Grant, Robert M., 6e Edition, Blackwell Publishing, 482p., 2008



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  • Grant, Robert M., 6e Edition, Blackwell Publishing, 482p., 2008
  • ISBN 978-1-4051-6309-5
  • Slides prepared by Daniel Degravel
  • Strategic Management
  • Contemporary strategic analysis
  • 1
  • Ch.01
  • The concept of strategy
  • 2
  • Ch.1 Concept of Strategy
  • 3
  • Four characteristics of three successful « strategic behaviors and outcomes »
  • Implementation
  • Goals
  • Understanding of competitive environment
  • Resources
  • Basic framework of strategy analysis
  • External environment
  • Internal (the firm)
  • Strategy
  • Fit
  • 4
  • Ch.1 Concept of Strategy (Ctd.)
  • Strategy (14, 17)
  • Strategic principles (25)
  • Corporate strategy (19)
  • Busines strategy (19)
  • Tactic (14)
  • Strategic fit (13)
  • RBV (16)
  • Vision (21)
  • Mission (21)
  • Business model (21)
  • Strategic plan (21)
  • Intended strategy (22)
  • Realized strategy (22)
  • Emergent strategy (23)
  • Long Range Planning (25)
  • Corporate Planning (25)
  • Bounded rationality (26)
  • Definitions Box
  • History of Business strategy
  • 1950
  • 1960
  • 1970
  • 1980
  • 1990
  • 2000
  • 2008
  • Where?
  • How?
  • CL-S
  • BL-S
  • BL-Ss
  • Industry attractiveness
  • Competitive advantage
  • Characteristics of strategic analysis:
  • Analytical; Soft; No Algorithm; Frameworks; Start guide; Flexibility (27)
  • Ch.1 Concept of Strategy (Ctd.)
  • 5
  • Realized strategy
  • Environment
  • Deliberate strategy
  • Emergent strategy
  • Roles of strategy
  • Decision support
  • Coordinating device
  • Target
  • Ch.02
  • Goals, values and performance
  • 6
  • 7
  • Ch.2 Goals, values and performance
  • Value (for customers and profit) (p35)
  • Value-added (p35)
  • Profit (p37-38)
  • Accounting profit (p37)
  • Economic profit (economic rent)(p38)
  • EVA (p38)
  • Free Cash Flow (p40)
  • Discounted Cash Flow DCF (p39)
  • Real options (p42)
  • ROIC, ROE, ROCE, ROA (p47)
  • Definition Box
  • 8
  • Ch.2 Goals, values and performance
  • To avoid ethical and societal issues, simplifying assumption:
  • Goal = interest of owners through long term profit maximization
  • Reasons: competition; market for corporate control; convergence of STOs’ interests and simplicity
  • PROFIT
  • Nature?
  • Questions
  • Accounting profit: Normal return to capital
  • Economic profit: surplus available after all inputs have been paid for
  • Linking profit to firm value
  • DCF
  • Max [Profit] = Max [NPV of profits over life-time of firm]
  • Therefore, use of DCF method where NPV of CF
  • Max [Profit} translates to Max [Firm value]
  • Difference DCF and Discounting profits is treatment of K consumed
  • Linking profit to shareholders value
  • Stock market value
  • SMV = net value of firm
  • Emphasis on Max [Firm value] rather than Max [STo value] because convenience and strategic view
  • In practice, they mean the same for strategy
  • Use of DCF method to value strategic options (p41)
  • 9
  • Ch.2 Goals, values and performance (Ctd.)
  • Real options
  • In a world of uncertainty, flexibility is invaluable
  • Option value arises from potential to amend the project during development or abandon it
  • Phases and Gates approach and Scalability
  • It can create STo value because increase in flexibility equates increase in value
  • Comparison Flex cost vs. Value Flex value
  • Creating option value means for complete strategy that large array of opportunities is possible
  • Strategies:
      • Platform investments
      • Strategic alliances
      • Joint ventures
      • Organizational capabilities
  • 10
  • Ch.2 Goals, values and performance (Ctd.)
