Introduction to Strategy

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What is strategy?
Identify and examine different meanings of strategy?
What are the theoretical & practical implications of these diverse meanings?
Discuss the nature of strategy in various organisation types.
Identify different levels of strategy in organisations.
Distinguish between corporate strategy, business unit strategy, functional strategy and tactical strategy.

Published in: Business, Travel

Introduction to Strategy

  1. 1. Introduction to
  2. 2. Learning ObjectivesI.What is strategy? i. Examine the concept of strategy through the lens of the: i. Planning school ii. Configuration school iii. Positioning school iv. Emergent school (Mintzberg’s 5 Ps) ii. What are the implications of each conceptual frame to business planning in today’s global environment? © 2013 Berlin Asong. All rights reserved. 2
  3. 3. Learning ObjectivesII. Examine the nature of strategy in: i. Profit organisations ii. Not-for-profit organisations iii. Single product or service organisations iv. Multiproduct organisations v. Social media organisations with respect to influences such as organisational goals, stakeholders’ expectations, competitive environment and challenges.III. Analyse different levels of organisational strategy. i. Distinguish between corporate strategy, business unit strategy, functional strategy and tactic. ii. Evaluate the degree of strategic alignment between them, whether such alignment improves or hinders organisational effectiveness. © 2013 Berlin Asong. All rights reserved. 3
  4. 4. You are now doing a business course. Why a business course? Why do thecourse with XYZ University? How willyour grades fit with your aspirations?© 2013 Berlin Asong. All rights reserved. 4
  5. 5. Describe your life? Whatmakes your life different fromyour peers’? Is it the same as it was five years ago?© 2013 Berlin Asong. All rights reserved. 5
  6. 6. How do I become a successful person?© 2013 Berlin Asong. All rights reserved. 6
  7. 7. How do I become this person or that person?© 2013 Berlin Asong. All rights reserved. 7
  8. 8. Your answers to thepreceding questions border on the subject of strategy.© 2013 Berlin Asong. All rights reserved. 8
  9. 9. © 2013 Berlin Asong. All rights reserved. 9
  10. 10. Pause for a moment… What is strategy?© 2013 Berlin Asong. All rights reserved. 10
  11. 11. …compare your definition with the following definitions.© 2013 Berlin Asong. All rights reserved. 11
  12. 12. © 2013 Berlin Asong. All rights reserved. 12
  13. 13. Strategy is the determinationof the basic long-term goals and objectives of an organization… Alfred Chandler, 1962© 2013 Berlin Asong. All rights reserved. 13
  14. 14. …and the adoption of courses of action… Alfred Chandler, 1962© 2013 Berlin Asong. All rights reserved. 14
  15. 15. …and the allocation of resources necessary for carrying out these goals. Alfred Chandler, 1962© 2013 Berlin Asong. All rights reserved. 15
  16. 16. Managers determine the firm’s long-term goals… Strategy analysis© 2013 Berlin Asong. All rights reserved. 16
  17. 17. Taking stock of the… PESTEL forces.© 2013 Berlin Asong. All rights reserved. 17
  18. 18. © 2013 Berlin Asong. All rights reserved. 18
  19. 19. …enables managers to spot market opportunities & threats.© 2013 Berlin Asong. All rights reserved. 19
  20. 20. Managers design how to achieve the firm’s goals… Strategy formulation© 2013 Berlin Asong. All rights reserved. 20
  21. 21. Managers allocate resources for achieving the firm’s goals…Strategy execution © 2013 Berlin Asong. All rights reserved. 21
  22. 22. © 2013 Berlin Asong. All rights reserved. 22
  23. 23. Strategy is the direction & scope of an organisation over the long term…© 2013 Berlin Asong. All rights reserved. 23
  24. 24. …through its configuration ofresources and competences with the aim of fulfilling stakeholder expectations. Johnson, Scholes & Whittington; Exploring Corporate Strategyy; 2008 © 2013 Berlin Asong. All rights reserved. 24
  25. 25. Employees Investors Suppliers/distributorsConsumers OrganisationGovernment/Regulators Communities © 2013 Berlin Asong. All rights reserved. 25
  26. 26. © 2013 Berlin Asong. All rights reserved. 26
  27. 27. Strategy is about being unique…choosing a unique position. Michael E. Porter© 2013 Berlin Asong. All rights reserved. 27
  28. 28. Strategy involves performing different activities than rivals’, orperforming similar activities in a different way, defining a unique position, making clear trade-offs and tightening fit. Michael E. Porter © 2013 Berlin Asong. All rights reserved. 28
  29. 29. © 2013 Berlin Asong. All rights reserved. 29
  30. 30. Strategy is a pattern in a stream of decisions and actions. Henry Mintzberg, 1979© 2013 Berlin Asong. All rights reserved. 30
  31. 31. 2003 2013 …shaped by forces within and out of the control of managers. © 2013 Berlin Asong. All rights reserved. 31
  32. 32. © 2013 Berlin Asong. All rights reserved. 32
  33. 33. Why is there no standard meaning of strategy?© 2013 Berlin Asong. All rights reserved. 33
  34. 34. 1 It’s a vocabulary that is tritely misused. © 2013 Berlin Asong. All rights reserved. 34
  35. 35. Examples “Our strategy is to deliver top line and margin growth”.© 2013 Berlin Asong. All rights reserved.
