Glob Strat User-Guide - Aide a comprendre la simulation faite dans le cadre de multiples évaluations PDF

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Aide a comprendre la simulation faite dans le cadre de multiples évaluations...

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GlobStrat User Guide Strategy ! Definition ! ! Strategy ! Execution

Strategy Evaluation

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Daniel PAUL, Ph.D. in Management, ITP Harvard Business School

GlobStrat_User Guide -Web 3.0

Table of Contents Overview

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What is GlobStrat?................................................................................................................. ! 3 Your mission!.......................................................................................................................... 3 GlobStrat simulation flow and agenda!.................................................................................... 3 Your Right to Win!................................................................................................................... 4 Your Industry.......................................................................................................................... ! 5 Strategy definition 6 Your values and goals!............................................................................................................ 6 Industry structure!................................................................................................................... 6 Your Business strategy: creating value for your target audience!............................................. 6 Corporate strategy: developing new capabilities..................................................................... ! 7 Your management.................................................................................................................. ! 8 Your Business Model!............................................................................................................. 8 Share Value creation!............................................................................................................ 11 Strategy Implementation 12 Marketing!............................................................................................................................. 13 Sales!................................................................................................................................... 14 R & D!................................................................................................................................... 15 Production!........................................................................................................................... 16 Human resources!................................................................................................................ 17 Finance!................................................................................................................................ 18 P&L (Income Statement)!...................................................................................................... 19 Balance sheet!...................................................................................................................... 19 GlobStrat available options!.................................................................................................. 20 Decisions cheat-sheet.......................................................................................................... ! 21 Detailed Profit & Loss Statement!.......................................................................................... 22

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Overview What is GlobStrat? GlobStrat is both a Business Game, for fun, and a Global Strategic Management simulation, for learning. The Business Game is built on a competition between teams engaged in a challenge: • You compete against firms ran by your peers, and the best company will emerge on top. • Your team «#willing to win#» will be a strong motivation, allowing for individual and team engagement . • The game allows you to run a company in a realistic, yet risk-free virtual environment, • This Game setting creates a learning by doing and learning with fun environment. Yet, the aim of the simulation is experiential learning. Based on corporate strategy practicing and team-work: • GlobStrat simulation looks very much like the actual global competition going on between firms in the real world. • GlobStrat teamwork will train you to communication & cooperation within your Executive Committee. GlobStrat is a strategic management training tool, aiming at: • Getting the understanding of strategy dynamics in a global competitive world. • Defining and implementing a successful business strategy, on the long-term. • Developing your ability to run a company, acquiring the CEO 360° perspective, • Experiencing team-work within an executive committee, improving you ability to cooperate with your peers. GlobStrat should demonstrate that a winning strategy is built on a few (yet difficult to obtain) fundamentals: • A clear definition of your business strategy, • A strong team engagement in its execution, • An alignment of every team member, and of all functions, in its implementation. • Coherence#should be the key-word explaining, in the final debriefing, the success… or failure of your strategy.

Your mission As a member of the executive team, your mission is to create value on a sustainable basis. Profit is obviously the foundation of sustainable business. Yet social and environmental impacts must also be managed to achieve true business sustainability. To that end, GlobStrat evaluates your company’s performance through an aggregate Value representing the value created for shareholders and stakeholders, on a Triple Bottom Line basis: Profit, People and Planet.

GlobStrat simulation flow and agenda Your first step, having read carefully this manual, is to assemble your team and define your business strategy. We recommend consulting market surveys to bette A «#practice round#» may end this preparation process. If that was the case (look at your simulation agenda in your Management tab), take advantage of this opportunity to learn how to use the software and test the first year implementation of your strategy. Note that during this practice round the competitors‘ data and intelligence surveys are not displayed, so that you can really test your own strategy, without any spying opportunity for competitors… You will then go through several simulation rounds, each representing one year of operation. • Analysis of your company’s and competitors’ performance (strategic diagnosis), • Decisions for each function and what-if analysis of your budgets (generated by Globstrat), • Coordination, adjustment and arbitrage of your decisions to fit within your strategy and your financial capacity, • Submission of your decisions, so that GlobStrat can compute the results for the year, given competitors’ decisions. At the end, you will have to prepare your Business Report and probably to present it during the final debriefing. !

