strm043-session 1 powerpoint slides - introducing strategy(2)
DESCRIPTION
Competitive strategyTRANSCRIPT
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Session 1
COMPETITIVE STRATEGY
INTRODUCTION:
THE STRATEGY PROCESS
Welcome!
STRM043 - Competitive Strategy
and Innovation
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Overview
What is strategy?Why strategy? The pros & cons of strategyThe many faces of strategyThe evolution of strategyThe strategy process -
What is Strategy?
A much used, if not over-used, wordThink about how you use the word strategy in relation toYour lifeYour workMilitary origins:Comes from Greek term strategos used in military operations and focused upon how to win battles -
What is Strategy?
Research the word strategy on GoogleDevelop your own understanding and definitionHere are some important definitions: -
What is Strategy?
The determination of the long run goals and objectives of an enterprise and the adoption of courses of action and the allocation of resource necessary for carrying out these goals Chandler (1963)The long term direction of an organisationJohnson & Scholes (2011)A pattern in a stream of decisions Mintzberg (2007) -
What is Strategy?
Objective of strategy
Make a return greater than cost of capitalOr in other words be
Faster, better, cheaperthan the competition
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What is Strategy?
More than a planImplies a long term perspectiveInvolves a processDynamic, interactiveFar reaching within the organisationDepartments and DivisionsStaffOnly visible after the event? What is the significance of this comment by Mintzbergs? -
Strategy vs tactics:
Strategy is the overall analysis and plan for deploying resources to establish a favorable position.Tactics are a scheme for a specific initiativeAttributes of strategic decisions:Important: involve a commitment of resourcesNot easily reversibleCombine hard and soft elementsHard / quantitative side: involves the language of ROI (return on investment) cost of capital, risk, economics etcSoft / qualitative side: involves people, history, corporate culture, motivation, etcDistinguishing features
According to Robert Grant
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What is Strategy?
This module focuses on the strategy process in the first of four sections in this module:A: Concepts & Tools: FoundationsB: Contexts & Cases: ApplicationsC: Forces & Issues: ReflectionsD: Innovation & Creativity: Projections(Workshop)
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Strategy
sets direction
Chart a course Create and maintain cohesion Wrong directionWhy Strategy:
For better and for worse
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Strategy
Promotes coordination Reduces disorder No peripheral vision Groupthink
focuses effortWhy Strategy:
For better and for worse
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Strategy defines
the organization
Captures essential meaning Creates shared identity Loss of richness stereotypingWhy Strategy:
For better and for worse
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Strategy provides
consistency
Reduces ambiguity Explains the world Can reduce creativity Simplify to the point of distortionWhy Strategy:
For better and for worse
- Specify future choicesMade in advance of action Calculated
towards achieving objectives
The Faces of Strategy
- Without preconceptionDriven by actions; not designConsistency
in behaviour
(whether or not intended)The Faces of Strategy
- A match between organization
and contextA unique place in the environmentFinding and sustaining
rent creating situationsThe Faces of Strategy
- Collective conceptA world view Intensely shared The character
of an organization
The Faces of Strategy
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Strategies deliberate and emergent
The Faces of Strategy
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Mintzbergs Critique of Formal Strategic Planning:
The fallacy of prediction the future is unknownThe fallacy of detachment - impossible to divorce formulation from implementationThe fallacy of formalization - inhibits flexibility, spontaneity,intuition and learning.
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The Evolution of Strategy
Corporate Planning `(1950-70s) Forecasting, diversifying
Competitive strategy (1980-90s) Industry analysis, portfolio planning
Strategic Management (1990s)Re-engineering, alliances
Strategic Innovation (2000+)New technology, CRM, innovation
Crisis Management (2007-2013)Managing in a recession
2014 onwards??CSR, social impact, globalisation
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In response
Ten Schools of Strategy
1. Design: a process of conception
2. Planning: a formal process
3. Positioning: an analytical process
4. Entrepreneurial: a visionary process
5. Cognitive: a judgmental process
6. Learning: an emergent process
7. Political: a process of negotiation
8. Cultural: a collective process
9. Environmental: a reactive process
10. Configuration: a process of transformation
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Evolution of the Ten Schools
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Evolution of the Ten Schools (contd)
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Late 1990s & early 2000s
Quest for Shareholder Value:
Refocusing, outsourcing, delayering, cost cuttingQuest for Competitive Advantage:
Emphasis on resources & capabilities Flexibility & innovation Collaborationalliances, networks Succeeding in dynamic (Schumpeterian) markets learning to live with disruption Blue Ocean Strategy: create own space with no competitorsWhere are we now?
