SIEN2210 Assignments and Lecture Notes PDF

SIEN2210 Assignments Participation - 20% Group Work - 40% - 20% strategy simulation - 10% group based reflection - 10% peer evaluation - Group - Week 6-9 Week 1 Lecture Notes Strategy— a plan of action designed to achieve a long-term or overall aim Stra...

SIEN2210 Assignments Participation - 20% Group Work - 40% - 20% strategy simulation - 10% group based reflection - 10% peer evaluation - Group - Week 6-9 Week 1 Lecture Notes Strategy— a plan of action designed to achieve a long-term or overall aim Strategy vs Planning→ strategy has a logic behind it Strategy What How Where Week 2 Pre-readings Billionaire No More: Patagonia Founder Gives Away the Company | The New York Times By David Gelles https://www.nytimes.com/2022/09/14/climate/patagonia-climate-philanthropy-chouinard.html Rather than selling the company or taking it public, Mr. Chouinard, his wife and two adult children have transferred their ownership of Patagonia, valued at about $3 billion, to a specially designed trust and a nonprofit organization. They were created to preserve the company’s independence and ensure that all of its profits— some $100 million a year— are used to combat climate change and protect undeveloped land around the globe. “I didn’t know what to do with the company because I didn’t ever want a company,” he said from his home in Jackson, Wyo. “I didn’t want to be a businessman. Now I could die tomorrow and the company is going to continue doing the right thing for the next 50 years, and I don’t have to be around.” Company given away 1% of sales for decades, mostly to grassroots environmental activists. Now that the future of Patagonia’s ownership is clear, the company will have to make good on its lofty ambitions to simultaneously run a profitable corporation while tackling climate change. Some experts caution that without the Chouinard family having a financial stake in Patagonia, the company and the related entities could lose their focus. While the children remain on Patagonia’s payroll and the elder Chouinards have enough to live comfortably on, the company will no longer be distributing any profits to the family. The end of capitalism has begun | The Guardian By Paul Mason http://ezproxy.library.usyd.edu.au/login?url=https://www.proquest.com/newspapers/end-capitalism-ha s-begun/docview/1751623862/se-2?accountid=14757 The knowledge content of products is becoming more valuable than the physical things that are used to produce them. It is a value measured as usefulness, not exchange or asset value. The postcapitalist era - Information technology, new ways of working, and the sharing economy - Capitalism will be abolished by creating something more dynamic that exists, at first, almost unseen within the old system, but which will break through, reshaping the economy around new values and behaviours→ postcapitalism - Postcapitalism is possible because o the 3 major changes information technology has brought about in the past 25 years - Reduced need for work, loosening the relationship between work and wags - Coming age of automation - Information is corroding the market’s ability to form prices correctly - Seeing the spontaneous rise of collaborative production Market's Inability to Price Information: The abundance of information challenges the market's ability to form correct prices, leading to the rise of monopolies in the tech industry. These monopolies are fragile, as they are at odds with the basic human need for free information exchange. In an economy where machines do most of the work, the nature of the knowledge locked inside the machines must, he writes, be "social". In a final late-night thought experiment Marx imagined the end point of this trajectory: the creation of an "ideal machine", which lasts forever and costs nothing. A machine that could be built for nothing would, he said, add no value at all to the production process and rapidly, over several accounting periods, reduce the price, profit and labour costs of everything else it touched. Once you understand that information is physical, and that software is a machine, and that storage, bandwidth and processing power are collapsing in price at exponential rates, the value of Marx's thinking becomes clear. We are surrounded by machines that cost nothing and could, if we wanted them to, last forever. Today, the thing that is corroding capitalism, barely rationalised by mainstream economics, is information. Most laws concerning information define the right of corporations to hoard it and the right of states to access it, irrespective of the human rights of citizens. The equivalent of the printing press and the scientific method is information technology and its spillover into all other technologies, from genetics to healthcare to agriculture to the movies, where it is quickly reducing costs. Lecture Why do organizations exist? - Profit Companies have to prioritise their impact on society from: Sustainability perspective Political perspective Innovation perspective Financial markets perspective And their own perspective of themselves Greenwashing— portraying a company or organization as greener or more socially responsible than it actually is→ problem of asymmetric information Mission— consists if fundamental principles that mobilize the enterprise and guide it in a particular direction