International Strategy Individual Work

Strategic choices

INTERNATIONAL STRATEGY

Nathalie Crutzen Anthony Santino

Associate Professor Principal

Director, Smart City Institute Roland Berger

HEC Liège

Date Session Company Speaker

5/02 Introduction to strategy and strategic analysis

Strategic position : external and internal analyses

Gaudeto Jacques Galloy

19/02 Business-level strategy Mithra Jean-Manuel Fontaine

26/02 Corporate-level strategy

Mergers, acquisitions and alliances Linklaters Eric Pottier

5/03 Strategy and internationalization Coca-Cola Mr Sabanegh

12/03 Digital strategy Dimension

Data Belgium

Pierre Dumont

19/03 Strategy evaluation and entrepreneurship EDF Luminus Grégoire Dallemagne

PART III: STRATEGIC CHOICES

I. Business level strategy

INDEX

1. Business Strategy: introduction

2. Definitions

3. Generic competitive strategies: different existing strategies a. Cost leadership b. Differentiation c. Focus strategy d. Hybrid strategy

4. Interactive strategies

5. Business model a. Business Model Canvas

b. Typical patterns of business model

c. Collaborative business model

INDEX

1. Business Strategy: introduction

2. Definitions

3. Generic competitive strategies: different existing strategies a. Cost leadership b. Differentiation c. Focus strategy d. Hybrid strategy

4. Interactive strategies

5. Business model a. Business Model Canvas

b. Typical patterns of business model

c. Collaborative business model

1. Business level strategy: introduction

Corporate level

Business level

Functional / Operational level

How the individual business should compete in

their particular market

1. Business level strategy: introduction

Business- level strategy

Differentiation

Focus strategy

Business model

Hybrid strategy

Leadership strategy

Competitive advantage

How to compete

in a marketplace?

INDEX

1. Business Strategy: introduction

2. Definitions

3. Generic competitive strategies: different existing strategies a. Cost leadership b. Differentiation c. Focus strategy d. Hybrid strategy

4. Interactive strategies

5. Business model a. Business Model Canvas

b. Typical patterns of business model

c. Collaborative business model

2. Definitions Business Strategy –‘How an individual business competes in its particular

market’

Strategic Business Unit (SBU) – ‘Supplies good or services for a distinct

domain of activity’

Competitive Strategy – ‘How a company, a SBU or organisation achieves

competitive advantage in its domain of activity’

Competitive advantage – ‘How a company, a SBU or an organisation

creates value for its users which is both greater than costs of supplying them

and superior to that of rivals’

Business model – ‘Relationship between the value created for customers

and others participants, the organisational activities that create value and

how the organisation and other stakeholders can capture value from this’

INDEX

1. Business Strategy: introduction

2. Definitions

3. Generic competitive strategies: different existing strategies a. Cost leadership b. Differentiation c. Focus strategy d. Hybrid strategy

4. Interactive strategies

5. Business model a. Business Model Canvas

b. Typical patterns of business model

c. Collaborative business model

3. Generic competitive strategies: different

existing strategies

Competitive strategy is concerned with how a company business unit

or organization achieves competitive advantage in its domain of

activity. It involves issues such as costs, product & service features

and branding.

Competitive advantage is about how a company, business unit or

organization creates value for its users which is both greater than the

costs of supplying them and superior to that of rivals. There are two

dimensions to identify a generic strategy

3. Generic competitive strategies: different

existing strategies

2 dimensions

ScopeAdvantage

Lower cost Differentiation Narrow

segment

Broad

segment

3. Generic competitive strategies: different

existing strategies

a. Cost leadership

b. Differentiation

c. Focus strategy

d. Hybrid strategy

3. Generic competitive strategies: different existing strategies

Porter’s generic strategies

https://www.youtube.com/watch?v=V14kuqYEsxE

a. Cost leadership strategy

Objective:

It involves becoming the lowest-cost organisation in a domain of activities

Four key cost drivers:

- Input Cost: seeking competitive advantage through low input costs as raw material and labour costs

- Economies of scale: increased volume reduces the average costs, especially for high fixed cost products/services

- Experience: cumulative experience gained with each unit leads to reduction in unit cost

- Product/Process design: efficient design, tailored to customers real needs and whole-life cost consideration lower costs.

b. Differentiation

Objective:

It involves uniqueness along some dimension that is sufficiently valued by customers, with higher perceived value to allow a price premium

Three differentiation drivers:

- Product and service attributes: better and unique features

- Customer relationship: special services and responsiveness, customisation, reputation

- Complements: differentiation built on linkages to other products

c. Focus strategy

Objective:

Targeting a narrow segment or domain of activity and tailoring products or services to the needs of that specific segment to the exclusion of others

Two types of focus strategy:

- Cost focuser: focusing on a niche market in

addition to practicing lower-price policy

- Differentiation focuser: focus on client particulars needs

d. Hybrid strategy

Objective:

Combination of different generic strategies

Circumstances in which strategies can be combined:

- Organisational separation – creating different SBU’s, each pursuing different generic strategies

- Technological or managerial innovation – allows radical improvement in both cost & quality

- Competitive failure – less competitive pressure when a competitor failed

INDEX

1. Business Strategy: introduction

2. Definitions

3. Generic competitive strategies: different existing strategies a. Cost leadership b. Differentiation c. Focus strategy d. Hybrid strategy

4. Interactive strategies

5. Business model a. Business Model Canvas

b. Typical patterns of business model

c. Collaborative business model

4. Interactive strategies

Concept: the business strategy choices interact with those of competitors

Different possibilities:

i. Interactive price & quality strategies

Competitors interactions in terms of movements against the variables

of prices and perceived quality

ii. Cooperative strategies

The collaboration in market can give competitive advantages. It can

be explicit or tacit – Tacit Collusion

iii. Game theory

https://www.youtube.com/watch?v=3Y1WpytiHKE

https://www.youtube.com/watch?v=t9Lo2fgxWHw

INDEX

1. Business Strategy: introduction

2. Definitions

3. Generic competitive strategies: different existing strategies a. Cost leadership b. Differentiation c. Focus strategy d. Hybrid strategy

4. Interactive strategies

5. Business model a. Business Model Canvas

b. Typical patterns of business model

c. Collaborative business model

5. Business model Business model (BM) involves:

 Value Creation – What is offered to what customers segment?

 Value Configuration – How is the value proposition structured?

 Value Capture – Why does the model generate margin?

What is a BM?

https://hbr.org/video/5072479512001/the-explainer-what-is-a-business-

model

https://www.youtube.com/watch?v=IP0cUBWTgpY

a. Business Model Canvas

b. Typical patterns of business model

Razer & Blade: focus on value capture component, selling

principal item at low price and refill at high price.

Freemium: the basic version of the product is for ‘free’ to

build a high volume of customers and the business makes

profit thanks to the ‘premium’ version for sale.

Multi-sides Platform: bringing together two distinct but

interdependent groups of customers on one platforms

c. Collaborative business model

The collaborative economy is practices and business models based on

horizontal networks and participation of a community, transforming how we live, work and create’ (OuiShare, 2016)

https://www.youtube.com/watch?v=q8shRsyeGr0

c. Collaborative business model

Reference book

Johnson, P., Whittington, R., Scholes, K., Angwin, D., Regnér, P.(2017). Exploring Strategy (11th

edition).Harlow, United Kingdom: Pearson.

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