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The strategic importance
of the current economical tendencies
for small and medium sized companies
Plato Academy
Fabiaan Van Vrekhem
Wednesday 29/09/2010
How companies grow
Levels of work
Time span
Value systems
7 – Corporate Prescience
20 years – 50 years
6 – Corporate Citizenship
Value for the future
10 years – 20 years
5 – Strategic Intent
5 years – 10 years
4 – Strategic Development
3 – Practice
2 years – 5 years
1 year – 2 years
2 – Service
3 months – 1 year
1 – Quality
1 day – 3 months
Value for the present
Each particular level is established to achieve particular objectives
Level of complexity correlates 100% with the time-span of realisation of the objective
Levels of work from a historical perspective
Level III ( 1850)

Functional
execution

Success was seen to
be driven by the
single function/holon
of production


“You can paint it any
color, so long as it’s
black”.
Level IV (1900)

Business Unit Profit

Profitability was
recognized as the
result of the interplay
of new produc dev.,
production, sales,
finance.

Level V (1970)
Relative Competitive
position

Industry structure

Michael Porter.

Boston Consulting
Group .

Industry profitability is
a function of the
relative power position
not only with
competitors, but also
with suppliers,
customers, and
potential competitors

Profitability was a
function of the relative
competitive position of
one business to all
others in that industry

Value creation

Quality
Service
Practice
Level VII (2000)

Value control
Build capacity
Level VI (1980)
Strategic
Development

Profitability is driven by
Worldwide Industry and
social structures

Succesful strategies at the
higher levels were
predicated on succesful
execution of the strategic
thinking at the lower
levels.

Build society
Build goodwill and
value
Strategic Intent
Corporate
Citizenship
Corporate
Prescience
Analysis of the Belgian companies (based on sales)
Quality
Service
Practice
Strategic
Development
Strategic Intent
Corporate
Citizenship
4.406
665
104
35
5
874
17
3.593
6.858
109.731
# COMPANIES
Sales
560.000
9.300.000
39.000.000
327.500.000
8.506.000.000
Gross Operating Margin
349.000
2.763.000
9.500.000
74.250.000
739.000.000
GOM/fte
69.000
78.000
91.000
112.000
168.000
Example : Omega Pharma
“To be the most dynamic
pan-European OTC company
“
1987
25.000 euro
1998
2000
2009
23m euro
178m euro
811m euro
Continuous innovation
Geographic expansion
Start
Internationalization
Quality
Service
Practice
Strategic
Development
Strategic Intent
Corporate
Citizenship
Corporate
Prescience
Human Capability – The origin of growth
A person's capability
to perform complex tasks
is both
a lifelong evolution
and predictable.
7
6
5
4
3
2
1
There is a 0.97 correlation between
organisational layers
and each step in complexity
of mental processing
and thus potential capability
Human Capability – The origin of growth
Corporate Prescience
Corporate Citizenship
Strategic Intent
Development
Practice
Service
Placeholder text
Quality
Managerial hierarchy
Is a reflection of discontinuous steps
in the nature of human capability
Human capability : Being in flow
Complexity of the job
Corporate Prescience
Corporate Citizenship
7
7
6
6
5
4
4
Practice
Previewing
Revealing
5
Strategic Intent
Strategic Development
Capability of the person
Modelling
3
3
Weaving
Connecting
Accumulating
Service
Quality
2
2
1
1
Touch and Feel
Demographic perspectives
World
population
is ageing
Life
expectancy
is
increasing
Weight
shifts from
West to
East
Growth of
the world
population
Demographic perspectives
-
+
 Headquarters shift to the East
 Consumption will increase
 New needs
 New market opportunities
World
population
is ageing
Weight
shifts from
West to
East
Life
expectancy
is
increasing
Growth of
the world
population
 Level 4/5/6 jobs decrease in Europe
 Innovation capability increase in the East

Level 1 jobs shift to the East

Increased competition from the East

Increasing demand for natural resources

Increasing mobility
The paradox of strategy – how will demography affect your organization.
THE FUTURE
possibilities
judgement
Corporate
citizenship
review
coherence
VIABILITY
tangible measures
• Cost reduces profit
• Competition on price and margin
REPUTATION
intangible measures
• Cost is essential to create profit
• Competition on service and quality
G.Stamp/C.R.Vishwanath (1999)