2. LearningOutcomes
Explain the meaning of strategy
Recognise the value of strategic
management
Acknowledge different elements of
strategy and relationship between
them
2
8. Strategy
8
Every strategy typically includes the following :
- Vision
- Objectives
- Analysis
- Decision making
- Planning
- Change
- Learning
- Action
- Revision
Strategy rarely takes a form of a linear predictable process or a plan
10. What do scholars say?
10
1963 Alfred D. Chandler ‘the determination of the long-run goals and objectives of an
enterprise and the adoption of courses of action and the allocation of resource necessary
for carrying out these goals’
1996 Michael Porter ‘Competitive strategy is about being different. It means
deliberately choosing a different set of activities to deliver a unique mix of value’
2008 Johnson et al [your textbook] ‘the long-term direction of an organisation’
2007 Henry Mintzberg ‘a pattern in a stream of decisions’
2020 MacKay et al [your other textbook] ‘maintaining a balance between ends, ways,
and means of surviving and thriving – providing a framework for making choices and trade-
offs; and identifying resources, methods, actions, and value-creating objectives that sustain
the organization over time within an ever-changing context’
11. Why so many definitions?
11
1.Theories are based on observations of real practices, however…
- organisations vary (large corporations, enterprises, SMEs)
- contexts differ (e.g., Porter’s 5 forces in the 80s and now)
- organisations change (structures, leadership styles, globalisation effects)
2. Discipline of strategy
- long history – begins with The Art ofWar by SunTzu written 2500 years ago
- Influence of economics, psychology, sociology, political science
3.Types of theory
- prescriptive: how things should be done (Porter’s
positioning, RBV)
- descriptive: how things are actually done (strategy
as practice)
- mixed (Mintzberg’s school)
Mintzber & Lampel (1999)
It is essential to stay critical, think of implications
and consider more than one theory
12. Why strategy?
12
Value of strategy:
- providing performance benefits that outweigh costs
- achieving desirable outcomes
- creating a roadmap to success
Functions of strategy:
- framework for managerial decision making
- blueprint for resource deployment
- social and political tool to manage and engage stakeholders
Strategic management is the discipline providing
knowledge of strategy for a business context
13. Strategy purpose
13
Strategy statements:
Mission statement: clarity about what the organisation is
fundamentally there to do – What business are we in? How do we
make a difference?Why do we do this?
Vision statement: the future the organisation seeks to create –
What do we want to achieve?
Values: the core principles guiding the organisation’s strategy and
its methods
Objectives: statements of specific outcomes that are to be achieved
15. Strategy failure
15
If a company collapsed, is it because it did not have a strategy?
50-90% of strategic initiatives fail
Or is it because its strategy was not good enough?
Candido and Santos (2015)
17. How to create a good strategy?
17
we can consider the following questions:
• who are we?
• where do we want to go?
• how are we going to get there?
One ideal solution that would fit everyone does NOT exist, but…
a successful strategy is:
• realistic
• flexible
• unique
success = strategy formulation + strategy implementation
strategic fit
alignment
competitive advantage
19. The 5 major elements of strategy
19
Arenas: where will we be active?
market segments, product categorises, geographic areas, core technologies,
value-creation stages
Vehicles: how will we get there?
internal development, JV, licensing, acquisition
Differentiators: how will we win?
image, price, styling, customisation, product reliability
Staging: what will be our speed and sequence of moves?
speed of expansion, sequence of initiatives
Economic logic: how will we obtain our returns?
through lowest cost or premium price?
Hambrick and Fredrickson (2001)
20. Structure of a good strategy
20
1. A diagnosis: an explanation of the nature of the challenge.
2. A guiding policy: an overall approach chosen to cope with or
overcome the obstacles identified in the diagnosis.
3. Coherent actions: steps that are coordinated with one
another to support the accomplishment of the guiding policy.
Rumelt (2011)
22. Strategy in organisations
22
• Corporate-level strategy is concerned with the overall scope of an
organisation and how value is added to the constituent business units
(e.g., diversification, internationalisation)
• Business-level strategy is concerned with the way a business seeks to
compete successfully in its particular market (e.g., cost-leadership,
differentiation, hybrid)
• Functional (operational strategy) is concerned with how different parts
of the organisation deliver the strategy in terms of managing resources,
processes and people (e.g. marketing strategy, HRM strategy, financial
strategy, IT strategy)
Levels of strategy:
The primary focus of this module is business- and
corporate-level strategies
23. Strategy and decision making
23
Corporate
Strategy
Business
Strategy
Functional Strategy
strategic decisions factors
What business to be in?
What to acquire?
Where to compete?
Global factors
Governance structure
Culture and ethics
How to meet customer needs?
How to create value?
How to compete?
Industry dynamics
Competitors
Resources
How to manage resources?
How to organise functions?
How to operate?
Systems & structures
Roles & responsibilities
Performance
24. Who can be a strategist?
24
Insiders or outsiders:
o Organisational members
o External advisors (consultants)
o Others
Organisational level:
o Top management
o Middle management
Role of insiders
Top management: strategic planners
o Information and analysis
o Managers of strategy process
Middle managers: implementors
o Possess information
o Strategy sense-makers and interpreters
o Champions of ideas
Role of outsiders:
o Access to information
o Collaboration
o Knowledge transfer
25. Lecture summary
25
• Strategy is a complex multidimensional process that is rarely linear and
should not be narrowed down to a plan.
• Despite differences in defining strategy and its success factors in research
literature, key components of strategy are often associated with
objectives, decision making, analysis and organisation.
• Strategy provides framework for managerial decision making, offers a
blueprint for resource deployment and can be used as a social and political
tool for stakeholder management.A good strategy helps to achieve
superior performance.
• Strategy failure can be a result of various issues associated with strategy
formulation, implementation, or both.
• Strategy is communicated through its statements that translate the core
purpose of an organisation.
26. References
26
Candido and Santos (2015). Strategy ImplementationWhat is the failure
rate? Journal of Management and Organization, 21(2), 237-262.
Hambrick, D.C. & Fredrickson, J.W. (2001).Are you sure you have a
strategy? Academy of Management Executive, 15(4): 48-59
Mintzberg, H. & Lampel, J. (1999). Reflecting on the strategy process.
Sloan Management Review, 40(3), 21-30.
Rumelt, R. (2011). Perils of bad strategy. McKinsey Quarterly