  36. 36. Examples Our strategy is to “be the best.”© 2013 Berlin Asong. All rights reserved.
  37. 37. Examples “Our strategy is to createsustainable shareholder value by growing our operations organically and through acquisitions.” © 2013 Berlin Asong. All rights reserved.
  38. 38. Examples “Our strategy is to transform thecompany from a traditional, high-volumeproduct wholesaler, to a next generation communications products wholesaler and managed solutions provider.” © 2013 Berlin Asong. All rights reserved.
  39. 39. 2 It’s a vocabulary connotedby researchers & practitioners to satisfy an agenda. © 2013 Berlin Asong. All rights reserved. 39
  40. 40. 3 Strategy is a borrowed vocabulary… © 2013 Berlin Asong. All rights reserved.
  41. 41. Comes from the Greek word... strategia© 2013 Berlin Asong. All rights reserved.
  42. 42. …meaning art of war.© 2013 Berlin Asong. All rights reserved.
  43. 43. …which is to cleverly win a war.© 2013 Berlin Asong. All rights reserved.
  44. 44. Therefore… Strategy is the means by which an organisation achieves its goals. Berlin Asong, 2008© 2013 Berlin Asong. All rights reserved.
  45. 45. The Planning, Configuration, Positioning, & Emergent schools’ definitions are distinct parts of the same subject called… STRATEGY . Henry Mintzberg, 1979© 2013 Berlin Asong. All rights reserved. 45
  46. 46. Mintzberg’s 5Ps for Plan explaining strategy. Perspective PloyHenry Mintzberg, "Five Ps for Strategy" in The Strategy Process, pp 12-19, H Mintzbergand JB Quinn eds., 1992, Prentice-Hall International Editions, Englewood Cliffs NJ. Position Pattern © 2013 Berlin Asong. All rights reserved. 46
  47. 47. Plan Designed intentionsfor achieving articulated outcomes. © 2013 Berlin Asong. All rights reserved. 47
  48. 48. © 2013 Berlin Asong. All rights reserved. 48
  49. 49. Ploy Specific actions used to outrun the competition. © 2013 Berlin Asong. All rights reserved. 49
  50. 50. VRIN-(ORK) Framework Valuable Renewable RareResources Organisation Knowledgeable Inimitable Non- substitutable© 2013 Berlin Asong. All rights reserved. 50
  51. 51. Increasing the barrier of industry entry as did Ryanair between 2002 and 2004.ERE O’Higgins, (2005), “Ryanair : The Low Fares Airline”, Case no. 305-066-1, UniversityCollege Dublin, Ireland, p. 14 © 2013 Berlin Asong. All rights reserved. 51
  52. 52. It could be a strategic© 2013 Berlin Asong. All rights reserved. alliance. 52
  53. 53. What’s the ploy behind Google’s acquisition of Motorola Mobility (Aug 2011)?© 2013 Berlin Asong. All rights reserved. 53
  54. 54. Pattern Intended Strategy Deliberate Realized Strategy Strategy Unrealized Emergent Strategy Strategy Henry Mintzberg, 1979 © 2013 Berlin Asong. All rights reserved. 54
  55. 55. 1976 2013 A pattern in a stream of actions and decisions. © 2013 Berlin Asong. All rights reserved. 55
  56. 56. © 2013 Berlin Asong. All rights reserved. 56
  57. 57. Position A unique position that aligns the firm’s competences with its environment. © 2013 Berlin Asong. All rights reserved. 57
  58. 58. …it’s about not doing everything for everybody.© 2013 Berlin Asong. All rights reserved. 58
  59. 59. Take Apple’siPhone. There are 50 reasons todislike the iPhone yet it trumps the competition in many ways.© 2013 Berlin Asong. All rights reserved. 59
  60. 60. Perspective How the firm perceives itself and the world, and theinfluence of that on strategy. © 2013 Berlin Asong. All rights reserved. 60
  61. 61. Is Apple a software or hardware company? Does it see itself as such?© 2013 Berlin Asong. All rights reserved. 61
  62. 62. From Apple Computer toApple. Why? How does that redefine the culture and direction of the company?© 2013 Berlin Asong. All rights reserved. 62
