Strategic Management

MBA Lecture Evaluating Strategy

Strategy Process

Screening Framework
Suitability Environment Industry Competition Objectives
Congruence Stakeholders Culture Ethics/ Governance Acceptability

Feasibility Finance Resources Competencies Opportunity

Contesting Profit Maximisation

Cyert and March (1963) suggest organisational

behaviour determined by interests and beliefs of dominant coalitions - stakeholder theory

Others suggest managers pursue market share or sales maximisation Some suggest utility functions which include profit but also other elements

Stakeholders
Stakeholders are those individuals or groups that affect or are affected by the achievement of an organizations objectives - Freeman (1984) These include customers, suppliers, employees, government, competitors, the local community and shareholders Those who advocate a stakeholder model dispute that the primary role of organisations is to create shareholder value The role of management is to balance these stakeholder needs rather than simply focus on shareholders

Meeting the Needs of Stakeholders

Figure 6.1 The stakeholder power-interest matrix

Stakeholder Mapping - Predictability

High
Low Few Manageable

Predictability

Low

Power
Consideration High Danger Area

What is Organisational Culture?

Schein (1992) suggests culture generally is
the way in which a group of people solves problems

He defines organisational culture as

basic assumptions and beliefs that are shared by the members of an organisation, that operate unconsciously and define in a basic taken-for-granted fashion an organisations view of itself and its environment

E Schein Organisational Culture and Leadership , 2nd edition, Jossey-Bass, 1992

Johnsons Cultural Web

Stories Symbols

Rituals

Paradigm

Power

Control

Structures

from G Johnson Managing Strategic Change: Strategy, Culture and Action Long Range Planning, Vol 25, no 1, 1992, pp28-36

The Balanced Scorecard Kaplan & Norton (1992)

For organizations to measure their performance from a

wider perspective than traditional financial measures more clearly highlight an organizations future performance Enables managers to provide consistency between the aims of the organization and the strategies undertaken to achieve those aims Supplementary operational measures include - customer satisfaction - internal processes - innovation and improvement activities

Balanced Scorecard 4 Perspectives

1. How do we look to shareholders? 2. How do customers view us? 3. What must we excel at? 4. Can we continue to improve and create value?