concept of strategy 1sum2011 sv

7/31/2019 Concept of Strategy 1sum2011 Sv

1/14

1

Strategic Management

Strategy : The unifying theme that gives coherence anddirection to the decisions of an organization

Strategic Management : Consisting of the analysis,decisions, and actions an organization undertakes inorder to create and sustain competitive advantages.

Strategic Management basically seeks to answer the question:How and why do some firms outperform others?


2/14


3/14

3

1950s: Strategy was largely introduced in business schools as a way of

analyzing the competitive environment and setting organizational goalsand objectives to fit that environment. Since then, major developments include:

Kenneth Andrews SWOT Analysis was developed still in use today. Theodore Levitts Marketing Myopia argued that when companies fail it

typically is because firms focus on the product rather than the changingpatterns of consumer needs and tastes.

Igor Ansoff argued, in response to Levitt, that a firms mission should exploitan existing need in the market, rather than using the consumer as the commonthread in business. In reality a given type of customer will frequently have arange of product missions or needs. Corporate Strategy , 1965.

BCG developed the experience curve and portfolio analysis concepts. McKinsey & Companys development of SBUs and the nine-block matrix. Mintzberg s Deliberate, Emergent & Realized Strategies Porter s Generic Strategies

More Historical Development


4/14

4

Evolution of strategic management

From his extensive work in the field, Bruce Henderson of the Boston ConsultingGroup concluded that intuitive strategies cannot be continued successfully if (1) thecorporation becomes large, (2) the layers of management increase, or (3) theenvironment changes substantially.

Phase 1 - Basic financial planning: Seek better operational control by trying tomeet budgets.

Phase 2 - Fore-cast based planning: Seeking more effective planning for

growth by trying to predict the future beyond next year. Phase 3. Externally oriented planning (strategic planning): Seeking increasing

responsiveness to markets and competition by trying to think strategically. Phase 4. Strategic management: Seeking a competitive advantage and a

successful future by managing all resources. Phase 4 in the evolution of the strategic management includes a consideration of

strategy implementation and evaluation and control, in addition to the emphasis onthe strategic planning in Phase 3.

General Electric, one of the pioneers of the strategic planning, led the transitionfrom the strategic planning to strategic management during the 1980s.


5/14

5

BCGs Growth -Share Matrix

Star

Question

Mark

Cash

CowDog

HighShare

LowShare

High

Growth

Slow

Growth

?

Bark!!


6/14

6

Forms of Strategy

RealizedStrategyUnrealized

Strategy

Emergent

Strategy

**Normally emergent strategy comes from

learning and dissemination within the organization.

Mintzbergs Critique of Formal Strategic Planning: The fallacy of prediction the future is

unknown The fallacy of detachment -- impossible todivorce formulation from implementation The fallacy of formalization --inhibits flexibility,spontaneity, intuition and learning.


7/14


8/148

Differing Perspectives of the StrategicManagement Process

External Environment

Industry Attractiveness

Strategy Formulation

I/O Model

Assets/Skills Assessment

Implementation

Resources

Capability

Sustainable CA

RBV Model

Strategy Formulation

Implementation


9/149

Strategy, Survival and Success

The ultimate goal of the organizations is tobe successful success is GAS :

Goal Achievement Above average returns/Profitability

(probably most important, because itdetermines the ability to achieve theabove two)

Survival (long-term success)


10/1410

The Balanced Scorecard

L e a d i n

g

L a g gi n

g

S of t

H ar d

Vision&

Strategy

CUSTOMER

To achieve our vision, howshould weappear to ourcustomers?

Objectives Measures Targets Initiatives

FINANCIAL

To succeedfinancially, howshould weappear to ourshareholders?


INTERNAL BUSINESS PROCESSES

To satisfy our shareholdersand customers,what businessprocesses mustwe excel at?


INNOVATION AND LEARNING

To achieve our vision, how willwe sustain ourability tochange andimprove?



11/1411

Thinking Strategically:The Three Big Strategic Analysis Questions

1. Where are we now? What is our situation?

2. Where do we want to go?

Business(es) we want to be in and marketpositions we want to stake out

Buyer needs and groups we want to serve

Outcomes we want to achieve

3. How will we get there?


12/1412

S t r a t e g

i c C o n

t r o

l ( 6 )

Formulating Directions - Develop Vision/Mission (1)

-Set Objectives (2)

Organizational CultureStakeholder Influence

Values / Ethics

Strategic Analyses (3)

Strategy Formulation (4)-Formulate and Consider

Alternatives

-Make Strategy Choice

Opportunities and Threatsfrom Economic, Political,Technological etc Sources

Opportunities and Threatsfrom Competition and

Key Stakeholders

Organizational CultureStakeholder Influence

Values / Ethics

Internal Organization

Competitor/Stakeholder

External Environment

Context of Strategy(type of organization, culture, values,

life cycle competitive position)


13/1413

Hambrick & Fredrickson, 2001


14/14

14

The Strategy Concept Levels of Analysis

CorporateStrategy

BusinessStrategy

FunctionalStrategy

Choice of ProductsChoice of Markets

Choice of Competitors

Where to Compete?

How to Compete?

How to Contribute?

concept of strategy 1sum2011 sv

Documents