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COMPETENCIES
Strategic Planning
1. A Planning Framework
2. Different Approaches to Strategic Planning
EMERGENT STRATEGIES
Emergent strategies do not arise out of conscious
strategic planning, but from a number of ad hoc choices,
perhaps made lower down the hierarchy.
They may not initially be recognised as being of strategic
importance.
Emergent strategies develop out of patterns of
behaviour, in contrast to planned strategies or senior
management decisions.
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IMPLICIT OR EXPLICIT STRATEGIES
Entrepreneurs often have a theory of the business,
which they may or may not document.
Implicit strategies may exist only in the chief
executive's mind
Explicit strategies are properly documented
Some plans are more explicit than others.
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The distinctive competence of an organisation is what
it does well, uniquely better than its rivals.
Strategic opportunities must be related to the firm's
resources.
A strategic approach involves identifying a firm's
competencies & core competencies. These
competencies may come in a variety of ways;
Experience in making and marketing a product or service
The talents and potential of individuals in the organisation
The quality of co-ordination
DELIBERATE AND EMERGENT
STRATEGIES
(a) Intended strategies are plans. Those plans which are
actually realised are called deliberate strategies.
(b) Emergent strategies are those which develop out of
patterns of behaviour.
CRAFTING EMERGENT STRATEGIES
Managers cannot simply let emerging strategies
take over. Why?
(a) Direction. The emergent strategy may be
inappropriate for the long-term direction of the
organisation and may have to be corrected.
(b) Resources. It may have future implications for
resource use elsewhere: in most organisations, different
parts of the business compete for resources.
(c) Managers might wish to build on the strategy by
actively devoting more resources to it.
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CRAFTING EMERGENT STRATEGIES
How to craft strategy
Manage stability : Knowing when to change is more
important.
Detect discontinuity : Some small environmental
changes are more significant for the long term.
Know the business : Awareness & understanding
Manage patterns : Detect emerging patterns and to
help them take shape.
Reconciling change & continuity : Requires a natural
combination of the future, present & past.
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INCREMENTALISM
Incrementalism involves small scale extensions of past
practices.
It is more likely to be acceptable, because
consultation, compromise and accommodation are
built into the process.
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DISADVANTAGES OF INCREMENTALISM
Incrementalism does not work where radical new
approaches are needed.
Incrementalism ignores the influence of corporate
culture, which filters out unacceptable choices.
It might only apply to a stable environment.
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A BEHAVIOURAL APPROACH
Strategy needs to be understood as an outcome of the social,
political and cultural processes of management in
organisations' (Johnson, Scholes & Whittington).
Step 1: Problem awareness
Internal results, customer responses or environmental changes can
make individuals aware of a problem.
Step 2 : Problem diagnosis
Analyse and get to the root of the problem.
Step 3 : Solution development
Solutions begin with a vague idea, which is further refined & explored
by internal discussion.
Step 4 : Solution selection
Eliminate unacceptable plans & Endorsements
INCREMENTALISM
BOUNDED RATIONALITY (Herbert Simon)
In practice, managers are limited by time, by the information
they have and by their own skills, habits and reflexes.
Strategic managers do not evaluate all the possible
options, but choose from a small number of possibilities.
Strategy making necessitates compromises with interested
groups through bargaining.
The manager does not optimise.
Instead the manager satisfices. The manager carries on
searching until finds an option which appears satisfactory, and
adopts it, even though it may be less than perfect.
LOGICAL INCREMENTALISM
Logical incrementalism: managers have a vague notion
as to where the organisation should go, but strategies
should be tested in small steps, simply because there is too
much uncertainty about actual outcomes.
Strategy is best described as a learning process.
The broad outlines of a strategy are developed by an in-
depth review
There is still practical scope for day-to-day incremental
decision making
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COMPETITION
GAINING GROUND ON COMPETITORS
'A good business strategy' is where a firm can gain
significant ground on its competitors at an acceptable cost.
o Re-adjust current resources allocate on core competence
o Relative superiority - exploiting competitors weaknesses
o Challenge assumptions
o Degrees of freedom - finding new ways of exploit markets
Successful strategy is the interplay of three Cs:
customers, competitors & corporation (the
strategic triangle).
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COMPETITION
Creating a sustainable strategic position
o Operational effectiveness : doing the same things better
than other firms
o Strategy rests on unique activities : different than rivals
o Strategy is about combining activities : hard to imitate
o Strategy is about choices, not blindly imitating competitors
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