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Strategic thingking 2020.pptx
- 1. Strategic thinking by PhamHung Cuong 5/14/2023 1
- 2. Objectives O Demonstrate knowledgeof the specific tools and frameworks of strategy as it relates to the current competitive strategy of an organization and its operating environment O Select and apply strategy tools and frameworks with which to produce an analysis of the strategic issues facing an organization and an evaluation of the appropriateness of its current strategy. 5/14/2023 2
- 3. References Essential Textbook O Foundationsof Strategy, 2012, Robert M Grant & Judith Jordan. Wiley Additional Texts O Exploring Strategy, 9th edition, 2011, Gerry Johnson, Richard Whittington, Kevan Scholes, Prentice Hall O Good Strategy Bad Strategy. The Difference and Why it Matters. 2011. Richard Rumelt. Palgrave O Understanding Michael Porter. Essential Guide to Competition and Strategy. 2012. Joan Magretta. Harvard Business School Press O Playing to win. How Strategy Really Works. 2013. A.G. Lafley and Roger L. Martin. Harvard Business Review Press. 5/14/2023 3
- 4. Evaluation O Attendance: 10% OMid-term exam: 30% O Final paper: 60% 5/14/2023 4
- 5. Rules required insideclass Do not lay your head on the desk, fall asleep Do not do private things Keep your mobile phones silent Raise questions if you do not understand 5/14/2023 5
- 6. Strategic thinking by PhamHung Cuong Chapter 1 What is strategy? 5/14/2023 6
- 7. Questions 1. What isstrategy? 2. What are roles of strategy in success? 3. How do you describe a firm’s strategy? 4. Whose interests should be prioritized? 5. What are considerations for analysing competition? 5/14/2023 7
- 8. What is strategy? OSome elements/characteristics O Long term O Competitive advantage O Planning O Distinctiveness O “Big” decisions OSignificant resources OImportant ONot easily reversible 5/14/2023 8
- 9. What is strategy? OWhere to compete? O Which businesses should we be in? O A corporate strategy decision O How to compete? O How do we create / build / defend a competitive advantage? O A competitive strategy / business strategy decision O Interlinked but, in principle, distinct 5/14/2023 9
- 10. Strategy is aboutchoice 5/14/2023 10
- 11. The role ofstrategy in success Common elements in successful strategies Successful Strategy Simple, consistent, long- term goals Profound understanding of the competitive environment Objective appraisal of resources Effective Implementation 5/14/2023 11
- 12. Strategy today O Whatis strategy? RATE OF RETURN ABOVE THE COST OF CAPITAL How do we make money? INDUSTRY ATRACTIVENESS Which industries should we be in? COMPETITIVE ADVANTAGE How should we compete? CORPORA TE STRATEGY BUSINESS STRATEGY 5/14/2023 12
- 13. How do wedescribe a firm’s strategy? Static Where are we competing? How are we competing? Dynamic What do we want to become? What do we want to achieve? How will we get here? 5/14/2023 13
- 14. How do weidentify a firm’s strategy? O The mission statement – ‘Why we exist?’ O A statement of principles and values – ‘What we believe in and how we will behave’ O The vision statement – ‘What we want to be’ O The strategy statement – ‘What our competitive game plan will be’ O Where is the company investing its money? O What technologies is the company developing? O What new products have been released? O Intended vs. released vs. emergent strategy 5/14/2023 14
- 15. Whose interests shouldbe prioritised? O Shareholders vs. stakeholders O Profit and purpose O The debate over CSR 5/14/2023 15
- 16. Developing analytical tools •The foundations of mainstream strategy lie in analysis of competition and firms’ quest to outperform their rivals. • Four key considerations: - Competition - The market for corporate control - Convergence of stakeholder interests - Simplicity 5/14/2023 16
- 17. Strategy analysis THE FIRM •Goalsand values •Resources and capabilities •Structure and systems THE INDUSTRY ENVIRONMENT •Competitors •Customers •Suppliers STRATEGY 5/14/2023 17
- 18. What is strategy? Aplan to achieve our goals. Exists at multiple levels – all linked. Helps us make wise choices as conditions change. As conditions change, the plan itself evolves. 5/14/2023 18
- 19. Discussion Choose a specificcompany and: - Make short introduction about this company. - Analyse its biggest competitor. 5/14/2023 19
