Page 1 Asia Pacific International College Pty Ltd. Trad.docx

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Asia Pacific International College Pty Ltd. Trading as Asia
Pacific International College
55 Regent Street, Chippendale, Sydney 2008: 02-9318 8111
PRV12007; CRICOS 03048D
Approved: 13th February 2019 & Version 1
Unit Code and Title: SBM4203 Management Information
Systems
Assessment Overview
Assessment Task
Weighting Due Length ULO
Assessment 1: Quiz
Online quiz of key content areas to identify further
support needs
10% Week 4 30 mins
ULO-1
Assessment 2: Case Study-1
Students should identify an unresolved problem

situation (only one) in an organisation and propose a
solution by doing critical analysis about it.
20% Week 6 2000 words ULO-1
ULO-2
ULO-3
Analyse a given case study and introduce a CRM
system to suit organisation growing.
30%
Week 9
2500 words
ULO-1
ULO-2
ULO-3
ULO-4
ULO-5
Assessment 4: Tutorial Participation and
Submission
Weekly exercises assess students’ ability to
understand theoretical materials.

10% Week 1,
2, 3, 4, 5,
6, 7, 8, 9,
10
N/A ULO-1
ULO-2
ULO-3
ULO-4
ULO-5
ULO-6
ULO-7
Assessment 5: Report
Write a report to propose enterprise resource
planning system for a specified organisation.
30% Week 12 2500 words ULO-4
ULO-5
ULO-6
ULO-7
Assessment Details
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Assessment 1: Online Quiz
Due date: Week 4
Group/individual: Individual
Word count / Time provided: 30 minutes
Weighting: 10%
Unit Learning Outcomes: ULO-1
Assessment Details:
This online quiz will assess your knowledge of key content
areas (Week 1, 2 and 3 contents) and to
identify further support needs. For successful completion of the
quiz, you are required to study the
material provided (lecture slides, tutorials, and reading
materials), engage in the unit’s activities, and
in the discussion forums. By completing this assessment
successfully, you will be able to identify key
aspects of scope management as per best project management
practices.
The quiz will be completed online through the APIC Online

Learning System (OLS).
Marking Information: The quiz will be marked out of 100 and
will be weighted 10% of the total unit
mark.
Due date: Week 6
Word count / Time provided: 2000 words
Weighting: 20%
Unit Learning Outcomes: ULO-1, ULO-2, ULO-3
Course Learning Outcomes: CLO-1, CLO-2, CLO-6, CLO-8
Graduate Attributes: GA09, GA10
Assessment Details:
This Assignment assesses the student’s application of the
theoretical learning to practical, real
world situations.
Students should identify a problem (s) in an organisation where
you are currently working or
previously worked. Identify a need for an information system

product (only one information
system product) that helps to solve problem. Do not focus on a
problem that has already been
solved. Also do not focus on many problems at the same time.
The following areas should be covered in your assignment:
1. A brief introduction of the organisation selected. Identify a
need for an information system
that helps solve a problem.
2. Provide a description of the problem, as much as possible in
terms of loss of funding or profit
due to outdated systems use, poor systems, increased customer
complaints; specific quality
concerns; high staff turnover; decreased market share.
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3. The problems should then be considered and analysed in
terms of material drawn from any
two topics studied as part of this subject. For an example, you
may choose to apply cloud-
based platform to solve an organisation problem, or use models
or concepts related to IS. Try
to choose the topic models/concepts that seem to offer the most

useful insights into the
problem. Do not try to deal with many models or concepts.
4. IT plays a strategic role by adding value and providing a
competitive advantage through
innovative application of IT. Identify how IT adds business
value to your organisation.
5. Design a change program or set of activities and procedures
for improvements. The change
program or set of activities or procedures need to ensure that it
solves the problem or
improves the situation. You also need to provide a list of
recommendations.
6. A report of 1200 to 1500 words summarising your analysis
must be submitted on the due date.
Your report must have a cover page duly completed and signed,
and it must be fully referenced.
7. Penalty for Late submission: a deduction of 5% of the total
mark shall be imposed on each of
the next subsequent days.
Marking Information: The Case Study-1 will be marked out of
100 and will be weighted 20% of the
total unit mark.
Marking Criteria and Rubric
Marking
Criteria

Not satisfactory
(0-49%) of the
criterion mark)
Satisfactory
(50-64%) of the
criterion mark
Good
(65-74%) of the
criterion mark
Very Good
(75-84%) of the
criterion mark
Excellent
(85-100%) of the
criterion mark
Paper Focus:
Purpose/
Position
Statement
(20%)
Fails to identify a
relevant research
topic or is not clearly
defined and/or the

paper lacks focus
throughout.
Identifies a research
topic but may be
too broad in scope
and/or the paper is
unclear and needs
to be developed a
lot further. Focal
point is not
consistently
maintained
throughout the
paper.
Identifies a research
topic but may be too
broad in scope and/or
the thesis is somewhat
unclear and needs to be
developed further.
Focal point is
somewhat consistently
maintained throughout
the paper.
Identifies a relevant
research topic and a
thesis that provides
adequate direction
for the paper with
some degree of
interest for the
reader. The paper
states the position,

premise, or
hypothesis, and is the
focal point of the
paper for the most
part.
Identifies a relevant
research topic that
provides direction for
the paper that is
engaging and thought
provoking. The paper
clearly and concisely
states the position,
premise, or hypothesis
and is consistently the
focal point throughout
the paper.
Analysis
(30%)
Demonstrates a lack
of understanding and
inadequate analysis
of the research topic.
Analysis is superficial
based on opinions
and preferences
rather than critical
analysis.
Demonstrates
general
understanding with
very limited critical

analysis of the
research topic.
Summarizes
perspectives,
counter-arguments,
or opposing
positions.
Demonstrates general
understanding with
limited critical analysis
Summarizes
perspectives, counter-
arguments, or opposing
positions.
Demonstrates an
understanding and
some critical analysis
Adequately
compares/contrasts
perspectives,
counter-arguments,
or opposing positions
but broader
connections and/or
implications are not
as thoroughly
explored.
Demonstrates a
sophisticated
understanding and
careful, critical analysis

Compares/contrasts
perspectives, considers
counter arguments or
opposing positions, and
draws original and
thoughtful conclusions
with future
implications.
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Evidence
(Sources)
(30%)
Lacks sufficient
research sources to
support the central
position and/or, if
included, are
generally not
relevant, accurate, or
reliable. Contains
numerous factual
mistakes, omissions,
or oversimplifications.

Sources, if included,
are not properly
referenced and cited
in the paper.
Provides very
limited evidence to
support the central
position with only a
few research
sources. Some
sources may not be
relevant, accurate,
and reliable and/or
appropriately
referenced and
cited in the paper.
Provides some evidence
to support the central
position with only a few
research sources. Some
sources may be
somewhat relevant,
accurate, and reliable
and/or appropriately
referenced and cited in
the paper.
Provides essential,
accurate evidence to
support the central
position with the
required (7) research
sources including 1
source from a

periodical database
that are mostly
relevant, accurate,
and reliable. Sources
are referenced and
cited appropriately
throughout the paper
for the most part.
Provides compelling
and accurate evidence
to support in-depth the
central position beyond
the required (7)
research sources with
at least 1 source from a
periodical database.
Research sources are
highly relevant,
accurate, and reliable
and add to the strength
of the paper; and are
effectively referenced
and cited throughout
the paper.
Organization
(10%)
Paper lacks logical
organization and
impedes readers’
comprehension of
ideas. Central
position is rarely

evident from
paragraph to
paragraph and/or the
paper is missing
multiple required
components.
Paper is less
organized, although
occasionally ideas
from paragraph to
paragraph may not
flow well and/or
connect to the
central position or
be clear. May be
missing a required
component and/or
component may be
less than complete.
Paper is somewhat
organized, although
occasionally ideas from
paragraph to paragraph
may not flow well
and/or connect to the
central position or be
clear. May be missing a
required component
and/or component may
be less than complete.
Paper is adequately
organized. Ideas are
arranged reasonably

with a progression of
thought from
paragraph to
paragraph connecting
to the central
position. Includes
required components
(introduction, body,
conclusion, Reference
List, etc.) for the most
part.
Paper is effectively
organized. Ideas are
arranged logically, flow
smoothly, with a strong
progression of thought
from paragraph to
paragraph connecting
to the central position.
Includes all required
components
(introduction, body,
conclusion, Reference
List, etc.).
Writing
Quality &
Adherence to
Format
Guidelines
(10%)
Paper shows a below
average/poor writing

style lacking in
elements of
appropriate standard
English and following
proper Harvard
guidelines. Frequent
errors in spelling,
grammar,
punctuation, spelling,
usage, and/or
formatting.
Paper shows below
average and/or
casual writing style
using standard
English and
following Harvard
guidelines. Some
errors in spelling,
grammar,
punctuation, usage,
and/or formatting.
Paper shows an average
and/or casual writing
style using standard
Harvard guidelines.
Some errors in spelling,
grammar, punctuation,
usage, and/or
formatting.
Paper shows above
average writing style

and clarity in writing
using standard
Harvard guidelines.
Minor errors in
grammar,
usage, and/or
formatting.
Paper is well written
and clear using Harvard
guidelines and standard
English characterized by
elements of a strong
writing style. Basically,
free from grammar,
usage, or formatting
errors.
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Due date: Week 9
Weighting: 30%
Unit Learning Outcomes: ULO-1, ULO-2, ULO-3, ULO-4,
ULO-5
Course Learning Outcomes: CLO-1, CLO-4, CLO-6, CLO-8,
CLO-9
Graduate Attributes: GA09, GA11, GA12
Assessment Details:
Read the case study below and complete the exercise at the end.
Hotwire.com Gains Control of Hotel Partner Information
Hotwire.com advertises four-star hotels at
two-star prices throughout North America and Europe. By
building businesses partnerships with more
than 7,000 hotels across North America, Hotwire assists its
hotel partners in filling otherwise empty