Elements of mission:  Organizational purpose Organizational beliefs Organizational values Business definition Vision— consists of an idea for the future and position of the company in it Elements of vision Envisioned contextual environments Envisioned industry environments Desired future organizational position Why do a mission and vision matter? Direction→ set boundaries within which actions have to happen Legitimacy→ justify to all stakeholders why the organization is doing what it is doing Motivation→ offer inspiration to employees to come together and push forward Profitability vs responsibility Corporate Social Responsibility (CSR) - Consistent emphasis on - People - Profit - Planet Week 3 Pre-readings Case: Starbucks Unfiltered - Into the Espresso Empire The coffee industry - Historically a simple commodity - The late 20th century witnessed a paradigm shirt - Emergence of specialty coffee - Shift in consumer preference towards more experiential and premium coffee culture - Now a dynamic and competitive arena - Driven by consumer demand for innovation, convenience, and ethical sourcing - Third wave coffee movements - Popularity of cold brews and speciality beverages - Increased awareness of environmental and social responsibility Brief history of starbucks - Initial focus of providing high-quality coffee beans and equipment for home brewing - Eventually envisioned a vibrant coffee culture in the US - Rapidly grew and established itseslf as a cultural phenomenon - Embraced digital innovation with the launch of its mobile app Product portfolio - Espresso-based beverages - limited-time seasonal beverages - Range of food items - Branded coffee beans, ready to drink bottle beverages, single-serve options Competition  - At home - Competition from retail packaged coffee, single-serve options, and other products that consumers might enjoy from the comfort of their homes - Away from home - Other coffee shops, quick-service restaurants, convenience stores - This dual focus enables starbucks to adapt and innovate within each category, maintaining its position as a key player in both home and out of home coffe consumption Value chain - Sourcing high-quality beans from around the world - Ethical sourcing, investment in programs like coffee and farmer equity (C.A.F.E) - Starbucks maintains control over roasting beans to ensure consistency and quality - Primary distribution channel - Retail stores - Shopping centres - Airports - Partnerships with grocery stores, licensing agreements for branded products, collaborations with international retailers Markets - US, the home turf - International markets - Emerging markets - Rising middle class - Increasing coffee consumption Lecture Business-level strategy Defining value and competitive advantage Competitive advantage— superior performance relative to other competitors in the same industry or the industry average The business model Product offering Which products should be developed and which markets should be served? - Firms must be selective in terms of which businesses they want to address - A business is a set of related industry-market combinations Different ways to achieve a competitive advantage - Price - Features  - Quality - image/brand - Relations - ‘Deep pockets’ - Availability Strategy of cost leadership vs differentiation: Basics of cost leadership - Strategic key elements - Scale-efficient production units - Design for easy manufacturing - Control over overheads - Process innovation - Outsourcing - What does this mean for the organiztion? - Focus on access to capital - Focus on process engineering skills - Focus on frequent reports and tight cost control - Focus on specialization in jobs and functions - Focus on bonuses linked to quantitative targets Risks of choosing cost leadership - Imitation  - Changing technology - Customers prioritize differentiation - More focused players have a lower cost structure Basics of differentiation - Strategic key elements - Branding and advertising - Design - Service - Quality - Product development - What does this mean for the organzation? - Focus on marketing competencies - Focus on product engineering skills - Focus on cross-functional coordination - Focus on creativity - Focus on research competencies - Focus on bonuses inked to qualitative and quantitative performance targets Risks of choosing differentiation - Imitation - Basis of differentiation is no longer valued by customers - More focused players create more value for customers New interpretations of product offering Access model: subscription and membership Consumption: paying for what one consumers Performance model: paying for a result Activity system/Value chain Resource base Organization→ is the organization aware of their competitive advantage and focussing their strategy on exploiting it Week 4 Pre-readings Here's the one glaring problem with the Amazon-Whole Foods deal|CNBC By craig crossland Largest acquisition of amazon — $13.7b deal to buy whole foods markets Problem: - Resources and capabilities that make amazon such an exceptionally effective competitor are quite distinct from the resources and capabilities that whole foods has focused on and developed over a long period of time - Whole foods pursues a differentiation-based competitive advantage - Amazon pursues a cost-based competitive advantage - Culture - Amazon is a