- 20. Strategic thinking by PhamHung Cuong Chapter 2 What is Strategic Thinking? 5/14/2023 20
- 21. Questions 1. What isStrategic thinking? 2. What are different between strategic thinking and strategic planning? 3. What are different between reactive future approach and proactive future approach? 4. How do you get started with strategic thinking? 5. What is aim of strategic thinking? 5/14/2023 21
- 22. What is strategicthinking? • “At this point, there is no generally accepted definition of the term, no common agreement as to its role or importance, and no standardized list of key competencies of strategic thinkers.” Wikipedia 5/14/2023 22
- 23. What is strategicthinking? Strategic thinking is learned, not innate. Strategic thinking cannot be taught. 5/14/2023 23
- 24. What is strategicthinking? The ability to see what is and what could be – and make choices that lead to desired outcomes. Analysis Vision/Goals Seeing systems 5/14/2023 24
- 25. What’s your definition ofstrategic thinking? 5/14/2023 25
- 26. From the literature •“The way in which people in an organization think about, assess, view and create the future for themselves and their associates. It is more than responding to both day-to-day as well as long-term problems, opportunities and new realities; it is creating tomorrow. It is not reactive, but proactive… Strategic thinking always involves change, and often, profound personal change.” Kaufman et al (2003: 40-41) • A “cognitive process … that precedes strategic planning or action, whereby an individual contemplates the future development of the organisation whilst considering its attributes, its past and present and the external realities within which it operates.” Tavakoli and Lawton (2005: 6) 5/14/2023 26
- 27. Strategic thinking isidentifying, imagining and understanding possible future operating environments for your organization. You can use that knowledge to expand your thinking about your potential strategic options… 5/14/2023 27
- 28. …to position yourorganization effectively in the external environment, 5/14/2023 28
- 29. …in order tomake better informed decisions about action to take today. 5/14/2023 29
- 30. • Thinking about thefuture is using your innate foresight capacity. • In a strategy context, for an organisation, it’s about building a strategic foresight capacity. 5/14/2023 30
- 31. Foresight? • The abilityto take a forward view and use the insights gained in organisationally useful ways. 5/14/2023 31
- 32. Current approaches to strategicthinking Traditional Trying Futures Ready 5/14/2023 32
- 33.
- 34. Strategic Thinking StrategicPlanning Only the shape of the future can be predicted Future is predictable and specifiable in detail Relies on self-reference – a sense of strategic intent and purpose embedded in the minds of managers that guides their choices Asserts control through measurement Requires that managers have an understanding of the larger system Assumes that the manager below need only to know his or her own role well Sees strategy and change as inescapably linked and assumes that finding new strategic options and implementing them successfully is harder and more important than evaluating them Assumes that the challenge of setting strategic direction is primarily analytic Sees the planning process itself as a critical value-adding element Focus on the creation of the plan as the ultimate object 5/14/2023 34
- 35. Purpose Thought Process StrategicThinking Discovernovel, imaginative strategies that can re-write the rules of the competitive game; and to envision potential futures; significantly different from the present. Synthetic Divergent Creative Strategic Planning Operationalise strategies developed through strategic thinking, and to support the strategic thinking process. Analytical Convergent Conventional 5/14/2023 35
- 36. • Longterm Uncertain Divergent •Incomplete • Beyond linear • Disrupting alignment 5/14/2023 36
- 37. • Short term •Logical • Convergent • Pragmatic • Deductive • Creating • Alignment 5/14/2023 37
- 38. • Current strategyprocesses tend to focus on the plan as the major outcome, rather than a shared understanding of your organization's preferred future to inform action today. 5/14/2023 38
- 39.
- 40. Thinktomorrow is going tobe more of today 5/14/2023 40
- 41.
