Introduction to StrategyLecture 1
Tahir Rashid
What is Strategy???
http://uk.youtube.com/watch?v=HwR5ql3EBs8
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What is Strategy
Strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations. (J& S, 2008)
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Why do some organizations succeed while others fail?
StrategyAn action managers take to achieve
one or more of an organization’s goals Strategic management process
The process by which managers choose a set of strategies that will allow a company to achieve superior performance
Characteristics of Strategic Decisions Long-term direction Scope of an organisation’s activities Competitive advantage Strategic fit with business environment Organisation resources and competences Values and expectations of power players
Dynamic Business environment
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http://www.youtube.com/watch?v=sDyqhcy1L-0&NR=1
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Levels of Strategic Management
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Strategic Managers
General managersResponsible for overall company
performance or divisional performance Functional managers
Responsible for supervising a particular task or operation
Vocabulary of Strategy
Mission Overriding purpose
Vision Desired future state
Goal General statement of aim or purpose
Objective Possible quantification or precise statement
of the goal- SMART
Vocabulary of Strategy
Strategic capability Resources, activities and processes
Strategies Long term direction
Business model Showing the flow of product, service and
information between parties Control
Monitoring of actions
Vocabulary of Strategy:
Vision/Mission Nokia-Connecting is about helping people feel close
to what matters. Wherever, whenever, Nokia believes in communicating, sharing, and in the awesome potential in connecting the 2 billion who do with the 4 billion who don’t.
ASDA-To make goods and services more affordable for everyone.
H& M- Our business concept is to offer fashion and quality at the best price
Ford- To become the worlds leading consumer company for automotive products and services
Vocabulary of Strategy:
Goals
H&M- “Our goal is to ensure that business is operated with the minimum use of resources and with as little impact on the environment as possible”
Objectives H&M-To increase the number of stores by
10-15% each year whilst maintaining increased sales in the existing stores
The Exploring Corporate Strategy Model
(J& S, 2008)
What is Strategic Position?
Strategic position is concerned with the impact on strategy of the external
environment, an organisation’s strategic capability and the expectations and
influence of stakeholders.
Strategic Position
The Strategic Position
Environment
Culture
PurposeCapability
(J& S, 2008)
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Strategic analysis
Information is required if Strategic decisions are to be made.
Must determine current situation and strategy Must determine what change, if any, is
desirable Who are we? Are we well? And who are our
competitors?
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External and Internal Analysis External analysis
Identify strategic opportunities and threats• Industry environment• National environment• Socioeconomic or macroenvironment
Internal analysis Identify organizational strengths and
weaknesses Sources of competitive advantage: superior
efficiency, quality, innovation, and responsiveness to customers
Strategic Awareness allows for the management of Strategic Change
Strategic Change
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Strategic Awareness
What changes are occurring in the environment? What are the resources and competencies available? Who affects the organisations i.e. the stakeholders The main aim of the analysis is to form a view of the key
influences on the present and the future A lack of awareness can result in:
Lost opportunities Inability to react and respond effectively
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SWOT Analysis and the Business Model
Identifying strategies to align a company’s resources and capabilities to its environment in order to create and sustain a competitive advantageFunctional-level strategyBusiness-level strategyGlobal strategyCorporate-level strategy
What are Strategic Choices?
Strategic choices involve understanding the underlying bases
for future strategy at both the business unit and corporate levels
and the options for developing strategy in terms of both the directions
and methods of development.
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Strategic Choice
Choice of suitable courses of action based on interpretation of analysis
restatement of mission and objectives generation of strategic options evaluation and selection of strategic options Logical and incremental Entrepreneurial opportunism
Strategic Choices
Strategic Choices
Business-level
Innovation
InternationalCorporate-
level
Evaluation
(J& S, 2008)
What is Strategy in Action?
Strategy in action is concerned with ensuring that strategies are working in practice.
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Strategy Implementation
After choosing strategies, managers must put them into action.
The feedback loop—strategy is ongoing. Managers must monitor and reevaluate for the next round of strategy formulation and implementation.
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Strategic Implementation
who is responsible?-leadership and communication
adaptations of systems? resource planning and logistics Structure
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Monitoring & Evaluation
Ongoing appraisal What has been successful? What needs to be changed/adjusted? Ability to be Flexible and willingness to
change
Strategy in Action
Strategy in Action
Processes
Changing
ResourcingStructuring
Practice
(J& S, 2008)
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The Traditional Strategic Management Process
Strategic Analysis
Strategy Creation & Choice
Strategy Implementation
Evaluation
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Conclusion
A strategy is an action a company takes to attain one or more of its goals
Formal strategic planning models stress that an organisations strategy is the outcome of a rational planning process
Strategy can emerge from deep within an organisation
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Conclusion
Strategic planning often fails because top management do not plan for uncertainty and planners may be out of touch with operational reality
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References
Johnson, G & Scholes, K., Whittington, R. (2008) Exploring Corporate Strategy, 8th ed, Pearson Education
Hill C. & Jones G. (2004) Strategic Management Theory New York Houghton Mifflin