Growth Strategies: Mapping Out Problems


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This is the introductory part of the undergraduate course in Growth Strategies. Read by Pavel Luksha

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  • Growth Strategies: Mapping Out Problems

    1. 1. GROWTH STRATEGIES Introduction and Key Concepts Pavel Olegovich Luksha [email_address]
    2. 2. Quick question: why do we talk about growth and not simply strategy ? PESSIMIST VIEW OPTIMIST VIEW
    3. 3. How to recite Torah on one leg
    4. 4. One thing to take away: The Essential Growth Strategy DO WHAT YOU LIKE AND WHAT OTHERS WANT
    5. 5. Minicase: Mirax Group <ul><li>Founded in 1994 </li></ul><ul><li>Focused on premium real estate </li></ul><ul><li>Grew into the top Russian developer with international presence in USA, UK, France, Switzerland, Cambodia, Turkey, Montenegro etc. Development portfolio over 12 Million square meters </li></ul><ul><li>Had to freeze nearly all objects in late 2008 </li></ul><ul><li>Undergoing major restructuring; major part of its property under control of AlfaBank and other financial institutions </li></ul>
    6. 6. Minicase: Research In Motion <ul><li>Developer of BlackBerry – the leading communicator for corporate emails </li></ul><ul><li>Began to work for Ericsson and RAM Mobile Data as the developer of pager technologies </li></ul><ul><li>Benefited from the growth of Internet and wireless technologies </li></ul><ul><li>Grew to 6 Bln turnover over eight years </li></ul>
    7. 7. What does a shampoo bottle tell us about strategy and growth?
    8. 8. Why so many kinds of shampoo?
    9. 9. Minicase: P&G <ul><li>Started as an inexpensive soap manufacturer in 19 century </li></ul><ul><li>Expanded over years into different consumer segments such as baby care, hygiene products, beauty products, fabric care, consumer electronics etc. </li></ul><ul><li>24 brands with sales over billion (e.g. Pantene, Wella, Head&Shoulders, Tide, Ariel, Lenor, Always, Oral-B, Duracell, Gillette, Pampers, MaxFactor, Pringles …) </li></ul><ul><li>Multinational presence: factories around the globe (30+ only in China) </li></ul><ul><li>Intense investment in R&D and advertising (first producer of soap operas) </li></ul>
    10. 10. Minicase: Lush <ul><li>Began in 1994 as a soap-making company (produced products for The Body Shop since 1980s) </li></ul><ul><li>Focused on hand-made natural cosmetics </li></ul><ul><li>Promotes environmental friendliness and animal right protection (active participation in protesting campaigns) </li></ul><ul><li>Grew to 600+ shops in 43 countries </li></ul>
    11. 11. Minicase: Swatch <ul><li>Launched in 1983 as the Swiss watchmaker response to growing electronic handwatch market (taken by Japanese companies such as Seiko) </li></ul><ul><li>Name means ‘Second Watch’ implying images of watches as casual, fun, and relatively disposible </li></ul><ul><li>Watches as collector items for kids and youth </li></ul><ul><li>Around half of the sales portfolio of Swatch Group (25% of world market, 5 bln USD) </li></ul>
    12. 12. Key concepts: markets Value proposition Branding Promotion strategies Hypercompetition Differentiation
    13. 13. Where has your laptop been made?
    14. 14. Minicase: Nokia <ul><li>R&D centers in Finland, Denmark, Germany, China, Japan, UK and US. </li></ul><ul><li>Nokia Institute of Technology in Brazil. </li></ul><ul><li>Design Department in Finland. </li></ul><ul><li>Production facilities in Finland, Brazil, China, UK, Hungary, India, Mexico, Romania and South Korea. </li></ul><ul><li>Total of 128K employees in 120 countries and sales in 150+ countries </li></ul><ul><li>Number one brand in Asia (2007) and Europe (2008), fifth most valuable global brand (BusinessWeek 2008) </li></ul>
    15. 15. Minicase: DHL Express <ul><li>Created in 1969 to service US-Hawaii route, expanded across US, Pacific and Europe </li></ul><ul><li>Acquired by Deutsche Post in 2001, now part of Deutsche Post World Net, largest global logistics group </li></ul><ul><li>Able to ship to any destination (incl. countries where US companies are embargoed) </li></ul><ul><li>300K employess in 220 countries </li></ul><ul><li>Owns four airlines to serve parts of the globe </li></ul>
