Transcript lvmh - Management Class

Discussion Notes
Teaching Notes: Finntrack
Strategy: Analysis and Practice ©2005 McGraw-Hill Education Europe
Index
• Workshops
• Case Analysis
• Debate
• Case Questions
• How to Use Your Workshop Resources
• Disclaimer
• Learning Objectives
• Conglomerate Company
• Luxury Goods Market
• Introduction to LVMH
• Overview
• Annual Results 2002 - 2005
• LVMH Strategy
Click on Image
Source: www.musicone.de
Index
• Competitive Position: Competitive Advantage
− Principles of Strategic Planning
− Principles of Strategic Management
• Global Strategies
• Corporate Strategy
• Chapter Outlines
• Competitive Strategy: the Analysis of
Strategic Position
–Lecture
• Corporate Strategy: Adding Value in
Multi-Business Firms
−Lecture
• Global Strategies and International
Advantage
−Lecture
Workshop
This workshop series is designed to
compliment Teaching and Learning
Strategies for undergraduate,
postgraduate and executive level
Strategic Management and related
programmes and courses using the case
studies featured in the ‘Strategy
Analysis and Practice’ text shown on the
right.
The overall aim is to support the
learning contents offered in the relevant
chapters of the book whilst expanding
participants’ knowledge and skills base
required to understand, review and
analyse the issues faced by LVMH’s
managers in the progress of in
implementing and reviewing the
company’s corporate strategy.
Strategy Analysis and Practice
John McGee, Warwick Business
School
Howard Thomas, Warwick Business
School
David Wilson, Warwick Business
School
Case Analysis
A case study is a particular method of
qualitative research.
Rather than using large samples and
following a rigid protocol to examine a
limited number of variables, case study
methods involve an in-depth, longitudinal
examination of a single instance or event:
a case.
They provide a systematic way of looking
at events, collecting data, analyzing
information, and reporting the results.
As a result the researcher may gain a
sharpened understanding of why the
instance happened as it did, and what
might become important to look at more
extensively in future research.
Click on Image
Source: Doyle Research
Case Analysis
Case studies lend themselves especially to generating (rather than
testing) hypotheses.
• The scope and relevance of case studies
• Types of case study
• Illustrative case studies
• Exploratory case studies
• Critical instance case studies
• Program implementation case studies
• Program effects case studies
• Cumulative case studies
• Business school case studies
• Medical case studies
• History of the case study
• Conclusions
• Notable case studies
• References
• See also
• External links
Click on Image
Source: ©1997 NCEAS, All Rights Reserved
Workshop Debate
Workshop discussion topics have been divided into four parts according to the
relevant chapters of the book:
1. Introduction
2. Competitive Position: Competitive Advantage
3. Corporate Strategy: Parenting Advantage
4. Global Strategies
5. Managing Strategic Change
You should ensure that you have understood the contents of chapters 6, 9, 11, and
15 prior to attending any of the above debates.
Also see:
How to Use Your Workshop Resources
Learning Objectives
Learning from Case Studies: A Short Guide for Students
Case Questions
Please Note:
At your instructor’s discretion the indicative questions below and
elsewhere in this resource may be varied or deemed unnecessary for
teaching and learning purposes for some courses or modules.
Also see Learning Using Case Studies for further information.
Also see A Model for Case Analysis and Problem Solving
Case Questions
How to Use Your Workshop Resources
Viewing
You will need either MS PowerPoint program or PowerPoint Viewer installed on your
computer. The latter may be downloaded free from Microsoft website here.
Navigation
The Learning Contents (Literature Reviews) are linked to a relevant public domain on
the Internet.
Most, if not all pictures/images are ‘clickable’, i.e. linked to its source which provides
further information on the topic or the copyright holder.
If your version of PowerPoint does not show the navigation buttons on the slide, right
click on the screen and select your destination from the dialogue box. Alternatively
use the small arrowheads, indicating ‘previous’ and ‘next’ respectively.
Disclaimer
This information is provided with the understanding that the authors and
publishers do not assume any legal responsibility for the completeness or accuracy
of the contents or any opinions or views expressed on these pages or linked
destination sources.
It is the nature of the media (Internet) that some of the pages may not always be
available due to broken or dead links, withdrawals, etc. Whilst the publishers will
be pleased to take any appropriate corrective action, for example, by replacing or
removing the sources when possible, they unable to assume any legal
responsibility for unavailability of any third party material for whatever reason
beyond their direct control.