culture of relentless, largely impersonal, efficiency - Whole foods is positioned as an orgainzation that not only provides healthier natural food, but also represented enlightened values Peugeot takeover of Opel sparks intense debate over consolidation By campbell, peter, mcgee, patrick The article discusses the strategic implications of PSA Group's acquisition of Opel from General Motors (GM), which has sparked a debate about the necessity of further consolidation in the European automotive industry. PSA's takeover makes it the second-largest carmaker in Europe, with an aim to achieve €1.7 billion in savings over the next decade. The move is seen as a bold one with the potential to unlock significant efficiencies, particularly in the context of the industry's need to invest in new technologies such as electric and self-driving vehicles. Industry leaders are divided on the merits of consolidation. Sergio Marchionne, CEO of Fiat Chrysler Automobiles (FCA), argues that scale is essential for European carmakers to compete with their US counterparts, who have already undergone a consolidation process. He believes that without scale, European carmakers will struggle to achieve competitive margins. Despite his enthusiasm for consolidation, Marchionne has faced rejection from both VW and GM, although he remains undeterred in his pursuit of a merger. Carlos Ghosn, CEO of Renault-Nissan, acknowledges the importance of scale for necessary investments in new technologies but also cautions that scale alone is not a guarantee of success. He points out that the largest companies by volume are not necessarily the most profitable and that the effectiveness of scale depends on how it is utilized. The Opel-PSA deal, which involved GM retaining pension liabilities and receiving only €1.3 billion for Opel's automotive business, is seen as a clear indication of GM's eagerness to exit the European market. Analysts suggest that the deal could fuel further merger and acquisition (M&A) speculation in the sector. The article also highlights a shift in dealmaking from traditional car alliances to carmakers investing in battery companies and tech start-ups, such as GM's investment in Lyft and the acquisition of Here by BMW, Audi, and Daimler. This trend reflects a recognition that the future of the industry lies in technological innovation rather than just increasing production scale. In conclusion, the PSA-Opel takeover has reignited the debate over consolidation in the European automotive industry. While some industry leaders see scale as crucial for competing in a rapidly changing technological landscape, others are more cautious, emphasizing the need for strategic investments and efficient utilization of resources. The future of the industry is expected to be shaped by both traditional consolidation and new forms of partnerships focused on emerging technologies. Lecture Corporate-level strategy Sources of synergy 1. Synergy by aligning resources a. Achieving resource allocation b. Achieving resource replication 2. Synergy by integrating value chains a. Sharing value-adding activities b. Linking value-adding activities i. Integrating levels of the value chain→ eg. the sourcing department finds resources for different business’ factories 3. Synergy by aligning positions a. Improving bargaining positions i. Offering broad package of related products or services to specific customer groups b. Improving competitive position Transaction costs can be eliminated eg cost of exchanging good or services with corporate-level strategy 1. Corporate composition Unilever General Electric 2. Corporate management a. Integration mechanisms i. Centralization 1. Bringing resources into the same location ii. Coordination 1. Communicating iii. Standardization 1. Setting common norms for resources, activities, product offerings b. The more related the businesses are, the more the corporate center will involve itself in the business unit c. The less connected they are, the more the businesses will be financially controlled d. Management mechanisms i. Week 5 Pre-readings Tesla 20 years on: EV leader’s rise sparked by Toyota partnership - Tesla’s path to becoming the top EV manufacturer was paved through a 2010 partnership with Toyota - Now, 13 years later, Toyota is turning to Tesla for manufacturing expertise - Gigacasting technology will be used for Toyota’s 2026 EV - Tesla already uses similar megacasting technology - Reduces cost - Less car components→ fewer order for suppliers - Partnership: tesla secured $50m from Toyota for a roughly 3% stake in the company, purchased portion of recently shuttered auto factory - Sparse returns for Toyota, toyota sold off entire Tesla stake - Toyota engineers were less enthusiastic cooperating with Tesla - Tesla’s different approach: - Toyota : kaizen philosophy of continuous improvement - Tesla: reassess production methods from ground up each time it builds a new auto factory→ continuously seeks 50% reduction in costs - Tesla’s challenges - Growing into a large cooperation - Novelty and relevance fading→ consumer sentiment shift - Emergence of chinese automkers and entrants The rules of Co-opetition — the mix of cooperation and competition The Rules of Co-opetition by Adam Brandenburger and Barry Nalebuff: **Summary:** - Co-opetition, the concept of cooperating with competitors, has been growing in business for three decades. - It involves collaborating for mutual benefits, such as cost savings, skill exchange, and risk reduction. - Strategic considerations are crucial, including the impact on competitive dynamics and protecting assets. **What Is Likely to Happen If You Don’t Cooperate?