Appunti Strategy & Marketing - prof. Josip Kotlar

Sommario

• Strategy ............................................................................................................................................... 2
• Introduction to strategy (__/__/2020) ........................................................................................... 2
• External analysis (__/__/2020) ........................................................................................................ 11
• Internal analysis & generation of strategic alternatives (__/__/2020).................................. 21
• Corporate strategy (__/__/2020) .................................................................................................... 35
• Business model canvas (__/__/2020) ............................................................................................... 42
• Blue ocean strategy (__/__/2020) ................................................................................................... 48
• Internationalization strategy (__/__/2020) ................................................................................. 55
• M&A (03/11/2020) ............................................................................................................................... 64
• Disruption innovation (05/11/2020) ............................................................................................... 71
• TBOS case study (18/11/2020)............................................................................................................ 78
• Digital competition (26/11/2020) .................................................................................................... 81
• Marketing.......................................................................................................................................... 89
• Marketing lecture 1 (24/11/2020) ................................................................................................... 89
• Marketing lecture 2 (__/__/2020) ................................................................................................... 96
• Marketing lecture 3 (__/__/2020) ................................................................................................. 108
• Marketing lecture 4 (10/12/2020) ................................................................................................. 121
• Strategic entrepreneurship ......................................................................................................... 127
• Business plan & startup program (27/11/2020) .......................................................................... 127
• Fund raising for startups (15/12/2020) ....................................................................................... 134
• Lean startup method (15/12/2020) ............................................................................................... 1491

Strategy

Introduction to strategy (__/__/2020)

What is a company?

It can be:

• A small business
• A large corporation
• A public sector organization a not-for-profit-organization

Our unit of analysis is the profit-oriented organization responsible for its own economic & financial results

How can we measure the size of a company?

Which indicators should we look at?

Largest companies by market cap Largest company by revenues (2019)

What is a company?

It is a legal entity:

• Limited or unlimited
• Private or public

A company is a legal entity, i.e. a legal construct (contract) through which the law allows a group of natural persons to act as if they were a single artificial person for certain purposes.

The legal form, i.e. the nature of the contract, can be different:

• Unlimited company
• Limited company

A company as a legal entity

Unlimited company

A company either with or without a share capital whose members or shareholders do not benefit from limited liability should the company ever go into formal liquidation. Unlimited companies are exempted from filing accounts with the Registrar of Companies for public disclosure.

Private company limited by guarantee

This is a company that does not have share capital, but is guaranteed by its members, who agree to pay a fixed amount in the event of the company’s liquidation. Charitable organisations are often incorporated using this form of limited liability.

Private company limited by shares

Has shareholders with limited liability and its shares may not be offered to the general public. Shareholders of private companies limited by shares are often bound to offer the shares to their fellow shareholders prior to selling them to a third party.

Public limited company

A public limited company can be publicly traded on a stock exchange; this is similar to the U.S. Corporation (Corp.) and the German Aktiengesellschaft (AG) 2

It can realize:

• A single output
• A portfolio of outputs

It can:

• Embody many activities
• Outsource many activities

It can serve:

• A single geographical market
• Several countries (internationalization)

A company is a living organism in a complex ecosystem

The job of strategy is to give a meaning and a direction to this very complex system

The goal of a company

The Shareholder value

The dominant view is that the company objective is to create value for shareholders.

Where: is the Net Cash Flow at year t for the shareholders (which is equal to Dividends + Buybacks – Capital injection) cost of equity capitale

Shareholder and enterprise value

The shareholder value (SV) is equal to the enterprise value (EV) less net debt

The net debt is equal to debt less cash

Therefore: SV = EV – debt + cash

The stock market value is a proxy of the shareholders value

Why a proxy?

Because the stock market is affected by bubbles, fads, speculations

Shareholder value for whom?

It depends on the ownership profile of the company:

• One owner
• Majority shareholders with a small % of shares- 3public company
• A private equity fund as the majority shareholder

This notion that shareholders interests should reign supreme became widely accepted only in the 1990s, and since 2000 it has come under increasing fire from business and legal scholars (former General Electric CEO Jack Welch declared in 2009, “Shareholder value is the dumbest idea in the world”).

Shareholder perspective looks incomplete. What is missing?

• Manager perspective: the objectives of management may in some situations differ from those of- the company’s shareholders. Even when corporate executives own shares in the company, their viewpoint may differ from that of shareholders
• Stakeholder perspective: corporations should be socially responsible and serve the broader public- (stakeholder) interest as well as shareholder interest

The value of a business is increasingly measured by a combination of financial success, usefulness to society, and satisfaction of employees.