Learning Objectives
The main objective of the workshop is to evaluate the strategic development
practices and implementation process of LVMH.
Participants will have an opportunity of developing and enhancing their
• strategic thinking skills
• appreciations of the complex decision making process involved in economic
strategies such as migration and outsourcing
• analytical and critical thinking skills by reviewing the factors that influenced
corporate centre's decisions on the businesses in their portfolios
Conglomerate Company
Conglomerate is:
A large, diversified company with a wide
array of businesses; see
Conglomerate (company), Holding
company.
In geology a rock consisting of other
stones that have been cemented
together; see Conglomerate
(geology).
In computing an XML editor for GNOME;
see Conglomerate XML editor.
It is a Clastic, Sedimentary rock.
Larger Image
Source: University of North Carolina
Also See Horizontal expansion and conglomerates
Conglomerate Company
• Potential Advantages of the
Portfolio Analysis Example
Conglomerate Organizational Form
• Conglomerate companies
• Media conglomerates
• See also
• Japanese
• Korean
Larger Image
Source: BCG
Luxury Goods
In economics a luxury good is a good for which demand increases more
than proportionally as income rises, contrast with inferior good and normal
good. Luxury goods are said to have high income elasticity of demand: as
people become more wealthy, they will buy more and more of the luxury
good.
This also means, however, that should there be a decline in income its
demand will drop. It must be noted, though, that income elasticity of demand
is not constant with respect to income, and may change sign at different
levels of income.
Luxury Goods
That is to say, a luxury good may
become a normal good or even an
inferior good at different income levels,
e.g. a wealthy person stops buying
increasing numbers of luxury cars for
his automobile collection to start
collecting airplanes (at such an income
level, the luxury car would become an
inferior good).
•
•
•
•
•
•
•
Perception
Market characteristics
Luxury brands
Locations
See also
External links
References
Click on Image
Source: BYG Publishing
Click on Image
Source: Wikipedia
LVMH Overview
•
Conglomerate Company
•
Luxury Goods
•
Overview
•
Annual Results 2002 - 2005
•
Strategy
Click on Image
Source: Christian Dior SA
LVMH Overview
LVMH Moët Hennessy Louis
Vuitton S.A. (Euronext: MC), usually
shortened to LVMH, is a French
holding company and the world's
largest luxury goods conglomerate. It
is the parent of around 50 subcompanies that each manage a small
number of prestigious brands. The
child companies are run, to a large
extent, autonomously. The group was
formed after mergers brought
together champagne producer Moët
et Chandon and Hennessy, a leading
manufacturer of brandy.
Also see www.lvmh.com
Click on Image
Source: ITAP International Inc
LVMH Overview
In 1987, they merged with baggage
manufacturer Louis Vuitton to form
the current group.
The group is partly owned by the
Christian Dior group, and Bernard
Arnault is Chairman and CEO of both
companies.
His successful integration of various
famous brands into the group has
inspired other luxury companies into
doing the same. Thus Gucci (now part
of the French conglomerate PPR),
Prada and Richemont have also
created extended portfolios of luxury
brands.
Click on Image
Source: Louis Vuitton
LVMH Overview
The oldest of the LVMH brands is wine
producer Château d'Yquem, which dates
its origins back to 1593.
De Beers LV: in 2001 De Beers launched a
joint venture with LVMH in order to
establish De Beers as a retail brand.
Click on Image
Source: De Beers
Click on Image
Source: thewinedoctor.com
Annual Results 2002 - 2005
2005 Full Year Results
• Presentation (PDF-357 ko)
• Press release
• Video webcast
2005 First Half Results
• Presentation (PDF-250 ko)
• Press release
Click on Images
Source: BBC
Strategy - Overview
• Introduction
• Overview
• Annual Shareholders’ Meeting, 2005
• Arnault's Online Strategy Risks A Fashion Don't
• LVMH Sells Lacroix Fashions to US Investment
LVMH Moët Hennessy Louis Vuitton has sold its Christian
Lacroix fashion house to the Falic Group, an investment
company based in the United States, a spokeswoman for
LVMH said yesterday. The spokeswoman, Florence Scheller,
said the deal ''confirms LVMH's strategy of concentrating on
its star brands which have the most growth potential.'' The
group's most profitable brands include Louis Vuitton and
Christian Dior. Ms. Scheller refused to disclose the financial
terms of the deal. LVMH has been selling its less profitable
brands for some time and has already sold the cosmetics
brands Hard Candy and Urban Decay to the Falic Group,
which is based in Hollywood, Fla.