    16. 16. Minicase: Zara <ul><li>Opened in 1975, now world’s largest fashion clothing chainstore: 1500+ shops in 70+ countries </li></ul><ul><li>Revolutionized fast fashion: </li></ul><ul><ul><li>design-to-distribution cycle of 10-15 days (vs two months industry average) </li></ul></ul><ul><ul><li>over 10,000 new designs every year </li></ul></ul><ul><li>Production: >50% in Spain/Portugal, ~25% outsourced to Asia (longer shelflife products) </li></ul><ul><li>IT system critical for logistics and fast design-to-distribution! </li></ul>
    17. 17. Key concepts Globalization Flexibility Innovation Technology Outsourcing & integration
    18. 18. What problems does your local McDonald’s face?
    19. 19. Minicase: McDonald’s <ul><li>The world’s largest fastfood chain (58 Mil customers daily), the first ‘speedy service system’ (since 1940s) </li></ul><ul><li>31K restaurants in 119 countries with 1.5 Mil employees. Keeps growing despite crisis </li></ul><ul><li>Seen as an outpost of globalization </li></ul><ul><li>Criticisms for menu (‘Super Size Me’) </li></ul><ul><li>Criticisms for environment record: packaging problem </li></ul><ul><li>Criticisms for ‘inhumane’ labor practices </li></ul>
    20. 20. Minicase: Severstal <ul><li>Top 3 steel producer in Russia </li></ul><ul><li>Wave of global acquisitions: </li></ul><ul><ul><li>Lucchini in 2003 (2 nd largest Italian steel group, 20 plants in five EU countries) </li></ul></ul><ul><ul><li>US entry: Rouge Industries in 2004 </li></ul></ul><ul><ul><li>Severstal NorthAmerica expansion: Sparrows Point (Maryland), WCI Steel (Ohio), Esmark Steel (West Virginia) in 2008 </li></ul></ul><ul><ul><li>failed acquisition of Arcelor in 2006 </li></ul></ul><ul><li>Became third largest steel group in the US – but faces downturn troubles… </li></ul><ul><li>Issues to handle in M&A: guaranteed output, trade unions, corporate social responsibility </li></ul>
    21. 21. Key concepts Globalization: transnational corporativism Integration Environmental friendliness Socio-sustainability Cross-cultural management
    22. 22. What does future bring to your favorite newspaper?
    23. 23. Minicase: Amazon & Kindle <ul><li>One of the first online retailers (1995), survived dotcom crisis to become largest global online shop since 2003 </li></ul><ul><li>Bookstore diversified to VHS, DVD, music CDs and MP3s, computer software, video games, electronics, apparel, furniture, food, toys, etc. </li></ul><ul><li>Dominates eBook reader market with Kindle (Kindle2 launched in Feb 2009) </li></ul><ul><ul><li>over 600,000 titles for download </li></ul></ul><ul><ul><li>subscription to daily / weekly newspapers </li></ul></ul><ul><ul><li>user document conversion services </li></ul></ul><ul><ul><li>built-in Internet browsing </li></ul></ul>
    24. 24. Minicase: IBM mainframe business <ul><li>Dates back to 1880s, became one of first computer manufacturers in 1950s </li></ul><ul><li>Absolute domination in computer market in 1960-80s with ‘mainframe’ concept </li></ul><ul><li>Overlooked PC market </li></ul><ul><ul><li>software: Microsoft </li></ul></ul><ul><ul><li>mighty competitors: Compaq, Dell, HP </li></ul></ul><ul><ul><li>mainframe concept out of fashion (drop in demand) </li></ul></ul><ul><ul><li>sold PC division to Lenovo and focused on integration services </li></ul></ul>
    25. 25. Minicase: Kodak in digital age <ul><li>The largest manufacturer of cameras and photographic materials until 1990s (originated in 1880s with first cameras for non-expert use) </li></ul><ul><li>Was the first to develop digital photo technology (1972) and commercial digital camera (1991) </li></ul><ul><li>Stayed in analog camera market and lost digital camera market to faster competitors (Canon, Nikon, Sony, …) </li></ul><ul><ul><li>Stopped analog camera production in 2004 </li></ul></ul><ul><ul><li>Lost 65% of jobs between 1987 and 2007, 25% of jobs between 2000 and 2007 </li></ul></ul>
    26. 26. Key concepts Global trends Innovation Hypercompetition Flexibility Technology
    27. 27. Mapping growth strategies Global markets Hypercompetition Leadership & entrepreneurship Innovation Technology Society & environment