fit & stretch
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Strategy and CompetitivenessAN INTRODUCTION
DEFINITIONOverriding 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 advantageExhibit 1.1a The vocabulary of strategy
Vision or strategic intent Goal Core competences
TERMStrategies Strategic architecture
DEFINITIONLong-term direction Combination of resources, processes and competences to put strategy into effect The monitoring of action steps to: assess effectiveness of strategies and actions modify strategies and/or actions as necessaryExhibit 1.1b The vocabulary of strategy
STRATEGIC MANAGEMENTAmbiguous Complex Organisation-wide Fundamental Long-term implications
Exhibit 1.2 Characteristics of strategic management and operational management
Exhibit 1.3 A basic model of the strategic management process
Expectations and Expectations purposes and purposes
The environment Strategic analysis
Resources, competences and capability
Bases of strategic choice Strategic choice Strategy implementation
Organisation structure and design
Strategy evaluation and selection
Managing strategic change
Resource allocation and control
Exhibit 1.4 A summary model of the elements of strategic management
ASPECT OF STRATEGY Underlying basis of strategy
ENVIRONMENTALLED FIT Strategic fit between market opportunities and organisations resources
RESOURCE-LED STRETCH Leverage of resources to improve value for money
Competitive advantage through ...
Correct positioning Differentiation directed by market need
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
ASPECT OF STRATEGY How small players survive ... Risk reduction through ... Corporate centre invests in ...
ENVIRONMENTALLED FIT Find and defend a niche Portfolio of products/ businesses Strategies of divisions or subsidiaries
RESOURCE-LED STRETCH Change the rules of the game Portfolio of 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
A DEFINITION OF STRATEGYStrategy is the direction and scope of an organisation over the long term which achieves advantage for the organisation through its configuration of resources within a changing environment to meet the needs of markets and to fulfill stakeholder expectations.
LEVELS OF STRATEGY (1)Corporate Level strategic decisions are concerned with: overall purpose and scope adding value to shareholder investment portfolio issues resource allocation between SBUs structure and control of SBUs corporate financial strategy
LEVELS OF STRATEGY (2)Business Unit strategy is concerned with: competitive strategy developing market opportunities developing new products/services resource allocation within the SBU structure and control of the SBU
LEVELS OF STRATEGY (3)Operational Strategies are concerned with: the integration of resources, processes, people and skills to implement strategy
STRATEGIC MANAGEMENT IN DIFFERENT CONTEXTS (1)In small businesses, the importance of: the expectations of individuals (e.g. owners and founders) competitive positioning In the multi-national corporation, the importance of: product and geographic scope portfolio decisions corporate structure and control
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 government competition for resources delivery of best value within a political context
STRATEGIC MANAGEMENT IN DIFFERENT CONTEXTS (3)In professional service organisations, the importance of: the expectations and standards of professionals the powerful influence of internal stakeholders (e.g. partners) increasingly, competitive positioning
THE CHALLENGE OF STRATEGIC MANAGEMENTThe management of complexity and ambiguity The ability to analyse and conceptualise strategic issues The reconciliation of the influences of a changing environment, stakeholder expectations and resource capabilities To identify or create strategy opportunities And manage change
Patterns of strategy development Explanations of strategy development strategy as: Outcome of cultural and political processes Configurations of process Challenges for strategy development The cultural web Strategic drift The learning organisation
Exhibit 2.1 A framework for understanding strategic management in practice
. Strategic decisions e.g. Product launch Acquisition Divestment Overseas expansion Strategies evolve and inform strategic decisions, which in turn consolidate strategic direction Evolving strategic direction
Exhibit 2.3 Strategic evolution and consolidation
5 Strategy as outcome (of cultural and political processes) 5 4
2 Unrealised strategy
Exhibit 2.4 Strategy development routes
Opportunities and threats
Strengths and weaknesses
Exhibit 2.7 The role of the paradigm in strategy formulation
THE PARADIGM... The beliefs and assumption held in common and taken for granted in an organisation.
THE BENEFITS OF FORMAL PLANNING SYSTEMSA 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.
DANGERS AND PROBLEMS OF FORMAL PLANNING SYSTEMSThe neglect of cultural and political dimensions of organisations. Delegating responsibility to specialists Failure to achieve ownership of plans Individuals understanding parts rather than the whole of plans Detail rather than vision Information overload Strategy as the plan The search for the mythical right strategy.
STRATEGY DEVELOPMENT DIMENSIONS (1)The Planning Dimensionstrategies are the outcome of rational, sequential, planned and methodical procedures definite and precise strategic objectives are set the organisation and environment are analysed potential strategic options are generated and the optimum solution chosen defined procedures for implementation and the achievement of the strategic objectives are developed the strategy is made explicit in the form of detailed plans
STRATEGY DEVELOPMENT DIMENSIONS (2)The Incremental Dimensionevolutionary but purposeful strategy development strategy is developed as issues arise strategy is continually adjusted to match changes in the operating environment early commitment to a strategy is tentative and subject to review strategic options are continually assessed for fit successful options gain additional resources strategic options are developed from existing strategies by experimentation and through gradual implementation
STRATEGY DEVELOPMENT DIMENSIONS (3)The Cultural Dimensiona way of doing things in the organisation guides strategic direction strategies evolve in terms of a core set of shared assumptions based on past experience, values and beliefs held by the organisations members the shared assumptions guidethe selection of goals and objectives the identification of strategic issues the selection of information the selection of strategies
STRATEGY DEVELOPMENT DIMENSIONS (4)The Political Dimensionstrategies are developed by negotiation and bargaining between interest groups the interest groups seek to realise their own desired objectives their influence on strategy development increases with power power comes from the ability to create or control the flow of scarce resources and the control and provision of information a strategy acceptable to powerful interest groups is achieved by a process of accommodation and mutual adjustment
STRATEGY DEVELOPMENT DIMENSIONS (5)The Command Dimensionan individual is the driving force behind the organisations strategy. strategy is primarily associated with the institutionalised power of an individual or small group. the strategy represents the aspirations for the organisations future 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.
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.
IMPLICATIONS: STRATEGIC MANAGEMENT PROCESSESBeware equating strategic management with strategic planning. You need to understand how strategies develop in your organisation:to account for strategic direction to manage formulation processes to manage strategic change
Managing strategic change means managing changes to the realised strategy - not just the intended strategy.