This document discusses strategy management and operational excellence consulting. It provides an overview of key concepts like developing a vision and mission, conducting a SWOT analysis, selecting projects based on business cases, and measuring performance through a balanced scorecard. The goal of strategy management is to systematically plan for the future while avoiding rigidity. Key aspects include building competitive advantages, analyzing industry forces and benchmarks, and monitoring strategy implementation.

1. Operational Excellence
Consulting
Business fundamentals &
Insights for better decision-making
The
Method

2. Resources
Vision
Mission
Strategy
Organization
Business
Products/Services
Portfolio
management
Strategy Management
ProjectsDetailed operations
=> generates value
Project
management
Operations
Function Role
E.g. innovation (new service/product/market)
Projects
Selection of projects is based on benefits of the
‘Business Case’ (quality, performance, status,. ..)
Project are launched from a current situation ‘AS-IS’
in order to obtain a desired future situation ‘TO-BE’
Strategic competitive advantage (SCA): patent,
install base, image/branding, disruptive/innovative
technology, …
Selection
Strategy management

3. Resources
Vision
Mission
Strategy
Organization
Business
Products/Services
Portfolio
management
Strategy Management
ProjectsDetailed operations
=> generates value
Project
management
Operations
Function Role
E.g. innovation (new service/product/market)
Projects
Project are launched from a current situation ‘AS-IS’
in order to obtain a desired future situation ‘TO-BE’
Strategic competitive advantage (SCA): patent,
install base, image/branding, disruptive/innovative
technology, …
Selection of projects is based on benefits of the
‘Business Case’ (quality, performance, status,. ..)Selection

4. What is Strategy Management ?
Strategy is to prepare systematically plans for the future in order to interact to new emerging
trends and changes in the wider scope of the company with special attention to avoid rigidity,
because the past is not equal to the future.
– “Wide scope of the company” : Companies are open systems : input side for resource seeking
and output side for market seeking (system dynamics!)
– “Avoid rigidity” : New events, new knowledge makes that the original strategy is no longer up
to date
– In general, strategy arises incrementally: “What are realistic objectives with current
characteristics of the context and future trends?”
Predictability is key for making strategic plans and investment decisions in the long run. Planning,
with hard data and soft data (tacit knowledge), is easier in stable environment. However in the
long run a small change in wide scope of the company could escalate dramatically due to system
dynamics.
Besides predictability, there is also legacy: most big companies have legacy to carry on while small
companies (e.g. Fintech) start from a clean sheet and are flexible, focused, motivated and can “do
more with less”.

5. For building and accumulating a “strategic competitive advantage (SCA)” a consistent flow of
investment is needed in order to obtain desired level of accumulation.
A “strategic competitive advantage (SCA)” can be a patent (intellectual property), a customer
install base, a certain image or branding in the mind of the customers, a new disruptive or
innovative technology, … and is the result of a strategic decision in investing a consistent flow and
stock.
– Stock – flow diagram : “Success breeds success”
For example: (1) a consistent investment in R&D will give a bigger stock of knowledge/competence
than the double investment in half of the time. So speeding up the investments will not give the
same stock at a certain moment. (2) a consistent investment in advertising will give a bigger stock
of reputation/image/branding than the double investment in half of the time.
Inflow Stock Outflow
great
time
lag
great
time
lag
Inflow or
investment are
immediately
adjustable
Cumulative result
of the inflow. This
“stock” or
knowledge is not
immediately
adjustable (time
lag!)
Outflow or
depreciation of
knowledge

6. Making strategic decisions involve resource commitments for future profits (and not volume) that
are irreversible : For example: company decision to drop a product/service, or company decision
to move production to low-wage countries, …).
However, strategic decisions have an impact on the system (“wide scope of the company”) and
due to system dynamics, there can be a reaction from others (with some time delay).
Crisis arises if eventually there are no profits made in the future.
How to start building a strategy plan ?
“Ambition pulls the future to the present and strategic planning is the road from the present to the
future. “
Building a strategy depends on : (1) phase of industry/product-life cycle, (2) B2B or B2C market , (3)
changes in consumer habits, (4) level of import in the market, (5) cluster/concentration of
companies, (6) changes in technology, (7) uniqueness of the offered product/service, (8)
consumer buying repeatedly/frequently or one-time

