WEEK 1 INTRODUCTION STRATEGY
The strengths-weaknesses-opportunities-threats of a firm → SWOT model
INTERNAL ANALYSIS:
Organizational Cultures, Organizational Structures, Reward and Motivation,
Governance,
EXTERNAL ANALYSIS:
PESTEL, Five-Forces, Competition, Growth Cycles, Strategic Groups, Strategic
Positioning, Strategic Purpose
HYBRID APPROACHES:
Corporate Strategy, Diversification, Resources Based Analysis, Mergers and
Acquisitions, Transaction Costs
WHAT IS STRATEGY?
= Strategy is about key issues for the future of organizations. In strategy it is typically important to
explore several options, probing each one carefully before making choices.
- A long term direction of an organization
- Being different
- Obtaining distinct resources
- A consistent pattern of decisions
- A process or practice
,According to economists strategy is:
Chandler emphasizes a logical flow from the determination of goals and objectives to the allocation
of resources.
Porter focuses on deliberate choices, difference and competition.
Mintzberg uses ‘pattern’ to allow for the fact that strategies do not always follow a deliberately
chosen and logical plan, but can emerge in more ad hoc ways.
Strategic plans should include different time horizons:
→ notice the importance of long-term directions
“Three-Horizons’’:
Short-term Horizon 1: businesses are the current core activities. Needs defending and
extending, but the expectation is that they’ll flat or decline in terms of profit in the long run.
Question: how do we defend and build our core business?
Medium-term Horizon 2 businesses are
emerging activities that should provide new
sources of profit. Question: how do we build
emerging businesses?
Long-term Horizon 3 possibilities for which
nothing is sure, such as risky research and
development projects, start-ups, test-market
pilots. Might generate profit after a couple of
years or even decades, depending on the type
of business. Question: how do we create new
viable opportunities?
DIFFERENT LEVELS OF STRATEGY
❖ Corporate-level strategy is concerned with the overall scope of an organisation and
how value is added to the constituent businesses of the organisational whole.
Geographical scope, diversity of products or services, acquisitions of new businesses,
and how resources are allocated between the different elements of the organisation.
❖ Business-level strategy is about how the individual businesses should compete in
their particular markets. Innovation, appropriate scale and response to competitors’
moves.
, ❖ Operational 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.
STRATEGY STATEMENTS SHOULD INCLUDE
Should include three main themes: The fundamental goals (mission, vision or objectives),
the scope or the domain of the organisation’s activities, particular advantages or
capabilities they has to deliver
Mostly mission statement include all the concept
- Mission relates to goals, and refers to the overriding purpose of the organisation. ‘What
business are we in?’
- Vision relates to goals, and refers to the desired future state of the organisation. Hat do we
want to achieve?’
- Objectives are more precise and ideally quantifiable statements of the organisation’s goals
over some period of time. ‘What do we have to achieve in the coming period?’
- Scope or domain refers to three dimensions: customers or clients; geographical location; and
extent of internal activities.
- Advantage describes how the organisation will achieve the objectives it has set for itself in
its chosen domain.
EXPLORING STRATEGY MODEL
= includes the strategic position of an organization, accessing strategic choices in the future,
and managing strategy in action.
Strategic position = is concerned with the impact on strategy of the external environment,
the organisation’s strategic capability, the organisation's goals and its culture.
- Environment: complex political, economic, social and technological. What opportunities and
threats are available to the organisations in this complex and changing environment?
- Strategic capability: made up of resources and competences. Are the organisation’s strengths
and weaknesses adequate to the challenges of its environment and the demands of its
goals?
- Strategic purpose: claim a particular purpose, as encapsulated in their vision, mission and
objectives. What is the organisation’s strategic purpose; what does it seek to achieve? Can be
unclear, contested or unrealistic.
- Culture: based on the organisation’s history, industry or country can influence strategy. How
does culture fit with the required strategy?
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.
, - - Business strategy: choices in terms of how the organisation seeks to
compete at the individual business level.
- - Corporate strategy and diversification: which businesses to include in the
portfolio. Internal relationships, both between business units and with the
corporate head office.
- - International strategy: is a form of diversification, but into new
geographical markets.
- - Innovation and entrepreneurship: the creation of a new enterprise is an act
of innovation.
- - Acquisitions and alliances: how to pursue a strategy. Buy another company,
ally or to go at it alone.
Strategy in action = about how strategies are formed and how they are implemented.
- Strategy performance and evaluation: decide whether existing and forecast
performance is satisfactory and decide between options that might approve it. Are
the options suitable in terms of matching opportunities and threats; are they
acceptable in the eyes of significant stakeholders; and are they feasible given the
capabilities available?
- Strategy development processes: What kind of strategy process should an
organization have? Developed through formal planning vs. emergent; accumulated
patterns of ad hoc decisions, bottom-up initiatives and rapid responses to the
unanticipated.
- Organizing: Once a strategy is developed, it needs to be successfully implemented.
Each strategy requires its specific configuration of structures and systems.
- Leadership and strategic change: Managing changes involves leadership, both at the
top and lower down in the organization.
Different styles and levers.
- Strategy practice: Who should do what in the strategy process? Which people to
include in the process; what activities they should do; and which methodologies can
help them do it.
