Strategic Management

The environment and strategic capabilities (SWOT)

September 2009 Mark van der Veen strategicmanagement-cc-feb@uva.nl

Programme
Introduction (1) Strategic Position 1, The Environment and Strategic Capabilities (2,3) Strategic Position 2, Expectations, Purposes and Culture; Business level strategies (4,5,6) Strategic Choice, Strategies (7,8,10) Strategy into Action (11,12,14,15)

Programme for today

FAQs Introduction to the theory Instructions for the case study assignment

FAQs
Where is the lecture, what should we read, etc Who is my tutor SEFA sold me a book without cases CTIS doesnt work There are only English groups left I want to change-over to another group New questions, please mail to strategicmanagement-cc-feb@uva.nl

SWOT
Opportunities Threats

relative Strengths relative Weaknesses

Scanning the environment, 3 levels

Macro
PESTEL Scenarios

Industry
Five forces Cycles of competition

Competitors and markets

Strategic groups Market segments Critical success factors

The macro environment

PESTEL, key drivers for change Building scenarios; considering the implications of high levels of uncertainty for key drivers for change, related to PESTEL

Full-time masters remain HBO and Unis remain New system More Part-time masters

The industry environment

Five forces
Direct competitive rivalry Threat of new entry < scale, experience, access to resources, expected defense; legislation; differentiation Bargaining power of buyers < cooperation, switching cost, alternatives (diy) Threat of substitutes Bargaining power of suppliers

Competitors and markets

Strategic groups (identify the most direct competitors)

Scope of activities (products, regions, segments, channels) Resource commitment (branding, marketing, integration, quality, innovation, size)

Market segments (group with similar needs)

Developing customer needs Relative market share

Opportunities and threats

Strategic gaps (new to the market opportunities) Opportunities in substitutes Opportunities in other strategic groups Opportunities in the chain of buyers Opportunities in complementary services Opportunities in new market segments Opportunities over time (first mover)

Elements of strategic management

Strategic position
The environment (PESTEL, O&T) Capabilities (Resources and Competences, S&W) Stakeholders

Strategic choice Strategy into action

Strategic capability
Resources and competences of an organisation that determine the competitive position (labour productivity, technology, market orientation, etc) Enable companies to exploit opportunities, neutralize threats Resource-based view focuses on resources to explain differences in business results

Strategic capabilities
Tangible, Intangible Unique, Treshold Competences: how resources are used Sustainable Competitive Advantage
Valuable (to the customer) Unique Difficult to imitate (complex, cultural and historical, not evident to competitors

Dynamic capabilities: ability to change

Diagnosing strategic capability

Value chain:
Activities within and around the organisation which create a product or service Where do we add value, perform well? How to become more profitable?

Diagnosing strategic capability

Value network:
Organisational links and relationships that are necessary to create a product or service Identify which activities are centrally important, where are the profit pools?

Diagnosing strategic capability

In the value network:

What are the bases of the strategic capabilities, the sources of competitive advantage? Where are cost and value created? Which activities are centrally important? Where are the profit pools in the value network? Is it possible to outsource some activities? Which organisations are the best partners in the network?

Diagnosing strategic capability

Activity map: showing how activities of an organisation are linked to identify strategic capabilities at a detailed level.

Benchmarking

Comparing capabilities instead of performance

Historical Industy Best-in-class

SWOT
Opportunities Threats

Relative strengths Relative weaknesses

Managing capabilities

Managers should look for strategic capabilities and exploit them (Barney), but Competences may be difficult to manage (not understood, not valued, difficult to formalise) Options for managing capabilities:
Extend best practices to other units Change activities Diversify based on the core competences Outsource activities Separate units for different activity maps HRM in general Building dynamic capabilities, the learning organisation

Assignment
Case Study Airlines Analyse the attractiveness of the industry pre-9/11 Analyse the attractiveness of the industry post-9/11 How might arilines better plan for disruptive events such as 9/11 2 pages, group work max 3, hand in before

Conclusion
A SWOT is the end result of analyses, not the starting point Outside the competitive context a SWOT is nonsense A SWOT can help to develop strategic options to use internal strengths in exploiting opportunities and neutralizing threats, while avoiding weaknesses