Introduction to strategy
Tronn Å. Skjerstad
Oslo, January 2013
We can always learn from history
Introduction to strategy
Tronn Å. Skjerstad
2
Introduction: do smarter strategic choices!
•  Competitive advantages are based on
–  product and/or
–  process
•  “Sustainable competitive advantages” are challenged due to
•  Globalisation
•  Technology development
•  Deregulation
•  Consequence: strategy development is challenged
Introduction to strategy
Tronn Å. Skjerstad
3
Implications
«Unless today’s established corporations learn to
reinvent themselves and their industries, much of the
new wealth will be created by newcomers.»
Gary Hamel (1997)
Introduction to strategy
Tronn Å. Skjerstad
4
Strategy for the incumbents
- stay on track or turn before it’s too late
Introduction to strategy
Tronn Å. Skjerstad
5
Strategy for the entrepreneurs:
new customers, new needs and new solutions
Introduction to strategy
Tronn Å. Skjerstad
6
Different focus in different contexts
• 
• 
• 
• 
• 
SMB: growth
Large, multinational: complexity
Professional partnership: individualism
Non governmental organisation: strong values
Public sector: the political dimension
Introduction to strategy
Tronn Å. Skjerstad
7
Introduction – focus and process
• 
Two typical starting points for strategic choice
–  Visionary front runner (proactive)à e.g. Google
–  Copy of competitors (reactive) à e.g. Microsoft
• 
Ideally an analytical, sequential process:
Internal analysis
External analysis
Strategy alternatives
Evaluation
-  Realism
-  Feasibility
-  Accept
(But this is not always the situation!)
Implementation
Introduction to strategy
Tronn Å. Skjerstad
8
Task: ”strategic”
•  What makes a choice ”strategic”?
•  What are the key success factors
for an effective strategy process?
Introduction to strategy
Tronn Å. Skjerstad
9
Introduction (ctd.)
•  What choices are really ”strategic”?
”Long term planning”
“Important”
-  Lang term
-  Irreversible
-  Resource allocation
-  Risky
-  Involves top management
-  Urgent
-  Limited information flow
-  Involves consultants
•  What are the threats against a good strategy process?
–  External: complexity and information access
–  Internal: guts and time pressure
Introduction to strategy
Tronn Å. Skjerstad
10
What is Strategy?
•  Origin-Greek word (strategos)-art of the general
–  Sun Tzu, Chinese military strategist in 500 B.C.
–  Modern-day application to business and competition dates to the
1960s
•  Plan versus Action - strategy is “explicit, rigorous formal
planning” versus “a set of flexible, goal-oriented actions”
•  Strategy as Theory-how to compete successfully
Ø  Firms have both intended and emergent strategies
Ø  One firm’s strategies may not work in all situations
Ø  Past success does not guarantee future success
Ø  It is often difficult to change strategy
Introduction to strategy
Tronn Å. Skjerstad
11
Fundamental Questions in Strategy
•  Why do firms differ?
Ø  Cultural differences between Western firms and Japanese
companies
Ø  Networks of relationships have powerful effect
•  How do firms behave?
Ø  Industry-based view - focus on competitive forces within an
industry that impact all firms
Ø  Resource-based (capabilities) view - focus on internal strengths
and weaknesses, firm specific resources and capabilities
Ø  Institution-based view - focus on government and societal forces
Introduction to strategy
Tronn Å. Skjerstad
12
Global Strategy and Globalization at a Crossroads
•  Three Defining Events - have brought corporate
social responsibility, ethics, and governance to
the forefront of strategic decisions
Ø Anti-globalization protests
- lost jobs, downward pressure on wages for
unskilled labor, environmental destruction
Ø Terrorist attacks
- 9/11, Madrid, London
Ø Corporate governance crisis
- industrial financial crisis, U.S. scandals, EU
Introduction to strategy
Tronn Å. Skjerstad
13
The “Strategy Tripod”
Three Leading Perspectives on Strategy
Introduction to strategy
Tronn Å. Skjerstad
14
The Essence of Strategy
Introduction to strategy
Tronn Å. Skjerstad
15
Starting point: “where are we?”
(aka SWOT)
Internal analysis
External analysis
Strengths
Opportunities
Weaknesses
Threaths
Environmental models
of competitive
advantage
Resource based
models of competitive
advantage
Introduction to strategy
Tronn Å. Skjerstad
16
Environmental model…
Michael Porter’s five forces give us an idea of how to analyze competition…
Introduction to strategy
Tronn Å. Skjerstad
17
Resource-based model…
- Firm Resource
Heterogenity
- Firm Resource
Immobility
Introduction to strategy
Value
Rareness
Imperfect Imitability
Sustained
Competitive
Advantage
Non-Substitutability
Tronn Å. Skjerstad
18
Institution based Considerations
In additon to the resource based and industry
based considerations, we need to address both
the formal and informal institutions…
Introduction to strategy
Tronn Å. Skjerstad
19
Institution based considerations
•  Institutions affect business decisions by signalling what
behaviour that is acceptable (Peng 2009)
•  The institutional framework consists of
–  The formal institutions, e.g. political laws and rules, and
economic contracts
–  The informal institutions are the social norms for behaviour in a
society that are fundamental for cultural and ethical conditions
Introduction to strategy
Tronn Å. Skjerstad
20
Music streaming is the future
It creates an optimal user experience – a fun one!
• 
• 
• 
• 
• 
• 
Access to a library of ALL music in the world – ever recorded
Fixed-fee rental model - no need to own music
Users explores new music in a totally different way – no need to decide to
buy a track or album
Accessible from all connected devices – PC, mobile, TV, home stereos,++
Offline-mode – play music when not online
Sharing of music online gets a new dimension
More people will play more music than ever before
Task
How do you predict that the music industry will develop in the next
three to five years?
Introduction to strategy
Tronn Å. Skjerstad
22
Music will become interactive and multimedia
When music meets the interactive screens, music will become an
interactive multimedia experience:
•  Music videos
•  More multimedia content; images, interactive presentations,++
•  Background info: bios, lyrics, etc
•  Interaction between artist and their fans
•  Live concerts and simultaneous music listening
•  Ticketing
Task
The concept “business model” is frequently used in strategy
processes. What is a “business model”?
Introduction to strategy
Tronn Å. Skjerstad
24
Task: “everything gets free,
and (some) people are loosing their jobs”
• 
Dagbladet is in “dire straits”
1500
Totalt
–  Dagbladet is loosing readers and revenues
from advertisers at an increasing speed 1200
–  Digital content is becoming increasingly
popular among consumers, but Dagbladets
revenues from digital content are small
900
Papir
Nett
• 
Suggest two-three strategic directions
Dagbladet could follow towards 2016
–  Offensive
–  Defensive
–  (Realistic)
Introduction to strategy
1322
1289
1368
1316
1172
1069
966
957
1008
997
943
973
946
966
956
1112
1076
985
976
891
854
796
Do a “SWOT” for Dagbladet
–  At least 5 Ss, Ws, Os and Ts
–  Prioritize down to 2 of each
1304
1229
813
• 
1302
788
789
788
906
780
669
683
600
635
555
504
469
437
300
259
278
1009
406
346
307
206
105
55
0 18
97/2 98/2
99/2
00/2
'01/2' '02/1' 03/1'
04/2'
05/1'
06/1' 07/2'
08/2'
09/2'
10/2'
11/2' 12/2'
(Kilde: TNS Gallup, 2012)
Tronn Å. Skjerstad
25