Download - Fit & Stretch
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
Strategy and
Competitiveness
AN INTRODUCTION
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
DEFINITION
Overriding purpose in line with the values or expectations of stakeholders
Desired future state: the aspiration of the organisation
General statement of aim or purpose
Resources, processes or skills which provide ‘competitive advantage’
TERM
Mission
Vision or strategic intent
Goal
Core competences
Exhibit 1.1a The vocabulary of strategy
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
TERM
Strategies
Strategic architecture
Control
DEFINITION
Long-term direction
Combination of resources, processes and competences to put strategy into effect
The monitoring of action steps to:assess effectiveness of strategies and actionsmodify strategies and/or actionsas necessary
Exhibit 1.1b The vocabulary of strategy
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
Ambiguous
Complex
Organisation-wide
Fundamental
Long-term implications
Routinised
Operationally specific
Short-term implications
Exhibit 1.2 Characteristics of strategic management and operational management
STRATEGICMANAGEMENT
OPERATIONALMANAGEMENT
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
Strategicanalysis
Strategicchoice
Exhibit 1.3 A basic model of the strategic management process
Strategyimplementation
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
Strategicanalysis
Strategicchoice
Strategyimplementation
Exhibit 1.4 A summary model of the elements of strategic management
Expectations andpurposesExpectations
and purposes
Organisationstructure and
design
Managingstrategicchange
Resourceallocation and
controlStrategicoptions
Basesof strategic
choice
Strategyevaluation and
selection
Resources,competencesand capability
Theenvironment
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
ASPECT OF
STRATEGY
ENVIRONMENTAL-
LED ‘FIT’
RESOURCE-LED
‘STRETCH’
Underlying basis of
strategy
Competitive
advantage
through ...
Strategic fit between
market opportunities
and organisation’s
resources
‘Correct’ positioning
Differentiation directed
by market need
Leverage of resources to
improve value for money
Differentiation based on
competences suited to or
creating market need
Exhibit 1.5a The leading edge of strategy: fit or stretchSource: Adapted from G. Hamel and C.K. Prahalad, Competing for the Future, Harvard Business School Press, 1994
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
ASPECT OF
STRATEGY
ENVIRONMENTAL-
LED ‘FIT’
RESOURCE-LED
‘STRETCH’
How small players
survive ...
Risk reduction
through ...
Corporate centre
invests in ...
Find and defend a
niche
Portfolio of products/
businesses
Strategies of divisions
or subsidiaries
Change the ‘rules of the
game’
Portfolio of competences
Core competences
Exhibit 1.5b The leading edge of strategy: fit or stretchSource: Adapted from G. Hamel and C.K. Prahalad, Competing for the Future, Harvard Business School Press, 1994
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
A DEFINITION OF STRATEGY
Strategy is the direction and scope of anorganisation over the long term which
achieves advantage for the organisationthrough its configuration of resources withina changing environment to meet the needs
of markets and to fulfill stakeholderexpectations.
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
LEVELS OF STRATEGY (1)
Corporate Level strategic decisions are concerned with:overall purpose and scopeadding value to shareholder investmentportfolio issuesresource allocation between SBUsstructure and control of SBUscorporate financial strategy
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
LEVELS OF STRATEGY (2)
Business Unit strategy is concerned with:competitive strategydeveloping market opportunitiesdeveloping new products/servicesresource allocation within the SBUstructure and control of the SBU
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
LEVELS OF STRATEGY (3)
Operational Strategies are concerned with:the integration of resources, processes, people andskillsto implement strategy
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
STRATEGIC MANAGEMENT IN DIFFERENT CONTEXTS (1)
In small businesses, the importance of:the expectations of individuals (e.g. owners andfounders)competitive positioning
In the multi-national corporation, the importance of:product and geographic scopeportfolio decisionscorporate structure and control
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
STRATEGIC MANAGEMENT IN DIFFERENT CONTEXTS (2)
In the public sector, the importance of:powerful stakeholder influence (e.g. by government)constraints or guidelines on strategic decision making by governmentcompetition for resourcesdelivery of ‘best value’within a political context
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
STRATEGIC MANAGEMENT IN DIFFERENT CONTEXTS (3)
In professional service organisations, theimportance of:the expectations and standards of professionalsthe powerful influence of internal stakeholders (e.g.partners)increasingly, competitive positioning
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
THE CHALLENGE OF STRATEGIC MANAGEMENT
The management of complexity and ambiguityThe ability to analyse and conceptualise strategic issuesThe reconciliation of the influences of a changing environment, stakeholder expectations and resource capabilitiesTo identify or create strategy opportunitiesAnd manage change
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
Patterns of strategy development
Explanations of strategy developmentstrategy as:
Outcome ofManagerial cultural and Externally
intent political imposedprocesses
Configurations of process
Challenges for strategy development
The cultural Strategic drift The learningweb organisation
Exhibit 2.1 A framework for understanding strategic management in practice
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
Exhibit 2.3 Strategic evolution and consolidation
.