- 42. Usually don’t explore thelong term future 5/14/2023 42
- 43.
- 44.
- 45. Downplay or dismissstaff beliefs, hopes and fears about the future 5/14/2023 45
- 46. Mintzberg (1994) • “Strategicplanning often spoils strategic thinking, causing managers to confuse real vision with the manipulation of numbers…”, and that “…the most successful strategies are visions, not plans”. Strategic planning then is better characterised as “strategic programming, the articulation and elaboration of strategies, or visions, that already exist”. 5/14/2023 46
- 47.
- 48. Liedtka (1998) • Traditionalstrategic planning processes as having “choked initiative and favoured incremental over substantive change. They have emphasized analytics and extrapolation rather than creativity and invention….They have lulled us into complacency with their comforting illusion of certainty in what is in reality a hopelessly uncertain world.” 5/14/2023 48
- 49. But…Lietdka (1998) • “Thereis little in the notion of planning itself that undermines strategic thinking; rather, it is the processes through which we have operationalized planning, and the assumptions that we have made about how and who ought to plan, that have gotten us into trouble. We have designed planning systems where participation in formulation is limited to senior management, while the rest of the organization waits to implement.” 5/14/2023 49
- 50. • Current strategyprocesses live in the pragmatic futures realm. • Working within the existing paradigm, making it better, but not challenging it. • We call it „strategic planning‟. • Beyond strategic planning – to strategy development and implementation. • Moving into the progressive futures realm, where we challenge the current paradigm and re-interpret how we do business to meet the challenges of the future 5/14/2023 50
- 51. Moving from pragmaticto progressive approaches requires a strong focus on building a high quality strategic thinking capacity in your organisation. 5/14/2023 51
- 52. We can't solve problemsbyusing the same kind of thinking we used when we created them. 5/14/2023 52
- 53. Reactive Future ApproachProactive Future Approach What has happened? What is happening? What caused it to happen? What is driving the trends that will influence our future? What are our alternative futures? How do we respond? What ought we do today? What would be the long term consequences of our actions today be? What will we do? What will we do? After the event Anticipating the event 5/14/2023 53
- 54. The gap betweenreactive and proactive approaches is bridged by making time for strategic thinking. 5/14/2023 54
- 55. So how dowe get startedwith strategic thinking? 5/14/2023 55
- 56. Inputs Analysis Interpretation “what is happeningout there?” “what seems to be happening?” “what‟s really happening?” Prospection “what might happen?” Outputs “what might we need to do?” Strategy “what will we do?” “how will we do it?” Foresight 5/14/2023 56
- 57. Plan and Do Thinking Envision a preferred future Identify Driversof Change External Quantitative Tangible S e en Internal Qualitative Intangible Unseen Planning Critique Drivers for Relevance Imagine what’s possible 5/14/2023 57
- 58. • The aimof strategic thinking is to understand - as best we can - the long term context of our decisions today so that we make those decisions as wise and as robust as is possible. 5/14/2023 58
- 59. Discussion Choose a specificcompany and: - Make short introduction about this company. - How does this company get started with strategic thinking? 5/14/2023 59
- 60. Strategic thinking by PhamHung Cuong Chapter 3 Some strategic thinking tools 5/14/2023 60
- 61. Questions 1. What arethe factors of internal environmental scanning? 2. What are the factors of external environmental scanning? 3. What is the biggest challenge to strategic thinking? 4. What are attributes of strategic thinking? 5. What are factors of strategic thinking? 5/14/2023 61
- 62. Inputs Analysis Interpretation “what is happeningout there?” “what seems to be happening?” “what‟s really happening?” Prospection “what might happen?” Outputs “what might we need to do?” Strategy “what will we do?” “how will we do it?” Foresight 5/14/2023 62
- 63. Inputs • Environmental Scanning • Providesthe raw information to inform your strategic thinking. • Both internal and external to your organisation. 5/14/2023 63
- 64. Where to scan Global, multiple dispersed cases,trends and megatrends Newspapers, magazines,websites, journals,blogs Government Institutions LateMajority Numberof cases; degreeof Scientists,artists, radicals,mysticsMainstream Laggards public awareness Fewcases, local focus EmergingIssues Innovators LateAdopters Trends Early adopters Today Time Time from emerging issue to mainstream varies between 18-36 years 5/14/2023 64
- 65. Analysis • Looking forpatterns and themes relevant for your organisation. • Trend analysis • Emerging Issues Analysis • Forecasting • Delphi 5/14/2023 65
- 66. Interpretation • System structureand dynamics – whose beliefs are dominant? • What‟s driving the trends? And what does it mean for us? • How will they develop? • Futures Wheel • Cross Impact Analysis • Causal Layered Analysis 5/14/2023 66
- 67. Prospection • How willthe trends evolve over the next 10-20 years? • How might we respond? What are our options? • Scenario planning • Visioning • Backcasting 5/14/2023 67
- 68.