rooms and helps its customers by finding them rates discounted
by as much as 60 percent. Hotwire
maintains a wealth of information about each of its 7,000 hotel
partners. Besides basics such as
location, amenities, customer reviews, and prices, it also
maintains information about the number of
available rooms. Much of the information Hotwire tracks
changes frequently. Maintaining accurate
and up-to-date information is a key to success in this highly
competitive business. Until recently,
Hotwire maintained its hotel information on shared Excel
spreadsheets. Hotwire employees kept the
information up to date by accessing the shared spreadsheets
over the corporate network. Various
applications drew information from the spreadsheets to provide
Hotwire the information it needed
to provide its customers with deals. Unfortunately, the system
was prone to errors and extremely
difficult to maintain. Hotwire systems analysts considered the
problem and possible solutions. The
data that the system manipulated was well defined, as were the
processes that were applied to the
data. The problem lay in the manner in which the data was
stored and accessed. It was clear to Hotwire

analysts that a centralized database-driven system would allow
Hotwire to gain better control over its
data. Hotwire analysts considered costs and benefits of
designing its own database and DBMS
compared to outsourcing the service to a provider. Upon
evaluation of the requirements for the
system, they discovered that the data Hotwire was managing
could be easily managed by a Customer
Relationship Management (CRM) system, even though its
partner hotels were not exactly customers.
Hotwire systems analysts evaluated a variety of CRM solutions
and found the one from Salesforce to
be most effective and feasible in terms of cost and technology.
The Salesforce CRM allows Hotwire
employees to access hotel data through a user-friendly Web-
based interface from any Internet-
connected computer. Hotwire data is securely stored and
maintained on Salesforce servers, relieving
Hotwire of that costly responsibility. Hotwire system engineers
customize the CRM to deliver the
information and reports needed by Hotwire managers and
systems. The new system has improved
data reliability and accuracy, allowing better management of the
information, happier customers, and

improved relationships with Hotwire partners.
Reference:
SOURCES: “Hotwire Uses Salesforce CRM to Keep Tabs on
More Than 7,000 Hotel Partners Across
North America,” Salesforce success stories,
www.salesforce.com, accessed May 25, 2010; Salesforce
Page | 6
CRM Web site, www.salesforce.com/crm/products.jsp, accessed
May 25, 2010; About Hotwire,
www.hotwire.com/about-hotwire/press-room/factSheet.jsp,
accessed May 25, 2010.
Exercise:
Imagine you run a hotel business similar to Hotwire.com. You
have many employees working in Asia,
Europe and North America. You also have many departments
such as supply chain, human resources,
sales, marketing, finance, HRM etc. You are in need to
introduce a CRM system to suit your growing

demand of customer and business needs. In deciding whether
the CRM suit your needs, you are
required to investigate the following through considerable
amount of literature review.
1. Summarize the case study objectives.
2. What is the problem presented in the case study?
3. What is Customer Relationship Management? Identify
different types of CRM software and select
best ones that meet your business needs. Explain your decision.
4. Why do you think it would be beneficial for your company to
introduce CRM systems into the
business?
5. How do you think system engineers determined that it was a
good time to invest in this
information systems development project?
6. What benefits did Salesforce provide Hotwire.com over its
previous system?
7. What considerations are required in deciding whether to host
your own system or outsource to a
vendor like Salesforce?
• Penalty for Late submission: a deduction of 5% of the total

Marking Information: The Case study-2 will be marked out of
100 and will be weighted 30% of the
total unit mark.
Marking rubric:
Marking
Criteria
Not satisfactory
(0-49%) of the
criterion mark
Satisfactory
(50-64%) of the
criterion mark
Good
(65-74%) of the
criterion mark
Very Good
(75-84%) of the
criterion mark
Excellent
(85-100%) of

the criterion
mark
Introduction
(10 marks)
Poor Introduction with
irrelevant details
Introduction is
presented briefly
with some
relevance and
missing elements
such as summary of
case objectives,
problem/ report
outline
Introduction is
generally presented in
good fashion,
however missing one
element such as
summary of case
objectives,
problem/report
outline
Introduction is well
written with clear
discussion about the
summary of case
objectives,

problem/outline of
report
Introduction is very
well written with very
clear background,
summary of case
objectives,
problem/report
outline
Page | 7
Content
Understanding of
the Key
components
including CRM,
salesforce, benefits
of CRM to
company,
outsourcing
analysis.

(30 marks)
Lack of evidence of
adequate understanding
of the selected project
case. Majority of
information irrelevant
and significant points left
out.
Evidence of
unsatisfactory
knowledge and skills
of CRM, salesforce,
benefits of CRM to
company, outsourcing
analysis.
Has given a factual
and/or conceptual
knowledge and skills.
Evidence of average
knowledge of CRM,
salesforce, benefits of
CRM to company,
outsourcing analysis.
Reasonable
Demonstrated
understanding of
CRM, salesforce,
benefits of CRM to

analysis.
Has excellent skills in
developing covering
case study analysis.
All questions
answered.
Comprehensive and
complete coverage of
information. In-depth
and profound
understanding of
CRM, salesforce,
benefits of CRM to
analysis.
Essay organization
How logically
arguments are
stated and how
critically problems
are analysed
(20 marks)
Does not clearly state a
conclusion or point of
view or else little or no
supporting reasoning or
evidence is presented.
Problem situation is not

critically analysed
States a conclusion or
point of view but does
not organize the
evidence or reasons in
a logically adequate
way. Analysis of the
problem situation is
not that satisfactory
States a conclusion or
point of view but
expected to be
organized more
logically. Analysis of
the problem situation
is so far reasonable.
Presents an argument
using evidence and /or
logical reasoning in
support of a point of
view. Problem
situation is analysed
with satisfactory level
of critical analysis
skills.
Develops a clearly
articulated argument,
using evidence and/or
systematic logical
reasoning in support
of a conclusion or
point of view. The way

problem situation is
analysed requires high
level of critical
analysis skills.
Working
Mechanism
(20 marks)
Poor discussion with
irrelevant information
Brief discussion about
working mechanism of
CRM systems
Generally good
discussion about
working
mechanism of CRM
systems
Very clear working
mechanism of CRM
systems
A very detailed
and very clear
working
mechanism of CRM
systems
Summary
(10 marks)

Summary not
relating to the
report
Brief summary of the
report with some
relevance
Generally good
summary of the
report
A section clearly
summarizing the
overall
contribution
A section very
clearly
summarizing the
overall
contribution
References and
citation
(10 marks)
Lacks consistency
with many errors.
Unclear
referencing/style
Generally good

referencing/style
Clear referencing/
style
Clear styles with
excellent source
of references using
Harvard referencing.
Assessment 4: Tutorial Participation and Submission
Due date: Week 1, 2, 3, 4, 5, 6, 7, 8, 9, 10
Word count / Time provided: N/A
Weighting: 10%
Unit Learning Outcomes: ULO-1, ULO-2, ULO-3, ULO-4,
ULO-5, ULO-6
Course Learning Outcomes: CLO-1, CLO-2, CLO-3, CLO-4,
CLO-5, CLO-7
Assessment Details:
Different exercises assess students’ ability to understand
theoretical materials on a weekly basis.
Students will be given simple activities each week and will be
required to provide answers and

Page | 8
achieve identified outcomes. The assessment requires students
to do the lab/tutorial activities
advised by the lecturer.
Students will not be assessed on work that the tutor has not seen
them produce in class so that
attendance is required as part of this assessment. Students are
required to submit the work that
they have completed during the tutorial session. The details of
the tutorial work and requirements
are provided on the online learning system.
Marking Criteria and Rubric: The assessment will be marked
out of 100 and will be weighted 10%
of the total unit mark
Marking Criteria Not satisfactory
(0-4) mark

Satisfactory
(5-8) mark
Excellent
(9-10) mark
Week-1 (marked 0 - 10)
(10%)
Attendance and no
submission
Attendance and
satisfactory
submission
Attendance and
excellent submission
(10%)
Attendance and no
submission
Attendance and
satisfactory
submission
Attendance and

(10%)
Attendance and no
submission
Attendance and
satisfactory
submission
Attendance and
(10%)
submission satisfactory
submission
(10%)
Attendance and no
submission
Attendance and
satisfactory
submission
Attendance and
(10%)

Attendance and no
submission
Attendance and
satisfactory
submission
Attendance and
(10%)
Attendance and no
submission
Attendance and
satisfactory
submission
Attendance and
(10%)
Attendance and no
submission
Attendance and
satisfactory
submission
Attendance and

(10%)
Attendance and no
submission
Attendance and
satisfactory
submission
Attendance and
(10%)
Attendance and no
submission
Attendance and
satisfactory
submission
Attendance and
Page | 9

Assessment 5: Report
Due date: Week 12
Weighting: 30%
Unit Learning Outcomes: ULO4, ULO5, ULO6, ULO7
Assessment Details:
The report will assess your knowledge of key content areas in
information systems. For successful
completion of the case study report, you are required to study
the material provided (lecture slides,
tutorials, and reading materials), engage in the unit’s activities,
and in the discussion forums. You
are required to propose enterprise resource planning system for
Linfox. You need to investigate the
feasibility of implementing ERP for Linfox. The prescribed
textbook is the main reference along with
the recommended reading material. By completing this
assessment successfully, you will be able to
identify key aspects of information systems. This will help in
achieving ULO4, ULO5, ULO6, and ULO7.

Exercise
Linfox is an Australian logistics company, headquartered in
Melbourne. There are 24,000 employees
spanning over twelve countries. Linfox Logistics is Asia
Pacific’s largest privately-owned logistics. The
company needs your help to improve internal business processes
and overall business performance
of the company. The company is planning to make a significant
investment in an enterprise resource
planning system (ERP) but need your advice prior to making a
decision to integrate all of its business
processes. The company wants to integrate business processes
in manufacturing and production,
finance and accounting, sales and marketing, and human
resources. In addition the company want
to reduce labour costs, IT expenses and improve interactions
between staff and companies. In
deciding whether the ERP system suit the company needs, you
are required to conduct literature
research and include the following in the report:
1. What is meant by an ERP system?
2. Discuss business value of ERP system for Linfox.
3. Using an example (s), discuss how does ERP system work for
Linfox. You can also illustrate with a
diagram.
4. Identify leading ERP software and select the best ones that
suit the company needs. Explain your
decision.
5. Do research on the cost of the ERP system for large company
such as Linfox. Make comparisons of
ERP vendors that are classified as Tier I, II or III according
to the type of customers they target.

