Foundation of Strategy Notes
Chapter 1 – Introducing Strategy
Ø Strategy first was used in HR – strategy is
about competition – it is about gaining
advantage – bottom-line is profit
Ø Porter is about – if you have an advantage
you have a strategy – it’s not even about
being good it’s just about being better than
the next best person
Ø Mintzberg says Porter is wrong – followed executives – how does an executive make
decisions – they choose the colour of the Tesla there is a bit of gut feel and focus on
statistics – there is no competitive advantage there – you have got to look at what
the executive is looking at – they look as past events but there is more – Porter has
not pointed correlation between a car colour and increase in advantage
Ø Drucker – suggests is how firms interprets its advantages – he also focuses on
competition
Ø Chandler – came in 1960s and had the longest running definition – there is no
mention of competition
Ø Strategy is defined as – long-term direction of an organisation – forward looking
temporal element – a sense of working towards a goal
Ø Strategies are typically measured over years, for some organisations a decade or
more
Ø An entity consisting of and embedded in a complex set of relationships
Ø Fundamental goals that the organisation seeks, which reflect the stated mission,
vision and objectives
Ø The scope or domain of the organisation’s activities
Ø The particular advantages or capabilities it has to deliver all of
these
Ø Horizon 1 businesses need defending and extending, but the
expectation is that in the long term they will likely be flat or
declining in terms of profits
Ø Horizon 2 businesses are emerging activities that should
provide new sources of profit
Ø Horizon 3 possibilities, for which nothing is sure. These are typically risky Research &
Development projects, start-up ventures, test-market pilots – this will generate
profits in a few-years than in the present time
Ø Sometimes a strategic direction only emerges as a coherent pattern over time.
Typically, however, managers and entrepreneurs try to set the direction of their
strategy according to long-term objectives
Ø Organisations involve many relationships, both internally and externally. This is
because organisations typically have many internal and external stakeholders
Ø A mission statement aims to provide employees and stakeholders with clarity about
what the organisation is fundamentally there to do
Ø A vision statement is concerned with the future the organisation seeks to create
Ø Objectives are statements of specific outcomes that are to be achieved
,Ø Corporate-level strategy – Diversifying from the organisation’s original activities into
other activities
Ø Business-level strategy – Marketing and product improvement strategies
Ø Functional strategies – are concerned with how the components of an organisation
deliver effectively the corporate- and business-level strategies in terms of resources,
processes and people
Ø The strategic position is concerned with the impact on strategy of the macro
environment and industry environment, the organisation’s strategic capability
(resources and competences), and the organisation’s stakeholders and culture
Ø Macro-environment – can be seen through PESTEL analysis
Ø Industry environment. At the industry level of analysis, competitors, suppliers and
customers present challenges to an organisation
Ø The second fundamental question is: how can an organisation manage industry
forces
Ø Strategic capability. Each organisation has its own strategic capabilities, made up of
its resources (e.g. machines and buildings) and competences (e.g. technical and
managerial skills)
Ø The third fundamental question on capability regards the organisation’s strengths
and weaknesses
Ø Stakeholders are the many actors who hold a ‘stake’ in the future of every
organisation
Ø Strategic choices involve the options for strategy in terms of both the directions in
which strategy might move and the methods by which strategy might be pursued
Ø Business strategy and models – strategic choices in terms of how the organisation
seeks to compete at the individual business level
Ø Corporate strategy and diversification – in other words which businesses to include
in the portfolio. This relates to the appropriate degree of diversification, with regard
to products offered and markets served
Ø An important consideration for corporate-level strategy is how to manage the
internal relationships of the group both between business units and with the
corporate head-office
Ø This also means that corporate strategy needs to be concerned with which method
to use for growth: whether to buy another company, ally or go it alone by using its
own resources to develop internally
Ø Managing strategy in action is about how strategies are formed and how they are
implemented
Ø Structuring an organisation to support successful performance. A key question here
is how centralised or structured should the organisational structure be. Structure
matters for who is in charge and who is accountable
Ø Systems are required to control the way in which strategy is implemented. Planning
and performance systems are important to getting things done. The issue here is
how to ensure that strategies are implemented according to plan
Ø Leading strategic change is typically an important part of putting strategy into action.
How should change be led? Here key questions include the speed and
comprehensiveness of change
Ø Rational-analytic view sees strategy development as a linear, planned process,
typically led by top management.