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Your Right to Win When starting, your firm does not have any true strategy: no identity, no original positioning (identical to competitors)… It is your team responsibility to give it a specific identity and, ideally, a unique strategy. Every business usually have a past, an history, a specific culture, a given strategy…Within GlobStrat this strategic identity is not given. Y y. All competitors are in the same beginning situation: a generalist positioning on its domestic market, with the same resources and market share. They may evolve differently in the future, but these trends are public and available in your Market intelligence survey. So you will be able to take them into account when analyzing your environment. In Globstrat, the governance (your board) is giving a «#carte blanche#» to the executive committee (your team), This may not seem very realistic, but from a pedagogical point of view it is very powerful, in terms of strategic freedom and teem empowerment. You may choose your strategy and engage strongly your team in its success… Take advantage of this situation in order to elaborate a potentially winning strategy, allowing your business to build on equal resources to develop a different, and may be unique, strategy, and to execute it better than your competitors. Your team work efficiency will make the difference!

The firm’s «#Right to Win#» is central to this strategic simulation. There is not any predefined winning strategy in Globstrat, no optimal way to success. What will make the difference looks very much like what Paul Leinwand & Cesare Mainardi, called «#the essential advantage*#», i.e. a strong coherence among the 3 main elements of your Business model, • A Value proposition and an adapted Portfolio of products & services associated to some value attributes and to the «#right#» price : your way to create value for your target customers. • A Value Architecture building your Capabilities System, i.e. your ability to deliver this value to your customers, to create some competitive advantage(s) and to generate an actual differentiation from your competitors. • A Profit equation, allowing your firm to finance its investments and generate a good Return on Capital employed. Strategy definition and strategy execution are strongly related, so that what will finally make the difference (in the real world as in GlobStrat) is probably your ability to define and implement a clear and coherent strategy, engaging you, and your team, in the success of your Business strategy.! * Paul Leinwand & Cesare Mainardi, The essential advantage, Strategy&, Harvard Business Press, 2011. ** Re-Invent your Business Model, Laurence Lehmann-Ortega, Hélène Musikas, Jean Marc Schoettl, Odyssey314.com *** Paul Leinwand & Cesare Mainardi,The Coherence Premium, Strategy&, Harvard Business Review, july 2011. !

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Your Industry Industry type This industry may be changing very fast, on a#»life cycle#» mode, from Emergence, Growth, Maturity, to Decline (or crisis). You start with one product: the T product. You can opt to innovate by developing up-to 3 new technologies: ! , leading to 7 new products combining technologies:

So markets’ life cycle, new technologies and new products, new entrants, new strategic positioning, more rivalry between competitors… are probably going to change this industry within the next years. Each new generation of products may be substituting to elder ones and take up to 50% of the preceding generation’s market share and then evolve accordingly to its own life cycle. Anticipating these evolutions and adapting your strategy to this changing environment will certainly be essential to your own success.

Business Scope GlobStrat is a global simulation, with three markets You start as a domestic player on one of these markets, and, when this option is activated, you can opt to expand internationally and even become a global player. Your instructor may open this «#going international#» option from the beginning or delay it to later, depending on his own objectives and course timing. This creates a business scope of up-to 9 market segments and up-to 72 product-markets combinations, among which your team will have to make strategic choices.

Competition A GlobStrat simulation contains from 4 to 9 teams competing for market share, revenue, profitability and, last but not least, sustainability. Initially, competitors are distributed across the 3 regions. Each competitor has an identical starting point, providing an equal chance of success. To that end, the 3 markets behave virtually identically, when starting. Market sizes are a function of the number of teams, so that each company starts with an identical market volume and share, regardless of the number of competitors on each market: the «competition» analysis will describe your competitors’ positioning, and tell you where your business is operating in Year 0: its domestic market. In addition, each region contains a set of Small Competitors modeled by the GlobStrat software. Small Competitors have no global ambitions and only act opportunistically, capitalizing on your inefficiencies. Your innovation ability should allow your company to progressively conquer their market shares.

Intelligence Surveys To develop a successful strategy you need to understand, anticipate and react to your environment - the markets and your competitors.

Global strategic Arena When the business game begins, your company is identical to all your competitors. Success requires building strategic advantages, which implies differentiating your company from competitors. This of course is achieved through investing in selected areas, given your own strategy. GlobStrat provides, each team, a complete strategic freedom. your own values are welcome and may lead your firm goals. There are no pre-defined winning recipes. Instead, success requires being better than competitors. Easier said than done. To help your strategic thinking and definition, here are a few elements to consider."

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Strategy definition Your values and goals Your strategic thinking step consists in defining shared by your executive committee, and the weighting of your economic (Growth, Customer Value), financial (Profit), environmental Creating competitive advantages requires investments, time, and resources allocation.