Which Tier do you think is suitable for Linfox business
needs? Explain your selection.
6. Identify and discuss challenges to the successful
implementation of ERP system for Linfox.
• Penalty for Late submission: a deduction of 5% of the total
Page | 10
Marking Information: The report will be marked out of 100 and
will be weighted 30% of the total
unit mark.
Marking rubric:
Marking
Criteria
Not satisfactory
(0-49%) of the
criterion mark

Satisfactory
(50-64%) of the
criterion mark
Good
(65-74%) of the
criterion mark
Very Good
(75-84%) of the
criterion mark
Excellent
(85-100%) of
the criterion
mark
Introduction
(10 marks)
Poor Introduction with
irrelevant details
Introduction is
presented briefly
with some
relevance and
missing elements
such as summary of

case objectives,
problem/ report
outline
Introduction is
generally presented in
good fashion,
however missing one
element such as
summary of case
objectives,
problem/report
outline
Introduction is well
written with clear
summary of case
objectives,
problem/outline of
report
Introduction is very
well written with very
clear background,
summary of case
objectives,
problem/report
outline
Content
Understanding of
the key
components
including ERP,

business value
using ERP system,
how ERP system
work, selection of
ERP software,
comparisons of ERP
vendors, and
challenges of
implementing ERP.
(50 marks)
Lack of evidence of
adequate understanding
of the selected project
case. Majority of
information irrelevant
and significant points left
out.
Evidence of
unsatisfactory
knowledge and skills
of ERP, business value
using ERP, how ERP
system work, selection
of ERP software,
comparisons of ERP
vendors, and
challenges of
implementing ERP
Has given a factual
and/or conceptual

Evidence of average
knowledge of ERP,
business value using
ERP, how ERP system
work, selection of ERP
software, comparisons
of ERP vendors, and
challenges of
implementing ERP
Reasonable
Demonstrated
understanding of ERP,
ERP, how ERP system
of ERP vendors, and
challenges of
implementing ERP
Has excellent skills in
developing covering
case study analysis.
All questions
answered.
Comprehensive and
complete coverage of
information. In-depth
and profound
understanding of ERP,
ERP, how ERP system

of ERP vendors, and
challenges of
implementing ERP
Organization
How logically
arguments are
stated and how
…
27/04/2020
1
MGT30005
Strategic Planning in Dynamic Environment
Strategy Narrative 8
Acquisition and Restructuring Strategy
CRICOS 00111D TOID 3059
Introduction
This session will address the following issues:
• Distinguish between mergers and acquisitions and
determine their relative merits in exploiting the linkages
between different businesses

• Assess the relative advantages of vertical and horizontal
integration in organising related activities
• Portfolio Analysis
27/04/2020
2
E-commerce giant Amazon purchased high-end
organic grocery chain Whole Foods for $13.7
billion. The purchase took Amazon near the top of
the $700 billion grocery industry, and sank stocks
of traditional grocers on fears that they would be
outmanoeuvred into oblivion.
Is it a business level strategy
or corporate level strategy?
What drives Amazon for
making this strategy?
In 2018, Intel has completed its tender offer for the
outstanding shares of Mobileye, a company that develops

sensors and cameras for Advanced Driver Assisted
Systems (ADAS); the company is also known for its
computer vision and machine learning technology. The
$15.3 billion deal gives Intel a huge advantage in the
growing self-driving car industry, a market they estimate will
grow to $70 billion annually by 2030.
Is it a diversification
strategy?
27/04/2020
3
Different types of corporate-level strategy
Fig. 8.1
Mergers and acquisitions
• Acquisition refers to the purchase of one
company by another (also known as a takeover or
a buyout
• It usually refers to a purchase of a smaller
company by a larger one

• An acquisition may be friendly or hostile
• There are 2 types of acquisition:
– share acquisition
– asset acquisition
27/04/2020
4
Mergers and acquisitions
• Merger is the combination of two companies into
a bigger company
• Both companies’ stocks are surrendered and
new company stock is issued in its place
• A merger is a transaction in which the assets of at least
two companies are transferred to a new company so that
only one separate legal entity remains.
• Acquisition is a transaction in which both companies in
the transaction can survive but the acquirer increases its
percentage ownership in the target
Reasons for merger and acquisition

• Many companies actively engage in merger
and acquisition activities to seek better
financial performance.
• The following reasons are the most common:
• Economies of scale
• Economies of scope
• Tax benefits
• Higher return on investment
27/04/2020
5
Some examples of Merger and
Acquisition
• BHP Billition -
– In 2001, BHP merged with the Billiton mining company to
form BHP
Billiton, the largest mining company in the world
• GlaxoSmithKline
– 1999 merger of Glaxo Wellcome and SmithKline Beecham,
both firms ceased to

exist when they merged, and a new
company,[GlaxoSmithKline], was created.
• Chrysler & Daimler Benz
• Walt Disney @ 21st Century Fox
• PriceWater houseCoopers (PWC)
• Microsoft LinkedIn
In 2018, Alphabet's Google division confirmed that it plans
to acquire part of HTC's mobile division team for $1.1 billion
as it grows its smartphone hardware business. Google has
become very serious about its hardware development with
the debut of its Pixel line of smartphones, and scooping up
a chunk of HTC's team means that the tech giant can better
directly challenge Android partners like Samsung, LG, and
Huawei.
Is it an example of
acquisition or Merger?
How do you explain this
kind of partial takeover?

27/04/2020
6
Quiz
Many companies engage into mergers and
acquisitions to seek better financial performance.
All of the following are common reasons, except:
a. Increase return on investment
b. Economies of Scale
c. Reducing the size or diversity of operations to
increase organisational flexibility
d. Tax benefits
Integration strategy
• The objective of integration strategy is to
develop a consistent approach to guide
implementation decisions and reduce
costs of key projects
• A company seeking integration strategies
faces a subset of choices:

– horizontal and
– vertical integration
27/04/2020
7
Vertical & Horizontal integration options
Figure Diversification and integration options: car manufacturer
example
Dimensions of Vertical integration
• Vertical integration is integration along a
supply chain through which a company will
control the production and distribution of
products
• Vertical integration has many dimensions:
• Backward
• Forward
• Full integration
• Partial integration
27/04/2020

8
Benefits of Vertical integration
• Vertical integration has multiple dimensions and
offers potential benefits including:
– Technical economies from physical integration
– Developing distinctive capabilities
– How to manage strategically different businesses?
– The incentive problem
– Competitive effects of vertical integration
– Flexibility
https://www.youtube.com/watch?v=JHzm0YSQmSU
Choosing between alternative vertical relationships
• Designing vertical relationships is not just a
‘make or buy’ choice
• Between full vertical integration and spot market
contracts, there is a broad spectrum of
alternative organisational forms
• Choosing the most suitable vertical relationship
depends on the economic characteristics of the
activities involved, legal and fiscal
circumstances, and the strategies and resources
of the companies involved

https://www.youtube.com/watch?v=JHzm0YSQmSU
27/04/2020
9
Horizontal integration strategy
• Horizontal integration refers to the expansion
or addition of business activities in the same
industry and at the same level of the supply
chain
• Organisations can achieve horizontal growth
through mergers and acquisitions
• Horizontal integration offers significant
advantages as well as drawback to the
organisations
Facebook bought Instagram
• In 2017, Facebook announced one of the best
business takeover in the history of Silicon Valley:
The $1 billion purchase of a photo-sharing app
called Instagram. At the time of the
takeover, Instagram had just 30 million users
and zero revenue.

• Is it an integration or acquisition?
27/04/2020
10
Quiz
Vertical integration provides:
a. Integration up or down a supply chain through
which a company will control the production and
distribution of products
b. A larger margin
c. Increased power over rivals in the same industry
d. Superior visibility at different stages of the value
chain of an industry
Retrenchment strategies
• When a company is not performing well enough,
its management considers either a turnaround or
a retrenchment strategy
• retrenchment strategy refer to the plan and effort to
return an underperforming company to acceptable
levels of profitability and long-term growth

• A well-designed retrenchment strategy involves
redefining strategic objectives, reducing cost
and restructuring organisational processes
27/04/2020
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Retrenchment & Turnaround activities
• There are four activities that characterise
retrenchment and turnaround:
• Restructuring
• Divestment
• Liquidation or bankruptcy
• Tie to a larger company
German $350 million takeover: Continental AG buys Kmart
Tyre
and Auto Service in Australia
• Kmart Tyre and Auto Service (KTAS) has 258 stores
across Australia with over 1,200 employees. It is one of
Australia’s largest tyre, automotive service and repair

retailers.
• Wesfarmers announced the sale of KTAS to Continental
AG for 350 million Australian dollars. Continental is
based in Germany. Its five divisions in 2017 generated
sales of 44 billion Euro and it currently employs more
than 243,000 people in 60 countries.
• Is it a Retrenchment strategy for Kmart?
27/04/2020
12
Portfolio analysis
• Portfolio analyse is one of the key means of
analysing the scope of activities of a diversified
organisation
• It is an important aspect to understand the
position of each SBU in relation to its
competitors and growth potential
Portfolio analysis methods

Growth/Share (BCG) Matrix
Directional Policy (GE-McKinsey) Matrix
Parenting Matrix
27/04/2020
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The growth share (or BCG) matrix (1)
Figure: The growth share (Boston Consulting Group - BCG)
matrix
• A star is a business unit which has a high
market share in a growing market.
• A question mark (or problem child) is a
business unit in a growing market, but it does
not have a high market share.
• A cash cow is a business unit that has a
high market share in a mature market.
• A dog is a business unit that has a low

market share in a static or declining market.
27/04/2020
14
Problems with the BCG matrix:
-fulfilling prophecies and
The directional policy: (GE–McKinsey) matrix
Figure Directional policy (GE–McKinsey) matrix
27/04/2020
15
The directional policy
(GE–McKinsey) matrix (2)