7. – Industry/Product-life cycle :
1. Identify the “core competence” of the company (via SWOT-analysis) :
Core competence of the company has produced the success in the past and will generate a solid
capability/competence for future success
LowMarket/ConsumerdemandHigh
Time
Introduction MaturityGrowth Decline

8. – SWOT-analysis:
2. Strategy fit : the combination between the “product and target market”:
Which of our products/services are served where in which market ? (market can be a geographic
region or it can be a market of a certain lifestyle) : “Where are we in currently? Where should we
be in for the future?”
Combination between the “product and target market” depends on (1) the long-term
attractiveness of the market, i.e. growth and (2) the company’s strength, i.e. market share.
Strengths
………………..
………………...
…………………
Weakness
………………..
………………...
…………………
Opportunities
………………..
………………...
…………………
Threats
………………..
………………...
…………………
Current
characteristics
Future
trends
Current
characteristics
Future
trends

9. – BCG-matrix : Market Attractiveness (future growth) vs. (current) Market Share
(1) Calculation of the weighted average of multiple factors collectively determine the
attractiveness of the market (e.g.: long run growth rate, industry size, barriers to entry, supplier
power, changes in demand, trend of prices, seasonality …)
(2) Calculation of the weighted average of multiple factors concur to determine the
competitiveness of the company (e.g. : total market share, brand strength, customer loyalty,
market share growth, strength of value chain, level of product differentiation, …)
Question Mark
Market at introduction
of industry-life cycle
Stars
Market at growth
phase of industry-life
cycle
Dogs
Disinvest
Cash cow
Mature market
LowMarketattractiveness(futuregrowth)High
Low Current Market Share High
Mature market
generates stable
revenues which can
be investment in the
new but risky markets
for the future

10. In the wider scope of the company, one important parameter is the competition.
How to build a competition strategy ?
Compare the “strategic competitive advantage” of the company (can be a patent, install base,
image/branding, new disruptive/innovative technology, … ) with the critical success factors of the
market. Critical success factors are rules of the game to be in the market (usually of vital
importance for the consumer to buy the product/service). For example critical success factor in the
clothing industry is fashion, in the computer industry is CPU power, ….
Options :
1. Low cost strategy (operational excellence) consists offering a ‘basic’ product or service (it does
what it has to do). Economies of scale (and market share) can be achieved by mass production
in order to spread fixed costs. Usually attention on removing waste that has no perceived
value for the consumer. Also robotisation and automation.
2. Differentiation strategy (product innovation) : offering a product/service with different
features (or bundle package) that is perceived as “unique” by the customer due to certain
“associations” in the mind of the customer. Marketing creates an image where “the perceived
value” is higher than “what client pays for”. Usually the perceived quality by the customer
makes that the company is less exposed to low cost strategy of competitors.
3. Focus strategy (customer intimacy) is targeting a very specific (and structural) need of the
customer.

11. The “first mover” in the market has an advantage and sets the industry standard and establishes a
customer install base or a customer loyalty foundation.
However success is not guaranteed because mostly due to network effects. Becoming the industry
standards requires a critical mass (a certain level of threshold should be passed).
Next to that, a follower can easily copy the quality and the technology of the “first mover” and
avoid “learning time/costs”.
– Strategy for growth and expansion :
Market
penetration
DiversificationMarket
expansion
Product
expansion
Current Product Future Product
Current Market
Future Market
Market
penetration
Market
expansion
Product
expansion

