business policy lecture 2

8/10/2019 Business Policy Lecture 2

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School of Economics and Management | Ola Mattisson | FEKH11 Business Policy|

Business PolicyLecture 2OLA MATTISSON


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Development of strategy theory

Agenda Two Swedish minutes The development of strategy theory Different perspectives on strategy

Strategy as a quest for value Current trends within strategy theory


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Historical periods

60

s: Period of growth and expansion. Control andfinancial budgeting needed. Corporate planning theconcept.

70

s: Period of instability and increasing competition.Planning useless.

80

s: Strategic Management period. Focus on industryenvironment. Competitive advantage.

90

s: Strategies for competition on different arenas.Source of profit within the firm. Resources andcapabilities.

00s: Global strategies. Competing for standards, winner-takes-it-all markets. Ethics and CSR.


4/20School of Economics and Management | Ola Mattisson | FEKH11 Business Policy|

The strategic perspective of the60

s and 70

s

Analytical or rationalistic perspective Strategy as the result of plans and planning.

Behavioural or incremental perspective Strategy as a result of the actions and decisions of

the managers.



1. Analytical perspective

Characteristics: Strategy created deliberately by managers. Tools and techniques of strategy analysis are used. Plans are the result of this process.



2. Behavioural perspective

Rationalistic planning and design of strategy notpossible in a changing world. Instead:

Strategy is seen as consisting of: Intended strategy Realized strategy Emergent strategy.



Strategy incremental actions

Realized strategy

Emergent

strategies

Plan

Unrealizedstrategy

Intendedstrategy

The realized strategy is a result of the intended strategyan incremental decisions (Mintzbrg)

Time


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80

s: Competitive industry analysis

Analysis of the industrial environment

Focusing on competitors, customers andsuppliers.

Positioning towards competitors in orderto gain competitive advantage andmaximizing profit.

Porter

s five forces.


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90

s: Strategies for competition ondifferent arenas

The resource based view (RBV) identifyingunique strategic capabilities and combination ofresources

Dynamic models: industry life cycles

Joint cost leadership and differentiation

Developed management control systemsincluding strategic dimensions (BSC)


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Four kinds of strategy .

Plan

Process

Position

Perspective


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Shareholder value

The purpose of the firm is to generate profit for theowners.

Goal to maximize the value that the firm produces.

Focus is on developing instruments for calculatingand reporting shareholder value: Example of tools: DCF (Discounted Cash Flow)


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Stakeholder approach

Value more than just profit

A firm has many stakeholders and can be regardedas a coalition of different interests

The manager ought to maintain a good relationshipwith stakeholders in order to secure the survival ofthe organisation


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Shareholder vs Stakeholder

Different perspectives on why and for who firms

exists

In reality: owners as well as other stakeholders areimportant for a firm


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Current trends

Reflects the development of society today

What demands do companies of today face?


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Current trends

Demands Demands on ethical behaviour Volatility Unpredictibility Fast technological devlopment


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Corporate Social Responsibility

A company has a two mandatory responsibilities:

-Financial and legal

CSR is about going beyond the mandatoryresponsibilities in order to create legitimacy and trust forthe company among the stakeholders.

- Ethical and moral responsibility


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Strategy in the beginning of the 21stcentury

Seeking more complex sources of competitiveadvantage

Theory regarding hyper competition

Strategies that recognizes the need for

flexibility. Complexity theory


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Concluding remarks

Linkage between problems and theories over time

Useful models survive and develop, others areforgotten

Models and theories are parts of the language in thebusiness community


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business policy lecture 2

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