- 69. The biggest challenge tostrategic thinking 5/14/2023 69
- 70.
- 71. • The pressuresof his job drive the manager to be superficial in his actions - to overload himself with work, encourage interruption, respond quickly to every stimulus, seek the tangible and avoid the abstract, makes decisions in small increments, and do everything abruptly. Henry Mintzberg. The Manager‟s Job: Folklore or Fact, HBR, 1975 5/14/2023 71
- 72. • “Managers whoget caught in the trap of overwhelming demands become prisoners of routine. They do not have time to notice opportunities. Their habituated work prevents them from taking the first necessary step toward harnessing willpower: developing the capacity to dream an idea into existence and transforming it into a concrete existence.” Heike Bruch & Sumantra Ghoshal, A Bias for Action: How Effective Managers Harness Their Willpower, Achieve Results, and Stop Wasting Time, HBSP, 2004 5/14/2023 72
- 73. To think strategically, youhave to move beyond busy. 5/14/2023 73
- 74.
- 75. • Scan often, scanwell 5/14/2023 75
- 76. • Invest more timein doing this… 5/14/2023 76
- 77. • …as well asthis. 5/14/2023 77
- 78. Think long term,act today 5/14/2023 78
- 79.
- 80. What this means Individual Consciousness Individuals inAction Critical Mass of Staff Strategic Foresight Capacity Values/Beliefs New models New processes 5/14/2023 80
- 81. We think strategicallyto avoid havingthis perspective on the future… 5/14/2023 81
- 82. Key questions thatcan help O What is our goal/purpose? O What key problems, causes and solutions do we exist to address? O What are past, current and possible future trends? O What are the key opportunities and threats we face? (Where is greatest leverage? Where is greatest risk?) O What will it take? What are possible course of action? O What are the implications of these choices? O What criteria will we use to choose and evaluate a course of action? O How does our plan intersect with other goals/plans? 5/14/2023 82
- 83. What is strategicthinking? O Reviewing the literature related to strategic management, points out that there is no agreement on definition of strategic thinking. A number of authors have used strategic thinking interchangeably with other concepts such as strategic planning or strategic management (Monnavarian et al, 2011). 5/14/2023 83
- 84. What is strategicthinking O Strategic thinking has been investigated in both the management and psychological literature with the management literature concentrating on the process of strategic thinking and making strategic decisions (Mintzberg, 1994; Drejer et al., 2005) whereas the psychological literature has concentrated on factors affecting strategic thinking and decision making (Hambrick and Mason, 2001; Pant, 1998). 5/14/2023 84
- 85. What is strategicthinking? O According to the management approach strategic thinking involves two distinct thought processes: planning and thinking. Planning concerns analysis, this involves establishing and formalizing systems and procedures whereas thinking involves synthesis encouraging intuitive, innovative and creative thinking at all levels of the organization (Mintzberg, 1994). 5/14/2023 85
- 86. What is strategicthinking? O Drejer et al., (2005) define it as “thinking about possible scenarios and strategy in a creative manner that is relatively free from existing boundaries”. O Bonn, (2005) defines strategic thinking as “a way of solving strategic problems that combine a rational and convergent approach with creative and divergent thought processes”. 5/14/2023 86
- 87. What is strategicthinking? O Garratt (1995) defined strategic thinking as a process by which senior executives ‘‘can rise above the daily managerial processes and crises’’ to gain a different perspective of the organization and its changing environments. 5/14/2023 87
- 88. What is strategicthinking? O Porter (1987) states that strategic thinking is “the glue that holds together the many systems and initiatives within the company” he also views good strategic planning as a contributor to strategic thinking. O Heracleous (1998) suggests that strategic thinking and strategic planning are interconnected and equally significant for effective strategic management. Thompson and Strickland (1999) stress that a well- designed strategic management system facilitates strategic thinking within the organization. 5/14/2023 88