The strengths-weaknesses-opportunities-threats of a firm → SWOT model
INTERNAL ANALYSIS:
Organizational Cultures, Organizational Structures, Reward and Motivation,
Governance,
EXTERNAL ANALYSIS:
PESTEL, Five-Forces, Competition, Growth Cycles, Strategic Groups, Strategic
Positioning, Strategic Purpose
HYBRID APPROACHES:
Corporate Strategy, Diversification, Resources Based Analysis, Mergers and
Acquisitions, Transaction Costs
WHAT IS STRATEGY?
= Strategy is about key issues for the future of organizations. In strategy it is typically important to
explore several options, probing each one carefully before making choices.
- A long term direction of an organization
- Being different
- Obtaining distinct resources
- A consistent pattern of decisions
- A process or practice
,According to economists strategy is:
Chandler emphasizes a logical flow from the determination of goals and objectives to the allocation
of resources.
Porter focuses on deliberate choices, difference and competition.
Mintzberg uses ‘pattern’ to allow for the fact that strategies do not always follow a deliberately
chosen and logical plan, but can emerge in more ad hoc ways.
Strategic plans should include different time horizons:
→ notice the importance of long-term directions
“Three-Horizons’’:
Short-term Horizon 1: businesses are the current core activities. Needs defending and
extending, but the expectation is that they’ll flat or decline in terms of profit in the long run.
Question: how do we defend and build our core business?
Medium-term Horizon 2 businesses are
emerging activities that should provide new
sources of profit. Question: how do we build
emerging businesses?
Long-term Horizon 3 possibilities for which
nothing is sure, such as risky research and
development projects, start-ups, test-market
pilots. Might generate profit after a couple of
years or even decades, depending on the type
of business. Question: how do we create new
viable opportunities?
DIFFERENT LEVELS OF STRATEGY
❖ Corporate-level strategy is concerned with the overall scope of an organisation and
how value is added to the constituent businesses of the organisational whole.
Geographical scope, diversity of products or services, acquisitions of new businesses,
and how resources are allocated between the different elements of the organisation.
❖ Business-level strategy is about how the individual businesses should compete in
their particular markets. Innovation, appropriate scale and response to competitors’
moves.
, ❖ Operational 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.
STRATEGY STATEMENTS SHOULD INCLUDE
Should include three main themes: The fundamental goals (mission, vision or objectives),
the scope or the domain of the organisation’s activities, particular advantages or
capabilities they has to deliver
Mostly mission statement include all the concept
- Mission relates to goals, and refers to the overriding purpose of the organisation. ‘What
business are we in?’
- Vision relates to goals, and refers to the desired future state of the organisation. Hat do we
want to achieve?’
- Objectives are more precise and ideally quantifiable statements of the organisation’s goals
over some period of time. ‘What do we have to achieve in the coming period?’
- Scope or domain refers to three dimensions: customers or clients; geographical location; and
extent of internal activities.
- Advantage describes how the organisation will achieve the objectives it has set for itself in
its chosen domain.
EXPLORING STRATEGY MODEL
= includes the strategic position of an organization, accessing strategic choices in the future,
and managing strategy in action.
Strategic position = is concerned with the impact on strategy of the external environment,
the organisation’s strategic capability, the organisation's goals and its culture.
- Environment: complex political, economic, social and technological. What opportunities and
threats are available to the organisations in this complex and changing environment?
- Strategic capability: made up of resources and competences. Are the organisation’s strengths
and weaknesses adequate to the challenges of its environment and the demands of its
goals?
- Strategic purpose: claim a particular purpose, as encapsulated in their vision, mission and
objectives. What is the organisation’s strategic purpose; what does it seek to achieve? Can be
unclear, contested or unrealistic.
- Culture: based on the organisation’s history, industry or country can influence strategy. How
does culture fit with the required strategy?
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.
, - - Business strategy: choices in terms of how the organisation seeks to
compete at the individual business level.
- - Corporate strategy and diversification: which businesses to include in the
portfolio. Internal relationships, both between business units and with the
corporate head office.
- - International strategy: is a form of diversification, but into new
geographical markets.
- - Innovation and entrepreneurship: the creation of a new enterprise is an act
of innovation.
- - Acquisitions and alliances: how to pursue a strategy. Buy another company,
ally or to go at it alone.
Strategy in action = about how strategies are formed and how they are implemented.
- Strategy performance and evaluation: decide whether existing and forecast
performance is satisfactory and decide between options that might approve it. Are
the options suitable in terms of matching opportunities and threats; are they
acceptable in the eyes of significant stakeholders; and are they feasible given the
capabilities available?
- Strategy development processes: What kind of strategy process should an
organization have? Developed through formal planning vs. emergent; accumulated
patterns of ad hoc decisions, bottom-up initiatives and rapid responses to the
unanticipated.
- Organizing: Once a strategy is developed, it needs to be successfully implemented.
Each strategy requires its specific configuration of structures and systems.
- Leadership and strategic change: Managing changes involves leadership, both at the
top and lower down in the organization.
Different styles and levers.
- Strategy practice: Who should do what in the strategy process? Which people to
include in the process; what activities they should do; and which methodologies can
help them do it.
