General and Strategic Management (GSM1):

Dr Kevan Williams6 December 2005

What happened this week?

What happened this week?

“ITV may be forced to scrap news channel”

“…have lost about £30m since it was launched in August 2000.”

“In October its share of the total television audience was just 0.1% compared with 0.5% each for the other two broadcasters.”

“The channel has been a serious drain on the main ITV network.”

Today

Recent developments in strategy

…towards the end of the course

Beginning of the course review

Thoughts on the exam

Recent Developments

Leadership

Governance

Managing change

Technology

International

Leadership

Leadership

The growing emphasis on leadership including the cult of ‘celebrity’ in leadership?

“Management is doing things right; leadership is doing the right things.”

Peter Drucker

“Leadership is practiced not so much in words as

in attitude and in actions.” Harold Geneen, Chairman, ITT Corp

See leadership in earlier lectures (and in GSM2)

Leadership

"It's not going bust and it doesn't have outrageous debts but it's in a cycle of decline and it's hard to see where that's going to stop,"

Marks & Spencer in 2004Good example of different leadership styles

- See previous articles / studies

Leadership Mistakes

The chief executive of Barclays Bank has done a Gerald Ratner. He went before a select committee of MPs and - in front of a battery of TV cameras and newspaper reporters - admitted that he doesn't own a credit card because it's too expensive.

Governance

“The chairman will get his way BSkyB shareholders are unlikely to prevent James Murdoch's appointment”

“Slow progress expected to end white, male dominance”

“NYSE plans independent board GRASSO RESIGNATION”

Managing Change

“BMW’s Coup: It Outsourced a Whole New Car”

Technology

“Research offers cancer drug hope”

“US scientists plan to create new life form”

International – a multidimensional issue

A global shift in power Easier to trade globally – technology driven Threat and opportunity “Italian lingerie maker [SG3]dodges China threat”

http://news.bbc.co.uk/1/hi/business/4469724.stm Journal of International Business Studies – going since

1970! – some people now waking up! The Great Reverse – Part III

Burgeoning Sino-Indian trade ties may significantly alter the world economic balance

Anna Greenspan YaleGlobal, 8 September 2004

Other issues…?

International - Tesco

“Sales across the group jumped 13.9% during the 14 weeks to 19 November, led by a 23.3% surge in international sales. UK sales grew by 11.6%.”

“Analysts say it plans to increase its global presence to offset a lack of growth opportunities in the UK.”

“In the past four weeks, the firm has opened 25 stores in eight countries, including its first store in Guangzhou, southern China.”

“Tesco said it was on track to open 150 stores abroad in the second half of the year.”

Review: What is Strategy About?

Different schools and expert opinions (Porter, Hamel, Mintzberg etc)

Different ways in which strategy gets created and implemented (Design, experience, ideas)

Strategy Development

- Strategy as Design- Strategy as Experience

- Strategy as Ideas

ThreeViewpointsor ‘Lenses’

- Strategic Planning- Strategic Leadership

- Organisational Politics- Logical Incrementalism

- The Learning Organisation- Imposed Strategy

Six ways in which strategy can be developed in practice

Current Mission,Vision, Strategy,

Objectives

Current Mission,Vision, Strategy,

Objectives

Desired Future Mission, Vision,

Strategy, Objectives

Desired Future Mission, Vision,

Strategy, Objectives

OrganisationalCompetencies,Strengths andWeaknesses

OrganisationalCompetencies,Strengths andWeaknesses

External, EconomicIndustry and

MarketEnvironments

External, EconomicIndustry and

MarketEnvironments

Strategic PlansAction Programmes

Strategic PlansAction Programmes

I. Strategy Development

II. Strategy Implementation

Organization& Systems

Organization& Systems PeoplePeople ResourcesResources

Strategic Management:

the Design Viewpoint

Stakeholder Needs

Some Tools and Techniques of

the Design Viewpoint

MOST: Analysis- Mission- Objectives- Strategies- Tactics

Organisational purpose

SituationAnalysis

SWOT: Analysis-Strengths-Weaknesses-Opportunities-Threats

PEST: Analysis- Political- Economic- Social- Technological

Industry Analysis:-5 Forces- Strategic groups

What are the Most Common Causes of Strategic Failure?

Bad luck Inward perspective Failure to generate a coherent strategy Poor top management Poor corporate governance Complacency Short term focus Poor timing Examples?

Most Widely Used Management Tools

What are they?

When should they be used?

When should they not be used?

How should they be used properly?