Industry structure There are several frameworks for this analysis l. This should lead you to evaluate: • The market trends, through a market intelligence (market survey, free in year 1, shown in appendix 2) • The segments’ key success factors (same Market survey) • The potential intensity of competitive rivalry, given your own scenario and your competitors’ one. • The threat of new competitors’ entry and the opportunity/threat of new technologies & new products launching.

Your Business strategy: creating value for your target audience Starting from a generalist positioning on your domestic market, without any competitive advantage, will lead you to build one or many strategic advantage(s) on your target markets. But building a strong and sustainable leadership will take some time. So, we recommend Not leaving any current market too quickly, using these non strategic markets (for you) as a source of revenues for financing your leadership elsewhere.

Choose a clear strategic direction! Customer Value" Differentiation!

Strategic innovation area Customer intimacy ? Stuck into the middle ? !

y nc e i c Effi

Progress ! Area! Cost-Volume! Strategies!

r" tie n o Fr

GlobStrat" Teams initial ! strategic positioning"

Low-cost! Non viable Area!

M. Porter ’s «"generic strategies"» choice, in STRATEGOR !

Cost" !

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Starting from a median positioning, without any strategic advantage, you can, and should, choose one remaining a Generalist, preferring a Customer Intimacy focalisation, specializing in Volume-Cost domination, or building a Premium Differentiation. Generalist: This is your initial positioning. Operating on the three segments of your domestic market, without any differentiation of you customer proposal from one market segment to another. Defending this positioning may be difficult, given the potential specialization of your competitors, and the new entry of international competitors trying to conquer your market share. Building strong Barriers to Entry may not be efficient enough to contain all of them and will probably be very costly: sales agencies, competitive prices, new products covering the whole range of innovation.…The risk of falling into the median positioning trap is high, but may perhaps be managed if you can find the necessary resources. Cost / Volume domination: High volume - Low cost This cost / Volume domination strategy involves winning market share by appealing to price-sensitive customers. This is achieved by having the lowest prices in the target market segment. To succeed, your company must be able to operate at a lower cost than your competitors. This simultaneously requires achieving economies of scale through high volumes, driving down your costs and improving environmental efficiency. Customer intimacy: focusing on specific segments This segmentation strategy involves focusing on the unique expectations of target market segments, and customizing your products, services and distribution to optimally serve a selected audience. If targeting multiple market segments, your will need to customize your offer differently for each target audience. This can be achieved by new services adapted to each market segment, but you will have, first, to develop these new service capabilities, and then, to deliver them to your customer.

This differentiation strategy involves offering customers with the best product offering, through product innovation, quality and ecological certifications. Innovation implies R&D investments to develop new technologies & products; Quality is a transversal activity (R&D, Production, HR) which can even be rewarded by ISO 9000 certification. Ecology is also a transversal activity which can even be rewarded through ISO 14000 certification.

Corporate strategy: developing new capabilities Whatever your Business strategy, you will have to build the required strategic capabilities: innovation capabilities, and international capabilities, setting the scope of your business: domestic, international or global. Innovation strategy As you operate in a high-tech industry, innovation is essential. You will need to decide which technologies to develop, and in which time frame. You will also need to decide on the depth & breadth of your product portfolio. And wether your company is a leader or a follower. The contents and intensity of your innovation strategy can make a substantial difference. A new product may help you conquer more market share, but a new product is also a substitute to an older product. And don’t forget that new services and ISO certifications may help too. You will have to allocate your resources! Scope of business . There are You start as a domestic player operating in all 3 segments. You need to decide wether you want to become a global player, operating on two or more markets. Likewise, you need to decide if you want to be a generalist, operating on all segments, or a specialist operating on selected segments. Again this will take time and resources that you may have to allocate.Whatever your strategy, DO NOT disinvest to quickly, from a given market segment, even if it’s not essential to your strategy: you will need its resources for financing your development elsewhere, and offering your market share to competitors would strengthen them too easily. This kind of strategy divestment should be implemented on several years, time for you to grow on your customer targets…

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Your management Your management on-line tools will help you to perform some tasks, such as: • Defining the name of your corporation (A…, B…., C….): the first letter is given, but you may add 5 others. • Organizing your executive committee (team): one CEO, 5 Functional Vice-Presidents, , for your archives and your instructor information. • • Look at your past records: Practice round results + yearly decisions, forecasts & performances (Management tab). • Access to the Agenda of your simulation (Management tab). • Access to your Pee...