3. Claude Chalem
■ Present the third stage of the strategic diagnosis:
the analysis of the firm's expectations and
intentions
○ Role and power of stakeholders
○ Impact of stakeholders on strategic and organizational
choices
- 57 -
Objectives
4. Claude Chalem
Corporate governance
What interests should the
organization serve?
How should objectives be
determined?
Ethics
What objectives should be
given priority?
Why?
Organizational objectives
Mission Objectives
Cultural context
What objectives are really a
priority?
Why?
Stakeholders
What interests does the
organization actually serve?
- 58 -
Source: Stratégique, 2002, p. 253
Influences on organizational goals
5. Claude Chalem
Mapping of stakeholders
Weak
High
Weak High
A
Minimal
Effort
C
keep
satisfied
B
keep
informed
D
key actors
Level of interest
Power
Source A. Mendelow
- 59 -
6. The three levels of organizational culture
Values
Beliefs
Paradigm
Implicit assumptions
Source E. Schein, 1985, in Stratégique 2002, p.283
Claude Chalem
8. Claude Chalem
The cultural fabric
Power
structures
Rites and
routines
Organizational
structures
Control
systems
Myths Symbols
Paradigm
Source: Stratégique, 2002, p. 285
12. Claude Chalem
■ Present Business Strategy
○ Distinguish generic strategies.
○ Identify the determinants of success
○ Understand managerial impacts.
- 65 -
Objectives
13. Competitive advantage
Objective: Obtaining a Competitive ADVANTAGE
Definition: Better mastery than the competitors of some skills that are a decisive facto
performance in a given field of activity.
Decisive
Characteristics of
Sustainability
A.C.
Defensible Durable
93 Claude Chalem
14. Typology of competitive universes
Strong
Sensitivity
of differentiation
Weak
Faible Forte
Sensitivity to volume
94 Source: Strategor, d ’ après
Claude Chalem
Fragmentation Specialization
Impasse Volume
15. Typical strategies
Competitive system Strategy
Volume Low number of competitors
Very profitable leader
Grow faster than competitors to improve Cost position
Spécialisation Several very profitable companies
Central part of each niche protected,
Evolving and competitive borders.
Unprofitable followers
Focus the effort on defensible niches
Maximize the advantage on specific costs
Fragmentation Many small competitors incoming and
leaving continuously
Diverse and unstable margins
Large company disadvantaged.
For a large company:
Either isolate the activity and manage it like a small company (diff
Or transform the activity into an activity of
Volume or specialization if possible
Impasse No competitor has high market share
If no one reduces their production, everyone loses money
Concentration sous l' égide des pouvoirs publics
contrôle d’un marché local
localiser l' investissement là où les coûts des facteurs
sont les plus favorables
95 Source: Strategor d ’ après
Claude Chalem
16. In summary,
TWO main STRATEGIC OPTIONS:
• MARKET SHARE or VOLUME
• DIFFERENTIATION OR NICHE
96 Claude Chalem
17. M. Porter's three generic strategies
Strategic advantage
Unique characteristic
product perceived by
customers
Company situation is characterized
by low costs
Whole
sector
Strategic target
Segment
particulier
Source : Porter
!!!!!
If none of these strategies are sustainable, there is a fourth left: Withdrawal
97 Claude Chalem
Differentiation Overall cost
domination
Concentration or niche
18. Strategy of cost domination
"....I will build my Competitive Advantage by minimizing
costs and by offering the cheapest products....."
Increase the volume
increase M/S
increase in Profitability
Claude Chalem
19. Sources of successful cost domination
Effect of experience : Constant decrease in the unit cost of a product each time combined production
It is based on : Economies of scale
- Size effect
- Learning
- Substituting capital for work
Three IMPERATIVES !!! :
- Check the link between increased cumulative production and a decrease in unit cost
- Check the link between M/S and profitability
- Have a dominant market share
99 Claude Chalem
21. Relative market share and profitability
(%)
40
30
20
Commercial profitability
Financial profitability
10
0
20 60 100 140
Relative market share (%)
Comment : Relative M/S is M/S of the company compared to that of the company
Leader or that of the main competitor.