12. – For analysing the wider scope of the company  Porter’s 5 Forces Model : “for each force who
has more power and who is more vulnerable”. Internet has dramatically changed the 5 forces
with more power for clients (less stickiness of the clients).
2. Suppliers (input side) have more
power when: there are few suppliers,
when only few substitution
possibilities, when supplier has a
wide range of customers, when
company is a small buyer from the
supplier, when the company has
huge switching costs to another
supplier, when supplier decides to
“go to market” instead of supplying
3. Substitution threat when:
Interesting “price-quality” ratio. So if
there are substitution possibilities,
the maximum willingness to pay by
the client is much lower. Competitors
within sector could improve their
“price-quality” ratio or competitors
from outside the sector with high
profit margin could enter the market
with a new business model
4. Competitor threat (future entry like
innovative start-ups) when : market
has low capital barriers, low switching
costs, low initial investment,
government incentives, strong
distribution channels, easy access to
resources, high location advantage,
easy to copycat, no lock-out
possibility. Company has low loyal
clients, low branding, low economies
of scale
5. Hostility (current competitors) :
Rivalry when numerous and different
competitors, when few competitors
control 80% of market, when
products/services are standardized,
when decreasing/change of consumer
demand, when mature market, when
high fixed costs, when sunk costs (exit
barrier), overinvestment in the market
1. Clients (output side) have more power when:
Clients are sensitive to price increases of ‘basic’
products/ services, when there is low switching
costs to another platform, when there is a low
buying habit of client, when the client is vital for
company’s revenue, when company itself has high
fixed costs, when the client decides to make
instead of buying, when all clients form one group
6. General environment (PEST) is complex (due to numerous and different factors) and
dynamic (due to frequent changes and period of unpredictability). PEST = Political (laws),
Economical (market size), Socially (human capital), Technology (industry-life cycle) + culture
(lifestyle) + environment (nature) + demographics (elder)
Company
 To secure
against threats and
find opportunities

13. How to benchmark and measure performance of a chosen strategy ?
1. Identify Strategic Groups : Strategic groups are a group or category of companies within the
same market industry for which the conduct of strategy is closely similar.
The division of groups is based on perceptions of the client on the characteristics of the product or
service. E.g. category of top companies of the same sector, category of average companies of the
same sector, category of local companies of the same sector, ….
Example of analysis at strategic group level:
1. Future trends
Price evolution, legal,
digitalization, robotisation,
specialization, diversification,
…
4. Strategic Decisions
• Continue as-is
• Consolidate
• Specialization
• Merger Acquisition
3. Strategic Options
• Operational Excellence
• Customer intimacy
• Product Innovation
2. Financial
performance analysis
per strategic group

14. 2. Competition analysis : benchmarking of own critical success factors (‘rules of the game to be
in the market’ like CPU power for computer industry or fashion for clothing industry) versus
critical success factors of the strongest competitor
Other benchmarking variables that can be used for comparison with the strongest competitor:
profits, growth, financial, manpower, R&D, modernisation, production,…
3. Balanced scorecard : a tool used to translate mission and strategy into indicators and
concrete, measurable initiatives that will be monitored.
Mission
Values
Vision
Strategy
Strategic objectives
Criteria
Objectives
– What we do
– What we believe
– What we aspire to be
– How we accomplish our goals
– What we have to do
– Indicators of our progress
– Measurable state we want to
reach
Initiatives – Concrete actions we launch to
get there

15. 4. (Real-time) monitoring of the strategy implementation:
– Example of balanced scorecard at company level :
Useful for benchmarking however the four angles are interrelated which makes a lot of indicators.
There are interactions in between. There are leading indicators and lagging indicators.
Customer
Delivery time, after sale
service, complaints, ….
Innovation & Learning
Manpower, IT system,
procedures, ...
Financial
Cash flow, profit, ROI,
turnover, productivity,…
Internal Process
Operations, processes, service,
…
Initiatives
Targets
Measures / action
Objectives
Initiatives
Targets
Measures / action
Objectives
Initiatives
Targets
Measures / action
Objectives
Initiatives
Targets
Measures / action
Objectives