© LVMH 2006
Strategy - Overview
Moet Hennessy Louis Vuitton (LVMH), the world's largest luxury goods
company owns famous luxury brands like Dom Perignon, Christian Dior, Donna
Karan and Louis Vuitton. LVMH defines a brand's identity by mining its history
and finding the right designer to express it.
LVMH believes in controlling quality and distribution and creating brand
excitement among customers with innovation, which in its view is the ultimate
driver of growth and profitability.
Chairman Bernard Arnault believes that star brands are born when a company
manages to make products that 'speak to the ages', yet remain intensely
modern. These products fulfil the consumer's fantasy. A star brand is timeless,
modern, fast growing and highly profitable. Arnault believes that the
impression of timelessness can be created with uncompromising quality.
Source: Copyright © 2005 ICFAI . All rights reserved.
Strategy - Overview
• De Beers and Lvmh, joint venture
between giants
• LVMH Sells Ebel
• LVMH announces record revenue
of 14 billon Euros in 2005 up 11%
over 2004
• Portfolio Strategy
• LVMH to focus on top brands
• Regional Business Networks and
the Multinational Retail Sector
Click on Image
Source: Copyright © 2001-2006
brandchannel.
Strategy - Objectives
• Shareholder Value Maximisation
• Divestment
• Growth Investing
• Integration
• Acquisitions and Mergers
Click on Image
Source: ©1996-2006 Accenture All Rights
Reserved
Strategy - Shareholder Value Maximization
Creating and managing shareholder value
Shareholder value
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•
•
•
Definition
Shareholder Value Maximization
Criticism
Alternative Definition based upon
Criticism: Stakeholder Analysis
Source: Shareholdervalue.com
Strategy - Divestment
In finance and economics, divestment or divestiture is the reduction of some
kind of asset, for either financial or social goals. A divestment is the opposite of
an investment.
• Divestment for financial goals
• Divestment for social goals
• Criticisms of divestment
for social goals
• External links
• See also
Larger Image
Click on Image
Source: Accenture
Strategy - Growth Investing
Growth investing is a style of investment
strategy. Those who follow this style, known
as growth investors, invest in companies
that exhibit signs of above-average growth,
even if the share price appears expensive in
terms of metrics such as price-to-earning or
price-to-book ratios. In typical usage, the
term "growth investing" contrasts with the
strategy known as value investing.
However, some notable investors such as
Warren Buffett have stated that there is no
theoretical difference between the concepts
of value and growth when considering
("Growth and Value Investing are joined at
the hip"). Indeed, when just investing in one
style of stocks, diversification could be
negatively impacted.
Click on Image. Larger Image
Source: © 2003 by Lightbulb Press, Inc.
All Rights Reserved.
Strategy - Economies of Scale
Integration
This occurs when two firms join
together to form one new company.
Integration can be voluntary (a
merger) or forced (a takeover). The
figure below shows the three main
types of integration.
Click on Image
Source: BizEd,
University of Bristol
Strategy - Acquisitions and Mergers
• Financing M&A
• Merger
• Acquisition
• High-yield
• Examples
• Motives behind M&A
• M&A and Investment Banking
• M&A Marketplace Difficulties
• Levels and flows
• Merger
• Classifications of mergers
• Issues
• World Economic Forum
Click on Image
Source: George & Co
Strategy - The Gucci Battle
In March 1999, a $ 3 billion stock deal
was announced between luxury goods
major Gucci N V and the PinaultPrintemps-Redoute (PPR) group of
France. The news of PPR acquiring a
40% stake in Gucci came as a surprise
for Bernard Arnault (Arnault),
Chairman of the Moet Hennessy Louis
Vuitton (LVMH) group, who had been
trying to acquire Gucci through open
market stock acquisitions.
More …
Click on Image
Source: Copyright 2006 Ronald
Feldman Fine Arts, Inc.
Strategy - The Gucci Battle
In the late 1990s, Gucci became mired in a
standoff with one of fashion's biggest
conglomerates, LVMH Moët Hennessy Louis
Vuitton.