- 89. Conclusion O From allthe previous definitions it can be concluded that strategic thinking differs from strategic management and strategic planning, from the researcher point of view strategic thinking can be defined as: Engaging of the mind in the concepts and theories of strategic management and landing them on the reality of the organization to achieve its long run goals. 5/14/2023 89
- 90. Strategic management, Strategic planningand Strategic thinking O Nowadays, Strategic Management is the father of all branches of knowledge related to strategy including strategic planning and strategic thinking O Strategic Management can be defined as: a set of managerial decisions and actions which determines the performance of the organization in the long run, it includes the following phases : environmental scanning, strategy formulation, strategy implementation, and strategy monitoring, controlling and evaluation (Wheelen and Hunger, 2012) 5/14/2023 90
- 91. Strategic management, Strategic planningand Strategic thinking • Strategic planning can be considered as strategic planning and can be defined as: the development of long-range plans for the effective management of environmental opportunities and threats in light of organizational strengths and weaknesses (SWOT) (David, 2011; and Wheelen and Hunger, 2012) • 5/14/2023 91
- 92. Strategic management, Strategic planningand Strategic thinking O Mintzberg (1994) stated that ‘‘strategic planning is not strategic thinking’’ (p. 107) and suggested a clear distinction between strategic thinking and strategic planning. In his view, strategic planning focuses on analysis and deals with the articulation, elaboration and formalization of existing strategies. 5/14/2023 92
- 93. Strategic management, Strategic planningand Strategic thinking O Strategic thinking, on the other hand, emphasizes synthesis, using intuition and creativity to create ‘‘an integrated perspective of the enterprise’’. He argued that each term focuses on a different stage in the strategy development process. In his view, strategic planning is a process that should occur after strategic thinking (Monnavarian et al, 2011). 5/14/2023 93
- 94. Strategic management, Strategic planningand Strategic thinking O From the researcher’s point of view strategic thinking is a process that should occur in all strategic management phases 5/14/2023 94
- 95.
- 96. Attributes of strategicthinking Liedtka (1998) posits five major attributes of strategic thinking: O 1. Strategic thinking reflects a systems or holistic view that appreciates how the different parts of the organization influence and affect each other as well as their different environments. O 2. Strategic thinking embodies a focus on intent. In contrast with the traditional strategic planning approach that focuses on creating a ‘‘fit’’ between existing resources and emerging opportunities, strategic intent intentionally creates a substantial ‘‘misfit’’between these. 5/14/2023 96
- 97. Attributes of strategicthinking O 3. Strategic thinking involves thinking in time. Strategic thinkers understand the interconnectivity of past, present and future. O 4. Fourth, it is hypothesis driven. Hypothesis generating and testing is central to strategic thinking activities. By asking the creative question ‘‘What if?’’ followed by the critical question ‘‘If . . . then . . .?’’ strategic thinking spans the analytic-intuitive dichotomy that Mintzberg refers to in his definition of thinking as synthesis and planning as analysis. 5/14/2023 97
- 98. Attributes of strategicthinking O 5. Strategic thinking invokes the capacity to be intelligently opportunistic, to recognize and take advantage of newly emerging opportunities O Napier and Albert (1990) referring to system thinking, thinking about long-term profits rather than short-term benefits, identifying repetitive patterns in the events, choosing a person responsible for strategic thinking, making use of past events to predict future, using past knowledge to prepare appropriate model for decision making. 5/14/2023 98