Figure Strategy guidelines based on the directional policy
matrix
The parenting matrix (1)
Figure The parenting matrix: the Ashridge Portfolio Display
Source: Adapted from M. Goold, A. Campbell and M.
Alexander, Corporate Level Strategy, Wiley
27/04/2020
16
The parenting matrix (2)
1. Heartland business units - the parent understands these well
and
can add value. The core of future strategy.
2. Ballast business units - the parent understands these well but
can
do little for them. They could be just as successful as
independent
companies.
If not divested, they should be spared corporate bureaucracy.
3. Value-trap business units are dangerous. There are attractive
opportunities to add value but the parent’s lack of feel will
result in

more harm than good . The parent needs new capabilities to
move
value-trap businesses into the heartland. It is easier to divest to
another corporate parent which could add value.
4. Alien business units are misfits. They offer little opportunity
to add
value and the parent does not understand them. Exit is the best
strategy.
Quiz
In the Boston Consulting Group Matrix, stars:
A. Have high growth rates and low relative market
share
B. Have low growth rates and high relative market
share
C. Have low growth rates and low relative market
share
D. Have high growth rates and high relative market
share
E. Have low growth rates and low profitability

27/04/2020
17
Summary
• This session has covered issues of Corporate
level strategy including:
• Merger and acquisition
• Vertical and horizontal integration
– Shell New Energies, a subsidiary of oil major Royal Dutch
Shell,
acquired EV charging start-up Greenlots, claiming a bigger
stake
in the emerging electric mobility marketplace.
– Greenlots will keep its brand and leadership, and will become
the “foundation” of Shell’s electric mobility business in North
America, the companies said in a statement.
• Portfolio Analysis
19/04/2020

1
MGT30005
Corporate-level Strategy
Introduction
This session will address the following issues:
• Understand the nature of corporate-level strategy
and be able to identify and explain various types of
corporate strategies
• Identify the conditions under which diversification
creates value for shareholders
• Related diversification and unrelated diversification
19/04/2020
2
Case study: Marks & Spencer
• Corporate strategy poses questions for companies like Marks
&

Spencer, one of the oldest clothing retailers in the world.
Having
been in business and reached such a massive scale, the types of
choices an organisation such as this makes become larger in
scale
as well. Organisations must consider questions of scope, such as
which markets they wish to compete in, and how diverse to
make
the range of products or services they offer. They must also
think
about the appropriate corporate structure that will best enable
them
to function within their markets of choice.
• How do you think a clothing retailer
might approach decisions of market
penetration and diversification?
Definition
• Corporate-level strategy is about how and
where a company, as a whole, competes.
• There are two key questions to address:
1. In what product markets and

businesses should the firm compete?
2. How should corporate headquarters
manage those businesses?
19/04/2020
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Purposes of Corporate-level Strategy
• Three purposes of this strategy include:
– Corporate parenting: The corporate parent is
expected to grow the overall organisation by
creating value for its individual businesses
– Business portfolios: Organisations need to
decide what new businesses should be added
to the portfolio
– Portfolio matrices: There is a need to
approach this in a rational and systematic
manner
Different aspects of corporate-level strategy

• Many aspects influence corporate-level strategy
including:
– Product scope (diversification) - How specialised
should the company be in terms of the range of
products?
– Geographical scope (multinationality) - What is the
optimal geographical spread of activities?
– Vertical scope (vertical integration) - What range of
vertically linked activities should the company
encompass?
19/04/2020
4
Different types of corporate-level strategy
Fig. 8.1
Setting Direction
19/04/2020
5
Diversification strategy
• Diversification strategy refers to a company’s

decision to expand its operations by adding new
products and services, markets, or stages of
production to the existing business
• The purpose of diversification is to allow the
company to enter lines of business that are different
from current operations
• There are two types of diversification: related and
unrelated diversifications
Related diversification
• When more than 30% of a firm’s sales
volume is outside its dominant business
and its businesses are related, it is
classified as related diversification.
• transfer core competencies and
capabilities to different portfolios.
• Examples
– Qantas
– Apple
–BHP Billiton
19/04/2020

6
Unrelated Diversification
• Less than 70% of revenue comes from the
dominant business, and there are no
common links between businesses.
• cannot transfer core competencies and
capabilities to different portfolios but
finance resources
• Example
– Virgin
– General Electric
– Wesfarmers
Drivers of diversification
Diversification has been driven by three major
goals:
• Growth
• widening the company’s range of potential
investment
• Risk reduction

• cash flows of different businesses
• Profitability
• The attractiveness test.
• The cost-of-entry test.
• The better-off test
19/04/2020
7
Diversification and market power
• Diversification can increase a company’s
market power
• The following four mechanisms are
particularly important:
• Predatory pricing
• Bundling
• Reciprocal dealing
• Mutual forbearance
LEVELS AND

TYPES OF
DIVERSIFICATI
ON
19/04/2020
8
Single business strategy
Corporate-level strategy in which the firm generates 95 per cent
or
more of its sales revenue from its core business area
• Example: Wrigley
– Wm. Wrigley Jr. Company, the world’s largest producer of
chewing
and bubble gums, historically used a single-business strategy
while
operating in few product markets.
– In 2005, Wrigley employed the dominant-business strategy
when it
acquired the confectionary assets of Kraft Foods Inc., including
Life
Savers and Altoids.
– In 2008, Wrigley was acquired by Mars, a privately held
global
confectionary company.

Dominant business diversification strategy
Corporate-level strategy whereby firm generates 70–95 per cent
of
total sales revenue within a single business area
•Example: United Parcel Service (UPS)
LOW LEVELS OF DIVERSIFICATION
Related constrained diversification strategy
• Less than 70 per cent of revenue comes from the
dominant business.
• There are direct links (i.e. shared products,
technology and distribution linkages) between the
firm’s businesses.
• Examples: Proctor & Gamble
MODERATE TO HIGH LEVELS OF
DIVERSIFICATION
19/04/2020
9
Quiz
The scope of corporate level strategy refers

to:
a. Vertical, geographical, and product scope
b. Common concepts used in micro-economics
c. Concepts used in the Porter's five forces
model of competition
d. Different activities related to the risk they
entail
REASONS FOR
DIVERSIFICATION
19/04/2020
10
VALUE-CREATING DIVERSIFICATION:
RELATED DIVERSIFICATION
Sharing
Activities
(Operational
Relatedness)
Transferring
Core

Competencies
(Corporate
Relatedness)
Creation
of
Economies
of Scope
VALUE-CREATING DIVERSIFICATION:
UNRELATED DIVERSIFICATION
Unrelated diversification creates value through two types
of financial economies:
• cost savings realised through improved allocations of
financial resources based on investments inside or
outside firm
– efficient internal capital market allocation
• the restructuring of acquired assets.
– Firm A buys firm B and restructures assets so it
can operate more profitably and then A sells B for
a profit in the external market.
19/04/2020
11
Incentives to diversify

VALUE-NEUTRAL DIVERSIFICATION:
INCENTIVES AND RESOURCES
External Incentives Internal Incentives
Antitrust regulations Low Performance
Tax laws Uncertain Future Cash
Flows
Synergy & Firm Risk
Reduction
VALUE-REDUCING DIVERSIFICATION
MANAGERIAL MOTIVES TO DIVERSITY
Top-level executives may diversify in order to diversity
their own employment risk, as long as profitability does
not suffer excessively.
• Diversification adds benefits for top-level
managers but not shareholders.
• This strategy may be held in check by governance
mechanisms or concerns for one’s reputation.
19/04/2020
12
THE
CURVILINEAR

RELATIONSHIP
BETWEEN
DIVERSIFICATION
AND
PERFORMANCE
https://www.youtube.com/watch?v=3jTyZl25Llo
INTERNAL INCENTIVES TO DIVERSITY
Low
performance
Low performance is an
incentive for diversification
as corporations chase
profitable firms (or divest
poor performers).
https://www.youtube.com/watch?v=3jTyZl25Llo
19/04/2020
13
Diversification may be a

defensive strategy if:
• the product line matures
• the product line is threatened
• the firm is small and is in a
mature or maturing industry.
Low
performance
Uncertain
future cash
flows
Low
performance
Uncertain
future cash
flows
Synergy and
risk reduction
• Synergy exists when the value created by
businesses working together exceeds the
value created by them working

independently.
• However, synergy creates joint
interdependence between business units.
• A firm may reduce the level of
technological change by operating in more
certain environments, resulting in more
related types of diversification.
• A firm may become risk averse, constrain
its level of activity sharing and forgo
potential benefits of synergy, resulting in
more unrelated types of diversification.
19/04/2020
14
Quiz
Distinguishing related and unrelated businesses
within a firm requires:
a. Establishing whether the businesses fall within

the same 2-digit SIC code
b. Whether the businesses share common
customers or common technologies
c. Whether the businesses have the potential to
share common resources and capabilities
d. All of the above
Case: Woolworths Mobile
• Smartphones are only as smart as the
network they’re on. That’s why Woolworths
Mobile uses parts of Telstra's 4G and 3G
network, covering over 23 million
Australians. That's an incredible 1.59
million square kilometres of coverage.
• Is it a case of diversification?
3/04/2020
1

MGT30005
Business-Level Strategies
Introduction
• This session will address the following
issues:
– What are business-level strategies?
– Different types of business-level strategy?
– What business-level strategies can a
company use to exploit its competitive
advantage?
3/04/2020
2
Opening Case: IKEA
Business strategies describe the choices that businesses
make in order to compete within its chosen market. Think for
a minute about what has made the Swedish furniture

company IKEA so successful. It is truly one of the world's
great business success stories, becoming a dominant player
due to its innovative use of flat pack furniture.
What strategic choices has it made,
based on the environment within which
it operates and its internal capabilities,
in order to compete?
Is it more about price, or product
differentiation, or is it because the
company focuses on a particular
domain?
Definition
Business-level strategy is an integrated and
coordinated set of commitments and actions
designed to gain a competitive advantage by
exploiting core competencies in specific, individual
product markets.
• Every firm must form and use a business-level strategy

for each one of its businesses
• Business-level strategy choices matter because long-
term performance is linked to a firm’s strategies
• In essence, it constitutes how a firm will compete
3/04/2020
3
The purpose of a business-level strategy
Business-level strategies are intended to create differences in
the firm’s
position relative to that of its rivals.
To be successful in a chosen strategy, the firm must integrate its
primary and support activities to provide the unique value it
intends to
deliver.
Match external opportunities and threats with internal strengths
(i.e. its
core competencies).
Positioning

