Lecture 6

Question 1

Growth drivers for international companies

Answer 1

Portfolio Dynamics
M&A
Market share gain

Question 2

Portfolio dynamics

Answer 2

• Refers to the growth and changes in industries or segments a company operates in.
• Focuses on evaluating and adjusting a company’s portfolio based on market trends, demand shifts, and performance.
* responsible for around 66% of CAGR (McKinsey)

Question 3

M&A

Answer 3

Decisions for inorganic growth
Around 31% of CAGR (Compound annual growth rate)

Question 4

Market share gain

Answer 4

Increase of market share trough better performance than the competition

Question 5

Market share gain

Answer 5

Increase of market share trough better performance than the competition

Question 6

According to the McKinsey lecture strategy is

Answer 6

1. an integrated set of hard-to-reverse choices
2. made ahead of time in the face of uncertainty
3. to create and capture economic profit

Question 7

The sources of competitive advantage according to McKinsey

Answer 7

(Positional advantage)
Market structure
Industry Conduct

(Proprietary advantage)
Privileged tradable assets
Distinctive mix of competencies

Question 8

Proprietary

Answer 8

Owned exclusively by the company, often giving it unique advantages

Question 9

Power curve of economic profit

Answer 9

• Concept: The Power Curve shows the economic profit distribution among global companies.

•	Key Insight:
•	Companies in the middle quintiles earn around $50 million per year.
•	Companies in the top 20% earn 30 times more than the average firm.
•	Goal: Break into the top quintile by making strategic “Big Moves” to stay ahead of trends.
•	Challenge: Only half of top companies remain there over a decade.

Question 10

What are performance moves

Answer 10

Productivity
Differentiation

Question 11

What are portfolio moves

Answer 11

Programmatic M&A
Dynamic resources
Big Investment

Question 12

Common types of biases

Answer 12

• Overconfidence
• Anchoring
• Risk aversion
• Confirmation bias
• Herding and groupthink
• Champion bias

Question 13

Common types of biases

Answer 13

• Overconfidence
• Anchoring
• Risk aversion
• Confirmation bias
• Herding and groupthink
• Champion bias

Question 14

4 Phases of strategy design

Answer 14

1. Frame the Strategic Context• Question: What is our strategic context and aspiration?
   • Activity: Align on initial challenges and strategic choices.
2. Investigate the Challenge• Question: Are we equipped to address the core challenge?
   • Activity: Establish performance baseline, assess future forces.
3. Design Strategic Alternatives• Question: What are the options to tackle the challenge?
   • Activity: Design and evaluate performance and portfolio moves.
4. Commit to the Strategy• Question: Do we agree on the strategic direction?
   • Activity: Refine moves, identify resources, build a financial plan.

Question 15

What are the five lenses I can use to investigate my challenge

Answer 15

• Financial
• Market
• Competitive advantage
• Operating Model & Talent
• ESG (Ecological, Social, Government)