,Ø The emergent view sees strategy development as incremental adaptation, often
inspired by actions low down in the organisation
Ø A strategy statement should cover an organisation’s goals, scope of activities, and
the advantages or capabilities it brings to these goals and activities
, Chapter 2 – Macro-Environmental Analysis
Ø The business environment creates both opportunities and threats for organisations
Ø The macro- environment consists of broad environmental factors that impact to a
greater or lesser extent many organisations, industries and
sectors.
Ø The further out you go the less causality you have – as with
Covid-19 there are major changes – while if one competitor
leaves you can predict how much market share you will gain
Ø Non-market are government influences and decisions
Ø Megatrends – trends that are constantly observed
Ø Weak signals – help you read the situation – you notice when
things turn bad
Ø Forecasting is a prediction emphasis – given this data this
outcome will happen
Ø Scenario analysis – focuses on learning-emphasis – using past
scenarios to learn from the mistake – what will we do if this happens
Ø PESTEL stands for political, economic, social, technological, ecological and legal
factors
Ø The market environment consists mainly of suppliers, customers and competitors
Ø Here companies typically compete for resources, revenues and profits. Pricing and
innovation are often key strategies here
Ø Key participants in the non-market environment include non-governmental
organisations (NGOs), politicians, government departments, regulators, political
activists, campaign groups and the media.
Ø In the non-market environment, organisations need to build reputation,
connections, influence and legitimacy
Ø Lobbying, public relations, networking and collaboration are key non-market
strategies
Politics
Ø The role of the state: in many countries and sectors, the state is often
important as a direct economic actor, for instance as a customer,
supplier, owner or regulator of businesses
Ø Exposure to civil society organisations: civil society comprises a whole
range of organisations that are liable to raise political issues, including
political lobbyists, campaign groups, social media or traditional media
Economics
Ø Macro-economic factors such as currency exchange rates, interest rates and
fluctuating economic growth rates around the world
Ø A key concept for analysing macro-economic trends is the economic cycle. Despite
the possibility of unexpected shocks, economic growth rates have an underlying
tendency to rise and fall in regular cycles
Ø For example, severe downturns in economic growth are often followed by falls in
interest rates and exchange rates
Chapter 1 – Introducing Strategy
Ø Strategy first was used in HR – strategy is
about competition – it is about gaining
advantage – bottom-line is profit
Ø Porter is about – if you have an advantage
you have a strategy – it’s not even about
being good it’s just about being better than
the next best person
Ø Mintzberg says Porter is wrong – followed executives – how does an executive make
decisions – they choose the colour of the Tesla there is a bit of gut feel and focus on
statistics – there is no competitive advantage there – you have got to look at what
the executive is looking at – they look as past events but there is more – Porter has
not pointed correlation between a car colour and increase in advantage
Ø Drucker – suggests is how firms interprets its advantages – he also focuses on
competition
Ø Chandler – came in 1960s and had the longest running definition – there is no
mention of competition
Ø Strategy is defined as – long-term direction of an organisation – forward looking
temporal element – a sense of working towards a goal
Ø Strategies are typically measured over years, for some organisations a decade or
more
Ø An entity consisting of and embedded in a complex set of relationships
Ø Fundamental goals that the organisation seeks, which reflect the stated mission,
vision and objectives
Ø The scope or domain of the organisation’s activities
Ø The particular advantages or capabilities it has to deliver all of
these
Ø Horizon 1 businesses need defending and extending, but the
expectation is that in the long term they will likely be flat or
declining in terms of profits
Ø Horizon 2 businesses are emerging activities that should
provide new sources of profit
Ø Horizon 3 possibilities, for which nothing is sure. These are typically risky Research &
Development projects, start-up ventures, test-market pilots – this will generate
profits in a few-years than in the present time
Ø Sometimes a strategic direction only emerges as a coherent pattern over time.