Shareholder, manager and other stakeholder perspectives are forced to engage in a partnership of “value creation”. In facts, in a long term view...

• Stakeholders are vulnerable when management fails to create shareholder value
• Without stakeholders value there can be no shareholder value in the long term

Emphasis on the maximization of long-term cash flows

Stakeholder impact analysis

Why a stakeholder impact analysis? Several events eroded the public’s trust in business and capitalism, made the relationships with stakeholders more critical and reinforced their role:

• Accounting scandals (Enron, Arthur Andersen, WorldCom, Tyco, Parmalat)
• Global Financial Crisis
• Other black swan events (9/11; Fukushima nuclear disaster; the fall of the Berlin wall and the collapse of the Soviet Union)

Internal and External Stakeholders in an Exchange Relationship with the Firm

Attributes of a stakeholder (from a managerial perspective):

• Power over a company (to get the company to do something- that it would not otherwise do)
• Legitimate claim when it is perceived to be legally valid or- otherwise appropriate
• Urgent claim when it requires a company’s immediate- attention and response

The Pyramid of Corporate Social Responsibility 4

Stakeholder Impact Analysis

The corporate governance

How to make this real

• Managers are not shareholders and they can have different (more short term oriented or individual)- objectives.
• There is an intrinsic power and information asymmetry between managers and shareholders, as well as- between managers and stakeholders and shareholders and stakeholders.
• Stakeholders can have different objectives, in some cases even in contrast among each other.
• This holds particularly true for public limited companies, i.e. those companies living in the most- complicated ecosystem, involving a huge number of shareholders and stakeholders.

Corporate Governance (CG) refers to:

The set of systems, principles and processes by which a company is governed.

They provide the guidelines as to how the company can be directed or controlled in order to:

• Fulfil its goals and objectives
• Add value
• Be beneficial for all stakeholders in the long term.

Models of Corporate Governance

The concept of strategy

The goal of a manager should be to maximize long term cash flows, which allows to achieve a combination of value creation for both shareholders and stakeholders.... So what is STRATEGY?

«Strategy» comes from the Greek word «Strategos» which means generalship.

It is the art of war, especially the planning of movements of troops, ships, aircraft etc. into favourable positions. A plan of action or policy in business. 5

Common elements in successful strategy:

The concept of “Strategic decision” and “Strategy”:

Strategy: an integrated, comprehensive plan which

• Identifies the scope and the direction of the organisation
• Is aimed at obtaining long term performance superior to competitors
• Integrates a coherent set of strategic decisions

Strategic decision is a decision that

• Has long term, significant and non-reversible effects on the organisation
• (Usually) requires large amounts of resources
• Requires top management involvement

Why strategy is important

• Strategy as decision support (constraining decision alternatives, integrating knowledge of different- individuals)
• Strategy as coordinating device (coordinating the actions of different parts of the organisation,- defining messages easy to communicate)

The process of setting the company’s strategy

Strategic decisional process: the logic flow

External and internal environment

The external environment comprises all the economic, social, political and technological factors that influence the company’s decisions and its performance.

The internal environment comprises:

• The company’s values and goals;
• The company’s resources and capabilities;
• The company’s organisational structure and systems. 6

External and internal analysis to identify SWOT's

A Strength could be:

• An expertise, a set of skills;
• An innovative product or service;
• The business location;
• The quality of processes and procedures;

A Weakness could be:

• Lack of competencies and expertise;
• Undifferentiated product or service (relative to competitors);
• Poor quality of products or services;
• Bad reputation.

Opportunities:

• Can the company introduce its current products into new markets?
• Might demographic changes increase demand for the company’s products?
• Can the company use its technology in other fields?

Threats:

• Are new regulations going to be introduced which will narrow the company’s business or for which the company is unprepared?
• Are there new technologies that might reduce the company’s competitive advantage?

Strategy as a link between Internal and External Environment

Let’s try

Case “Silk”

Silk is a medium-sized privately held company that operates in the fashion textile industry. More precisely Silk produces silk accessories (ties and scarves in particular) that are sold to distributors and retailers. Silk is a B2B operator that has a good reputation in the trade but is unknown in the consumer market.

Its core products – ties and scarves – are considered by the trade of fairly good quality but too expensive, also because Silk’s delivery service is rather poor, in terms of both lead time and flexibility.