Just before Gucci Group’s IPO in 1995,
Investcorp approached LVMH chairman
Bernard Arnault with a proposition to sell
him the entire Gucci brand, including its
lucrative watch and fragrance divisions.
Click on Image
Source: Wikipedia
Competitive Position: Competitive Advantage
Literature Review
• Strategic Planning
• Strategic Management
• Income Elasticity of Demand
• What in the World is Competitive
Advantage?
• Competitive Position: Competitive
Advantage
• Sustainable Competitive Advantage
• Positioning Strategy
Click on Image
Source: BRS
• Performance measures to support
competitive advantage
Also see Annotated Lecture Outline
Click on Image
Source: businessballs.com
Competitive Position: Competitive Advantage
• Competitive Strategies
• Risk-related Challenges
Click on Image
Source: Stanford University
Corporate Strategy
Literature Review
• Business Strategy Map
• Value Based Management
• Value Creation
• Value Management Models
• Centralization, Decentralization and
Delegation
• Strategy Modelling Technique for
Financial Services
Global Strategies
Literature Review
• Going Global: Assess Market
Opportunities
• Institutions and Business Strategies
in Emerging Economies: A Study of
Entry Mode Choice
• Globalization, Models of
Competitive Advantage and Skills
• The Competition of Countries
• Competitiveness of Nations: The
Fundamentals
• Economist Country Briefings
Click on Image
Source: Agrium Inc. 2004
Also see Annotated Lecture Outline
Literature Review
Strategic Planning
• Principles of Strategic Planning
• Principles of Strategic Management
Click on Image
Source: © 2000 Know and Lead.com
Literature Review
Strategic Planning
Strategic planning consists of the
process of developing strategies to
reach a defined objective. As we label a
piece of planning "strategic" we expect
it to operate on the grand scale and to
take in "the big picture" (in
contradistinction to "tactical" planning,
which by definition has to focus more
on the tactics of individual detailed
activities).
"Long range" planning typically projects
current activities and programs into a
revised view of the external world,
thereby describing results that will most
likely occur (whether the planner wants
them or not!)
Click on Image
Source: Long Range Planning - International
Journal of Strategic Management
Literature Review
Strategic Planning
"Strategic" planning tries to "create"
more desirable future results by
(a) influencing the outside world or
(b) adapting current programs and
actions so as to have more
favorable outcomes in the external
environment.
Click on Image
Source:
[email protected]
Literature Review
Strategic Planning
• Methodologies
• Situation Analysis
• Identifying cultures
• Perspectives
• Ethnographical versus Clinical
approach
• Functionalistic versus Interpretionistic
approach
• Artifacts
• Visible artifacts
• Invisible artifacts
• Culture types
• Changing cultures and strategy
• Approaches
• Resistance
• Measurements
• Goals, objectives and targets
• Mission statements and vision statements
• Why strategic plans fail
• External links
Click on Image. Larger Image
Source: University of Cambridge,
Department of Engineering
Literature Review
Strategic Management
• Strategic Management
• Strategy Formulation
• Strategic Implementation
• Introduction to Strategic Management
• General approaches
• The strategy hierarchy
• Historical development of strategic
management
• Birth of strategic management
• Growth and portfolio theory
• The marketing revolution
• The Japanese challenge
• Gaining competitive advantage
• External Links
Click on Image. Larger Image
Source: IUS
Literature Review
Strategic Management
Strategic management is the process of specifying an organization's
objectives, developing policies and plans to achieve these objectives, and
allocating resources so as to implement the plans. It is the highest level of
managerial activity, usually performed by the company's Chief Executive Officer
(CEO) and executive team. It provides overall direction to the whole enterprise.
An organization’s strategy must be appropriate for its resources, circumstances,
and objectives. The process involves matching the company's strategic
advantages to the business environment the organization faces. One objective
of an overall corporate strategy is to put the organization into a position to
carry out its mission effectively and efficiently.
A good corporate strategy should integrate an organization’s goals, policies, and
action sequences (tactics) into a cohesive whole. To see how strategic
management relates to other forms of management, see management.
Strategic management can be seen as a combination of strategy formulation
and strategy implementation.
Literature Review
Strategic Management - Formulation
Strategy formulation involves:
Doing a situation analysis: both
internal and external; both microenvironmental and macroenvironmental.