  • Past
  • Present
  • Future
  • Backward-looking performance
  • DCF function of 3 variables
  • Return on K
  • Weighted average cost of K
  • Growth of operating profit
  • Result of the past
  • ROIC, ROCE, ROA, ROE
  • Forward-looking performance
  • Characteristics of desirable goals (consistent with long-term objectives; linked to strategy, meaningful to managers)
  • ? Present
  • Balanced Scorecard
  • Financial evaluation
  • Customer evaluation
  • Internal perspective (processes)
  • Innovation and learning
  • Linking overall value maximization to strategic and operational targets to balance ST-LT
  • Values and Principles
  • Pursuit of profit constrained by values and principles
  • -Values as external image management
  • -Values as guide
  • -Values as motivator
  • 11
  • Ch.2 Goals, values and performance (Ctd.)
  • Simplifying assumption
  • Fundamental goal = LT profit
  • Paradox of profit
  • Success seems to be inked with objectives other than profit
  • Great entrepreneurs and B H A G
  • Sony; Microsoft; Boeing; Ford
  • -obsession and blinding
  • -motivation of members
  • CSR Debate
  • Friedman vs. Handy; Goshal …
  • Property conception vs. Social entity conception
  • But convergence in the LT
  • Ch.03
  • Industry analysis: the fundamentals
  • 12
  • 13
  • Ch.3 Industry analysis: the fundamentals
  • Profit
  • Sources of profit?
  • CL-S
  • Which industry ?
  • How to allocate resources between businesses?
  • BL-S
  • Which competitive advantage?
  • How to compete in industry?
  • Attractiveness of industries in terms of potential profit
  • Customer needs and KSF
  • Sources of Competitive advantage
  • 1- Structure of industry features that impact competition and profitability
  • 2- Explain differences in competition intensity and profitability
  • 3- Forecast changes in competition and profitability
  • 4- Influence industry structure
  • 5- Identify KSF
  • Program
  • 14
  • Ch.3 Industry analysis: the fundamentals (Ctd.)
  • Industry
  • P5F
  • General Environment
  • PEST
  • 15
  • Ch.3 Industry analysis: the fundamentals (Ctd.)
  • Value = price that customer is willing to pay minus cost incurred by firm
  • Value
  • Producer surplus
  • Consumer surplus
  • Cost
  • Price actually paid in transaction
  • Price that consumer is willing to pay
  • Profit
  • Determined by:
  • 1- Value of products to consumers
  • 2- Intensity of competition
  • 3- Relative bargaining power of industry players
  • 16
  • Ch.3 Industry analysis: the fundamentals (Ctd.)
  • BPS
  • Cost/total cost
  • P Differentiation
  • Competition between S
  • Size and concentration S/C
  • Switching cost
  • Information
  • Ability C to forward integrate
  • BPC
  • Idem BPS
  • Rivalry
  • Concentration
  • Diversity of rivals
  • P Differentiation
  • Excess capacity
  • BTExit
  • Cost conditions
  • NE
  • Capital
  • EoSca
  • Absolute cost advantage
  • P Differentiation
  • Access to distribution channels
  • Retailation
  • S
  • Government and legal barriers
  • PS
  • C propensity to substitute
  • Relative prices and performance of substitutes
  • BP ultimately boils down to refusal to deal with other party
  • BP ultimately boils down to refusal to deal with other party
  • State is 6th force in model extension
  • 17
  • Ch.3 Industry analysis: the fundamentals (Ctd.)
  • Description of industry
  • Structure
  • Complex value-chain and vertical integration
  • Industry boundaries
  • Forecasting profitability
  • 1-Present effect of existing industry structure
  • 2-Identification of trends
  • 3-Impact of trends on structure and profitability
  • Industry vs. Market
  • Geography
  • Micro-level approach
  • Substituability on D and S sides
  • 18
  • Ch.3 Industry analysis: the fundamentals (Ctd.)
  • Key Success Factors
  • Question approach
  • 1-What do customers want?
  • 2-How to survive competition?
  • Direct modeling of profitability
  • Disagreggation of ROCE
  • No generic strategy guarantees success
  • R&C and strategy and KSF
  • 19
  • Ch.3 Industry analysis: the fundamentals (Ctd.)
  • Consumer surplus (p67)
  • Producer surplus (economic rent) (p67)
  • Monopoly (p69)
  • Perfect competition (p69)
  • Oligopoly (p69)
  • Contestable market (p74)
  • Barrier to entry (BTE) (p74)
  • Barrier to exit (BTExit) (p76)
  • Industry (p85)
  • Market (p85)
  • KSF (p88)
  • Definition Box
  • Ch.04
  • Further topics in industry and competitive analysis
  • 20
  • 21
  • Ch.4 Industry and competitive analysis: further
  • 1-What about « complementary » relationship between products?