** - Companies should analyze the potential outcomes of not collaborating. - Consider the alternatives that other parties might pursue and the potential loss of opportunities to competitors. - Evaluate the status quo and whether it will remain an option if a cooperative opportunity is declined. **Will Cooperation Give Away Your Competitive Advantage?** - Assess the risk of sharing proprietary information or "special sauce." - Determine if the deal falls into one of four categories: neither party risks their special sauce, both parties benefit from sharing, one party has a strong competitive advantage, or one party shares to access another's customer base. - Evaluate the potential risks and benefits of sharing proprietary knowledge. **How to Structure an Agreement:** - Establish the scope of cooperation, control mechanisms, and how to unwind the arrangement if necessary. - Address the division of costs and benefits, which can be complex in uneven trades or when there are multiple parties involved. - Ensure that the agreement does not create dependency, allowing for fair renegotiation or a graceful exit. **Changing Minds:** - Recognize the emotional aspect of co-opetition and the resistance to the idea of multiple winners. - Encourage a mindset that embraces both competition and collaboration. - Choose the right people to staff cooperative teams, those who are open to the dual nature of co-opetition. **Conclusion:** - Co-opetition can be a strategy of first resort if approached with the right mindset and careful consideration of risks and rewards. - Encourages businesses and nations to explore co-opetition for greater success. Lecture Network level strategy Ways to collaborate between companies Supplier Product placement Research Airline alliances ○ Code share→ more flights for customers ○ Incentivise consumers to book with the same alliance→ consumer loyalty ○ Sharing lounges, priority boarding→ reduce cost and increase convenience Vertically integrated→ gain as much power over their entire value chain Fully vertically disintegrated→ developing products with a wide array of integrated partners Inter-organizational relationships Base rules on networks Every company is always in a network of relationships, with many collaborations The more formally a network is structured, the more companies need to align their strategies with the most dominant partner Collaborations are not always explicitly initiated, they evolve over time 2. Relational objectives Looking for synergy across companies Leveraging resources Integrating activities Aligning positions 3. Relational factors  4. Relational arrangements Clusters - Geographically dense area where companies come together to share resources/knowledge/talent - Eg silicon valley - MNCs contribute to their development - Diverse access to technology - More risk averse towards innovation - Compete and collaborate→ talent is present, technology is developed Tutorial Early partnership  actors Direct horizontal objectives Leveraging resources Aligning resources factors Legitimacy - tesla was less established as it is now Urgency - Tesla needed to learn how to mass produce cars Frequency - Joint venture/partnership Power - Tesla depended on Toyota for resources, enabled them to scale arrangements Bilateral equity and contractual current partnership actors Direct horizontal objectives Integrating activities - Sharing the charging network Leveraging resources - Equipping teslas charging plug design into other cars Aligning positions - Improves negotiating power against other car brands with different chargers factors Legitimacy - Tesla is the legit one now Urgency Frequency - Joint venture/partnership, other companies have to adapt Power - Tesla is the goat arrangements Multilateral and contractual Week 6 Pre-readings BOSS handbook and terms Lecture Strategy formation Strategy formation activities  a. Identifying activities i. All activities that provide a better view on what needs to be solved 1. Mission setting 2. Agenda setting b. Diagnosing activities i. All activities that contribute to better structuring of strategic issues, leading to improved understanding 1. External assessment a. PESTLE, Porter’s Five Forces, SWOT 2. Internal assessment c. Conceiving activities i. All activities that lead to the development of a course of action 1. Option generation 2. Option selection d. Realizing activities i. All practical activities conducted by the organization 1. Action-taking 2. Performance control ** caveat: plans dont always go to plan and may not be linear, this model doesnt take into account plan revisions Formal and informal strategy formation Highly formalized ○ Strategic planning system, timings, roles, responsibilities, budgets etc. Highly informal ○ Provides more flexibility but is less clear for the organization, leading to excessive subjectivity and potentially jumping to conclusions Causation vs effectuation Strategy formation in large established organizations ○ Leans heavily into causation logic ○ Linear process ○ Whats our competitive advantage, how