Strategic Management Lecture 1
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Transcript of Strategic Management Lecture 1
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Strategic Management
Master of Business Administration
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About the Module
Lecture Key Streams
Tutorial Practical Application
Reading Seminal Works
Assessment
Assignment
Examination
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What is Strategy?
Strategy has a long antecedentSun Tzu The Art of War
& Karl Von Clausewitz
Strategy is about achieving a competitive advantage
Meeting customer needs better than rivals
Porter (1996) competitive strategy is about being
different
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Studying Strategy
I shall proceed from the simple to the complex. But in
war more than in any other subject we must begin by
looking at the nature of the whole; for here more than
elsewhere the part and the whole must always be
thought of together.
Karl Von Clausewitz 1780-1831
Strategy without tactics is the slowest route to victory.Tactics without strategy is the noise before defeat.
Sun Tzu 544-496 B.C.
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Some Definitions.
Strategy noun: a plan of action designed to achieve a long-term or
overall aim: time to develop a coherent economic strategy; [mass
noun] shifts in marketing strategyC Soanes and A Stevenson (Eds), The Oxford Dictionary of English, Oxford University Press,
2003
Strategy is about how an organization sets about getting to where
it wants to getJ Thompson and F Martin, Strategic Management: Awareness and Change, 5th Edition,
Thomson, 2005, p.xvii
Strategy is the direction and scope of an organisation over the
long term, which achieves advantage for the organisationG Johnson and K Scholes Exploring Corporate Strategy, 6th Edition, Pearson, 2002, p10
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What is Strategy?
Markides (1999) selecting a strategic position an
organization can call its own based on:
Who should the organization target as customers?
Whatproducts or services should be offered?
How can the organization do this efficiently?
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What is Strategy?
Kay (1993)an organizations strategy is the match
between its internal capabilities and external
relationships
Internal: what the organization is capable of doing External: Its relationship with employees, customers,
shareholders, and suppliers.
The use of analytical techniques allows the firm toinfluence its position in the market
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The Matching Concept:
Strategy as Fit
InternalAnalysis
- Resources &
Capabilities
ExternalAnalysis
- Environment
MATCHING
PROCESS
Strengths, Weaknesses Opportunities, Threats
SWOT is the most misused technique by students
Avoid a long list - what is really important?
Try to match SW with OT
Should be a summary of analysis useful as a basis to judge
future options against
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What is Strategy?
The process of creating a strategy is called strategicmanagement
Strategic management consists of: strategy analysis, strategy
formulation, and strategy implementation
In reality these elements are interdependent and should notbe considered in isolation
Strategy analysis, formulation, and implementation all need tobe considered if the organization is to meet the needs of itsenvironment
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What is Strategy?
Strategy analysis is a useful starting point for crafting strategy
It includes the generaland competitive environmentfacing
the organization
It also deals with the organizations internal environment
Strategic analysis helps the organization evaluate how well itis positioned to exploit external opportunities
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What is Strategy?
Strategy formulation usually takes place at the business and
corporation level
Strategic analysis is important for strategy formulation
So too is creative insights which synthesize experiences that
exist within the organization to form a novel strategy
An organization is seldom faced with only one strategy which
means it is necessary to evaluate competing strategies
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What is Strategy?
Strategy implementation requires the organization to be
sufficiently flexible
A given strategy must be effectively communicated with
stakeholders inside and outside the organization
The organizations values are crucial in sign-posting to
individuals what the organization considers important
An organizations culture will determine how it responds to
opportunities that exist
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What is Strategy?
A vision is often associated with the founder of an
organization
It represents a desired state the organization aspires to
achieve in the future
A mission seeks to answer the fundamental question ofwhy
an organization exists
Campbell et al. (1990) make a distinction between mission
and sense of mission
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Komatsus Mission
To Encircle Caterpillar - Maru C
www.komatsu.com
Clarity of strategic intent can motivate an
organisation to achieve its goalsG Johnson & K Scholes,Exploring Corporate Strategy, 5th Ed, Pearson, 1999, p265
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The Ashridge Mission Model
Purpose
Strategy Values
BehaviourStandards
The competitive
position anddistinctivecompetence
What thecompany
believes in
The policies and behaviour patternsthat underpin the distinctive
competencies and the value system
Why the company exists
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What is Strategy?
The assumptions on which an organization has been built andthe basis on which it is run are its theory of business
It includes assumptions about markets, customers,
competitors, and its internal capabilities
Organization encounter difficulties when their theory ofbusiness no longer fit with reality
A organizations theory of business becomes obsolete when ithas achieved its objectives
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STRATEGIC DRIFT
Over time, paradigms about what works to deliver success canbecome entrenched. However reality of what is required may drift away
from organisational positionStrategic Drift
G Johnson and K Scholes Exploring Corporate Strategy, 6th Edition, Pearson, 2002, p81
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Speed of Change..
Consider the parable of the frogin hot water
Image by Maggie LLI from http://www.kiddyhouse.com/Themes/frogs
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What is Strategy?
Corporate strategyis concerned with which markets an
organization wants to compete in
Business strategydeals with how an organization will compete
in its chosen industry or market
Functional strategyoccurs according to functional lines such
as R&D, marketing and finance
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What is Strategy?
The Design Schoolseeks to match the capabilities of theorganization to the opportunities within its competitiveenvironment
This rationalist approach is exemplified by Michael Porters genericstrategies
The Learning School emphasizes deliberate and emergent strategies
A deliberate strategy is one the organization intends to pursue
An emergent strategies involves managerial learning andexperience that coalesce into a realised strategy
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What is Strategy?
A strategic management framework
Figure 1.3
A strategy must
take account ofthe organizations
stakeholders if it isto succeed
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Strategy
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What is Strategy?
Mintzberg et al
Plan
PloyPosition
PerspectivePattern
Terminology
Vision
MissionObjectives
Strategies
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H Mintzberg Five Ps for Strategy in H Mintzberg, J Lampel, J B Quinn and S
Ghoshal The Strategy Process: Concepts, Contexts, Cases, 4th Edition,
Prentice Hall, 2003, p5
Intended vs Realised Strategy
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Strategic Management
Analysis
Choice Implementation
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The Matching Concept:
Strategy as Fit
InternalAnalysis
- Resources &Capabilities
ExternalAnalysis
- Environment
MATCHING
PROCESS
Strategy as Stretch
Strategic Position
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Strategy Formulation/ Formation
Classical PerspectivesPlanning, Positioning, Design
The Strategist(s)Learning, Cognitive, Entrepreneurial
ForcesCulture, Environment, Configuration,
Power
Mintzberg et al(2008) Strategy Safari.