16. – Goal is to link the critical success factors (‘rules of the game to be in the market’) with relevant
processes/activities of the company. The linking can be done by finding those variables that
can be adjusted and directed in the right direction.
– KPI is a “early warning system” : A KPI (Key Performance Indicator) is connected with initiatives
so that measures or actions could achieve a target. The number of KPI (a lot or very few)
depends on “statistical principal component analysis” by reducing the number of
correlated/associated variables.
– Scorecard (snapshot) : is a cross-functional analysis of KPI in order to achieve a strategy
– Dashboard (real time) : is a scorecard on operational level : visual representation of the most
important information that is necessary in order to achieve an objective. It can be a single
screen display: e.g. operating a machine. Managers aggregate the data and analyse relations
between the root cause and the consequence
– Management reporting can also be used for monitoring the strategy implementation.
Examples reporting on motivation, productivity, forecasting, governance, strategy,
markets/segments, clients, brand image, characteristics of consumer.

17. – Basics of corporate finance:
Ratios:
– Liquidity: short-term obligations:
=
𝐴𝑠𝑠𝑒𝑡𝑠<1 𝑦𝑒𝑎𝑟
𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 <1 𝑦𝑒𝑎𝑟
– Profitability: profit margin
=
𝑃𝑟𝑜𝑓𝑖𝑡
𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟
– Leverage: use of debt (pay interest)
to acquire additional assets (make
profit)
– Solvency: long-term obligations:
=
𝐴𝑙𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝐴𝑙𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
For example, a company with $2 million in total assets and $500,000 in total liabilities would have
a solvency (or debt) ratio of 25%.
Turnover
Liabilities (equity/capital) Assets (components)
Using for
Capitalneeds
Time
Working capital (assets < 1 year) for accounts payable <1year
Fixed capital (equity, loans …)

18. Evolution of ratios in time :
– Return On Investment (
𝑃𝑟𝑜𝑓𝑖𝑡
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
) decreases over time when market is in maturity
– Quality has a positive impact on ROI due to repeated buying and less price sensitivity of the
consumer.
– ROI is low in start ups with small market share and high investment in R&D.
– High ROI is when full production capacity is used and market is concentrated in few
companies.
– ROI is low when high capital intensity (
𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟
). Capital intensity leads to less
profitability (is more an exit barrier than an entry barrier). However low capital intensity and
high capacity usage leads to high ROI.
– High capital intensity and high marketing intensity leads to low ROI
– Market share is an indication of performance (profit) and not of concentration/cluster

19. Strategic advantage of Location
• Some regions are attractive due to concentration of companies, e.g. Silicon Valley (in San
Francisco) where the biggest tech companies are clustered.
• In many regions or cities around the world, the same agglomeration effects are being
observed due to “clustering dynamics”, meaning a successful or innovative entity such as a
company, university, harbour, … attracts and enforces a chain of positive and cumulative side
effects. Example :

20. – Clustering dynamics are usually triggered by a successful or innovative entity (companies,
universities, harbours, … ) when they have influence outside the agglomeration or region
through “export”
– This region serves as a magnet for other smaller companies and business.
– This concentration of companies in the region then creates a dynamic that benefits all players on
input side (resource seeking) and on output side (market seeking).

21. – Importance of an attractive region (location advantage) depends on its characteristics :
Accessibility, market size of the area, labor market, production structure, vitality or dynamics of
the region, sufficient qualitative business locations, administrative power, administrative culture,
image of the area, attractive location in relation to the area that it serves
Industry/Product-life cycle also applies to regions :
– Example: the successful or innovative entity can decline in time if the same product/service is
standardized and produced in low-income countries.
– Eventually that specific region can decline as well with high unemployment rates. The chain of
effects is now reversed in negative way (negative cumulative side effects).
Market/Consumerdemand
Time
Introduction MaturityGrowth Decline