Perform Activities
Differently
Perform Different
Activities
OR
BUSINESS-LEVEL STRATEGY
• A single-product market/single
geographic location firm employs one
business-level strategy and one
corporate-level strategy to identify what
industry the firm will compete in.
ONE BUSINESS-
LEVEL STRATEGY
• A diversified firm employs a separate
business-level strategy for each product
market area in which it competes and
one or more corporate-level strategies
dealing with product and/or geographic
diversity.
SEVERAL BUSINESS-
LEVEL STRATEGIES
3/04/2020
4
CUSTOMERS: THEIR RELATIONSHIP

TO BUSINESS-LEVEL STRATEGIES
KEY ISSUES
in
BUSINESS-
LEVEL
STRATEGY
Who will be
served?
What needs will
be satisfied?
How will those
needs be satisfied?
FIVE BUSINESS-
LEVEL
STRATEGIES
3/04/2020
5
COST LEADERSHIP STRATEGY
• An integrated set of actions taken to produce goods
or services with features that are acceptable to
customers at the lowest cost, relative to that of
competitors with features that are acceptable to

customers.
• Products:
– are relatively standardised
– have features acceptable to many customers
– offer the lowest competitive price.
The sources of cost advantage
3/04/2020
6
Using the value chain to analyse costs
strategy
• A value chain analysis of a company’s cost position comprises
the
following stages:
– Disaggregate the company into separate activities
– Establish the relative importance of different activities in the
total
cost of the product
– Compare costs by activity
– Identify cost drivers
– Identify linkages: how costs in one activity influence costs in

another
– Identify opportunities for reducing costs
– Which activities should be undertaken within the company
and
which activities should be outsourced.
EXAMPLES OF
VALUE-
CREATING
ACTIVITIES
ASSOCIATED
WITH THE COST
LEADERSHIP
STRATEGY
3/04/2020
7
Risks of cost leadership
Although strategy analysis has traditionally
emphasised cost advantage as the primary basis for
competitive advantage, the cost leadership strategy

offers a less secure basis for competitive advantage
than does differentiation.
• Obsolescence – Processes used to produce and
distribute goods and services may become obsolete
because of competitors’ innovations.
• Cost reductions – Too much focus on cost reductions
may occur at expense of customers’ perceptions of
differentiation.
• Imitation – Competitors, using their own core
competencies, may successfully imitate the cost
leader’s strategy.
COST LEADERSHIP STRATEGY:
COMPETITORS
Threat of new
entrants
Bargaining
power of
suppliers
Rivalry
among
competing firms
Bargaining
power of
buyers

Threat of
substitute
products
RIVALRY WITH
EXISTING
COMPETITORS
Due to the cost leader’s
advantageous position:
• rivals hesitate to compete on
basis of price
• a lack of price competition
leads to greater profits
• rivalry may be based on
factors such as size,
resources, location, market
dependence and prior
competitive interactions.
3/04/2020

8
BUYERS & SUPPLIERS
• The cost leadership strategy can
mitigate buyers’ power by driving
prices far below competitors,
causing them to exit and shifting
power away from buyers back to
the firm.
• Powerful customers can force a
cost leader to reduce its prices, but
not below the level where the next-
most-efficient industry competitor
can earn average returns.
BARGAINING POWER OF
BUYERS
BARGAINING POWER OF SUPPLIERS
The cost leadership strategy can
mitigate suppliers’ power by:

• being able to absorb cost
increases due to low-cost position
• being able to make very large
purchases, reducing the chance
of the supplier using power
• outsourcing to reduce costs may
also require relationship-building,
particularly to a foreign supplier.
NEW ENTRANTS & SUBSTITUTE
Barriers to potential entrants
include:
• their need to enter on a large
scale in order to be cost
competitive
• the time it takes to move up
the learning curve
• the cost leader’s efficiency
through continuous efforts to

reduce costs enhances profit
margins.
THREAT OF POTENTIAL
ENTRANTS
PRODUCT
SUBSTITUTES
The cost leader is well
positioned to:
• make investments to be the
first to create substitutes
• buy patents developed by
potential substitutes
• lower prices in order to
maintain value position
• be more flexible than its
differentiated competitors.
3/04/2020

9
Quiz
Cost drivers are:
a. Factors that increase the costs a firm
experiences
b. Factors that determine a firm's cost
position
c. Factors that is neutral for a firm's costs
d. Factors that explain costs in an industry
DIFFERENTIATION STRATEGY
Definition: An integrated set of actions taken to produce
goods or services (at an acceptable cost) that customers
perceive as being different in ways that are important to
them
• Focus is on non-standardised products.
• Its an appropriate strategy when customers value
differentiated features more than they value low cost.
• Firms must still be able to produce differentiated
products at competitive costs to reduce upward
pressure on the price that customers pay.

3/04/2020
10
DIFFERENTIATION STRATEGY:
DISTINCTIVE ACTIONS
• Firms seek to be different from competitors on as
many dimensions as possible.
• Differentiation approaches
– Unusual features
– Responsive customer service
• Rapid product innovations
• Technological leadership
• Perceived prestige and status
• Different tastes
• Engineering design and performance
Differentiation: Drivers
The drivers of uniqueness
• product features and product performance
• complementary services (e.g. credit, delivery, repair)

• intensity of marketing activities (e.g. rate of advertising
spending)
• technology embodied in design and manufacture
• the quality of purchased inputs
• procedures influencing the conduct of each of the activities
(e.g.
rigour of quality control, service procedures, frequency of sales
visits
to a customer)
• the skill and experience of employees
• location (e.g. with retail stores)
• the degree of vertical integration (which influences a
company’s
ability to control inputs and intermediate processes)
• https://www.youtube.com/watch?v=-sJ6IJZJhUU
https://www.youtube.com/watch?v=-sJ6IJZJhUU
3/04/2020
11
Using the value chain to analyse
differentiation

Fig. 7.3
EXAMPLES OF
VALUE-CREATING
ACTIVITIES
ASSOCIATED
WITH THE
DIFFERENTIATION
STRATEGY
3/04/2020
12
COMPETITORS
• The relationship between
brand loyalty and price
sensitivity insulates a firm
from competitive rivalry.
• Reputation can also sustain
the competitive advantage
of firms following a

differentiation strategy.
Threat of new
entrants
Bargaining
power of
suppliers
Rivalry
among
competing firms
Bargaining
power of
buyers
Threat of
substitute
products
RIVALRY WITH
EXISTING
COMPETITORS
BUYERS & SUPPLIERS
• The differentiation strategy can
mitigate buyers’ power because

well-differentiated products
reduce customer sensitivity to
price increases.
• Customers are willing to accept
a price increase when a product
satisfies their perceived unique
needs, as long as they do not
think that an acceptable product
alternative exists.
BARGAINING POWER
OF BUYERS
BARGAINING POWER
OF SUPPLIERS
• The differentiation strategy can
mitigate suppliers’ power by
absorbing price increases due to
higher margins from high-quality
components.

• Alternatively, considering
buyers’ relative insensitivity to
price increases and their brand
loyalty, firms may pass along
higher supplier prices to the
buyer.
3/04/2020
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NEW ENTRANTS & SUBSTITUTE
There are substantial barriers to
potential entrants.
• customer loyalty and the need
to overcome the uniqueness of
a differentiated product
• the need for new products to
surpass proven products
• the need for new products to

be at least equal to the
performance of proven
products, but offered at lower
prices.
THREAT OF POTENTIAL
ENTRANTS
PRODUCT
SUBSTITUTES
Products must be well
positioned relative to
substitutes because brand
loyalty to a differentiated
product tends to reduce:
• customers’ testing of new
products
• switching brands.
COMPETITIVE RISKS
• The price differential between the differentiator’s and

the cost leader’s products becomes too large.
• Value diminished occurs when differentiation ceases
to provide value for which customers are willing to
pay.
• Experience narrows customers’ perceptions of the
value of differentiated features.
• Counterfeit goods replicate differentiated features
of the firm’s products.
3/04/2020
14
Quiz
Which one of the following is not a risk associated
with the differentiation strategy?
• A. Price differential for the value becoming too
large
• B. Narrowing of customer perceptions of the
value of product differentiation
• C. Counterfeits

• D. Processes becoming obsolete
FOCUSED STRATEGIES
• Definition: an integrated set of actions taken to
produce goods or services that serve the needs of a
particular competitive segment
• Target markets include:
– a particular buyer group (e.g. youths or senior
citizens)
– different segment of a product line (e.g. products
for professional painters or the do-it-yourself
group)
– different geographic market (e.g. northern or
southern Italy by using a foreign subsidiary).
3/04/2020
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FOCUSED STRATEGIES
Types of focused strategies:
– Focused cost leadership strategy
– Focused differentiation strategy
To implement a focus strategy, firms must be able to:

• complete various value chain activities in a
competitively superior manner in order to
develop and sustain a competitive advantage
and earn above-average returns.
FACTORS THAT DRIVE
FOCUSED STRATEGIES
• Large firms may overlook small niches.
• A firm may lack the resources needed to compete
in the broader market.
• A firm is able to serve a narrow market segment
more effectively than its larger industry-wide
competitors can.
• Focusing allows the firm to direct its resources to
certain value chain activities to build competitive
advantage.
3/04/2020
16
FOCUS STRATEGIES: COMPETITIVE RISKS
• Out-focused – A focusing firm may be out focused
by its competitors. Narrow market view; High/low
price range
• Competition – A large competitor may decide that
the market segment served by the focus strategy

firm is attractive and worthy of competitive
pursuit. Large firms may decide to pursue the niche market
• Changing preferences – Customer preferences in
the niche market may change to more closely
resemble those of the broader market.
Customer preferences may change; Short term
INTEGRATED COST LEADERSHIP/
DIFFERENTIATION STRATEGY
• Efficiency: sources of low cost
• Differentiation: source of unique value
• Efficiently produced products with differentiated
attributes:
– readily adapt to external environmental
changes
– concentrate simultaneously on two sources of
competitive advantage: cost and differentiation
– requires competence and flexibility in several
value chain activities
3/04/2020
17

Stuck in the middle
• Strategy is gaining in popularity, but it is risky.
– Products do not offer sufficient value in terms
of either low cost or differentiation
– Cost structure is not low enough for attractive
pricing of products.
– Products are not sufficiently differentiated to
create value for target customer
• As a result, firms do not earn above-average
returns.
INTEGRATED COST LEADERSHIP/
DIFFERENTIATION STRATEGY: RISKS
Final quiz
Companies that seek competitive advantage
through differentiation but focus on a narrow
geographic or demographic customer segment
pursue which of Porter's generic strategies?
a. Focused differentiation
b. Integrated cost leadership/differentiation
c. Focused cost leadership

d. Focused integration
STRATEGIC PLANNING
IN DYNAMIC ENVIRONMENTS (MGT30005)
- WEEK 3 -
§ www.swinburne.edu.au/news/latest-
news/2020/01/updates-on-coronavirus-
.php
§ 15 March – 7pm AEDT
§ Any Swinburne student or staff member
required to self-isolate will be supported
and offered flexible learning or working
arrangements where possible.
§ Universities and schools will stay open for
the time being.
§ At Swinburne, classes are continuing as
scheduled.
§ However, the university is preparing to
transition to remote delivery in case face-
to-face classes, labs and tutorials need to
be suspended.
§ Anyone who is unwell is asked to stay
home.