- 99. Attributes of strategicthinking O Bonn (2005) emphasizing on process approach, using cognitive concepts, ability in finding different solutions for specific problems, interaction among strategies at different levels and between different units of organizations, understanding the dynamics of internal and external environment, understanding the situation of organizations within bigger systems, visualizing future goals and most advantageous future, knowing new competitive areas, capability of integrating different ideas into a new and fresh idea. 5/14/2023 99
- 100. Strategic thinking factors OCreativity and attention to the past, the present and the future O Organic structure organization O Environment analysis O Conflict management O Awareness of the situation O Futuristic approach O Intelligence O Diversified mind pattern O Accountability O Organizational climate and coordination O Systematic thinking O Process approach 5/14/2023 100
- 101. Peter Drucker’s strategicthinking O Drucker tended to start by asking some basic questions, which, despite their simplicity, are often overlooked. Every senior manager, he said, should be constantly asking ‘Do we want to be in this business? Would we choose to enter this sector now? Who are our customers? Where are they? What do they want?’ In fact, all three of his key strategies start with questioning. 5/14/2023 101
- 102. Peter Drucker’s strategicthinking Zand phrases them like this: O 1. Ask penetrating questions of people who understand current and future realities so they can generate and evaluate a creative set of strategic options. O 2. Reframe the prevailing few in simple understandable terms that enable a review of priorities and an adjustment of actions to better adapt to the competitive environment. O 3. Question the assumptions underlying current views. Consider alternative assumptions and diligently probe their context and strategic implications 5/14/2023 102
- 103. Strategic thinking areasof research O A Review on Leader's role in Creating a Culture that Encourages Strategic Thinking. O Improving strategic thinking: a multilevel approach. O Leadership practices that encourage strategic thinking O Strategic thinking and decision making. O Strategic thinking and knowledge management, O The measurement of strategic thinking type for top managers 5/14/2023 103
- 104. We can benefit from learning aboutthings that LIMIT strategic thinking 5/14/2023 104
- 105. Lack of sharedanalysis can limit strategic thinking shared vision/goals historical analysis power analysis Problems and causes opportunities and threats 5/14/2023 105
- 106. Power relationships canlimit strategic thinking More power Less Power 5/14/2023 106
- 107. Over-emphasis on onlythe long- term or immediate challenges Immediate only Long term only 5/14/2023 107
- 108. Anchoring can limitstrategic thinking O When faced with a choice, we may ANCHOR on a certain good outcome we think will occur. O It can be hard to remain open to other options or implications. O Anchoring is often the result of over-the-top urgency to “just do something.” 5/14/2023 108
- 109. Bias can limitstrategic thinking O We all have biases. O We select for information that supports our viewpoint and experiences. O We tend to disregard information that doesn’t fit our beliefs/values. 5/14/2023 109
- 110. What can I/wedo? SELF-REFLECTION O What are my own strengths and weaknesses related to strategic thinking? O What adjustments can I make? How might I improve my own strategic thinking skills and habits? O How can I provide more strategic leadership – regardless of the position I hold? 5/14/2023 110
- 111. What can I/wedo? GROUP REFLECTION O How can we (continue to) develop a shared analysis among the staff and board? O How can we (continue to) nurture a staff culture that promotes strategic thinking? O What skills/habits can we learn to improve our ability to think and work strategically as a staff team? 5/14/2023 111
- 112. Discussion Choose a specificcompany and: - Make short introduction about this company. - What are the factors of this company for environmental scanning? 5/14/2023 112
- 113. Strategic thinking by PhamHung Cuong Chapter 4 Industry trends and analysis 5/14/2023 113
- 114. Questions 1. What arethe main elements of environment? 2. What are the main elements in the basics? 3. What is the PESTEL analysis? 4. What are key issues in industry analysis? 5. What are determinants of the industry profit? 5/14/2023 114
