Introduction

Strategy

Context- where does the concept fit in

(Source: Mckinsey quarterley-1980-Strategic Management and Competitive Advantage)

The word Strategy

The term strategy is derived indirectly from the Classic and Byzantine (330
A.D.) Greek strategos, which means general. While the term is credited to
the Greeks, no Greek ever used the word. The Greek equivalent for the modern
word strategy would have been strategike episteme or (generals knowledge)
strategon sophia (generals wisdom). One of the most famous Latin works in
the area of military strategy is written by Frontius and has the Greek title of
Strategemata. Strategemata describes a compilation of strategema, or
strategems, which are literally tricks of war.

Definition of Strategy
Strategy is the direction and scope of an
organisation over the long term, which
achieves advantage in a changing
environment through its configuration of
resources and competences with the
aim of fulfilling stakeholder expectations.

Strategic decisions

Exhibit 1.1

LEVELS OF STRATEGY

Corporate level:
It is concerned with overall purpose and
scope of organization and how values will
be added to different parts of the business
in organization
Corporate level strategy is the basis of other
strategic decisions
Large decision scale
Meet expectations of stakeholders

Strategy is about choices firm make on

Products and Markets and how they
leverage their advantage.

If we simplify this we can create a model of

strategic choice for the business:
Missions and goals of the firm
Assessment of the competitive forces
ranged against the firm
The competencies enjoyed by the firm

Definitions of Strategy
Strategy can be defined as the
determination of the basic long term
goals and objectives of an enterprise,
and the adoption of courses of action
and the allocation of resources
necessary for carrying out these
goals.
Strategy and Structure
Chandler

Definitions of Strategy
A strategy is a unified, comprehensive
and integrated plan that relates the
strategic advantages of the firm to the
challenges of the environment and that
is designed to ensure that the basic
objectives of the enterprise are
achieved through proper execution by
the organisation.

Definitions of Strategy
That activity which specifies for a
business a course of action that
is designed to achieve desired
long-term objectives in the light of
all major external and internal
factors, present and future.
General Electric Company

Or put another way:

Strategic Goals
What is our mission ?
Strategic Analysis What is happening to our
business ?
Strategic Choice What do we do about it ?
Strategic
Implementation

How do we do it ?

 Business level (SBU)

It is about to complete successfully in particular
market
How competitive advantage over the customers can be
achieved
Strategic decisions here are related with strategic business
units.

SBU is unit of an organization for strategy

making purpose

 Operational
It is concerned with how the component
parts of the organization deliver effectively
the corporate and business level
strategies in terms of resources,
processes and people.

Definition of Enterprise Strategy

A strategy combines explicit statements and implicit beliefs and

understandings in and around an enterprise about:

Its core purpose (mission) will it change in the future?

A vision of its future direction and what it intends to achieve
Its scope current and potential clienteles
The resources and competences that create value for its
clientele. Will they have to change in the future to add value?
The foundations of its present competitive standing and
future sustainability.

The 5 Ps of Strategy
Plan: overall understanding of aims and how
they will be achieved.
Ploy: combination of actions and tactics that
will be employed.
Perspective: assumptions and ways of
thinking
Position: can be based on market-share,
reputation, brand image etc.
Pattern: evolved stream of observed events.

Figure 1.2: Various Types of Strategy*

Unplanned or emergent strategies

are more common than often
supposed.
When they prove successful they
are adopted permanently and
become part of the future
intended strategy.
* After Mintzberg (1978)

The vocabulary of strategy

Exhibit 1.2

Strategic Management Processes

Strategic management: a process which
encompasses the ongoing activities of
forming and implementing strategy.
Because these activities are ongoing,
strategy content evolves over time,
sometimes intentionally, sometimes not.

The Subtlety & Complexity of

Strategic Management Skills
Strategic managers apply important artistic and
craft skills that enable them to:
Demonstrate leadership.
Innovate and encourage colleagues.
Value adaptiveness, improvisation and timely,
practical actions.
Exercise personal political skills for
negotiations.
Establish clear priorities and achieve desired
results.

Frames of Reference
The enterprises frame of reference (shared
belief set):
1.Informs and constrains how its managers
think about their strategic management
processes (conduct).
2.Influences the decisions and actions (strategy
content) that emerge from these processes.

Figure 1.3: 4 Strategy Frames of

Reference
Singular, profit-maximising objectives

Classic rational
planning

Evolutionary
Emergent,
adaptiveintuitive
processes

Deliberate,
logical
strategic
processes

Socio-cultural
systemic

Power-process
(negotiated)

Multiple (plural), potentially conflicting objectives

Adapted from Whittington (2001, page 3)

2 Key Dimensions from Figure 1.3

Should managers incorporate a singular or
multiple profit-maximising objective?
Will the strategy have to be adapted if
emerging unanticipitated events are
expected?