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2014+?
Quest for Stakeholder Value:
New goal of long term shareholder value not short term profit maximisation Fairer distribution of the rewards of business?Quest for Competitive Advantage:
New and growing concept of shared value (CSR) Social media and customer insights New two way conversation with customers The VUCA world (Volatile/Uncertain/Complex/Ambiguous) Implications for Governance, leadership and management Organisational structuresWhere are we heading?
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Strategy Safari
Core text books (both available as e-books)Johnson & Scholes (2011), Exploring Strategy, 9th edition, Pearson for core techniques,Mintzberg et al (2009) Strategy Safari, Prentice Hall for thinking about strategyDue to Rapid change in the business worldLong run evolution in strategic thinkingReference book for approaches to strategyCritically reviews each school of strategyExcellent read for deep understanding
Core text book -
Complementary Reading
Other good strategy text booksGrant (2010) Contemporary Strategy Analysis, 8th Edition, WileyDe Wit & Meyer (2010) Strategy: Process, Content, Context 4th Edition, CengageMintzberg, Lampel etc al (2014) The Strategy Process, 5th Edition, Pearson (Highly recommended)Financial Times: www.ft.com Available free to all NBS students via NILEThe EconomistWeekly review of the news, good strategic coverage of industriesKey academic articles from leading thinkersCase studies -
Case Studies:
Cases give an insight into real lifeUsually involve a management decisionNeed reading 2 or 3 times to benefitMust be read before the class discussion Be prepared to discussOpportunity to work in sub-groupsSimilar to Harvard Business SchoolAssignments are case basedGroup presentationIndividual written case analysis
Key component of the module -
The Strategy PROCESS
We now start to look at the basics of strategy and the strategy processCompanies are assumed to be seeking competitive advantage:How to identify and meet customer needs faster, better, cheaper than competitorsTraditionally only possible 2 of 3 -
The Strategy Process
Decisions aboutWhich industries to be inHow to compete in themKey concept of FIT between:Internal resourcesExternal environmentBalance between:Competing for the presentPreparing for the future -
THE FIRM
Goals &
Values
Resources &
Capabilities
Structure &
Systems
THE
INDUSTRY
ENVIRONMENT
Customer needs
Competitor actions
Suppliers - source of key resources
STRATEGY
The Basics of Strategy:
Fit between the Organisation and its Environment*
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Long-term, simple and agreed objectives
Objective appraisal of resources
EFFECTIVE IMPLEMENTATION
Strategic Success
Profound understanding of the competitive environment
What Makes a Successful Strategy?
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The Strategy Process
Where are we now?Where do we want to get to?How do we get there?with some reflection on
Fit with The business environment and customer needs?Our mission, history, culture and staff?Our resources and risk profile? -
The Strategy Process
Internal AnalysisExternal AnalysisSWOT AnalysisSecond stage synthesis tool!Generate Strategic OptionsEvaluate OptionsImplementation PlanMonitor and Reflect on results -
SWOT
Analysis
2nd stage tool
Strategy the hard side
Adapted from: http://management-class.co.uk/management-class.co.uk/courseware/learners/strat_process.htm
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McKinseys 7 S Framework
Hard & soft elements combined
Light blue hard elements. Dark blue soft elements
A useful over-arching framework. We will return to this later in the module
- Strategic analysisimproves decision processesbut doesnt give
answersassists us to identify and understand the main issuesbut we
need to explore the drivers of future changeshelps us to manage
complexitybut we must recognise that our strategy concepts &
models are simplifications of reality; they help us ask the right
questions, thereafter critical thinking and judgment are
keyenhances flexibility and innovationby supporting learning
The Role of Strategic Analysis
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Case study:
ROBIN HOODPlease read this very short case at least 3 times once to orientate yourself, second time for detail and third for deeper insights.
Despite its brevity, this case study is very rich with many layers, and can be looked at from a variety of perspectives eg HR, marketing etc. Robin needs help to be able to see his organisation from a holistic point of view, and to assess his goals and objectives.
Task
Your tutor is Robin Hood and you are a consultant brought in to advise Robin on his future strategy. Working in groups of 3-4 you are asked to
Undertake a strategic analysis of the present position of Robin HoodIdentify his strategic options Make clear recommendations as to which strategy he should adopt and why -
Readings & references
Core text books
Mintzberg et al Strategy Safari, Ch 1Johnson & Scholes, Exploring Strategy, Ch 1Key academic article (available on the web)
Porter, M.E. (1996) What is Strategy. HBR, Nov-Dec*