Strategy and Competitiveness

AN INTRODUCTION

TERM
Mission

DEFINITION
Overriding 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 advantage
Exhibit 1.1a The vocabulary of strategy

Vision or strategic intent Goal Core competences

TERM
Strategies Strategic architecture

DEFINITION
Long-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 necessary
Exhibit 1.1b The vocabulary of strategy

Control

STRATEGIC MANAGEMENT
Ambiguous Complex Organisation-wide Fundamental Long-term implications

OPERATIONAL MANAGEMENT
Routinised

Operationally specific

Short-term implications

Exhibit 1.2 Characteristics of strategic management and operational management

Strategic analysis

Strategic choice

Strategy implementation

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

Strategic options

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 stretch

Source: 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

Core competences

Exhibit 1.5b The leading edge of strategy: fit or stretch

Source: Adapted from G. Hamel and C.K. Prahalad, Competing for the Future, Harvard Business School Press, 1994

A DEFINITION OF STRATEGY
Strategy 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 MANAGEMENT

The 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

Managerial intent

Externally imposed

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

Imposed strategy

Intended strategy

Planned implementation

Realised strategy

2 Unrealised strategy

Exhibit 2.4 Strategy development routes

Opportunities and threats

Strengths and weaknesses

THE PARADIGM

Environmental forces

Strategy

Organisational capabilities

Performance

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 SYSTEMS

A 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 SYSTEMS

The 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 Dimension
strategies 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 Dimension
evolutionary 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 Dimension
a 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 guide
the selection of goals and objectives the identification of strategic issues the selection of information the selection of strategies

STRATEGY DEVELOPMENT DIMENSIONS (4)

The Political Dimension
strategies 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 Dimension
an 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 Dimension
strategic 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 PROCESSES

Beware 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.