  63. 63. Perspectivegives personality to strategy. © 2013 Berlin Asong. All rights reserved. 63
  64. 64. Features of Strategy It has a direction & scope It operates in an environment Has short-term & long-term orientations It involves seeking “competitive” advantage It could (and may not) be known in advance Configuration of resources | competences Driven by the attainment of goals It’s an ongoing process Stakeholders’ benefits Noticeable pattern© 2013 Berlin Asong. All rights reserved. 64
  65. 65. © 2013 Berlin Asong. All rights reserved. 65
  66. 66. STRATEGY IN DIFFERENTORGANISATION TYPES© 2013 Berlin Asong. All rights reserved. 66
  67. 67. © 2013 Berlin Asong. All rights reserved. 67
  68. 68. Discuss the nature of strategy in these organisations: Home Office Facebook Goldman Sachs MacMillan Cancer Support Your university or college Small family-sized firm News Corporation McDonald’s Apple Inc. L’Oreal© 2013 Berlin Asong. All rights reserved. 68
  69. 69. Use the framework below to focus your discussion: Purpose Stakeholder(s) Competitive Challenges Environment.© 2013 Berlin Asong. All rights reserved. 69
  70. 70. Public Service Organisation© 2013 Berlin Asong. All rights reserved. 70
  71. 71. Purpose Stakeholder(s) Competitive Challenges Environment.© 2013 Berlin Asong. All rights reserved. 71
  72. 72. Publicly traded organisation© 2013 Berlin Asong. All rights reserved. 72
  73. 73. Purpose Stakeholder(s) Competitive Challenges Environment.© 2013 Berlin Asong. All rights reserved. 73
  74. 74. Tourism Company© 2013 Berlin Asong. All rights reserved. 74
  75. 75. Purpose Stakeholder(s) Competitive Challenges Environment.© 2013 Berlin Asong. All rights reserved. 75
  76. 76. Charity Organisation© 2013 Berlin Asong. All rights reserved. 76
  77. 77. Purpose Stakeholder(s) Competitive Challenges Environment.© 2013 Berlin Asong. All rights reserved. 77
  78. 78. Social media Organisation© 2013 Berlin Asong. All rights reserved. 78
  79. 79. Purpose Stakeholder(s) Competitive Challenges Environment.© 2013 Berlin Asong. All rights reserved. 79
  80. 80. Multi-products organisation© 2013 Berlin Asong. All rights reserved. 80
  81. 81. Purpose Stakeholder(s) Competitive Challenges Environment.© 2013 Berlin Asong. All rights reserved. 81
  82. 82. Small family-sized firm© 2013 Berlin Asong. All rights reserved. 82
  83. 83. Purpose Stakeholder(s) Competitive Challenges Environment.© 2013 Berlin Asong. All rights reserved. 83
  84. 84. Multi-national organisation© 2013 Berlin Asong. All rights reserved. 84
  85. 85. Purpose Stakeholder(s) Competitive Challenges Environment.© 2013 Berlin Asong. All rights reserved. 85
  86. 86. © 2013 Berlin Asong. All rights reserved. 86
  87. 87. LEVELS OF STRATEGYIN ORGANISATIONS© 2013 Berlin Asong. All rights reserved. 87
  88. 88. Corporate Strategy Business Level Strategy Functional Strategy Other sub-strategies© 2013 Berlin Asong. All rights reserved. 88
  89. 89. Corporate Strategy A term used to describe the long-term plan of a large organisation.© 2013 Berlin Asong. All rights reserved. 89
  90. 90. © 2013 Berlin Asong. All rights reserved. 90
  91. 91. Characteristics of Corporate strategy: Long-term planning efforts. May affect the entire organisation. Made by top or mid-level executives. Involve huge capital investment. May take years to get results.© 2013 Berlin Asong. All rights reserved. 91
  92. 92. Examples Entering a new market Exiting a market Opening new stores Acquiring other firms Partnering with suppliers Leadership change Etc.© 2013 Berlin Asong. All rights reserved. 92
  93. 93. Ford’s 2005 Turnaround Plan Affects the Entire Organisation. Six year on, the benefits of the plan is yet to materialise fully.© 2013 Berlin Asong. All rights reserved. 93