  • 2-Stability of industry
  • Which direction? Industry Competition
  • 3-Impact of other players
  • Game theory
  • 4-Competitor analysis
  • 5-Level of analysis
  • Segmentation of industry
  • Themes of chapter
  • 22
  • Ch.4 Industry and competitive analysis: further (Ctd.)
  • 1-What about « complementary » relationship between products?
  • Research shows that industry specificities account for minority of differences in profitability
  • Razor – razor blade effect
  • Substitutes decrease value whereas Complements increase value, because customers value the whole system
  • A missing force in P5F model?
  • Complements situation
  • Firm’s own product
  • Complement product
  • Monopolization
  • Shortage of supply
  • Differentiation
  • Competition
  • Commodization
  • Excess capacity
  • 23
  • Ch.4 Industry and competitive analysis: further (Ctd.)
  • 2-Stability of industry
  • Which direction? Industry Competition
  • Creative destruction (p.100)
  • Competition is a dynamic process of rivalry that constantly reformulates industry structure (Austrian school of Economics, J. Schumpeter)
  • Therefore, structure can be seen as outcome of competitive behavior
  • Speed of change is key
  • Debate about reality of increase of creative destruction
  • Schumpeterian industry (p.101)
  • Hypercompetition (p.101)
  • 24
  • Ch.4 Industry and competitive analysis: further (Ctd.)
  • Necessity to take into account interaction among players and fact that decision of player depends on actual and anticipated decisions of other players
  • 1-Framing of strategic decisions
  • 2-Predicts outcome of competitive situations and identifies optimal strategic choices
  • Prisoner dilemma
  • 1-Cooperation
  • 2-Deterrence (p.102)
  • 3-Commitment
  • 4-Signaling (p.105)
  • Nash equilibrium (p.103)
  • Bertrand model (p.121)
  • Cournot model (p.121)
  • Emphasis in strategy formulation is less in influencing behavior of rivals than transforming competitive games through building positions of unilateral competitive advantage, through exploiting uniqueness
  • 3-Impact of other players: Game theory
  • 25
  • Ch.4 Industry and competitive analysis: further (Ctd.)
  • 4-Competitor analysis
  • Competitor intelligence (p.107)
  • 1-Forecast
  • 2-Predict
  • 3-Influence
  • Framework
  • 1-Strategy
  • 2-Objectives
  • 3-Assumptions
  • 4-Resources and capabilities
  • Predict
  • 26
  • Ch.4 Industry and competitive analysis: further (Ctd.)
  • 5-Level of analysis: Segmentation of industry
  • Segmentation (p.110)
  • Stages of segmentation
  • 1-Identify key segmentation variables and categories
  • 2-Construct segmentation matrix
  • 3-Analyze segment attarctiveness
  • 4-Identify segment’s KSF
  • 5-Select segment scope
  • Barriers to mobility (p.113)
  • Profit pool mapping (p.117) Four steps for analysis […]
  • Strategic groups (p.117)
  • Dimensions: product range; geography; distribution channels; quality; technology; VI; etc.
  • 27
  • 28
  • Ch.5 Analyzing Resources and Capabilities
  • 1-R&C and strategy
  • 2-R&C: nature and attributes
  • 3-Appraising R&C
  • 4-R&C Management: a framework
  • 5-Developing R&C
  • 6-KM and KBV
  • Themes of chapter
  • 29
  • Ch.5 Analyzing Resources and Capabilities (Ctd.)
  • 1-R&C and strategy
  • Firm
  • Goals; R&C; structure and systems
  • Strategy
  • RBV
  • Why?
  • 1- Instability of environment
  • 2- Competitive advantage main source of profitability; industry factors explain little
  • What?
  • 1- Source of new products
  • 2- Foundation for strategy
  • Link with strategy
  • Uniqueness of each firm is key. Profitability results from exploitation of differences and uniqueness of R&C portfolio
  • Strategic use of R&C
  • 1- Exploit strengths
  • 2- Change existing situation by filling gap between actual and required R&C
  • RBV (p.125)
  • Monopoly rents (market power) (p.128)
  • Ricardian rents (superior R&C) (p.128)
  • Honda 126
  • Canon 126
  • 3M 127
  • Motorola 127
  • Olivetti 127
  • Remington 128
  • Kodak 128
  • Mariah Carey 129
  • Walt Disney 129, 130
  • Toyota 129
  • Microsoft 129
  • Johnson & Johnson 129
  • British Petroleum 129
  • 30
  • Ch.5 Analyzing Resources and Capabilities (Ctd.)