Concurrent with this assessment,
objectives are set. This involves
crafting vision statements (long term
view of a possible future), mission
statements (the role that the
organization gives itself in society),
overall corporate objectives (both
financial and strategic), strategic
business unit objectives (both financial
and strategic), and tactical objectives.
Click on Image. Larger Image
Source: Vadim Kotelnikov, Founder, Ten3
BUSINESS e-COACH
Literature Review
Strategic Management - Formulation
These objectives should, in the light of
the situation analysis, suggest a
strategic plan. The plan provides the
details of how to achieve these
objectives.
This three-step strategy formation
process is sometimes referred to as
determining where you are now,
determining where you want to go,
and then determining how to get
there. These three questions are the
essence of strategic planning. SWOT
Analysis: I/O Economics for the
external factors and RBV for the
internal factors.
Click on Image. Larger Image
Source: Vadim Kotelnikov, Founder, Ten3
BUSINESS e-COACH
Literature Review
Strategic Management - Implementation
Strategy implementation involves:
• Allocation of sufficient resources (financial, personnel, time, computer
system support)
• Establishing a chain of command or some alternative structure (such as
cross functional teams)
• Assigning responsibility of specific tasks or processes to specific individuals
or groups
• It also involves managing the process. This includes monitoring results,
comparing to benchmarks and best practices, evaluating the efficacy and
efficiency of the process, controlling for variances, and making adjustments
to the process as necessary.
• When implementing specific programs, this involves acquiring the requisite
resources, developing the process, training, process testing, documentation,
and integration with (and/or conversion from) legacy processes.
Literature Review
Strategic Management - Implementation
Strategy formation and implementation is an on-going, never-ending,
integrated process requiring continuous reassessment and reformation.
Strategic management is dynamic. See Strategy dynamics. It involves a
complex pattern of actions and reactions.
It is partially planned and partially unplanned. Strategy is both planned and
emergent, dynamic, and interactive. Some people (such as Andy Grove at
Intel) feel that there are critical points at which a strategy must take a new
direction in order to be in step with a changing business environment. These
critical points of change are called strategic inflection points.
Click on Image
Source: ©2006 Intel
Corporation
Literature Review
Strategic Management - Implementation
Strategic management operates on several time scales. Short term strategies
involve planning and managing for the present. Long term strategies involve
preparing for and preempting the future. Marketing strategist Derek Abell
(1993), has suggested that understanding this dual nature of strategic
management is the least understood part of the process. He claims that
balancing the temporal aspects of strategic planning requires the use of dual
strategies simultaneously.
Click on Image
Source: © 1999 2006 Brazos Consulting
Literature Review
Income Elasticity of Demand
In economics, the income elasticity
of demand measures the
responsiveness of the quantity
demanded of a good to the income of
the people demanding the good.
It is measured as the percentage
change in demand that occurs in
response to a percentage change in
income. For example, if, in response to
a 10% increase in income, the quantity
of a good demanded increased by
20%, the income elasticity of demand
would be 20%/10% = 2. (Case & Fair,
1999: 119).
Larger Map
Click on Map
Source: bized.ac.uk/
Literature Review
Income Elasticity of Demand
•
•
•
•
Spotlight on the theory
Mathematical Definition
See also
References
• Lists
Larger Map
Click on Map
Source: bized.ac.uk/
Literature Review
Income Elasticity of Demand
A negative income elasticity of demand is associated with inferior goods; an
increase in income will lead to a fall in the quantity demanded and may lead
to changes to more luxurious substitutes.
A positive income elasticity of demand is associated with normal goods; an
increase in income will lead to a rise in the quantity demanded. A high
positive income elasticity of demand is associated with luxury goods.
A zero income elasticity of demand is an increase in income without leading
to a change in the quantity demanded of a good.
Many necessities have an income elasticity of demand between zero and one:
expenditure on these goods may increase with income, but not as fast as
income does, so the proportion of expenditure on these goods falls as income
rises. This observation for food is known as Engel's law.
Literature Review
Competitive Position: Competitive
Advantage
Competition is the act of striving against another force for the purpose of achieving
dominance or attaining a reward or goal, or out of a biological imperative such as survival.
Competition is a term widely used in several fields, including economics, business, politics,
and sports. Competition may be between two or more forces, life forms, agents, systems,
individuals, or groups, depending on the context in which the term is used.
