Lvmh

Teaching Notes: Finntrack Strategy: Analysis and Practice ©2005 McGraw-Hill Education Europe

Discussion Notes

Index

• Workshops• Case Analysis• Debate• Case Questions• How to Use Your Workshop Resourc

es• Disclaimer • Learning Objectives

• Conglomerate Company• Luxury Goods Market

• Introduction to LVMH• Overview• Annual Results 2002 - 2005

• LVMH Strategy

Click on ImageSource: www.musicone.de

Index

• 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

• Competitive Position: Competitive Advantage

−Principles of Strategic Planning−Principles of Strategic Managemen

t• Global Strategies• Corporate Strategy

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 SchoolHoward Thomas, Warwick Business SchoolDavid 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 ImageSource: 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 ObjectivesLearning 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.

Also See

Horizontal expansion and conglomerates

Larger ImageSource: University of North Carolina

Conglomerate Company

• Potential Advantages of the Conglomerate Organizational Form

• Conglomerate companies • Media conglomerates

• See also • Japanese • Korean

Portfolio Analysis Example

Larger ImageSource: 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 ImageSource: BYG Publishing

Click on ImageSource: Wikipedia

LVMH Overview

• Conglomerate Company

• Luxury Goods

• Overview

• Annual Results 2002 - 2005

• Strategy

Click on ImageSource: 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 sub-companies 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.

Click on Image

Source: ITAP International Inc Also see www.lvmh.com

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 ImageSource: 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 ImageSource: De Beers

Click on ImageSource: 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 k

o)

• Press releaseClick on ImagesSource: 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 ImageSource: Copyright © 2001-2006 brandchannel.

Strategy - Objectives

• Shareholder Value Maximisation • Divestment

• Growth Investing

• Integration

• Acquisitions and Mergers

Click on ImageSource: ©1996-2006 Accenture All Rights Reserved

Strategy - Shareholder Value Maximization

Creating and managing shareholder value

Shareholder value • 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 ImageClick on ImageSource: 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 ImageSource: 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 ImageSource: 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 Pinault-Printemps-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 ImageSource: Copyright 2006 Ronald Feldman Fine Arts, Inc.

Strategy - The Gucci Battle

Click on ImageSource: Wikipedia

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.

Competitive Position: Competitive Advantage

• Strategic Planning

• Strategic Management

• Income Elasticity of Demand

• What in the World is Competitive Advantage?

• Competitive Position: Competitive Advantage

• Sustainable Competitive Advantage

• Positioning Strategy

• Performance measures to support competitive advantage

Click on ImageSource: BRS

Click on ImageSource: businessballs.comAlso see Annotated Lecture Outline

Literature Review

Competitive Position: Competitive Advantage

• Competitive Strategies

• Risk-related Challenges

Click on ImageSource: Stanford University

Corporate Strategy

• Business Strategy Map

• Value Based Management

• Value Creation

• Value Management Models

• Centralization, Decentralization and Delegation

• Strategy Modelling Technique for Financial Services

Literature Review

Global Strategies

Click on ImageSource: Agrium Inc. 2004

Literature Review

Also see Annotated Lecture Outline

• 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

Literature Review Strategic Planning

• Principles of Strategic Planning

• Principles of Strategic Management

Click on ImageSource: © 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 ImageSource: 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 ImageSource: [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 ImageSource: University of Cambridge, Department of Engineering

Literature Review Strategic Management

• Strategic Management• Strategy Formulation• Strategic Implementation• Introduction to Strategic Managem

ent• 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 ImageSource: 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 micro-environmental and macro-environmental.

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 ImageSource: 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 ImageSource: 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 ImageSource: ©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 ImageSource: © 1999 - 2006  Brazos Consulting

Literature ReviewIncome 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 MapClick on MapSource: bized.ac.uk/

Literature ReviewIncome Elasticity of Demand

Larger MapClick on MapSource: bized.ac.uk/

• Spotlight on the theory

• Mathematical Definition

• See also • References

• Lists

Literature ReviewIncome 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 ReviewCompetitive 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 ReviewPositioning 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 ImageSource: © www.marketingteacher.com 2000-2006

Literature Review Business Strategy Overview

Larger Map

Source: BizEd, University of Bristol

Click on image for further information

Literature ReviewValue Based Management

Source: Dresden International University

Source: FDC

Click on Images for further information

Literature ReviewValue 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 ReviewShareholder Value

• What is Shareholder Value?

• What Drives Shareholder Value?

• Shareholder Value Analysis

Larger ImageSource: Accenture

Literature ReviewShareholder Value Analysis

Larger ImageSource: agility.com.au

• Rediscovering Shareholder Value: A Proven Approach

• How to Build Value into a Merger

• Shareholder Value Tool

Literature ReviewValue Management Models

Larger ImageSource: performgroupClick on Image for further information

Literature ReviewValue 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 ImageSource: KETCH.ca

Literature ReviewValue Management Models

• 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

Six Sigma

Click on ImageSource: QCI International. All rights reserved.

Literature ReviewValue Management Models

Value Chain

Click on ImageSource: 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

• Faster decision-making

• Decision better adapted to local condition

• Better management experience for managers that are considered for promotion to higher level management

Click on ImageCopyright: Cornell University

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 RemarksIt 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 SchoolA recap on the ‘generic strategies’ framework introduced briefly in the last chapter and restatement of the stuck in the middle hypothesis.

Larger ImageClick on ImageSource: Wikipedia

Competitive Position - Competitive Advantage 2/4

The Nature and Source of Cost AdvantageA 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 AdvantageA 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 AdvantageA 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 AnalysisThe 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 AnalysisThe 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 AnalysisAn 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 TransformationUsing 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.

Larger ImageClick on ImageSource: Vadim Kotelnikov, GIVIS, Ten3 East-West

Corporate Strategy: Parenting Advantage 1/3

LectureIntroduction 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 examplesSlide: 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 organizationSlide: Figure 9.2 plus bullet points outlining strengths and weaknesses of this form of organizationSlide: 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 organizationSlide: 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 stylesSlide: Figure 9.7Slide: 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 relatednessSlide: 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. Click on Image.

Larger ImageSource: 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 globalizationSlide: Table 11.1 and 11.2

Click on ImageSource:

© 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 ImageSource: 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 multi-national firms, introducing the notion of multi-domestic and global strategies.Slide: Figure 11.3Slide: 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 environmentsSlide: 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.

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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 re-introduce the notions of country-specific and firm-specific advantages and Rugman & D'Cruz's (2000) 'flagship'modelSlide: Figure 11.7Slide: 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 structureSlide: Figure 11.13

Click on Image. Larger ImageSource: © Department of Industrial Engineering and Management 2006, Helsinki University of Teachnology

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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.

Click on Image. Larger MapSource: BizEd