Product launch
Acquisition
Divestment
Overseas expansion
Strategies evolve andinform strategic
decisions, which in turn consolidate
strategic direction
Evolving strategic direction
Strategic decisions e.g.
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
Exhibit 2.4 Strategy development routes
Unrealised strategy
Intended strategy
3
5
Planned implementation 1
2
5
Realised strategy
Strategy as outcome(of cultural and
political processes)
Imposed strategy
4
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
Exhibit 2.7 The role of the paradigm in strategy formulation
Opportunitiesand threats
Strengths andweaknesses
Performance
Environmentalforces
Organisational capabilities
THE PARADIGM
Strategy
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
THE PARADIGM
... The beliefs and assumption held in commonand taken for granted in an organisation.
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
THE BENEFITS OF FORMAL PLANNING SYSTEMS
A structured means of analysis and thinking about strategic problems.Encouraging questioning and challenging of the taken for granted.The involvement of people in strategy development.Contributing to ownership and co-ordination of strategy.A means of communication of intended strategy.A means of control against agreed objectives.
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
DANGERS AND PROBLEMS OF FORMAL PLANNING SYSTEMS
The neglect of cultural and political dimensions of organisations.Delegating responsibility to specialistsFailure to achieve ownership of plansIndividuals understanding parts rather than the whole of plansDetail rather than visionInformation overloadStrategy as ‘the plan’The search for the mythical ‘right strategy’.
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
STRATEGY DEVELOPMENT DIMENSIONS (1)
The Planning Dimensionstrategies are the outcome of rational, sequential, planned andmethodical proceduresdefinite and precise strategic objectives are setthe organisation and environment are analysedpotential strategic options are generated and the optimum solution chosendefined procedures for implementation and the achievement of the strategic objectives are developedthe strategy is made explicit in the form of detailed plans
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
STRATEGY DEVELOPMENT DIMENSIONS (2)
The Incremental Dimensionevolutionary but purposeful strategy developmentstrategy is developed as issues arisestrategy is continually adjusted to match changes in the operating environmentearly commitment to a strategy is tentative and subject to reviewstrategic options are continually assessed for fitsuccessful options gain additional resourcesstrategic options are developed from existing strategies by experimentation and through gradual implementation
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
STRATEGY DEVELOPMENT DIMENSIONS (3)
The Cultural Dimensiona “way of doing things” in the organisation guides strategic directionstrategies evolve in terms of a core set of shared assumptions based on past experience, values and beliefs held by the organisation’s membersthe shared assumptions guide
the selection of goals and objectivesthe identification of strategic issuesthe selection of informationthe selection of strategies
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
STRATEGY DEVELOPMENT DIMENSIONS (4)
The Political Dimensionstrategies are developed by negotiation and bargaining between interest groupsthe interest groups seek to realise their own desired objectivestheir influence on strategy development increases with powerpower comes from the ability to create or control the flow of scarce resources and the control and provision of informationa strategy acceptable to powerful interest groups is achieved bya process of accommodation and mutual adjustment
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
STRATEGY DEVELOPMENT DIMENSIONS (5)
The Command Dimensionan individual is the driving force behind the organisation’s strategy.strategy is primarily associated with the institutionalised power of an individual or small group.the strategy represents the aspirations for the organisation’sfuture of this individual.the strategic direction may be related to a “vision” based on rational understanding and intuition, or experience and intuition.the individual becomes the representation of the strategy for the organisation.
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
STRATEGY DEVELOPMENT DIMENSIONS (6)
The Enforced Choice Dimensionstrategic choice is prescribed or limited by external forces which the organisation is unable to control or influence.organisations respond to environmental imperatives.strategic change is instigated from outside the organisation.barriers in the environment severely restrict strategic mobility.
From: Gerry Johnson and Kevan Scholes Exploring Corporate Strategy 5th Edition 1999
IMPLICATIONS: STRATEGIC MANAGEMENT PROCESSES
Beware equating strategic management with strategic planning.You need to understand how strategies develop in your organisation:
to account for strategic directionto manage formulation processesto manage strategic change
Managing strategic change means managing changes to the realised strategy - not just the intended strategy.