• Sizes and levels of competition
• Consequences of competition
• Competition in different fields
• Economics and business competition
• Competition in biology and ecology
• Competition in politics
• Sports competition
• Competition in education
• The Study of competition
• Competitiveness
• Econometrics
• See also
Click on Image
Source:Brecker Associates
Literature Review
Positioning Strategies
The third and final part of the
SEGMENT - TARGET - POSITION
process is 'positioning.' Positioning is
undoubtedly one of the simplest and
most useful tools to marketers. After
segmenting a market and then
targeting a consumer, you would
proceed to position a product within
that market.
Click on Image
Source: © www.marketingteacher.com
2000-2006
Literature Review
Business Strategy Overview
Larger Map
Source: BizEd, University
of Bristol
Click on image for further
information
Literature Review
Value Based Management
Source: Dresden International
University
Source: FDC
Click on Images for further information
Literature Review
Value Creation
• Michael Goold, Andrew Campbell and Marcus
Alexander, Corporate Strategy and Parenting
Theory, Long Range Planning, Vol.31, No.2,
pp.308-314, 1998.
• Parenting Advantage (Goold & Campbell)
• Parenting Styles (Goold & Campbell)
• Core Competence (Hamel & Prahalad)
• Distinctive Capabilities (Kay)
• Financial Institutions Re-evaluate Offshore
Operations
Copyright © 2000, Community
Intelligence Labs. Click on Image
Literature Review
Shareholder Value
• What is Shareholder Value?
• What Drives Shareholder Value?
• Shareholder Value Analysis
Larger Image
Source: Accenture
Literature Review
Shareholder Value Analysis
Larger Image
Source: agility.com.au
• Rediscovering Shareholder Value: A Proven
Approach
• How to Build Value into a Merger
• Shareholder Value Tool
Literature Review
Value Management Models
Larger Image
Source: performgroup
Click on Image for further
information
Literature Review
Value Management Models
Six Sigma
Six Sigma was pioneered by Bill Smith at Motorola in
1986[1]. Originally, it was defined[2] as a metric for
measuring defects and improving quality; and a
methodology to reduce defect levels below 3.4 Defects Per
(one) Million Opportunities (DPMO). Six Sigma is a
registered service mark and trademark of Motorola, Inc[3].
Motorola has reported over US$17 billion savings[4] from
Six Sigma to date.
AlliedSignal and GE became early adopters of Six Sigma
and reported benefits of over US$300 million during its first
year of application[5]. Their CEO's, Larry Bossidy and Jack
Welch, played a vital role in popularizing Six Sigma. Other
major organizations who claim to have benefited from Six
Sigma implementation are Ford, Caterpillar, Microsoft,
Raytheon, Quest Diagnostics, Seagate Technology,
Siemens, Merrill Lynch, Lear, 3M and many more.
Click on Image
Source: KETCH.ca
Literature Review
Value Management Models
Six Sigma
• Definition
• Application & Success
• Healthcare
• Banking
• Insurance
• Construction
• Military
• Methodology
• DMAIC
• DMADV
• Roles Required for Implementation
• Examples of Some Key Tools Used
• Criticisms of Six Sigma
• Of its origin
• Of the term: Six Sigma
• Of statistics
• Of methods
• Of effects
• References
• See also
• External links
Click on Image
Source: QCI International. All rights reserved.
Literature Review
Value Management Models
Value Chain
Click on Image
Source: Vickers
Literature Review
Centralization, Decentralization and
Delegation
Advantages of Centralization
•
Close control of operations
•
Uniformity of policies, practices, and procedures
•
Better use of centralized experts
Advantages of Decentralization
Click on Image
Copyright:
Cornell University
•
Faster decision-making
•
Decision better adapted to local condition
•
Better management experience for managers that are considered for
promotion to higher level management
Literature Review
Why Delegate?
At a certain point, there are just too many facets to running a successful business
to continue doing it alone.
In an increasingly complex business environment, with all the trends affecting
business today, such as globalization, the information technology explosion,
strategic alliances, increased mergers and acquisitions, heightened competition,
and higher expectations of nearly every customer, it just isn't possible to still be
that one person in control of everything. Bringing in others to manage is an
absolute necessity for survival now.
Source:
Competitive Position - Competitive
Advantage 1/4
Lecture
Opening Remarks
It is useful to start the session by recapping on
the previous lecture and emphasizing the notion
of ‘strategy as imperfection’ or the quest for
‘unfair’ advantage. This lecture explores the idea
of competitive advantage in more detail and puts
some flesh on the bare bones of generic
strategies introduced in the preceding session.