to take advantage of it Strategy formation in small, entrepreneurial organizations ○ Leaning into effectuation logic ○ Non-linear  ○ Given the resources we have what can we achieve Effectuation principles Strategy formation roles - Who is involved? - Management - staff/employees - Internal toles - External roles - Consultants or interim managers Strategy formation monitoring Week 7 Pre-readings Blue ocean strategy By W.Chan Kim and Renee Mauborgne The idea in brief - Stop competing in overcrowded industries (red oceans) - Create blue oceans— unconteste market spaces where the competiton is irrelevant The idea in practice - Its not about technology innovation - Blue oceans seldom result from technological innovation - You dont have to venture into distant waters to create blue oceans - Most blue oceans are created from within, not beyond, the red oceans of existing industries - Never use the competition as a benchmark - Make the competition irrelevant by creating a leap in value for both yourself and your customers - Reduce your costs while also offering customers more value Blue and red oceans Blue oceans will remain the engine of growth Prospects in most established market spaces (red oceans) are shrinking steadily As brands become more similar, people increasingly base purchase choices on price The paradox of strategy Most new ventures are line extensions 86%, and 14% were aimed at creating new markets and industries ○ Line extensions accounted for 62% of total revenues and delivered only 39% of total profits Toward blue ocean strategy Blue oceans are not aout technology innovation Incumbents often create blue oceans— usually within their core business  Company and industry are the wrong units of analysis Creating blue oceans builds brands ○ A blue ocean strategic move can create brand equity that lasts for decades The defining characteristics Barriers to imitation Imitation requires companies to make changes to their whole system of activities Organizational politics may impede a would-be competitors ability to switch to the divergent business model of a blue ocean strategy Cognitive barriers can be effective ○ Brand buzz and loyal following Visual exploration— round blue-1 Chain of buyers and users - Most numerous and outspoken people were parents of potential gamers - Horror stories about other peoples children spending whole weekends just playing video games - Dilemma of having control over their childs gaming habits - Ongoing costs  - Expensive games, break easily - Environmental impact of batteries - Buying re-chargers and re-chargable batteries is a hassle - High cost of gaming equipment - Wished all televisions in the house were connected so that he could move freely from room to room with controller without having to break his ame - Ugly game consoles - Behind in technology developments - Issue with relationships with suppliers - A day late and a dollar short→ internal capabilities - Make games longer so value perceived increases Path 1: looking across alternatives - Cost issue - Better things to spend their money on - Matter of choice - Lack of interest in a really sophisticated hand device, or in surround sound and amazing graphics Path 5: looking across the functional and emotional appeal for buyers - Retired folks and families did not have these consoles - Feel backward and stupid - Negative opinion of video game industr - Found characters hideous and intimidating - Mobility ossies - Wanted fun with no real effort Lecture Strategic change and innovation 2 kinds of environment 1. Task environment a. Competitors, suppliers, customers, relgulators 2. General environment a. Macroenviornment Population ecology theory: Core idea ○ Organizations are inert, once they are established it is nearly impossible to make significant changes ○ Changes that do occur in business happen at the level of the population, not the single firm ○ Environment will dictate the continuation of firms based on natural selection Common rule of thumb ○ Industries change based on the rule of survival of the fittest How the environment dictates change ○ Variation Development of new organizational features ○ Selection Some features enjoy a competitive advantage ○ Retention Only organizations that display necessary features will be retained Why would organizations be inert? Polutical resistance to change Cultural resistance to change Psychological resistance to change Investment lock-in Competence lock-in System lock-in Shareholder lock-in 1. Areas of change a. Business model i. How the organixation delivered value for customer 1. Poeduct offering 2. Activity system 3. Resource base b. Organizational system i. How the organization is configured to allow the business model to occur 1. Organizational structure, processes, culture 2. Magnitude of change 3. Pace of change - Timing - Speed Ambidexterity in organizations - Being able to simultanoeoiusly - Exploit existing knowledge and resources as a stable configuration - Explore new possible avenues as a dynamic entity - Ability of management to econfigure assets to compete both in mature and emerging businesses How to achieve ambidexterity? - Traditional blue ocean model Week 8 Lecture Strategic reasoning — foundational to tackle strategic problems and make strategic choices Cognitive activities→ application level, mental reasoning - The normal