Grade 12 Presentation

Overview External Corporate Strategy VELUX

VKR Holding A/SInvesting in daylight, fresh air, and a better environment

Overview External Corporate Strategy VELUXOverview

VKR FEEDBACK

Good external analysis – remember to sumamrize key findings after macro, industry and market level

Good corporate strategy analysis – although more on drivers of diversification and value adding actvities

Good competitive strategy analysis – using all main tools and concepts

Overview External Corporate Strategy VELUXCorporate Strategy

Agenda

Company Overview

External Analysis

Corporate Strategy Analysis

VELUX’s Competitive Strategy


Company Overview


VKR Holding – Company Overview

VKR Holding A/S (VKR) is a holding and investment company that owns companies in four business area.

The company was founded in 1941 by Mr Villum KannRasmussen

Currently, VKR is operating with 4 main business functions which includes; Roof windows & Skylights, Vertical Windows, Solar thermal energy and Ventilation & indoor climate


Recent Developments and Key Figures

WindowMaster A/S, was sold in early 2015 as a form of divestment by VKR

Amendments to building legislation and the trend in favour of energy-efficient buildings are in favour to the operations of VKR Holdings

VKR Holdings promotes gender equality by Increasing proportion of female board members standing currently at 20%

Highlights of latest reported financial

report (FY 2013)


External Analysis

Overview External Corporate Strategy VELUXExternal

External Analysis

Macro Industry Market


PESTEL Framework

Factors Drivers of Change Likelihood Impact Priority

Political

Economical Volatility in markets due to various economic

factors (debt-servicing problems etc.) 2

Sociocultural Urbanization

Shift towards simplicity and functionality in design 5

Technological Advancement in manufacturing and design

process 3

Environmental Energy consumption concerns

Renewable energy 1

Legal Changes in legislation/requirements 4


Industry Overview

Industry Building/Construction (Building Materials)

Pace of Change Low

Life Cycle Maturity

Strategic Group


Five Forces Framework

High

Limited number of suppliers

Relatively high switching costs

Bargaining Power of Suppliers

Low

Non-concentrated buyers

High switching costs

Bargaining Power of Customers

Low

Economies of scale

Experience

Differentiation

Threats of Entry

Threats of Substitutes

Competitive

Rivalry

Large players


Market Level Analysis

Individual (Residential)

Institutional (Corporate)

Strategic Customers

Reputation (proven track record, CSR, brand image)

Product quality

Service quality

Critical Success Factors


Implications

Key external strategic issues:

Opportunities Shift towards environmental concerns

Relatively low competitive risk allows for growth

Threats Uncertainty in economic conditions

Advancement of other key players


Corporate Strategy Analysis


Corporate Structure

VKR act as a holding company with portfolio of various businesses

VKR Holding Parent: VKR

Businesses


Strategic Business Units

Four Business Areas


Strategic Business Units

Market-based criteria Product offering

Market

VKR Holding

Roof windows

and SkylightsVertical windows

Solar thermal

energy

Ventilation and

Indoor climate


Scope-Related Issues

Degree of

Diversification

Drivers for

Diversification

Corporate Strategy

Direction


Degree of Diversification

Hugely diversified Operation

Sales

Mostly in European markets

Also in other markets VELUX products are sold globally

Wide range of related products Synergies among strategic business units


Corporate Strategy Directions

Market

Penetration

Product

Development

ConglomerateMarket

Development

Currently operates in various markets

New products with energy enhanced performance to serve energy requirement development

Fairly diversified in terms of market for now

Product

Development


Product Development

Related diversification

Focusing on product innovation To produce energy-efficient products

New products Leveraging on existing capabilities

Within areas of expertise

Issues to concern: Costs involved (particularly R&D)

Risks (market, development, regulation)


Value-Related Issues

Parental Role

Value-Adding

Activities

Portfolio

Management

Value-Destroying

Activities


Parental Role

VKR as portfolio manager and synergy manager

Competitive strategy development happens within each strategic business unit

Managing synergy (within business area)