In the past two years Silk’s competitive and financial performance has suffered a dramatic decrease: 25% decrease in sales, 10% decrease in margin, 40% decrease in net income. 7

The entrepreneur – who is also the President and CEO of the company - attributes this performance to the very difficult current market and competitive scenario: a higher and higher attention of customers (trade) to cost, quality, time and flexibility; a more and more aggressive competition due to both local competitors (operating in the same district as Silk) and competitors located in low-cost countries.

Assuming you are a consultant to the entrepreneur:

– What decisions would you suggest to him?

Explore new markets, improve the distribution channel. Creating a brand, becoming recognizable without changing the product but just making it more recognizable by the customer (brand has a value → brand equity). Moving from B2B to B2C. More advertising (but to do adv you need a brand), marketing, optimize delivery, increase product portfolio (create new products, like socks, shirts, …). Create a district strategy. Customize products. Enter new markets. Hire high skilled people as managers to set new competitive strategies. Joint Ventures (creating a brand together). Getting influencers for promotions. Add services to the single products.

– What analysis would you carry out?

SWOT.

Here, in this text are missing the following info: Who are the competitors? What are the values of this company? what are the goals? What is the production speed? How do the products perform? Why customers buy them? What is the relationship with the customers/suppliers? How is the market growing? …

Strategy in action

Approaches to Strategy

Strategy as “stretch and leverage” rather “resource allocation and fit”

A firm’s performance

Two main factors determine the firm performance:

• Firm effects
• Industry effects

Which one is the most important and explain a firm’s performance?

Some final definitions

Vision and Mission

The vision statement expresses the aspirations of a company, what an organisation wants to accomplish

The mission statement broadly defines what a company does, the means by which vision is accomplished 8

Vision and mission: the case of Airbus

Vision: to be the world’s leading aerospace company

Mission: manufacturing the world’s largest aircraft with passengers at heart and airlines in mind

Product oriented vs. customer oriented vision

Product oriented visions define a business in terms of good or service provided

Customer oriented visions define a business in terms of providing solutions to customer needs

Customer oriented visions do not mean to listen to the customer voice but mean to define how the customer need is met

Ex.: Ford “to provide personal mobility for people around the world”

Examples

Ford: 110 years ago its vision was “to make automobile accessible to everyone”, today is “to provide personal mobility for people around the world”

Intel: in the ‘80ies its vision was “to be the preeminent building block supplier of the pc industry”, in 1999 it was “the preeminent building block supplier to the Internet company”, in 2008 it became “to delight our customers, employees, and shareholders by relentlessly delivering the platform and technology advancements that became essential to the way we work and live”

A unified definition of organisational purpose

More recently the concept of Organisational Purpose has been introduced

It is “the long-term and normative aspiration that identifies why an organization exists and pushes it to take actions that are meaningful and impactful for its stakeholders”

It requires an organization to adopt an outward-looking perspective and to look at things from the eyes of its stakeholders

To become an organizational purpose, a statement has to be authentic and shared

Examples of organizational purpose statements

Tata: Improve the quality of life of the communities we serve

Nike: Bring inspiration and innovation in every athlete in the world

Unilever: Making sustainable living commonplace

Tencent: Enhance people’s quality of life through internet services

Disney: Promote and spread happiness

ING: Empowering people to stay a step ahead in life and in business

IAG: To help people manage risk and recover from the hardship of unexpected loss

Kellogg: Nourishing families so they can flourish and thrive

Organizational purpose, mission, and vision

• Mission: “what business the organization is in (& what it isn’t) both now and projecting into the future”
• Vision: “what the organization wishes to be like in some years’ time”
• Purpose: it has a broader and outward-oriented perspective, it does not represent what the company- does, will do or wants to be, but represents why a company exists.
• Mission and vision often remains empty, not-enacted statements because they do not capture the- deep meaning and the reason why an organization exists

Culture and values

Organisational culture describes the collectively shared values and norms of the firm.

Organisational values define what is important and include the ethical standards, beliefs and norms that define the appropriate employee attitude and govern the behaviour of individuals within a firm.

Corporate culture finds its expression into artifacts: design and layout of physical space, symbols (type of clothing), vocabulary and language, stories told, events celebrated. 9

Employees learn about an organisation’s culture through socialisation

Organisational culture comes from founder imprinting, which often persist decades after his/her departure.

The risk is the so called groupthink

Culture is o