 1. More control over value system and value 1. Up- and downstream acquisition can be chain costly 2. Increased profitability 2. Loss of strategic and operational flexibility 3. Additional entry barriers against 3. Integration challenges competitors 4. Risks from venturing outside core competence (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Horizontal Diversification Horizontal Diversification: Suppliers Firm Channel Buyers Firm Expansion at the same station of the value system into more or less similar products or services (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Horizontal Diversification 1. Starbucks acquires Teavana 2. Pepsi buys KeVita Probiotics 3. McDonald’s expands into chicken wings (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Pros and Cons of Horizontal Diversification BENEFITS DRAWBACKS 1. Economies of scale 1. Integration & coordination difficulties 2. Economies of scope 2. Risks from venturing outside core competence 3. Increased control of the value system 3. Unrealized “synergies” Synergies: the interaction of elements when combined produces a sum greater than the individual elements, contributions, etc. 2+2= 5 (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Vertical Integration & Horizontal Diversification Organic (own) expansion via innovation, greenfielding, etc. Contracting Co-branding Strategic alliances Joint Ventures Buy via mergers and acquisitions (Source: Derived from Braun & Latham, 2014, “Mastering Strategy”) © 2025 Dr. Elizabeth J. Altman  Measuring Success: Goals vs. Objectives Goals 🡪 Big picture outcomes Objectives 🡪 The incremental means to get there ----------------------------------------------------------------------------------------- Objective setting is not a solitary endeavor Objectives are not moving targets – don’t move the goalposts Objectives are not private Objectives are not about the past: Don’t set benchmarks only against the past Objectives need to take into account competitors and the industry Objective setting should not be solely top down Objectives should not work against each other Objectives should not look like a grocery list (like this…) – Pick a few. Focus. (Derived from: Braun & Latham, 2014, Mastering Strategy) © 2025 Dr. Elizabeth J. Altman Multi-Sided Platform Business Model Role of Data is critical in Multi-Sided understanding platform businesses. Platform Affiliation Affiliation Complementor Consumer Direct Interaction Network Effects © 2025 Dr. Elizabeth J. Altman