§ Staff and students are asked to familiarize
themselves with recommended public
health measures.
UPDATES ON
CORONAVIRUS
http://www.swinburne.edu.au/news/latest-
news/2020/01/updates-on-coronavirus-.php
§ Stay at home if you are unwell and
if you have any concerns about
your health, contact your medical
practitioner.
§ Wash your hands regularly and
cough into your elbow or a
disposable tissue.
§ Support each other to practice
social distancing:
§ Aim to stay 1.5 metres from other people.
§ Do not shake hands.
§ Avoid gatherings in enclosed spaces.
§ These are extraordinary and
challenging times. Let’s support
each user.
KEY
RECOMMENDED
PUBLIC HEALTH
MEASURES

THIS WEEK: CAREERS AND EMPLOYABILITY EVENTS
AROUND CAMPUS
Mon 16/03 Check out swin.nu/ask; swin.nu/careerpulse;
swin.nu/careerstart;
swin.nu/experts; swin.nu/careerhelp; swin.nu/aach
Tues 17/03 On Campus: ALL STUDENTS: Ask an Employer
- BA302 12.30-1.30pm:– Robert Bosch and students talk about
the
professional placement program
- GS Level 2 Rm 209: 10.15 -11am EY (Ernst & Young) Writing
Resumes
Webinar: Resumes & Cover letters 2.30 – 3.30pm
Wed18/03 On Campus: ALL STUDENTS: Ask an employer:
- GS Level 2 11.45-12.30pm VPSC
- JCSC 1.30-4pm National Security Careers Event
Portfolio development: Writing STAR - EN 406 12.30-1.30
Thurs 19/03 On Campus: ALL STUDENTS: Ask an employer:
- TD121 10.30-11.30pm: – NAB and students talk about the
professional placement program
- GS Level 2 11.45-12.30: DXC (INF students)
Coming up in Weeks 3 & 4
Placement Information
sessions with employers
and past students
Mid & Final degree students
Do this week:
• Submit your resume to

Career Start
• Register for a placement
(swin.nu/pp); Internship
(Swin.nu/intern)
Get your resume ready now:
Week 5 - Placements positions
for S2 2020 open
Week 8 - Internship positions
for Winter & S2 2020 open
Find out & register at https://www.swinburne.edu.au/events//
and SWINEMPLOY
https://www.swinburne.edu.au/current-students/work-study-
opportunities/jobs-careers/events/
16 March – 20 March
IS YOUR SEMESTER GOING
THE WAY YOU EXPECTED?
NOW’S THE TIME TO REFLECT
• What are you struggling to understand right now?
• How you can get the most out of your studies?
WE ARE HERE TO SUPPORT YOU
swi.nu/kfg4m
31
MAR

CENSUS
DATE
TIME TO MAKE
DECISIONS
Academic Development Advisors (FBL)
[email protected]
9214 8408
FOUR KEY
PILLARS OF
SUCCESS ON
CAMPUS
(SEE CANVAS)
Copyright: Porter (2008)
LAST WEEK:
ENVIRONMENT
AL ANALYSIS –
OVERLAP AND
INTEGRATION
Copyright: www.spotlightgrowth.com
THE TRANS-

PORTATION
SECTOR
“STRATEGY’ IN THE NEWS – LAST WEEK
https://iview.abc.net.au/show/business
“STRATEGY’ IN THE NEWS – THIS WEEK
www.iata.org/pressroom/pr/Pages/2019-06-02-01.aspx
http://www.iata.org/pressroom/pr/Pages/2019-06-02-01.aspx
“… Strategy can be viewed as
building defenses against the
competitive forces or as finding a
position in an industry where the
forces are weaker.
Changes in the strength of the
forces signal changes in the
competitive landscape critical to
ongoing strategy formulation. …”
Porter (2008, p78)
BUT, WHAT
INFLUENCES
COMPETITION
INSIDE THE
INDUSTRY?

PORTER’S FIVE
FORCES
MODEL OF
INDUSTRY
COMPETITION
§ Perfect Competition
§ Monopolistic Competition
§ Oligopoly
§ Monopoly
SO, WHAT
USUALLY
HAPPENS?
FOUR MARKET
STRUCTURES
§ Threat of new entrants: barriers
to entry
§ Bargaining power of suppliers
§ Bargaining power of buyers
§ Threat of substitute products
§ Rivalry among competing firms
INDUSTRY
ENVIRONMENT
ANALYSIS: THE
5-FORCES
COMPETITION
MODEL

Porter (2008, p78)
1
THREAT OF
NEW
ENTRANTS:
BARRIERS TO
ENTRY
§ High entry barriers tend to increase
the returns for existing firms in a
industry and may allow some firms to
dominate the industry
§ Industry incumbents want to maintain
high entry barriers in order to
discourage potential competitors from
entering the industry
§ Economies of scale
§ Product differentiation
§ Switching costs
§ Access to distribution channels
§ Cost disadvantages independent of scale
§ Government policy
THE EXPERIENCE CURVE & ECONOMIES OF SCALE:
REDUCING THE COSTS PER UNIT
Porter (2008, p78)

2
BARGAINING
POWER OF
SUPPLIERS
§ Supplier power increases when:
§ Suppliers are large and few in number
§ Suitable substitute products are not available
§ Suppliers’ goods are critical to buyers’ marketplace
success.
§ Supplier power increases when:
§ Suppliers’ products create high switching costs
§ Suppliers have substantial resources and provide a
highly differentiated product
§ Suppliers pose a credible threat to integrate forward
into the buyers’ industry.
Porter (2008, p78)
3
BARGAINING
POWER OF
BUYERS
§ Buyer power increases when:
§ Buyers purchase a large portion of an industry’s total
output

§ Buyers’ purchases are a significant portion of a
seller’s annual revenues
§ Switching costs (to other industry products) are low.
§ Buyer power increases when:
§ The industry’s products are undifferentiated or
standardised
§ Buyers pose a credible threat to integrate backward
into the sellers’ industry.
Porter (2008, p78)
4
THREAT OF
SUBSTITUTE
PRODUCTS
§ Function of a substitute
§ Goods or services outside a given industry perform
the same or similar functions at a competitive price
(e.g. plastic has replaced steel in many applications).
§ Differentiated industry products
that are valued by customers
reduce this threat.
Porter (2008, p78)

5
RIVALRY
AMONG
COMPETING
FIRMS
§ Competitors are rarely homogeneous; they
differ in resources and capabilities and seek to
differentiate themselves from competitors.
§ Firms seek to differentiate their products in
ways that customers value and in ways the
firms have a competitive advantage.
§ Common rivalry dimensions include:
§ Price
§ Service after the sale
§ Innovation
§ Industry rivalry intensifies with:
§ Numerous or equally balanced competitors
§ Slow industry growth
§ High fixed costs or high storage costs
§ Lack of differentiation opportunities or low switching costs
§ High strategic stakes
§ High exit barriers
forces are weaker.

Porter (2008, p78), Johnson, Whittington & Scholes (2011)
BUT, WHAT
INFLUENCES
COMPETITION
INSIDE THE
INDUSTRY?
PORTER’S FIVE
FORCES
MODEL OF
INDUSTRY
COMPETITION
STRATEGIC
GROUPS
§ Strategic groups are organisations
within an industry or sector with
similar strategic characteristics,
following similar strategies or
competing on similar bases.
§ These characteristics are different
from those in other strategic groups in
the same industry or sector.
§ An industry is a group of firms producing products and
services that are essentially the same (e.g. automobile
industry, airline industry).
§ A market is a group of customers for specific products or

services that are essentially the same (e.g. the market for
luxury cars in Germany … Luxury = horizontal segment; SUVs
= vertical segment).
§ A sector is a broad industry group (or a group of markets)
especially in the public sector (e.g. the health sector)
§ Greater competition within a strategic
group than between strategic groups
§ Similar products
§ Similar market positions
§ Similar strategic actions
§ Strategic groups can be mapped on to
two dimensional charts – maps. These
can be useful tools of analysis.
Johnson, Whittington & Scholes (2011)
CHARACTERIST
ICS FOR
IDENTIFYING
STRATEGIC
GROUPS
TWO-DIMENSIONAL MAPPING OF STRATEGIC GROUPS
(INDIAN PHARMACEUTICALS, WATCH-MAKING,
EUROPEAN LOW-COST AIRLINES)

USES OF
STRATEGIC
GROUP
ANALYSIS
§ Understanding competition - enables
focus on direct competitors within a
strategic group, rather than the whole
industry.
§ Analysis of strategic opportunities -
helps identify attractive ‘strategic spaces’
within an industry.
§ Analysis of ‘mobility barriers’ i.e.
obstacles to movement from one
strategic group to another. These barriers
can be overcome to enter more attractive
groups. Barriers can be built to defend an
attractive position in a strategic group.
§ Helping to clarify…
§ ‘strategic customer’: the person(s) at whom the strategy is
primarily addressed because they have the most influence
over which goods or services are purchased (e.g. for a
pharmaceutical manufacturer, usually, it is the health
authorities and hospitals not the final patient)
§ ‘critical success factors’: those factors that are either
particularly valued by customers or which provide a
significant advantage in terms of cost. Critical success factors
are likely to be an important source of competitive advantage
if an organisation has them