Usage of Management Tools

http://www.bain.com/management_tools/

Most Popular Management Tools

http://www.bain.com/management_tools/

525254

5759

626264

6970

7576767878787879

8484

89

0 20 40 60 80 100

Economic Value Added Analysis

Business Process Reengineering

Downsizing

Knowledge Management

Strategic Alliances

Core Competencies

Growth Strategies

Customer Relationship Management

Outsourcing

Mission and Vision Statements

Strategic Planning

% Use

When to Use the Tools?

Corporate Strategy - Developing Strategy for the Whole Organisation•Value chain integration•Portfolio analysis (BCG, Directional Policy Matrix)•Directional policy matrix•Mergers and acquisitions•Corporate parenting styles•Core competencies (corporate)

Business Strategy – Developing Strategy for a Strategic Business Unit•Single value chain analysis•Resource analysis •Porter 5 forces•PEST analysis•SWOT analysis•Generic business strategy analysis (strategy clock)Core competencies (business)

Functional/Operations Strategy – Developing Strategy for a Function•e.g. Supply chain strategy

Questions to ask When Using Strategy Tools?

Is the tool intended to be used at the level of strategy at which I am operating?

Some tools can be used at different levels, in different ways. Am I using such a tool in the right way?

If multiple tools are available for the same situation, which one is the right one for the job?

What Does it Take to be aGood Strategist?

Mindset

Competencies

Training

Experience

Knowledge

GSM1...the early days

What is strategy?

“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 and to fulfil stakeholder expectations”

Fit or Stretch (leverage)?

Language of strategy

Levels of strategy

Environmental uncertainty (forecasting / scenarios

Elements of Strategic Management

GSM1...understanding strategy development

Strategy development – seen, understood, implications

Three strategy lenses – design, experience, ideas

Strategy development process in organisations

Implications for Strategy Development

Some types of strategy

GSM1...The Environment

PESTELSWOTForecasting and ScenariosIndustry AnalysisPorters 5-forcesLife cycleCompetitive AdvantageStrategic Groups

GSM1...Strategic Capability

Roots of strategic capability Types of resources Nature of competencies, core competencies,

distinctive capabilities [Kay], dynamic capabilities [Teece et al, Eisenhardt & Martin] and critical success factors (CSF’s)

Competitive advantage and capabilities Framework for analysis: VRIO [Barney 1997]-

resources and capabilities should beo Valuable o Rareo Inimitableo Organization can effectively exploit them

[www.ecofine.com/strategy/RBV%20of%20the%20firm.htm]

GSM1...Strategic Capability…continued

… Experience curve effects Value chain analysis Benchmarking and Knowledge

management Resource-based approach to

strategy-development

GSM1...Expectations and Purposes

Organisational expectations and purpose Importance of corporate governance Stakeholders and stakeholder mapping Ethical issues and their impact on

strategy Meaning and importance of legitimacy Culture and its impact on strategy Communicating organisational purpose

GSM1...at the Corporate Level

Nature of strategic choices – Corporate, Business or Competitive, Directions and Methods of Development

Corporate level strategy and multi-business organisations

Creating value through corporate strategy Different styles of corporate ‘parenting’ –

portfolio, restructurer, synergy manager, parental developer

Frameworks for portfolio analysis of corporate strategy – balance, attractive, fit

Diversification strategies The corporate portfolio and the nature of

corporate control

GSM1...and at the Business Level

Strategic Business Units (SBUs) and business unit strategy

Competitive advantage Different ways of achieving competitive

advantage – the strategy clock The meaning and importance of differentiation

strategies – cost leadership, differentiation, focus

Relation of differentiation strategies to core competencies

Sustainability of competitive advantage Cooperation versus competition Principles of game theory Fast-paced environments: hypercompetition

GSM1...finally Directions and Methods of Development

Identify development directions (new / existing, markets, products) open to an organisation – available, preferred, succeed better

Compare three methods of development (internal, acquisitions, alliances)

Understand the different forms of strategic alliance and the conditions for successful alliances

Strategic evaluation: what makes a good strategy?

Understand suitability, acceptability and feasibility

Selecting strategies for implementation

Readings for Exam Preparation

Read…review…and read again chapters 1 – 8 of Johnson and Scholes textbook

Work through case studies in Johnson & Scholes Review of slides and lecture notes Read in Management journals – follow-on from the Authors given

in the lecture notes Consider other people’s points of view Newspapers/Journals – e.g. Financial Times, Economist, Business

Week Visit the Website of Bain and Co to review the management tools

(http://www.bain.com/management_tools/) Visit the Website that goes with the textbook by Johnson and

Scholes Look for real world examples – you must have a few in mind

…final thoughts

“Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things.”

Miyamoto Musashi

I don't want any yes-men around me. I want everybody to tell me the truth even if it costs them their jobs.

Samuel GoldwynUS (Polish-born) movie producer (1882 - 1974)