  94. 94. Business unit Strategy A term used to describethe long-term plan of a subsidiary division of an organisation. © 2013 Berlin Asong. All rights reserved. 94
  95. 95. Corporate Strategy Business Level Strategy Functional Strategy Other sub-strategies© 2013 Berlin Asong. All rights reserved. 95
  96. 96. Corporate Strategy Business units Strategy Functional Strategy Other sub-strategies© 2013 Berlin Asong. All rights reserved. 96
  97. 97. Corporate Strategy Business units Strategy Americas Europe Asia-Africa S-Business units Strategy Operational Strategy Other sub-strategies© 2013 Berlin Asong. All rights reserved. 97
  98. 98. Characteristics of Business unit strategy: Long-termplanningefforts. Affectstheentiredivision. Madebydivisional-levelexecutives. Maybeaffectedbycorporate-levelstrategy Involvehugecapitalinvestment. Maytakeyearstogetresults.© 2013 Berlin Asong. All rights reserved. 98
  99. 99. Functional Strategy A term used to describeplans designed & carried out by functional departments of an organisation.© 2013 Berlin Asong. All rights reserved. 99
  100. 100. Marketing Finance OperationsManufacturing HRM R&DAdministration IT PR © 2013 Berlin Asong. All rights reserved. 100
  101. 101. Corporate Strategy Business Level Strategy Functional Strategy Other sub-strategies© 2013 Berlin Asong. All rights reserved. 101
  102. 102. Characteristics of Functional unit strategy: Affectstheentiredepartment&division. Short-termtolong-termplanningefforts. Madebydivisional&functionallevelexecutives. Affectedbycorporate-level&divisionalstrategies. Maybereactivetochangingbusinessenvironment. Mayinvolvehugecapitalinvestment. Takemonthstogetresults. Maybereactiveinnature.© 2013 Berlin Asong. All rights reserved. 102
  103. 103. Tactics The daily actions & decisions that drive the organisationstowards its short-term, medium & long-term goals.© 2013 Berlin Asong. All rights reserved. 103
  104. 104. Characteristics of Tactics: Dailyorweeklydecisions. Areusuallyreactiveinnature. Aimstogetimmediateresults. Takeweeksormonthstogetresults. Usually,madebymid-/lowlevelmanagers. Reactiveinnature.© 2013 Berlin Asong. All rights reserved. 104
  105. 105. Corporate level Tactics Business level Tactics Marketing Tactics HRM Tactics Production Tactics R&D Tactics © 2013 Berlin Asong. All rights reserved. 105
  106. 106. Modifyingthe packageof products.© 2013 Berlin Asong. All rights reserved. 106
  107. 107. Sales promotions© 2013 Berlin Asong. All rights reserved. 107
  108. 108. How are these tiers of strategies interrelated?© 2013 Berlin Asong. All rights reserved. 108
  109. 109. Corporate PlanBusiness units Plan Functional Plan Other sub-plans © 2013 Berlin Asong. All rights reserved. 109
  110. 110. Functional strategy SBU strategy Corporate strategy© 2013 Berlin Asong. All rights reserved. 110
  111. 111. Functional strategy Tactics SBU strategy Tactics Corporate strategy Tactics Tactics Tactics Tactics Tactics Tactics© 2013 Berlin Asong. All rights reserved. 111
  112. 112. Must these tiers ofstrategies be aligned with each other?© 2013 Berlin Asong. All rights reserved. 112
  113. 113. In principle, variousorganisational plans ought tobe aligned with one another. © 2013 Berlin Asong. All rights reserved. 113
  114. 114. …in practice, not always thecase. Misalignment can cause problems in the long-term. Browne, S. & Cuddihy, L. (2011), “Questioning the Currency of Marketing Planning Today”. Irish Marketing Review, vol. 21, no. 1/2, p. 49 © 2013 Berlin Asong. All rights reserved. 114
  115. 115. Corporate PlanBusiness units Plan Marketing Plan Other sub-plans © 2013 Berlin Asong. All rights reserved. 115
  116. 116. © 2013 Berlin Asong. All rights reserved. 116

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