Firm Theory Kim Valbum RUC MEA

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Firm TheoryKim Valbum RUC MEA

• Strategy

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The common elements of successful strategies
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Strategy as link between firm environment
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Some definitions of strategy

• The art of war, especially the planning movements
  of troops and ships etc. Into favorable
  positions plan of action or policy in business
  or politics etc. (Oxford dictionary)
• The determination of the long-run goals and
  objectives of an enterprise, and the adoption of
  courses of action and the allocation of resources
  necessary for carrying out theses goals. (Alfred
  Chandler, MIT)

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The evolution of Strategic Management

• Period 1950s 1960s 1970s 1980s 1990s 2000
• Dominant Budgetary planning Corporate Corporate
  strategy Analysis of The quest for Strategic
• Theme and control planning industry
  competitive advantage innovation
• competition
• Main issues Financial control Planning Portfolio
  planning Choice of Sources of competitive Strategi
  c
• through operating growth industries, advantage
  whithin organi-
• budgets segments the firm zational
• positioning advantages
• Principal Financial budgeting Forecasting Synergi
  , SBUs, Analysis of Ressource analysis Dynamic
• Concepts investment planning Investment Portfoli
  o planning matrices industry Analysis of core
  sources of
• Techniques project appraisal planning Experience
  curves structure competences
  competetive
• models Returns to market share Competitior
  advantage
• analysis Control of standards
• Knowledge learning
• Organizational Financial management Rise
  of Diversification Greater Corporate
  The virtual
• Implications is the key corporate Multidivision
  al structures industry restructuring
  organization

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Sources of superior profitability
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Level of strategy organization structure
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Linking value drivers to performance targets
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Balanced scorecard for Mobil
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The companys dilemma
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The Strategy Clock
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The strategic window a visual metaphor for
entrepreneurs

• Seeing the window scanning for new opportunities
• Locating the window positioning the new venture
• Measuring the window
• Opening the window gaining commitment
• Closing the window sustaining competitiveness

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Strategic positioning Value addition in an
industry chain

• The end consumer Goods available to consumer
• Distribution and retail Goods promoted to
  consumer
• Marketing Finished Goods
• Manufacturing Refined raw materials
• Secondary processing Raw materials
• Primary processing Natural commodities
• Extraction

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General factors in market positioning

• Price relative to competitors
• Perceived quality value for money
• Demographic imagery dynamic, up?
• Performance
• Number and type of features advanced or ?
• Branding imagery
• Service and support
• Attitude towards supplier

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Positioning of the ventures product

• Functional core
• Aesthetic attractions
• Emotional benefits

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The experience curve and technological innovation
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Competitive advantage
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Sustaining competitive advantage
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Sources of competitive advantage
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Porters Generic Strategies
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Features - Cost leadership and differentiation
strategies

• Generic strategy Key strategy elements Rersource
  organizational
• requirements
• Cost leadership Scale-efficient plants Access to
  capital
• Design for manufacture Process engineering
  skillds
• Control of overheads RD Frequent reports
• Avoidance of marginal Tight cost control
• customer accounts Specialization of jobs
  functions
• Incentives for quantitative
  targets
• Differentiation Emphasis on branding Marketing
  abilities
• advertising, design, service, Product
  engineering skills
• and quality Creativity
• Research capability
• Qualitative performance
• targets incentives
• Strong interfunctional coordinate