Transparent

Less management cost

and complexity

Decentralized; easily

adaptable to changing

environment

Value-added from synergy

Benefits

Subject to higher agency

costs

Excessive costs may

outweigh synergy benefits

Need proper guidance to

ensure consistency

Costs


Portfolio Management

Growth/Share Matrix

Focus on one level down first Companies that are holding companies are evaluated as one

entity

In-depth analysis can be conducted with more detailed information about each company

Output: Identify appropriate guideline for each business

From cash-consuming to cash-generating units


Growth/Share (BCG) Matrix

Ma

rke

t G

row

th

Market Share


Conclusion

With recent development, the company focuses on product development, which, in turn, supports its core value of ‘giving back’ to the society

As VKR Holding is acting as a portfolio manager, it is possible for each strategic business unit to serve its customers more effectively

Also, with the role of synergy manager, VKR can make sure that the investments made will turn out to be value-added to the whole group


Analysis on VELUX

Overview External Corporate Strategy VELUXVELUX

VELUX

Specialised in providing products and services related to roof windows and skylights

Strong global brand in the building materials sector with manufacturing companies in 11 countries and sales companies in almost 40 countries


VELUX - Vision

To leader the development of better buildings with

daylight and fresh air through the roof and to be

rated as the best in the eyes of its customers


VELUX

“... Our founder Villum KannRasmussen formulated the company’s ambition to

produce products that are useful to the society and

also to treat our employees, suppliers and customers

better than most other companies…”


Contribute to the society by returning part of the profits of

the company (extensive R&D)

Work with products useful to the society

(product quality)

Treating employees, suppliers and

customers better than most other

companies (strong CSR image)

VELUX – Critical Success Factors


VELUX – Basis of Competitive Strategy

Differentiation focus strategy is made on the basis of the critical success

factor

Why not differentiation?

Different as compared to evaluating on VKR as an entire organisation


VELUX – Basis of Competitive Strategy

Strategy Clock

Through economies of production and sales in more than 40 countries, Velux is capable of producing premium productions at lower prices

Although the company pursues a differentiation strategy, the low input costs allows them to reduce the cost of production and pursue a hybrid strategy


VELUX - Bases of Competitive Advantage

•Serves customers and partners with local know-how and work closely with them to develop better living environments

•Engaging with stakeholders in the building industry, initiating experiments and getting their involvement

•Products that ensure a healthy indoor climate for work, learning, play and pleasure

•Product that gives back to the environment by being highly energy-efficient, generating more energy than goes into producing them

•Manufacturing in more than 40 countries and achieving economies of scale

Cost Efficiency

Uniqueness in Product

Uniqueness in Process

Marketing


VELUX – 2 x 2 Matrix

Resource Competences

Threshold

capabilities

Infrastructure

Employees

Financial Results

Technical knowledge to make products

R&D capabilities for continuous

improvements

Ability to adapt to the new regulatory

requirements (e.g. using products that are

less harmful to the environment)

Distinctive

capabilities

Rich company history and track record

Exclusive brand name and label

Considered to be one of the largest

company in the industry with the number

of employees, number of employees

have been increasing since 2009

Holds and administers patents, utility

models and designs

The consistency in portraying the image of

Velux as being socially responsible

Ability to work with local partners and tab on

their exclusive knowledge of the country

Consistently in contact with shareholders of

companies to engage in experiments for

improvements

The ability to produce and market products

that are energy saving which goes beyond

being an ordinary manufacturing company


VELUX – VRIO

Valuable Rarity Inimitability Organisational

Support

Competitive

Implications

Rich Company history

and track record✓ ✓ ✓ ✓ Sustainable

competitive

advantage

Holds patents, utility

models and designs✓ ✓ ✓ ✓ Sustainable

competitive

advantage

Ability to attract and

retain employees✓ ✓ ✓ ✓ Sustainable

competitive

advantage

Ability to work with

local partner✓ ✓ x ✓ Competitive

Advantage

Consistency in

portraying the same

company image

✓ x x ✓ Competitive

Parity

Producing energy

saving product✓ x x ✓ Competitive

Parity


Conclusion

VELUX uses a ‘hybrid’ strategy

To achieve this, the company focuses on product differentiation as well as cost efficiency

As the company possesses several distinctive capabilities which support these bases, it could maintain such sustainable competitive strategy

Date post:	13-Apr-2016
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