22. How to select a location ?
Tools for location analysis : input side (resource seeking) and output side (market seeking)
– Scenario analysis of the region : Trend analysis of the characteristics over time
Reflection of possible trends and description of a scenario with ‘early warning systems’. Trends can
be “in line with the past” or be “opposite of the past”
Examples of trends in a region/cluster : world wide supply chain, local demand, customer intimacy,
customization/personalized, trend setting city vs followers, flexible labour market “24/7”, division of
workers and disadvantaged people, division of attractive region and neglected/abandoned country
side
– SWOT-analysis of region : Strengths
………………..
………………...
…………………
Weakness
………………..
………………...
…………………
Opportunities
………………..
………………...
…………………
Threats
………………..
………………...
…………………
Current
characteristics
Future
trends
Current
characteristics
Future
trends

23. – Porter’s diamond model
– Clusters are formed due to competitive sectors/markets. Government policy is also
important: Policies that support the positive dynamic of a cluster (free market, support
resources, high standards/quality).
– However there can be disruptive changes  for example : unexpected new technologies or
inventions or war.
– Strategy for sustainable growth as opposed to tactical “short-term” view . Taking strategic
decisions while it shouldn’t be the case, for example relocation of company in reaction to
foreign exchanges rates fluctuations or ending of temporary government incentives,
1 – Resources (input)
Despite globalization, the importance of agglomeration or region is increasing. Companies rely on location-specific
factors, like skilled workforce, energy, commodities, natural resources, culture, nature, education, ICT, infrastructure, …
2 – Market demand of consumers (output)
Transferring domestic demand into international demand, sophisticated domestic demand for innovation, size of
demand in absolute numbers matters.
3 – Related and supporting industries
Network of companies: international companies work together with local national companies and transfer knowledge
Competition (culturally or government) that benefits resources via training, capital markets, management, …
4 – Firm strategy, structure and rivalry
Innovation reward and strong competition

24. Strategy for International Business
– Companies overestimate the ability to transfer internationally its Strategic Competitive
Advantage “SCA” (patent, customer install base, image/branding, new technology, …). This
because of the cultural, economic, institutional (in emerging economies!) and spatial distance.
– 3 types of international companies : (1) export-oriented of the home country preferences, (2)
multi-national with focus on national preferences and (3) global company who serves the world
market (world wide preference)
– Success is mostly due to advantage of a favourable local environment : settle in an attractive
cluster in a region and entering the local scientific community. Choosing to be present in a
cluster for not only market seeking but also seeking resources or knowledge by becoming an
insider of the cluster.
– Objective within the cluster should remain to upgrade its SCA with newly accessed local
resources : (1) allow initiatives from bottom-up, (2) tacit knowledge (the way of thinking,
brainstorming, insights, taking strategic decisions,…) is difficult to access but important.
However sometimes there is resistance from headquarter : “not invented in here”
– “Globalization of markets” makes no longer need for customizing to cultural preferences. Due to
technology, price and quality are more important. Even small local niches are not safe for global
approach. However customizing could be a strength (a type of customer found across different
countries).

25. 1. Operationally: 24/7 order-taking, customer service, customs-handling expertise, foreign
marketing
2. Distributors : often companies sell in foreign markets on a unplanned way. Initial use of local
distributors is to reduce costs and minimize risks. Companies remain too long in the “initial
entry phase”.
However selection and relationship governance with distributors may avoid problems (e.g. buy-
back price depends on profit margins instead sales volumes). Select location and then select
suitable distributors (the largest who already distribute competing product lines is not the best).
Keep independent, local distributors in the long term, even after own local network. Don’t
delegate marketing strategy to distributors.
3. Alliance / Joint Venture : opportunity to upgrade its own Strategic Competitive Advantage by
forming an alliance or joint venture on solely the wanted tacit knowledge of the partner.
However the best alliances on the surface may be the most vulnerable in reality because of
risk by the partner to replicate and enter market on its own. The multi-national is likely to win
any “learning race”.
4. Mergers/Acquisitions is a method to (1) acquire competences/platforms/businesses, (2) to
have a more power in Porter’s 5 Forces model, (3) to reach critical mass (economies of scale
or market share).
Sometimes integration of the two companies is sometimes difficult due to low synergy
benefits.