19 Competitive strategy in the digital age

Abstract

Managing companies in a better way from a strategic point of view not only benefits the companies themselves, but also society in general. In the end, the goal of strategy is to ensure the company's long-term profitability, which means that scarce resources are better used. Each time a bad strategic decision is made, resources are wasted. As our society be-comes older and more dependent on savings, the performance of those savings becomes ever more important. We can actually see the impact of better strategic thinking in the increased profitability of companies over the last 25 years. Of course, many factors are behind that improvement, but it is undeniable that, if companies avoid wasteful investments and concentrate their effort on those activities that pay off over the long term, aggregate profitability will increase. But the reality of new information technologies has given a new importance to strategic analysis: although the basic principles have not changed, their application in a new techno-Zusammenfassung The last few decades have seen an extraordinary development in the field of Competitive Strategy. Ideas that were first developed by obscure academics working on Industrial Mi-croeconomics were adopted (and adapted) by business school professors, consultants and, eventually, practitioners. Many tenets of corporate strategy held as evident in the last centu-ry are now rightly considered wrong. For instance, it would be difficult today for a company specializing in weapons to justify buying a shoe brand, as Oerlikon did with Bally, or for a European telecom to buy an isolated minority stake in an Asian country, as Swisscom did in Malaysia. Markets, i.e., investors, would immediately react against such strategic nonsense, no matter how much the respective Public Relations departments dressed the idea up. There is now a clear appreciation of the need for a solid strategy to ensure the health of the com-pany, going beyond platitudes such as " diversifying cash-flow streams " or " establishing bridgeheads in emerging markets to ensure future growth " . We have all learned that future profits don't depend on some " story telling " , but are subject to a strict " Strategic Logic " .