The lecture focuses on the idea that strategy is
about the position of an organisation with respect
to its markets and competitors (the so called
market-based or positioning school) and looks at
the relationships between market structure,
pricing and strategy.
The Market Positioning School
A recap on the ‘generic strategies’ framework
introduced briefly in the last chapter and
restatement of the stuck in the middle hypothesis.
Larger Image
Click on Image
Source: Wikipedia
Competitive Position - Competitive
Advantage 2/4
The Nature and Source of Cost Advantage
A more detailed look at the nature and sources of cost advantage focussing on the links
between economies of scale, scope and learning and the achievement of cost advantage.
The Nature and Source of Differentiation Advantage
A more detailed look at the nature and source of differentiation advantage and the risks
associated with this strategy emphasising the difference between differentiation and cost
based strategies. Identifying the potential for differentiation.
The Concept of Competitive Advantage
A definition of competitive advantage and a description of its constituent elements. An
explanation of firm-specific imperfections as the source of competitive advantage and the
interrelationship between industry structure and competitive advantage.. This latter point may
be omitted from undergraduate lectures and developed in a tutorial context.
Figure 6.7. An explanation of the concept of sustainability and its determinants (on
undergraduate programmes this may be included a little later in the course)
Competitive Position - Competitive
Advantage 3/4
Three Major Routes to Competitive Advantage: Is it possible for a firm to
pursue more than one generic strategy?
A re-statement of the ‘stuck in the middle’ hypothesis and a summary of the reasons for
arguing that, in order to be successful, a firm should commit to a single strategy. The
critique of this position and the implications of composite strategies. The relationship
between generic strategies and market structure (this may be omitted on undergraduate
programmes).
On undergraduate programmes the following sections may form the basis of a second
lecture
Market Segmentation Analysis
The rationale for market segmentation analysis. The concept of offer curves and
price/quality trade-offs (this element may be omitted on undergraduate programmes). The
identification of segmentation variables.
Value Creation and Value Analysis
The concept of value and consumer surplus. The link between value, competitive strategy
and competitive advantage. Value maps could be included if time permits but can be
omitted without losing the main thrust of the argument.
Competitive Position - Competitive
Advantage 4/4
Strategic Group Analysis
An explanation of the concept of strategic groups
and rationale for this kind of analysis. Mapping
strategic groups over time and strategic groups in
practice.
Industry Transformation
Using the 5 forces framework to gain insight into
industry transformation. On undergraduate
programmes this may be omitted from the main
lecture and developed in tutorial sessions.
Business Models
This is an optional part of this session and may
be considered in a later slot.
An explanation of the terminology. The key
elements of a business model. Business models in
practice. Achieving a sustainable and defensible
strategic position.
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Source: Vadim Kotelnikov, GIVIS, Ten3
East-West
Corporate Strategy: Parenting Advantage 1/3
Lecture
Introduction
The move from a focus on competitive strategy to a focus on corporate strategy.
A discussion of the growth in multi-business firms with illustrative examples
Slide: Definition of corporate strategy.
Changes in Organisational Structures over Time
An explanation of the ways in which organizational structures have evolved and
developed over time and a discussion of the advantages and disadvantages of U
versus M forms of organization
Slide: Figure 9.2 plus bullet points
outlining strengths and weaknesses
of this form of organization
Slide: Figure 9.3 bullet points
outlining strengths and weaknesses
of this form of organization
Click on Image for further information
Corporate Strategy: Parenting Advantage 2/3
Strategy and Structure
A discussion of the two-way relationship between strategy and structure and
Alfred Chandler’s work. A consideration of the questions raised by the rise of M
forms of organization
Slide: Bullet points of issues (page 343)
Managing the Multi-business Firm 1: The Corporate-Business Interface
An introduction to issues of business unit boundaries, groupings of businesses
and headquarter/business unit relationships. An exposition of common
corporate-business interface styles.
Slide: Bullet points relating to three different styles (p.347)
Managing the Multi-business Firm 2: The Role of the Corporate
Headquarters
An explanation of the different ways in which the centre can add value and a
description of Gold and Campbell’s work on parenting styles
Slide: Figure 9.7
Slide: Figure 9.8
Corporate Strategy: Parenting Advantage 3/3
Managing the Multi-business Firm 3: Managing the Portfolio
A brief review of portfolio models such as the familiar BCG matrix plus an
explanation of the limitations of these models and the reasons why they are no
longer popular.