- 115. Where to start? OAnalysis O Understand existing situation O Forecast likely / possible change O Intended, deliberate, prescriptive model 5/14/2023 115
- 116. Analysing the mainelements of the environment Environment Resources Purpose Options Options Choice Options 5/14/2023 116
- 117. Analysing the strategicenvironment The nine basic analytical tools Company or public sector organisation Environment basics Degree of turbulence PESTEL analysis Industry life cycle Key factors for success Five Forces analysis Four Links analysis Competitor analysis Customer analysis 5/14/2023 117
- 118. Available tools/models O Thebasics – market size, growth and share O Environmental character – turbulence O PESTEL O Scenario planning O Industry life cycle O Key factors for success O Five Forces Analysis O Four Links Analysis O Competitors O Customer analysis 5/14/2023 118
- 119. The basics O Marketsize O How big is a big company going to be in this industry? O Growth O Is it fast growing, maturing, declining? O Are there one / several / many PLC’s here? O What are the market shares of the key competitors? Our market share? 5/14/2023 119
- 120. The basics (cont) OFor strategy: O Often wider market or industry O Can’t neglect the details O Raises questions O How many markets / segments do we / should we compete in? O How do the markets / segments connect? O Does competing in one / some help us extend into others? 5/14/2023 120
- 121. PESTEL analysis O Political OEconomic O Socio-cultural O Technological O Environmental O Legal 5/14/2023 121
- 122. From environmental to industryanalysis THE INDUSTRY ENVIRONMENT The national/internat ional economy Technology Government and politics Social structure Demographic structure The natural environment 5/14/2023 122
- 123. The determinants ofindustry profit O Consumer surplus and producer surplus O Determinants to the firm profit: - The value of the product to customers - The intensity of competition - The bargaining power of the producers relative to their suppliers 5/14/2023 123
- 124. Analysing industry attractiveness Porter’sFive Forces 5/14/2023 124
- 125. Applying industry analysis •Forecasting industry profitability : - How easy is it to enter the industry? (What are the barriers?) - How powerful are the suppliers and why? - How powerful are the buyers and why? - Are the substitutes a strong alternative? - Are there many competitors? Is it easy to differentiate? O Positioning the company O Strategies to alter industry structure 5/14/2023 125
- 126. How do theforces interact on each other? How do they affect profitability? 5/14/2023 126
- 127. How do theforces interact on each other? How do they affect profitability? 5/14/2023 127
- 128. Create two futurescenarios Scenario one What might change the forces? How might they change? Scenario two What might change the forces? How might they change? How might these different scenarios affect the industry 5/14/2023 128
- 129. Key issues inindustry analysis O Defining the industry O Choosing an appropriate level of analysis - Segmentation: 1. identify segmentation variables 2. construct a segmentation matrix 3. analyse segmentation attractiveness 4. identify key success factors in each segment 5. analyse the attraction of broad vs. narrow scope 5/14/2023 129
- 130. Key success factors Analysisof demand -Who are our customers? -What do they want? Analysis of competition - What drives competition? - What are the main dimensions of competition? -How intense is competition? -How can we obtain a superior competitive position? What do customers want? How does the firm survive competition? Prerequisite for Success KEY SUCCESS FACTORS 5/14/2023 130
- 131. Discussion Choose a specificcompany and: - Make short introduction about this company. - Analyse the main elements of environment of this company by using PESTEL 5/14/2023 131
- 132. Strategic thinking by PhamHung Cuong Chapter 5 Developing options 5/14/2023 132
- 133. Questions 1. What arecommon elements in successful strategies? 2. What are the roles of resources and capabilities in strategy formulation? 3. What is the link between resources, capabilities and competitive advantage? 4. What are the features of cost leadership and differentiation strategies? 5. How do you analyse resources and capability? 5/14/2023 133