Typically, however, managers and entrepreneurs try to set the direction of their
strategy according to long-term objectives
Ø Organisations involve many relationships, both internally and externally. This is
because organisations typically have many internal and external stakeholders
Ø A mission statement aims to provide employees and stakeholders with clarity about
what the organisation is fundamentally there to do
Ø A vision statement is concerned with the future the organisation seeks to create
Ø Objectives are statements of specific outcomes that are to be achieved
,Ø Corporate-level strategy – Diversifying from the organisation’s original activities into
other activities
Ø Business-level strategy – Marketing and product improvement strategies
Ø Functional strategies – are concerned with how the components of an organisation
deliver effectively the corporate- and business-level strategies in terms of resources,
processes and people
Ø The strategic position is concerned with the impact on strategy of the macro
environment and industry environment, the organisation’s strategic capability
(resources and competences), and the organisation’s stakeholders and culture
Ø Macro-environment – can be seen through PESTEL analysis
Ø Industry environment. At the industry level of analysis, competitors, suppliers and
customers present challenges to an organisation
Ø The second fundamental question is: how can an organisation manage industry
forces
Ø Strategic capability. Each organisation has its own strategic capabilities, made up of
its resources (e.g. machines and buildings) and competences (e.g. technical and
managerial skills)
Ø The third fundamental question on capability regards the organisation’s strengths
and weaknesses
Ø Stakeholders are the many actors who hold a ‘stake’ in the future of every
organisation
Ø Strategic choices involve the options for strategy in terms of both the directions in
which strategy might move and the methods by which strategy might be pursued
Ø Business strategy and models – strategic choices in terms of how the organisation
seeks to compete at the individual business level
Ø Corporate strategy and diversification – in other words which businesses to include
in the portfolio. This relates to the appropriate degree of diversification, with regard
to products offered and markets served
Ø An important consideration for corporate-level strategy is how to manage the
internal relationships of the group both between business units and with the
corporate head-office
Ø This also means that corporate strategy needs to be concerned with which method
to use for growth: whether to buy another company, ally or go it alone by using its
own resources to develop internally
Ø Managing strategy in action is about how strategies are formed and how they are
implemented
Ø Structuring an organisation to support successful performance. A key question here
is how centralised or structured should the organisational structure be. Structure
matters for who is in charge and who is accountable
Ø Systems are required to control the way in which strategy is implemented. Planning
and performance systems are important to getting things done. The issue here is
how to ensure that strategies are implemented according to plan
Ø Leading strategic change is typically an important part of putting strategy into action.
How should change be led? Here key questions include the speed and
comprehensiveness of change
Ø Rational-analytic view sees strategy development as a linear, planned process,
typically led by top management.
,Ø The emergent view sees strategy development as incremental adaptation, often
inspired by actions low down in the organisation
Ø A strategy statement should cover an organisation’s goals, scope of activities, and
the advantages or capabilities it brings to these goals and activities
, Chapter 2 – Macro-Environmental Analysis
Ø The business environment creates both opportunities and threats for organisations
Ø The macro- environment consists of broad environmental factors that impact to a
greater or lesser extent many organisations, industries and
sectors.
Ø The further out you go the less causality you have – as with
Covid-19 there are major changes – while if one competitor
leaves you can predict how much market share you will gain
Ø Non-market are government influences and decisions
Ø Megatrends – trends that are constantly observed
Ø Weak signals – help you read the situation – you notice when
things turn bad
Ø Forecasting is a prediction emphasis – given this data this
outcome will happen
Ø Scenario analysis – focuses on learning-emphasis – using past
scenarios to learn from the mistake – what will we do if this happens
Ø PESTEL stands for political, economic, social, technological, ecological and legal
factors
Ø The market environment consists mainly of suppliers, customers and competitors
Ø Here companies typically compete for resources, revenues and profits. Pricing and
innovation are often key strategies here
Ø Key participants in the non-market environment include non-governmental
organisations (NGOs), politicians, government departments, regulators, political
activists, campaign groups and the media.
Ø In the non-market environment, organisations need to build reputation,
connections, influence and legitimacy
Ø Lobbying, public relations, networking and collaboration are key non-market
strategies
Politics
Ø The role of the state: in many countries and sectors, the state is often
important as a direct economic actor, for instance as a customer,
supplier, owner or regulator of businesses
Ø Exposure to civil society organisations: civil society comprises a whole
range of organisations that are liable to raise political issues, including
political lobbyists, campaign groups, social media or traditional media
Economics
Ø Macro-economic factors such as currency exchange rates, interest rates and
fluctuating economic growth rates around the world
Ø A key concept for analysing macro-economic trends is the economic cycle. Despite
the possibility of unexpected shocks, economic growth rates have an underlying
tendency to rise and fall in regular cycles
Ø For example, severe downturns in economic growth are often followed by falls in
interest rates and exchange rates
