Introduction to StrategyLecture 1

Tahir Rashid

What is Strategy???

http://uk.youtube.com/watch?v=HwR5ql3EBs8

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What is 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. (J& S, 2008)

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Why do some organizations succeed while others fail?

StrategyAn action managers take to achieve

one or more of an organization’s goals Strategic management process

The process by which managers choose a set of strategies that will allow a company to achieve superior performance

Characteristics of Strategic Decisions Long-term direction Scope of an organisation’s activities Competitive advantage Strategic fit with business environment Organisation resources and competences Values and expectations of power players

Dynamic Business environment

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http://www.youtube.com/watch?v=sDyqhcy1L-0&NR=1

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Levels of Strategic Management

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Strategic Managers

General managersResponsible for overall company

performance or divisional performance Functional managers

Responsible for supervising a particular task or operation

Vocabulary of Strategy

Mission Overriding purpose

Vision Desired future state

Goal General statement of aim or purpose

Objective Possible quantification or precise statement

of the goal- SMART

Vocabulary of Strategy

Strategic capability Resources, activities and processes

Strategies Long term direction

Business model Showing the flow of product, service and

information between parties Control

Monitoring of actions

Vocabulary of Strategy:

Vision/Mission Nokia-Connecting is about helping people feel close

to what matters. Wherever, whenever, Nokia believes in communicating, sharing, and in the awesome potential in connecting the 2 billion who do with the 4 billion who don’t.

ASDA-To make goods and services more affordable for everyone.

H& M- Our business concept is to offer fashion and quality at the best price

Ford- To become the worlds leading consumer company for automotive products and services

Vocabulary of Strategy:

Goals

H&M- “Our goal is to ensure that business is operated with the minimum use of resources and with as little impact on the environment as possible”

Objectives H&M-To increase the number of stores by

10-15% each year whilst maintaining increased sales in the existing stores

The Exploring Corporate Strategy Model

(J& S, 2008)

What is Strategic Position?

Strategic position is concerned with the impact on strategy of the external

environment, an organisation’s strategic capability and the expectations and

influence of stakeholders.

Strategic Position

The Strategic Position

Environment

Culture

PurposeCapability

(J& S, 2008)

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Strategic analysis

Information is required if Strategic decisions are to be made.

Must determine current situation and strategy Must determine what change, if any, is

desirable Who are we? Are we well? And who are our

competitors?

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External and Internal Analysis External analysis

Identify strategic opportunities and threats• Industry environment• National environment• Socioeconomic or macroenvironment

Internal analysis Identify organizational strengths and

weaknesses Sources of competitive advantage: superior

efficiency, quality, innovation, and responsiveness to customers

Strategic Awareness allows for the management of Strategic Change

Strategic Change

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Strategic Awareness

What changes are occurring in the environment? What are the resources and competencies available? Who affects the organisations i.e. the stakeholders The main aim of the analysis is to form a view of the key

influences on the present and the future A lack of awareness can result in:

Lost opportunities Inability to react and respond effectively

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SWOT Analysis and the Business Model

Identifying strategies to align a company’s resources and capabilities to its environment in order to create and sustain a competitive advantageFunctional-level strategyBusiness-level strategyGlobal strategyCorporate-level strategy

What are Strategic Choices?

Strategic choices involve understanding the underlying bases

for future strategy at both the business unit and corporate levels

and the options for developing strategy in terms of both the directions

and methods of development.

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Strategic Choice

Choice of suitable courses of action based on interpretation of analysis

restatement of mission and objectives generation of strategic options evaluation and selection of strategic options Logical and incremental Entrepreneurial opportunism

Strategic Choices

Strategic Choices

Business-level

Innovation

InternationalCorporate-

level

Evaluation

(J& S, 2008)

What is Strategy in Action?

Strategy in action is concerned with ensuring that strategies are working in practice.

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Strategy Implementation

After choosing strategies, managers must put them into action.

The feedback loop—strategy is ongoing. Managers must monitor and reevaluate for the next round of strategy formulation and implementation.

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Strategic Implementation

who is responsible?-leadership and communication

adaptations of systems? resource planning and logistics Structure

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Monitoring & Evaluation

Ongoing appraisal What has been successful? What needs to be changed/adjusted? Ability to be Flexible and willingness to

change

Strategy in Action

Strategy in Action

Processes

Changing

ResourcingStructuring

Practice

(J& S, 2008)

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The Traditional Strategic Management Process

Strategic Analysis

Strategy Creation & Choice

Strategy Implementation

Evaluation

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Conclusion

A strategy is an action a company takes to attain one or more of its goals

Formal strategic planning models stress that an organisations strategy is the outcome of a rational planning process

Strategy can emerge from deep within an organisation

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Conclusion

Strategic planning often fails because top management do not plan for uncertainty and planners may be out of touch with operational reality

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References

Johnson, G & Scholes, K., Whittington, R. (2008) Exploring Corporate Strategy, 8th ed, Pearson Education

Hill C. & Jones G. (2004) Strategic Management Theory New York Houghton Mifflin