  • 2-R&C: Nature and attributes
  • Resource = productive asset owned by the firm (p.130)
  • Capability = what the firm can do (p.130-131)
  • Three categories:
  • 1-Tangible resources
  • 2-Intangible resources
  • 3-Human resources
  • How to create additional value from them?
  • Economizing on their use
  • Employing assets more profitably
  • More valuable; largely invisible
  • Reputational assets
  • Technology
  • Intellectual property
  • Expertise, knowledge and efforts
  • People are not owned
  • Attitude, motivation, learning capacity and potential for collaboration
  • Competency modelling 133
  • Emotional intelligence 134
  • Organizational culture 134
  • Disney 131
  • British Airways 131
  • Philip Morris 132
  • Harley-Davidson 132
  • Johnson & Johnson 132
  • Coca-Cola 132
  • Google 132
  • UPS 132
  • 3M 132
  • Texas Instruments 133
  • Qualcomm 133
  • IBM 133
  • 31
  • Ch.5 Analyzing Resources and Capabilities (Ctd.)
  • 2-R&C: Nature and attributes
  • Capability = what the firm can do (p.130-131)
  • Capability = firm’s capacity to deploy resources for a desired end result (p.135) (Helfat and Liberman, 2002)
  • Capability = competence (p.135)
  • Distinctive competence = capability that can provide a basis for competitive advantage (p.135) (Selznick, 1957)
  • Core competence = something that an organization does particularly well relative to its competitors (p.135) (Hamel and Prahalad, 1990) (disproportionate contribution to ultimate customer value or efficiency; basis for entering new markets)
  • Two bases for classification:
  • 1-Functional analysis
  • 2-Value-chain analysis
  • 32
  • Ch.5 Analyzing Resources and Capabilities (Ctd.)
  • 2-R&C: Nature and attributes
  • Organizational routine = regular and predictable pattern of activity made up of a sequence of coordinated actions by individuals (p.137) (Nelson and Winter, 1982)
  • Routines are basis for capabilities
  • Routines develop through learning by doing
  • Trade-off between efficiency and flexibility
  • Capabilities can be disaggregated into more specialist capabilities
  • Sony 135
  • RCA 135
  • GE 135
  • Thomson 135
  • 3M 137
  • Wal*Mart 137
  • Toyota, Ford and GM 137
  • McDonald’s 137
  • Hospital 137
  • Toyota, Honda, Nissan 138-139
  • Telecom equipment manufacturer 138
  • -cross functional capabilities
  • -broad functional capabilities
  • -activity-related capabilities
  • -specialized capabilities
  • single-task capabilities
  • 33
  • Ch.5 Analyzing Resources and Capabilities (Ctd.)
  • 3-Appraising R&C
  • What is the potential of R&C to to earn profits?
  • Potential earning of R&C
  • Establishing competitive advantage
  • 1-Scarcity
  • 2-Relevance
  • Sustaining competitive advantage
  • 1-Durability
  • 2-Transferability
  • -geography
  • -imperfect information
  • -complementarity between R
  • -integration
  • 3-Replicability
  • Asset mass efficiencies
  • Time compression diseconomies
  • Appropriating returns to competitive advantage
  • Ownership of R&C not always clear-cut
  • a) Degree of definition of property rights in R&C
  • b) Embeddedness of individual skills and knowledge within routines
  • c) Identifiability of employee’s contribution to profitability
  • d) Mobility of employee
  • e) Employee offers similar productivity to other firms
  • Oil and gas exploration 139
  • British coal mines 140
  • Retail banking 140
  • Heinz, Kelloggs, Campbell, Hoover 140
  • IBM, Lenovo 141
  • Investment banking and M&A 141
  • Financial services, retailing 141
  • Federal Express 142
  • Nucor 141
  • PPR, Gucci 142
  • 34
  • Ch.5 Analyzing Resources and Capabilities (Ctd.)
  • 4-R&C Management R&CM: a framework
  • A practical guide to manage R&C
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