L2: External Flashcards
Leiblein et al. (2018): Strategy
The article is about strategic decisions how strategy is defined. Previous thoeries (Mintzberg) defined strategic decisions as important decisions. However Leiblein et al. suggest e.g. finance decisions can be important. Therefore threefold characterization!
Definition of strategic decision?
Interdependence 1) across
contemporary decisions, 2) across the decisions of other economic actors, 3) and across time
1) Interdependence Across contemporary Decisions
Denne dimension fokuserer på, hvordan samtidige beslutninger i en organisation er indbyrdes afhængige. For eksempel kan valg om ressourcetildeling og produktudvikling påvirke hinanden og kræver koordination. Når samtidige beslutninger er strategisk komplementære, kan de skabe synergier, der fører til større værdi end enkeltstående valg ville gøre.
2) Interdependence with across the decisions of Other Actors
Denne dimension handler om, hvordan en organisations beslutninger interagerer med valg foretaget af eksterne aktører, som konkurrenter, leverandører eller kunder. Strategiske beslutninger kræver ofte en forståelse af, hvordan andre aktørers handlinger kan påvirke egne beslutninger og omvendt. For eksempel kan en virksomhed tage hensyn til konkurrenters prisstrategier eller teknologiske fremskridt, når de beslutter deres egen markedsstrategi.
3) Intertemporal Interdependence
Intertemporal interdependens beskriver, hvordan beslutninger træffes med langsigtede overvejelser og tager højde for fremtidige valg. Langsigtede strategiske beslutninger kræver ofte, at man forpligter sig til bestemte handlinger, der kan have irreversible konsekvenser eller kræve store investeringer. Denne afhængighed af fremtidige beslutninger betyder, at organisationen skal overveje, hvordan aktuelle beslutninger kan påvirke og forme fremtidige muligheder.
Figure 1
Figur 1 i artiklen giver en visuel oversigt over de tre dimensioner af interdependens: Contemporaneous Decisions, Decisions of Other Actors, og Intertemporal Interdependence. Modellen viser, hvordan strategiske beslutninger er placeret i midten, omgivet af samtidige valg, eksterne aktører og fremtidige beslutninger. Figuren illustrerer også, hvordan interaktionen mellem disse dimensioner skaber et netværk af afhængigheder, der styrker eller begrænser værdiskabelsen afhængig af, hvor godt de er integreret.
Figure 2
Tripple Venns:
Theory of Strategic Investment (how to allocate resources): Unlike finance, which often uses net present value (NPV) models, strategic management emphasizes patterns of interdependent choices that evolve over time.
Theory of Competitive Advantage (how to win): Strategic decisions often involve identifying unique resource configurations or market positions that others cannot easily replicate.
Theory of the Firm (how to organize): It addresses questions of whether a firm should internally handle certain functions or outsource them.
Felin & Zenger (2017): TBV
Strategy and Theory based view: A firm’s strategy, then, represents a set of contrarian
beliefs and a THEORY—a unique, firm-specific point of view—about what problems
to solve, and how to organize and govern the overall process of value creation
Value creation and capture
Value Creation is about how companies develop unique theories and identify new ways to create value for customers and the market. In TBV, value creation comes from the ability of leaders to spot opportunities and set them apart from competitors.
= WTS - WTP
Value Capture, refers to a company’s ability to retain and benefit from the value they’ve created. In the TBV perspective, value capture means not only creating value but also protecting and capitalizing on that value through strategic decisions and effective resource allocation.
= Price - Costs =Profit
Theory-Based View (TBV)
The Theory-Based View suggests that economic actors are “theorists” who develop unique theories or hypotheses about value creation. Unlike behavioral economics, which often highlights cognitive limitations, TBV emphasizes the role of leaders in generating unique insights about the market: often counterintuitive so competitors don’t know yet. (This is evident in companies like Apple or Airbnb, which achieved success through bold, unconventional ideas.)
Organizational Implications of TBV
Organizations serve as “containers” that support the development and implementation of unique theories. Through organizational structure and incentive systems, TBV emphasizes the importance of fostering an environment where innovative ideas can thrive.
The Role of Capital Markets in TBV
Capital markets play a critical role in TBV by determining which theories receive funding. Since innovative and high-risk theories may be difficult to assess through traditional funding models, TBV highlights the need for “alternative financing” like private equity to back these ideas.
Zenger (2013): Corporate theory
Corporate theory: interconnected
system of assumptions, hypotheses, and actions.
How a given company can continue to create value. Corporate theory encourages firms to focus on their UNIQUENESS to create value, rather than merely defending competitive advantages. (E.g. Apple: emphasis on design, closed systems, and vertical integration)
Corporate theory and the 3 sights
Foresight (external), Insight (internal), and Cross-sight (relational): A successful corporate theory is built on three core perspectives: foresight (predicting industry trends and shifts in customer preferences), insight (deep understanding of the firm’s unique resources), and cross-sight (recognizing potential synergies between assets).
Corporate theory purpose
When a company lacks a clear corporate theory, its strategy often ends up focusing on short-term goals which makes them less innovative –> bad for long term value creation. A clear corporate theory are better able to identify valuable acquisition opportunities, often by targeting undervalued assets that align with their unique value creation model (Mittal steel saw opputunity in steel and invested in technology and operations).
P5F
Porter explains how understanding the five forces helps firms identify where they stand within the competitive landscape and align their strategies accordingly (strategic positioning).
As industries evolve, the five forces can shift,and therefore companies need to adapt to these structural changes by re-evaluating their strategies and being agile.
Porter also discusses defensive strategies that firms can adopt to protect their market position: creating barriers or differentiate
Netflix case
Subscriber Loss and Stock Impact
Netflix’s loss of over 200,000 subscribers led to a steep 35% drop in stock value. This is due to market penetration (Disney), higher price, and people coming back from the pandemic (the customers increased massively here).
Slides (Facts)
FACT #1: The fragility of high performance (Most firms cannot sustain high performance)
FACT #2: The desolated land of the “middle”
Most companies make almost no profits
FACT #3: Hockey stick performance
Most strategy fails
