Concept of Strategy

1. Chapter 1 :
The Concept of Strategy
Prof. Luciano Thomé e Castro

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www.contemporarystrategyanalysis.com
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3. The Concept of Strategy
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OUTLINE
• The role of strategy in success
• A framework for strategy analysis
• The evolution of strategic management
• What is strategy? Who do we describe it?
• How is strategy made?
• Strategy and not-for-profit organizations

4. Ingredients of Success
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Queen Elizabeth & The
House of Windsor
Lady Gaga and the Haus
of Gaga
Goals Life-long dedication to role as
head of state and reigning
monarch
Single-minded quest for
stardom through her Lady
Gaga persona
Understanding the
Environment
Alertness to the changing
political environment
Sensitive to the mood and
needs of the British people
Awareness of the new
economics of the music
business, the marketing
potential of social networking
and needs of Generation Y
Resource Appraisal Recognized lack of formal
authority and need to exploit
traditional loyalties and
informal influence
Exploited her innate
theatricality, eccentricity,
design capability and musical
skills
Implementation Resolute commitment; strong
self discipline; emphasis on
building an effective family
team supported by loyal
professionals
Devotion to living the Lady
Gaga character; wiliness to
create new images on almost
a daily basis

5. What Makes a Successful Strategy?
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The Basic Strategy Framework
Strategy as a Link Between the Firm and its Environment

7. The Evolution of Strategic Management
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8. Ryanair’s Activity System
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• Distinguishing strategy from tactics
o Strategy is the overall plan for deploying resources to establish
a favorable position
o Tactic is a scheme for a specific manoeuvre
• Characteristics of strategic decisions
o Important
o Involve a significant commitment of resources
o Not easily reversible
What is Strategy?

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Strategy: a plan, method or series of actions designed to achieve a specific goal or effect
Wordsmythe Dictionary (http://www.wordsmyth.net)
Strategy is the pattern of objectives, purposes or goals and the major policies and plans
for achieving these goals, stated in such a way as to define what business the company is
in or is to be in and the kind of company it is or is to be.
Kenneth Andrews - The Concept of Strategy (Irwin, 1971)
The determination of the long-run goals and objectives of an enterprise and the
adoption of courses of action and the allocation of resources necessary for carrying out
these goals.
Alfred Chandler - Strategy and Structure (MIT Press, 1962)
Definitions of Strategy

11. Sources of Superior Profitability
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Describing Strategy
Current Positioning; Future Direction

13. Strategy Making: Decision or Process?
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STRATEGY AS DESIGN
Planning and rational choice
STRATEGY AS PROCESS
Many decision makers
responding to multitude of
external and internal forces
INTENDED STRATEGY EMERGENT STRATEGY
REALIZED STRATEGY
Mintzberg’s Critique of Formal Strategic Planning
• The fallacy of prediction – The future is unknown
• The fallacy of detachment – Impossible to divorce formulation from
implementation
• The fallacy of formalization – Inhibits flexibility, spontaneity, intuition and
learning

14. Sources of Superior Profitability
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Strategy as Decision
Support
Improves the quality
of decision making
Improves performance
by setting high
aspirations
Strategy as
Coordination &
Communication
Strategy as Target
Creates consistency
and unity

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• Strategy analysis improves decision
processes, but doesn’t give answers
• Strategy analysis assists us to identify
and understand the main issues
• Strategy analysis helps us to manage
complexity
• Strategy analysis can enhance flexibility
and innovation by supporting learning
The Role of Analysis in Strategy Making

16. Applying Strategy Analysis to
Not-For-Profits
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