§ Problem/opportunity: groupings are not
stable as there are pathways/trajectories
within or across
§ Lets change our perspective and we can
apply the idea of ‘grouping the similar,
but distinct’ by focusing on organisations
(to get Strategic Groups) or focusing on
Products (Segments)
§ Each of these products, organisations and
strategic groups can compete in the
same “space” as each other or in
differing segments…. And each of those
various sub-sections of the industry may
vary in terms of how well “developed”, or
‘aged’ that product segment is.
§ This metaphor of life stages that people
go through as they age has also been
applied to businesses and their products
– most famously by the application of the
idea of a Product Life Cycle
Moon (2005)
BREAK FREE
FROM THE
PRODUCT LIFE
CYCLE
InventionèInnovation

THE DYNAMICS
OF
COMPETITIVE
RIVALRY: KEY
ISSUES FOR
COMPETITION
OVER THE LIFE
CYCLE
THE DYNAMICS
OF
COMPETITIVE
RIVALRY:
MONEY FLOWS
PER LIFECYCLE
STAGE
Levitt (1965)
BUT
REMEMBER –
BEND THE
MODEL:
“THERE IS NO
SPOON”…. USE
STRATEGIC
THINKING

AND JUST AS
WE CAN WARP
THE IDEA OF
LIFE CYCLES,
WHAT IF WE
RE-EXAMINE
SEGMENTS &
PRODUCTS IN
TERMS OF
VALUE?
§ Value: A product’s performance
characteristics and attributes for
which customers are willing to pay
§ Analysing “value” is also a flexible
tool
§ So, remember your perspective
when analysing value
§ For example, value chain analysis can be used either
across an industry or within an organisation
§ What and where is the value?
§ Three external points of reference
can get us started:
§ (1) the customer
§ (2) competitor-centred comparisons
§ (3) vertical relationships within the industry
VERTICALLY
RELATED

VALUE CHAINS:
A
STEREOTYPICA
L INDUSTRY
Suppliers/
Components
Wholesale
Distribution
Retailers
Consumers
Manufacturer
A PRODUCT
VALUE CHAIN
Mining
Sorting & Grading
Sale of rough diamonds (sights)
Cutting and polishing
Jewellery Manufacture
Jewellery Sales
Customers

VERTICALLY
RELATED
VALUE CHAINS:
REMEMBER TO
KEEP TRACK
OF WHERE
YOU ARE
ANALYSING
Suppliers/
Components
Wholesale
Distribution
Retailers
Consumers
Manufacturer
Power
of Suppliers
Power of
Customers
Threat of
New Entrants
Threat of
Substitutes
Rivalry

Among
Existing
Competitors
Power
of Suppliers
Power of
Customers
Threat of
New Entrants
Threat of
Substitutes
Rivalry
Among
Existing
Competitors
VALUE CHAIN
OF AIRLINE
‘SPACE’
Supplier Airline Channels Customers
Fleet
Fuel
Catering
Staff
Maintenance

Services
Aggregate to
provide
transportation
service
Freight
Forwarders
Airlines
Travel agency
Tour packages
Business
customers
Individuals
USING VALUE
CHAIN
ANALYSIS
§ Analyse the value contributed at
different stages in (a) the
Industry, (b) the product’s value
chain
§ Integrate the messages from
these analyses into your
strategic thinking
§ Where could your organisation
add value that’s not being added
(or ‘denied’), and/or where

customers want value, and/or…
§ (Later, when we analyse inside the
organisation, we’ll look at which
activities contribute value Although
some activities are necessary and/or
strategic/part of a capability needed
for our competitive advantage)
“A MAN IS WHAT HE THINKS
ABOUT ALL DAY LONG.”
(RALPH WALDO EMERSON)
Copyright: Johnson, Scholes & Whittington (2011)
POTENTIAL
BENEFITS AND
DANGERS OF
STRATEGIC
PLANNING
STRATEGIC PLANNING
- WEEK 2 -

§ What business is your
organisation in?
§ What industry are you in? (see Levitt’s Marketing
Myopia)
§ What customer problem do you solve?
§ What “job” do you do for the customer?
§ Which value or ”denied value” can you create?
FROM LAST
WEEK TO THIS
WEEK: FROM
BROAD
CONTEXT TO
SECTOR/
INDUSTRY
“STRATEGY’ IN THE NEWS - EXAMPLE
https://www.theage.com.au/business/companies/woolies-bottles-
it-on-pokies-and-gives-customers-what-they-want-20190705-
p524da.html
p524da.html
“STRATEGY’ IN THE NEWS - EXAMPLE
https://www.afr.com/companies/retail/green-shoots-metcash-s-
bold-strategy-for-growth-20200130-p53wb3

https://www.afr.com/companies/retail/green-shoots-metcash-s-
bold-strategy-for-growth-20200130-p53wb3
“STRATEGY’ IN THE NEWS – EXAMPLE
THE TRANS-
PORTATION
SECTOR
§ “We now have five-forces analysis,
core competencies,
hypercompetition, the resource-
based view of the firm, value chains,
and a host of other helpful, often
powerful, analytic tools.
§ Missing, however, has been any
guidance as to what the product of
these tools should be - or what
actually constitutes a strategy.
§ Indeed, the use of specific strategic
tools tends to draw the strategist
toward narrow, piecemeal
conceptions of strategy that match

the narrow scope of the tools
themselves.”
§ “ … The general's challenge — and
the value-added of generalship —
is in orchestration AND
comprehensiveness.”
HAMBRICK &
FREDRICKSON
(2001): ARE
YOU SURE YOU
HAVE A
STRATEGY?
5 MAJOR ELEMENTS OF STRATEGY (HAMBRICK &
FREDRICKSON, 2001)
5 MAJOR ELEMENTS OF STRATEGY: IKEA (HAMBRICK &
FREDRICKSON, 2001)
Copyright: Own figure
UNIT CONTENT
WILL BE FROM
THE OUTSIDE
INWARDS
The Strategic Context

The Industry
(and Markets)
The Organisation(s)
Copyright: Adopted from Porter (1984)
THE
COMPETITIVE
ADVANTAGE
OF NATIONS
§ Factor conditions are operational
issues in the country or region —
cost of capital, cost and skill of
labour, and cost and availability of
resources, including technology and
information — as well as
infrastructure.
§ Demand conditions are the number
and nature of customer preferences.
§ Related and supporting industries
help develop efficiencies along the
supply chain.
§ Industry strategy, structure and
rivalry may force organisations to
develop strategies and structures to
make them more effective, in order
to stay in business.

THE ELEMENTS
OF PORTER’S
DIAMOND
EMPLOYMENT
IN AUSTRALIA
OVER TIME BY
SECTOR
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
February 1988 February 1993 February 1998 February 2003
February 2008 February 2013 February 2018

Primary
Secondary
Tertiary
Quaternary
Quinary
§ Primary: Agriculture, Forestry and Fishing; Mining
§ Secondary: Manufacturing; Electricity, Gas and Water
Supply;
Construction
§ Tertiary: Wholesale Trade; Retail Trade; Transport and
Storage;
Accommodation, Cafes and Restaurants
§ Quaternary: Communication Services; Finance and Insurance;
Property and Business Services; Education
§ Quinary: Health and Community Services; Cultural and
Recreational Services; Personal and Other Services
WHY ARE
SOME FIRMS
MORE
SUCCESSFUL
THAN OTHERS?

Context
COMPETITORS’
offerings
CUSTOMERS’
needs
ORGANISATION’S
capabilities
Sweet
Spot
KEY
QUESTIONS
REGARDING
THE
INDUSTRY
AND
COMPETITIVE
ENVIRONMENT
SIX ELEMENTS
OF PESTEL
ANALYSIS –
FOR THE
“MACRO”
ENVIRONMENT

PESTEL - AUSTRALIA
https://advantage-
marketline-
com.ezproxy.lib.swin.edu.au
/Analysis/details/country-
analysis-report-australia-in-
depth-pestle-insights-25973
https://advantage-marketline-
com.ezproxy.lib.swin.edu.au/Analysis/details/country-analysis-
report-australia-in-depth-pestle-insights-25973
PESTEL - MELBOURNE
https://advantage-
marketline-
com.ezproxy.lib.swin.edu.au
/CityAnalysis/Summary/mel
bourne#&panel1-1
https://advantage-marketline-
com.ezproxy.lib.swin.edu.au/CityAnalysis/Summary/melbourne
THE
COMPETITIVE
ADVANTAGE
OF NATIONS

BUT, WHAT
INFLUENCES
COMPETITION
INSIDE THE
INDUSTRY?
PORTER’S FIVE
FORCES
MODEL OF
INDUSTRY
COMPETITION
forces are weaker.
Porter (2008, p78)
BUT, WHAT
INFLUENCES
COMPETITION
INSIDE THE
INDUSTRY?
PORTER’S FIVE
FORCES
MODEL OF
INDUSTRY
COMPETITION

§ Perfect Competition
§ Monopolistic Competition
§ Oligopoly
§ Monopoly
SO, WHAT
USUALLY
HAPPENS?
FOUR MARKET
STRUCTURES
§ Characteristics of perfectly
competitive markets:
§ Many competing firms
§ Many buyers
§ Homogenous demand for and homogenous supply
of goods or services
§ Perfect information
§ No barriers to entry or exit
§ Strategic implications of
perfectly competitive market
structures
§ The firm must accept the market price
§ The firm cannot differentiate its products and
services

