Strategic Management

EM4002
WHAT IS STRATEGY?
An introduction to strategy and
strategic management

Learning objectives for week 1

1.

2.

3.

4.

5.

Appreciate the contribution that strategy

can make to successful performance
Be aware of the origins of strategy and
how views on strategy have changed over
time
Be familiar with some of the key questions
and terminology
Understand the debates that surround
corporate values and social responsibility
Comprehend the approach used in this
course, and the textbook

Business
WHY BOTHER?

Profit and purpose

whose needs does the organization

serve? (or should it serve?)
what are those needs? (and how do
they inter-relate?)
SHAREHOLDER
STAKEHOLDER

Profit and purpose

whose needs does the organization

serve? (or should it serve?)
what are those needs? (and how do
they inter-relate?)

Exploring Corporate Strategy, Seventh Edition,

Pearson Education Ltd 2005

Profit and other motives

The Social Responsibility of Business is to

Increase its Profits Milton Friedman
a company needs profits to continue, but
profits are not what the business is for
Richard Field
There is no inherent contradiction between
improving competitive context and making
a sincere to commitment to bettering
society Michael Porter and Mark Fuller
(the simplifying assumption that)
companies operate in the interests of their
owners by seeking to maximise profits over
the long term Robert Grant

External Stakeholders
Stakeholders

Examples

Influence

Market

Suppliers, competitors, Economic/value

distributors,
creation
shareholders

Social/
political

Policy makers,
Social legitimacy
regulators, government
agencies

Technological

Key adopters,
standards agencies,
owners of competitive
technologies

Diffusion of new
technology/
adoption of
industry standards

Exploring Corporate Strategy, Seventh Edition, Pearson Education Ltd 2005

Internal stakeholders

owners
Employers bosses /
management
employees
Trade unions
pensioners
Holding companies/parent
companies

Being strategic
WHY BOTHER?

Strategy and success

Successful strategy

Effective implementation

Simple, consistent,
long-term goals

Profound understanding
of the competitive
environment

Grant, 2008: 7

Objective
appraisal of
resources

Strategy and success

Choose a company that has

recently been celebrated in the
media for its success.
Examine its performance in
relation to the four
characteristics of successful
strategies.

Meanings of strategy

Strategy as

a direction or goal
a process
a plan
a document
a choice/decision
about performance
long term

Defining strategy and strategic

management

strategy is the means by which individuals or

organizations achieve their objectives (Grant,
2008)
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 (Johnson, Scholes and
Whittington, 2006)
strategic management is that set of managerial
decisions and actions that determines the longrun performance of a corporation (Hunger and
Wheelen, 2007)

Strategic choices and

decisions

Strategic decisions are likely to

Be complex in nature
Be made in situations of uncertainty
Affect operational decisions
Require an integrated approach (both inside and
outside an organisation)
Rely on external relationships and networks
Involve considerable change
Johnson, Scholes and Whittington, 2007

the essence of strategy is making choices

Where to compete?
How to compete?
Grant, 2008

Levels of strategy
INDUSTRY
ATTRACTIVENESS

CORPORATE
STRATEGY

Which industries
should we be in?
RATE OF RETURN
ABOVE THE COST
OF CAPITAL
How do we make
money?

COMPETITIVE
ADVANTAGE
How should we
compete?

BUSINESS
STRATEGY

Grant, 2008: 20

Describing strategy

Mission
Vision, strategic intent, goal
Objective, goal
Control
Business model
Strategic capability
Strategic plans

The prescriptive strategic process (Lynch, p1)

Long term monitoring and control
Strategic
option 1

Analysis
of the
environment
Vision,
mission and
objectives

Analysis
of resources

Strategic
option 2

Choose from
options

Strategic
option 3

perhaps more options

Long term monitoring and control

Implement
chosen
options

The emergent strategic process (Lynch, p1)

Active experimenting, learning and adjusting
Analysis
of the
environment
Vision,
mission and
objectives
but not firmly
fixed
Analysis
of resources

Active experimenting, learning and adjusting

Strategy
development
and trial of
various
options

design vs emergence

Intended strategies
Emergent strategies
Realized strategies

intended
strategy

deliberate strategy

unrealized
strategy

realized
strategy

emergent
strategy

Mintzberg and Waters Strategic Mgt Journal 1985