Source: Stratégique, 2002
101 Claude Chalem
22. Cost structure and key success factors
Industrial
cleaning
Making
Of components
Trading
company
Acquisition 3%
Materials and
Marchandise
40%
From the structure of
Costs of an activity, we
determine:
Direct costs
Construction
sites
75%
The most important cost
components necessary to
Personnel% undertake a strategy
87%
R&D 16%
d ’ activité
Amortisations
11% · the KSF
19,5%
Sales costs 2,5% 15%
Distribution
costs
7,5% 5,5%
Source: Strategor
102 Claude Chalem
23. The different pricing strategies
Different pricing strategies
Costs
Price
A B C
D
Are a function of position
relative of each company,
but also the life cycle of
the activity.
VOLUME CUMULE
A
B
C
DUMPING/Adjustment : acquire M/S
UMBRELLA : Maintain prices to increase the margin
DOMINATION : Pass on to prices the decrease in costs
D ABANDON: leave gradually by maximizing profitability
Source : Strategor
103 Claude Chalem
24. Domination by costs:
Risks and skills required
Risks
Skills and necessary
resources
Modes of organization
- Technical progress cancels
the effect of experience or
past investments
- Imitation and investments more
modern than that of competitors
- Decrease in capacity of innovation
due to "Obsession" with costs
- Power of distributors
- Sustained investments in
technical capital
- Efficacy of Technical process
- Simplicity of Design and
manufacture of products
- Efficiency of work force.
- Adapted distribution systems d
- Elaborate cost management
- Frequent and detailed audits
- Organization and structured responsibilities perfectly define
- Animation oriented towards
precise quantified objectives
Source: Stratégique, 2002,
104 Claude Chalem
25. Differentiation strategies
".... I will make an offer available to the customer whose
character will be recognized and valued..."
Value Differentiation Boundary
HIGH Economic
efficiency
Cost
Domination
Differentiation
LOW
105 ClaudeSource:Chalem Strategor
Zone de
rupture
stratégique
Price
26. What is the differentiation strategy based on?
Offer / COMPETITORS: benchmarking
- Redefine the value chain to do otherwise
- Optimization of value chain functions
- Coordination of links between intra- and inter-company functions
Offer / CUSTOMERS: perception of "quality"
- "Quality" is RELATIVE because SUBJECTIVE (personal indicators,..)
- Perceived « quality" et Not the one "measured" by the company
- Pay attention to the relationship between price and marketing positioning (range)
· How does the company do?
· How do the competitors do it?
· How to do otherwise?
· How are the offers perceived by the customer?
106 Claude Chalem
27. Claude Chalem
Identification of skills
The Value Chain
- 48 -
Marge
Logistics Production Sales Service
Procurement
Technological development
Human resources management
Infrastructure and systems
Support
Functions
M
ar
gi
n
Primary functions
Source: Stratégique, 2002
M
ar
gi
n
28. Conditions for successful differentiation
Significant : Differentiation very clearly
perceptible by buyer
Profitable : pay attention to the demand distribution
around the reference offer
Sustainable : Significant progress vis à vis competition
108
Claude Chalem
29. Differentiation: Risks and skills required
Risks
Skills and necessary
resousrces
Modes of organization
- Inability to control
difference in costs/
- Loss of importance of
differentiating factors
- Trivialization and imitation
- Intuition and creativity
- Research capability
- Product technology
- Commercial capacities
- Image
- Tradition in the sector or
original combination of skills
drawn from other sectors
- High cooperation of
distribution channels
- High coordination of R&D,
marketing and production
functions
- Objectives and controls
quantitative but also
qualitative
Source: Stratégique, 2002
109 Claude Chalem
30. Exit
Emergence Growth Maturity Decline
Causes
of exit
. Too long
. Too costly
. Doen’t meet
expectations
. Investments too
expensive
110
. No critical size
. No perpectives
. No Skills
. Unfavorable
perspectives
Claude Chalem
31. Generic strategies: : Bowman's clock
Sophistication
High
Hybrid
Without overprice
4 Sophistication With
Overprice
3 5
Perceived
value
Price 2 Competitors 6
1 7
Purge
8 Failed strategies
Low
Low High
111 Price Source: C. Bowman
Claude Chalem
32. Conclusion
Efficient
Ability to
achieve
low cost
+ The Cost-Driven E.
Internally efficient
·
Thriving on
·
predictability
The Laggard
· Insufficient in both
cost control and
customer satisfaction
The WINNING E.
·
Delivering
.
differentiation
efficiently
The Benevolent E.
·Customer needs
met at any costs
·Operations driven by
sales demands
Efficient -
- Low
Ability to
High +
Satisfy Customers
114
Source :
Edwards
Claude Chalem