The Rational-Planning Frame

Predominant mindset: strategy-as-grand-plan
Characteristics
The belief that a clear intent and detailed design
enhances the chances of achieving a futurefocused goal.
Strategists that apply rational-planning try to
optimize outcomes in relation to a goal (profit
maximization).

Example: Beaver & Tapley

The Systemic Frame

(Socio-cultural Systemic)
Predominant mindset: open system
Characteristics
Systemic managers view their enterprises as
open systems containing many actors, systems,
subsystems and embedded routines.
Multiple priorities and viewpoints have to be
accommodated, progress must be managed and
priorities are adjusted continuously.
Example: BBC

The Power-process Frame

Predominant mindset: pluralist
Characteristics
Collective scepticism over whether strategic management
can proceed in a wholly rational way.
Strategies are always a compromise that reflects whatever
the more influential actors can agree on.
Influential actors exercise political skills.
Usually associated with governmental politics.
Example: British Labour Party

The Evolutionary Frame

Predominant mindset: evolution (adaptation)
Characteristics
Assumption that strategy needs to be adaptive.
Characterises entrepreneurial, innovative, chaotic
business enterprises.
Draws on Darwinian concept of natural selection.
Exploratory responses from strategic management
processes produce visible changes (variations).
Example: EasyJet

The Significance of Reference

Frames
Reinforces accepted beliefs about strategic
management conduct.
Helps to secure agreement to strategic
decisions.
Alternative frames imply different standards
of risk tolerance.
There is no obvious frame in use, its future
strategies become less predictable.

The Design-plus Strategic

Management Framework
3 linked phases of the Design-Plus approach

Situation
assessment

Action
planning &
implementatio
n

Identification & evaluation

of the key strategic
issues and choices

Phase 1: The Importance of

Understanding Context
The Enterprise identifies and assesses relevant
issues in the external and internal
organizational environment.
External
Macro-environmental influences (ch. 2)
Competitor & industry sector environments (ch. 3)

Internal
Mission, vision, core values (ch. 4)
Value-creating resources & capabilities (ch. 5)

Phase 2: The Importance of

Identifying Strategic Alternatives
This phase involves the need to:
Change the mission or vision if necessary.
Make choices about future clienteles.
Enhance future value-creating performance
and distinctiveness of the enterprise.
Make judgements about acceptable risks.

Phase 2: The Importance of

Identifying Strategic Alternatives
Strategic alternatives must be considered with
respect to:

Analytical frameworks (ch. 7)

Business-unit level strategies (ch. 8)
Innovation strategies (ch. 9)
Enterprise diversification strategies (ch. 10)
Acquisitions, mergers & alliance strategies
(ch. 11)
Multinational & global strategies (ch. 12)

Phase 3: The Importance of Action

Strategy needs to be coherent as a whole
and its various elements are mutually
consistent.
Many important elements of strategy content
will penetrate into the domains of many
functional areas (marketing, finance,
operations and human resources
management etc).

The Challenges of Doing Strategy

Complacency & aversion to change.

The complexity of the operating environment.
Apparent contradictions.
Sustaining creativity and imagination.
Integrating & co-ordinating coherent actions.
Less thinking & reaction time.

Chapter Summary

Nature of Strategies
Important Strategy Concepts
Strategic Management Task
Strategic Frames of Reference
Design-plus Framework
Challenges of Doing Strategy

The Vocabulary of Strategy

Mission overriding purpose

Vision/strategic intent desired future state
Goal general statement of aim or purpose
Objective quantification or more precise
statement of goal
Strategic capability resources, activities
and processes
Business model how product, service and
information flow
Control monitoring of action steps

Strategy and Operations

Strategic Management
Organisation-wide
Conceptualisation of
issues
Creating new directions

Operational
Management
Routinised
Techniques and actions

Managing existing
resources
Developing new resources Operating within existing
strategy
Ambiguous/uncertain
Operationally specific
Long term
Day to day issues

There are many ways of looking at strategy:

Strategic Drift
It is the situation where the strategy
progressively fails to address the strategic
position and of the organization and
performance deteriorates

Strategic Drift
The organization undergo a long process
through a long period of time of relative
continuity of strategy in which an strategy
remain unchanged or change
incrementally which leads to strategic drift,
it is followed by period of flux but in no
clear direction, which leads to
transformational change in the direction of
strategy.

The risk of strategic drift

Irregular surface is
punctured
equilibrium where
punctured
equilibrium is the
tendency of
strategy to develop
incrementally with
periodic
transformational
change
Exhibit 1.4

Johnson, Scholes & Whittington (2005)

Thankyou
Everyone has a plan till they get
punched in the mouth Mike Tyson.