traditional process - Highly linear set of cognitive activities - They are usually instead feedback loops and interactions and difficult to achieve Cognitive maps - Cognitive schemata or mental models of reality - Cognitive maps represent our theory of how the world works - Concerns what we think is important and cause-effect relations - Are often shared, especially within an organizational context— leading to a dominant logic within a firm - Form a filter for how we perceive reality - Contain a collection of reactions or recipes under certain circumstances - Tacit→ difficult to objectively look at your own interpretation - Often understood as common sense - Detrimental effects - Cognitive dissonance— we try to retain harmony between our thoughts and behaviour  - Group think - Source of rigidity Cognitive abilities - Humans have imperfect cognitive abilities - Limited information sensing ability - Decision making happens based on context-based perception and bounded rationality - Limited information processing capacity - Decisions are made using heuristics and routine-driven processing and routine-based behaviour - Limited information storage capacity - We have selective memory and hindsight bias Biases and limitations Bias 1— anchoring bias - Behaviour based on information provided Bias 2— herding bias - Conforming behaviour to indicated group behavior Bias 3— sunk-cost effect - Making the most of something because you already spent money Bias 4— halo effect - Biased based on preferential unrelated traits Bias 5— mental accounting Bias 6— hindsight bias - I told u so Week 9 Lecture Guest lecture 1— raf adams and company Strategic decision making in work and life Striking a balance between being a suit or a monk Guest lecture 2— food ladder Strategic management Pre-readings Week 10 Lecture Industry context Industry— a group of manufacturers or businesses that together produce a particular kind of goods or services - Affects organizational conduct and thus performance Industry types Industry life cycle 1. introduction / growth a. Uncertainties b. High startup cost c. Strategies i. Developing standards, developing the market ii. Accelerating time to market iii. Creating first move advantages iv. Watch out for first-mover advantages→ watch out for copycats 2. Maturity a. Slowing growth b. Experienced customers c. Strategies i. Innovating the process ii. Refining the product iii. Segmenting and individualized offerings 3. Decline a. Decreasing sales b. Lots of competition c. Many bankruptcies d. Strategies i. Achieving market leadership after the shakeout ii. Developing niche markets by specializing iii. Harvesting and phased divesting Industry development  1. Dimensions a. Convergence vs divergence i. Are they pursuing the same business model or differentiating b. Concentration vs fragmentation i. Most of the market share is held up in a dominant firm vs fragmented into many players c. Integrated vs disintegrated i. How many steps of the value chain does a company own d. Expansion vs contraction i. Is the industry declining? 2. Paths of industry development Gradual development→ vehicle industry Continuous development→ phone industry Discontinous development→ airbnb, uber Hypercompetitive development→ generative AI, VR Industry environment: porter’s five forces framework analysis What matters most to: 1. Internal rivalry a. Concentration ratio b. Product differentiation c. Excess capability d. Exit barriers e. Cost structure f. EOS g. Industry growth 2. Supplier+buyer power a. Relative concentration of buyers vs suppliers b. Purchase volume of downstream firms c. High switching cost d. Price sensitivity in the industry e. Information transparency 3. New entrants a. Existence of entry barriers like i. EOS→ low cost products due to high EOS ii. Network effects→ lots of different partners in the industry iii. Capital requirements iv. Switching costs v. Government policies vi. Expected retaliation 4. Substitutes a. Existence of products that satisfy the same need b. Notably different pricing/costs structures c. Few noticeable switching costs Industry analysis: PESTLE analysis Pre-readings Case: Shine bright like a diamond Industry dynamics - Charcterized by a notable degree of concentration and integration, with key players exerting significant control over various stages of the supply chain - Vertical integration enabled major companies to consolidate operations - De Beers, ALROSA, Rio Tinto - Diamond cutting and polishing segment is is relatively fragmented - Trading, wholesaling, retailing→ blend of consolidation and diversification - Antwerp, Dubai, and New York Antwerp diamond hub - Suppliers regulate the flow of rough diamonds - Buyers increasingly prioritize transparency and sustainability in their procurement processes - Antwerp square mile→ more than 1600 diamond-related organizations allow for continuous innovation and the adoption of advance technology - Impacted by macroeconomic trends Trends - Demand for ethical and sustainable sourcing practices Rivalry between existing competitors Production level: De Beers, Alrosa, Rio Tinto form the oligopoly Processing: relatively fragmented, small to medium enterprises Trading, wholesaling, retailing: large trading companies and established family-run businesses Indysrtry growth: declining market, availability of substitutes Fixed costs: storage Intermittent overcapacity: fluctuations of demand Competitors: 1600 diamond-related organizations Product differences: low Switching costs: low Informational complexity: how easy or hard it is to understand the product: hard, need technical knowledge? Internal rivalry Trader on the market Concentration ratio Product differentiation - Moderately differentiated - Different diamonds to fit with cultural preferences, lifestyle aspirations, and ethical consciousness Excess capacity - Exit barriers Industry growth Week 11 Lecture Organizational context Why does organisation context matter for strategy - Intangible things can affect strategic position Organisations as configurations All businesses can be reduced to one or more configurations Configuration is based off the interaction of 3 factors ○ Different elements of an organization ○ The way work is coordinated ○ Structural parameters How many people report to the same boss etc. Types of configurations 1. Entrepreneurial configuration a. Key element: strategic apex b. Coordination mechanism: direct supervision i. Founders are hands on c. Structural parameters: centralized organic structure i. Centralized among top management d. Eg young startups 2. Machine bureaucracy a. Key element: technostructure i. Staff b. Coordination mechanism: standarization of processes c. Structural parameters: high formalization, high task specializtion, functional structure, high degree of centralization d. Eg government 3. Professional bureaucracy a. Key element: operating c0re i. Frontline management b. Coordination mechanism: standardization of skills c. Structural parameters: high degree of decentralization, education d. Eg consulting firms like deloitte, hospitals, universities 4. Divisionalized configuration a. Key element: middle line i. Having SBUs with middle managers who are responsible for the SBUs b. Coordination mechanism: standardization of outputs c. Structural parameters: deparmentalization according to the market  d. Eg P&G, older, larger organizations 5. Adhocracy configuration a. Key element: support staff or operating core b. Coordination mechanism: mutual adjustment c. Structural parameters: extensive coordination, matrix structure d. Eg Valve, innovative firms, happens in environments that are both complex and dynamic 1. Sources of leadership influence a. Legitimate power i. Power due to formal position b. Reward power i. Power due to the ability of giving something desirable c. Coercive power i. Power due to the ability of extending something desirable d. Expert power i. Power due to knowledge e. Referent power i. Power due to charisma 2. Levers of leadership influence a. b. Input→ influencing the input eg a storyboard during the animation c. Throughput→ giving directions of what should be put onto paper d. Output→ checking the end product 3. Arenas of leadership influence a. The political arena  i. Having necessary support b. The cultural arena i. In tune with values and beliefs of others c. The psychological arena i. Inspire, motivate, and engaging others Week 12 Lecture International context Dimensions of being global Scope ○ Spatial dimension ○ regional-national-international-global Similarity ○ Variance dimension ○ Global vs local product Integration ○ Relatedness dimension ○ Related markets vs loosely coupled markets Levels of globalisation Economies ○ Macro level ○ Convergence of national economies? Businesses ○ Meso level ○ Are customers being increasingly aligned? Companies ○ Micro level ○ Do I bring my companies across the globe? Being global Interationalization is dependent on 1. Industry globality a. Competitive structure: concentrated vs fragmented b. Customer structure: concentrated vs fragmented c. Supplier structure: concentrated vs fragmented d. International demand for products: homogeneous vs heterogeneous e. Trade and investment policy: liberal vs restrictive f. Degree to which industry operations, markets and competitive dynamics are interconnected and integrated 2. International maturity a. How much international sales b. Market presence in key markets  c. Etc etc Internationalization strategies International configurations 1. International composition  i. Come countries or regions have advantages that can matter significantly in international strategizing ii. iii. Factor conditions 1. Factors of production: labour, capital etc iv. Demand conditions v. Related and supporting industries 1. Are they available in the new country? vi. Firm strategy, structure, and rivalry 1. Conditions in a nation governing how companies are created, organized and managed, as well as the intensity of odmestic competition 2. International management a. 3 trade offs i. Product/service offering: global vs local product ii. Decision-making: centralized vs decenrtalized iii. Value chain activities: concentrated vs dispersed b. To manage trade-offs i. Standardize ii. Coordinate iii. Centralize c. CAGE framework How different countries are managed internationally is dependent on the distance that exists between them Cultural Differences in languages, ethnicities, religions, values, traditions Administrative Lack of colonial ties, shared regional trading block, common currency Geographic Physical distance, land border, time zones Economic Wealth differences, differences in cost or quality of resources Pre-readings Week 13 Lecture