§ To earn above normal profits, firms must control
their costs
§ This is the first of Porter’s generic strategies: COST
LEADERSHIP
FOUR MARKET
STRUCTURES:
PERFECT
COMPETITION
(“COMMODITIES”)
§ Characteristics of monopolistic
competition
§ Many competing firms
§ Many buyers
§ Heterogenous demand for, and heterogenous
supply of goods and services (i.e. product
differentiation)
§ No perfect substitutes
§ Imperfect information (i.e. a role for advertising)
§ Firms have discretion over pricing
monopolistically competitive
markets
§ Firms have several more strategic variables including
prices, product design, distribution, promotion and

advertising in targeting their offerings to particular
market segments or niches.
§ Transactional marketers call these the 4P’s
§ Porter calls this a second generic strategy:
DIFFERENTIATION
FOUR MARKET
STRUCTURES:
MONOPOLISTIC
COMPETITION
§ Characteristics of oligopoly
§ A few large firms
§ Many buyers
§ Demand may be homogenous or heterogenous
§ Substantial barriers to entry
§ Imperfect information
oligopoly
§ The BIG THING about oligopoly is...
INTERDEPENDENCE ...that the outcome of a strategic
move by an enterprise will depend upon the reaction
of its competitor(s)
FOUR MARKET
STRUCTURES:
OLIGOPOLY

§ Oligopoly and co-operation
§ Oligopoly (or high levels of industry concentration)
raises the possibility of anti-competitive behaviour.
§ Co-operation (whether implicit or explicit collusion)
involves reducing the power of consumers in the
determination of the terms of exchange (e.g., prices)
§ Under competitive conditions the secret to an
enterprise’s success usually depends upon satisfying
the needs and wants of consumers better than one’s
competitors.
§ However, under oligopoly there is the alternative
strategy of tacit co-operation (i.e., gang up against
the consumer!)
§ Co-operation can be achieved without explicit
collusion (which, in most Western economies at
least, is illegal).
§ With successive strategic moves, enterprises may
signal to competitors their intention not to compete
on price.
§ Thus an industry convention may become
established with enterprises tacitly conforming to
unstated rules of limited competition.
FOUR MARKET
STRUCTURES:

OLIGOPOLY
§ Characteristics of monopoly
§ Only one firm, many buyers
§ Demand may be homogenous or heterogenous
§ Imperfect information
§ Barriers to entry
monopoly
§ Monopoly provides the enterprise with a high degree
of market power in determining the terms of
exchange with customers (i.e. prices)
§ Customers may be faced with necessity rather than
choice.
§ The strategic implications for firms are: how can
monopolies be created and maintained?
§ ...and it’s this kind of thinking that leads some people
to try to think of ways they could “warp” the fabric of
the industry/market.... and “maintain” monopoly-like
situations by:
§ Building barriers to entry, forging strategic
alliances, adopting implicitly co-operative
behaviors or even explicit collusion with
competitors are alternative strategies by which
may seek to build/maintain/exploit market power
FOUR MARKET
STRUCTURES:

MONOPOLY
ENVIRONMENT
AL ANALYSIS –
OVERLAP AND
INTEGRATION
“IF YOU WISH TO MAKE AN
APPLE PIE FROM SCRATCH,
YOU MUST FIRST INVENT THE
UNIVERSE.”
(PAUL SAGAN)
Acknowledgement
of Country
On behalf of those present I acknowledge the
Wurundjeri people of the Kulin Nation who are
the traditional custodians of the land on which
we now meet. I pay my respect to their Elders:
past, present and emerging.
I also pay my respect to all Aboriginal and
Torres Strait Islander people of Australia and
hope that the path towards reconciliation

continues to be shared and embraced.
STRATEGIC PLANNING
- WEEK 1 -
UNIT OVERVIEW
p524da.html
p524da.html
https://www.theage.com.au/business/companies/auspost-chief-
christine-holgate-puts-stamp-on-strategy-to-deliver-profits-
20200228-p545e3.html
https://www.theage.com.au/business/companies/auspost-chief-
christine-holgate-puts-stamp-on-strategy-to-deliver-profits-
20200228-p545e3.html
Toastmasters will help you

to:
• Become a better
speaker and presenter
• Communicate with
confidence
• Develop leadership
skills
• Listen effectively
You'll find a fun, safe
supportive learn-by-doing
environment that allows
you to achieve your goals
at your own pace.
The club is available for
both students and staff.
When: Tuesdays
Time: 12:30-1:30pm
Where: GS302
Cost: $100 for new members*
Contacts:
Andrew Rixon (President)
[email protected]
Sam Wilson (VP Membership)
[email protected]
*- Scholarships available
http://swin.edu.au
http://swin.edu.au

UNIT OVERVIEW
§ What majors are you doing?
§ HR?
§ Marketing?
§ Finance?
§ Accounting?...
§ Anyone doing a degree from outside
the Business School?
§ Who is in their final year? Final
semester?
§ Who here regularly “watches” some
form of business TV/news?
GETTING TO
KNOW YOU…
§ You would have heard sayings like:
§ “Plans are nothing, planning is everything”....,
§ “Opportunity favours the prepared mind”....,
§ “The best way to predict the future is to create it”...
§ But how do we do that?
§ We will cover a variety of models
that can be useful as a starting

point... but
§ Strategy has lots of characteristics
and it basically comes down to
awareness of the wider business
horizon and, most notably,
strategic thinking
WHAT IS
STRATEGY?
Copyright: De Wit & Meyer (2010)
CONVENTIONAL
VERSUS
INTEGRATIVE
THINKING
Copyright: www.europeanbusinesssreview.com
WHY ARE
SOME FIRMS
MORE
SUCCESSFUL
THAN OTHERS?
WHY ARE
SOME FIRMS

MORE
SUCCESSFUL
THAN OTHERS?
Context
COMPETITORS’
offerings
CUSTOMERS’
needs
ORGANISATION’S
capabilities
Sweet
Spot
§ “Today’s competitive advantage
may become tomorrow’s
albatross unless strategists
attune themselves to changes in
underlying conditions.”
§ “… Every competitive advantage is
predicated upon a particular set of
conditions that exist at a particular
point in time for particular
reasons.”
§ “… The very existence of
competitive advantage sets in
motion creative innovations that, as
competitors thrive to level the

playing field, cause the advantage
to dissipate.”
CHRISTENSEN
(2001): THE
PAST AND
FUTURE OF
COMPETITIVE
ADVANTAGE
§ Strategic decisions are about:
§ The long-term direction of the organisation
§ The scope of an organisation’s activities
§ Gaining advantage over competitors
§ Addressing change in the business environment
§ Building on resources and competences
(capabilities)
§ Values and expectations of stakeholders
§ Therefore strategies are likely to
be:
§ Complex in nature
§ Made under uncertainty
§ Affect operational decisions
§ Require an integrated approach
§ Often involve change
WHAT IS
STRATEGY?

WHAT IS STRATEGY?
Mintzberg’s 5 Ps for Strategy
Strategy as plan Consciously intended course of action
Strategy as ploy Specific manoeuvre to outwit opponents
Strategy as pattern Pattern in a stream of actions
Strategy as position Position in relation to the organization’s
environment
Strategy as perspective The organization’s shared mindset
Copyright: Grunig et al.
THE INTENDED
STRATEGY MAY
NOT BE
REALISED
Copyright: Minzberg (1987)
DELIBERATE
AND
EMERGENT
STRATEGIES

Copyright: Hancock & Bezold (1994)
A FUTURES
CONE
UNIT CONTENT
WILL BE FROM
THE OUTSIDE
INWARDS
The Strategic Context
The Industry
(and Markets)
The Organisation(s)
THE
COMPETITIVE
ADVANTAGE
OF NATIONS
§ Factor conditions are operational
issues in the country or region —
cost of capital, cost and skill of

labour, and cost and availability of
resources, including technology and
information — as well as
infrastructure.
§ Demand conditions are the number
and nature of customer preferences.
§ Related and supporting industries
help develop efficiencies along the
supply chain.
§ Industry strategy, structure and
rivalry may force organisations to
develop strategies and structures to
make them more effective, in order
to stay in business.
THE ELEMENTS
OF PORTER’S
DIAMOND
EMPLOYMENT
IN AUSTRALIA
OVER TIME BY
SECTOR
0%
10%
20%
30%

40%
50%
60%
70%
80%
90%
100%
February 1988 February 1993 February 1998 February 2003
February 2008 February 2013 February 2018
Primary
Secondary
Tertiary
Quaternary
Quinary
§ Primary: Agriculture, Forestry and Fishing; Mining
§ Secondary: Manufacturing; Electricity, Gas and Water
Supply;
Construction
§ Tertiary: Wholesale Trade; Retail Trade; Transport and
Storage;
Accommodation, Cafes and Restaurants

§ Quaternary: Communication Services; Finance and Insurance;
Property and Business Services; Education
§ Quinary: Health and Community Services; Cultural and
Recreational Services; Personal and Other Services
§ But what business is your
organisation in?
§ What industry are you in? (see Levitt’s Marketing
Myopia)
§ What customer problem do you solve?
§ What “job” do you do for the customer?
§ Which ”denied value” can you create?
FROM BROAD
CONTEXT TO
SECTOR/
INDUSTRY
§ “We now have five-forces analysis,
core competencies,
hypercompetition, the resource-
based view of the firm, value chains,
and a host of other helpful, often
powerful, analytic tools.
§ Missing, however, has been any
guidance as to what the product of

these tools should be - or what
actually constitutes a strategy.
§ Indeed, the use of specific strategic
tools tends to draw the strategist
toward narrow, piecemeal
conceptions of strategy that match
the narrow scope of the tools
themselves.”
§ “ … The general's challenge — and
the value-added of generalship —
is in orchestration AND
comprehensiveness.”
HAMBRICK &
FREDRICKSON
(2001): ARE
YOU SURE YOU
HAVE A
STRATEGY?
5 MAJOR ELEMENTS OF STRATEGY (HAMBRICK &
FREDRICKSON, 2001)
5 MAJOR ELEMENTS OF STRATEGY: IKEA (HAMBRICK &
FREDRICKSON, 2001)

THE TRANS-
PORTATION
SECTOR
§ Individual - Industry Anomaly/ies
Video Commentary (20%)
§ Group Project – Strategic
Analysis of An Organisation
(40%)
§ Exam (40%)ASSESSMENT
"INTELLIGENCE WITHOUT
AMBITION IS A BIRD
WITHOUT WINGS.”
(SALVADOR DALI)

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