Slide: Figure 9.9
Evidence and Experience
A brief review of the finding of some of the empirical work in the area,
emphasizing the difficult of measuring relatedness
Slide: bullet points on concept of ‘relatedness’
Concluding Comments
Link back to the resource-based view highlighting the connection between core
competences and relatedness. A summary of the key tensions in managing
portfolio businesses including centralization v decentralization, vertical v
horizontal focus and co-operation v competition.
Global Strategies and International
Advantage 1/6
Lecture The 'global strategies and
international advantage' topic covers a lot of
ground and on undergraduate programmes it
might be worthwhile covering the topic over
two lectures.
The first lecture could focus on the concept
globalization and the pursuit of international
competitive advantage at the nation and
industry level. The second could focus on firm
level choices and the strategic options
available to international firms
Introduction – opening remarks should
establish the link with previous lectures on
competitive and corporate strategy and
explain this lecture’s focus on the global
arena.
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Source: Carnegie Endowment
Global Strategies and International
Advantage 2/6
The Terminology of International
Business – an explanation of key terms and
the introduction of the notions of
internationalization and globalization.
Slide: The terminology of international
business (list of key definitions drawn from
p.412 and 413)
The Context of International Strategy –
a brief review of the major trends in trade
and foreign direct investment. A discussion of
the factors driving globalization
Slide: Table 11.1 and 11.2
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Source: © 2000-2006 by The Globalist
Global Strategies and International
Advantage 3/6
National Competitive Advantage – an
introduction to, and explanation of, the
determinants of national competitive advantage
(Porter’s diamond model). Lectures to
postgraduate audiences could also include a
discussion of the limitations of the model
(discussed on p.434-436 of the text) and
introduce the double diamond model.
Slide: Figure 11.1
The Internationalization process – an
explanation of the ways in which domestic
firms develop their overseas activities and the
evolution of different forms engagement in
foreign markets over time. A summary of the
advantages and disadvantages of these
different forms of international activity, e.g.
licensing, foreign direct investment, etc.
Slide: Figure 11.2
Click on Image
Source: Irish Agriculture and Food
Development Authority
Global Strategies and International
Advantage 4/6
From international to global strategies – a reiteration of the opening themes of
internationalization, moving to a discussion of the strategic options available to multinational firms, introducing the notion of multi-domestic and global strategies.
Slide: Figure 11.3
Slide: Bullet points contrasting multi-domestic and global strategies
The Drivers of Globalization – a discussion of the forces that are driving the industries
and firms to go global and the limitations of, and tensions in, this process
Slide: Table 11.4
Global v Local – an outline of the trade-offs between standardisation and differentiation
and the link between the strategic environment and available strategic options.
Slide: Table 11.5
Strategic Choices – an explanation of Bartlett and Ghosal's four basic strategies used to
enter and compete in international environments
Slide: Figure 11.5
The Best of Both Worlds – Transnational Strategies – an outline of what is understood
by a transnational strategy and an explanation of implementing this strategy in practice.
Global Strategies and International
Advantage 5/6
Strategy and Organization – a return to one of
the key themes running through the strategy
literature, namely the strategy/structure debate. A
discussion of the fit between strategy and
structure in international firms, paying particular
attention to Bartlett and Ghoshal's (1989) model.
If time permits the lecturer may also like to reintroduce the notions of country-specific and firmspecific advantages and Rugman & D'Cruz's
(2000) 'flagship'model
Slide: Figure 11.7
Slide: Figure 11.11 (optional)
Managing International Organizations – an
explanation of the complexity inherent in
organising a multi-product, multi-market firm and
a discussion of the ways in which managers may
seek to organise and control such businesses.
Slide: Bullet points for and against a matrix
structure
Slide: Figure 11.13
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Source: © Department of Industrial
Engineering and Management 2006,
Helsinki University of Teachnology
Global Strategies and International
Advantage 6/6
Concluding Comments – a summary of some of the main themes including the nature of
globalization and the significance of national competitive advantage, the global/local debate
and the way this connects with firm-specific versus country-specific advantages, the
tantalizing possibility of gaining the 'best of both worlds' through transnationality and the
possibilities and problems of developing appropriate organizational structures and systems to
make the transnational organization a reality.
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Source: BizEd