- 134. Common elements in successfulstrategies Successful Strategy Simple, consistent, long- term goals Profound understanding of the competitive environment Objective appraisal of resources Effective Implementation 5/14/2023 134
- 135. The role ofresources and capabilities in strategy formulation O Basing strategy on resources and capabilities (RBV) THE FIRM •Goals and values •Resources and capabilities •Structure and systems THE INDUSTRY ENVIRONMENT •Competitors •Customers •Suppliers STRATEGY The Environment- Strategy Interface The Firm- Strategy Interface 5/14/2023 135
- 136. The link betweenresources, capabilities and competitive advantage RESOURCES TANGIBLE • Financial (cash, securities, borrowing capacity) • Physical (plant equipment, land, mineral reserves) INTANGIBLE •Technology (patents, copyrights, trade secrets) • Reputation (brands, relationships) •Culture HUMAN • Skills/know-how • Capacity for communication and collaboration • Motivation ORGANISATIONAL CAPABILITIES STRATEGY INDUSTRY KEY SUCCESS FACTORS COMPETITIVE ADVANTAGE 5/14/2023 136
- 137. Identifying the organisation’s capabilities OOrganisational capability, distinctive and core competences O Classifying capabilities - Functional analysis - Value chain analysis O The nature of capabilities - Process and routine - Hierarchy of capabilities 5/14/2023 137
- 138. Function classification of organisationalcapabilities 5/14/2023 138
- 139. Function classification of organisationalcapabilities Grant, R. and Jones, J. (2012) Foundations of Strategy , Wiley 5/14/2023 139
- 140.
- 141. Appraising the strategicimportance of resources and capabilities 5/14/2023 141
- 142. Resources and capabilityanalysis O Step 1: Identify the key resources and capabilities Step 2: Appraising resources and capabilities - Assessing importance - Assessing relative strengths O Step 3: Developing strategy implications - Exploiting key strengths - Managing key weaknesses 5/14/2023 142
- 143. A framework foranalysing resources and capabilities 5/14/2023 143
- 144. The emergence of competitiveadvantage How does competitive advantage emerge? External sources of change e.g.: •Changing customer demand •Changing prices •Technological change Internal sources of change Resource heterogeneity among firms means different impact Some firms are faster and more effective in exploiting change Some firms have greater creative and innovative capability 5/14/2023 144
- 145. Types of competitiveadvantage – cost and differentiation COMPETITVE ADVANTAGE COST ADVANTAGE DIFFERENTIATION ADVANTAGE 5/14/2023 145
- 146. Features of costleadership and differentiation strategies 5/14/2023 146
- 147. The drivers ofcost advantage 5/14/2023 147
- 148. MIS that supports fast response capabilities Trainingto support customer service excellence Unique product futures. Fast new product development Quality of components and materials Defect-free products. Wide variety Fast delivery. Efficient order processing. Building brand reputation Customer technical support. Consumer credit. Availability of spares. Principal stages of value chain analysis for differentiation advantage 5/14/2023 148
- 149. Porter’s generic strategies COST LEADERSHIP DIFFERENTIATI ON FOCUS Lowcost Differentiation SOURCES OF COMPETITITVE ADVANTAGE Industry-wide Single segment COMPETITIVE SCOPE 5/14/2023 149
- 150. The strategy clock (Bowmanand Faulkner 1997) 5/14/2023 150
- 151. Discussion Choose a specificcompany and: - Make short introduction about this company. - Analyse the link between resources, capability and competitive advantage of this company 5/14/2023 151
- 152. Strategic thinking by PhamHung Cuong Chapter 6 Evaluating options 5/14/2023 152
- 153. Questions 1. What aredynamics of industry structure? 2. What are stages of the life cycle? 3. What are strategies at different stages of the life cycle? 4. What are the main bases of segmentation? 5. What is the evolution of industry structure and competition over the life cycle? 5/14/2023 153
- 154. The dynamics ofindustry structure 5/14/2023 154
- 155. The dynamics ofindustry structure Source: Based on Figure 2.4 in Hill and Jones (2008). Source: Based on Figure 2.4 in Hill and Jones (2008). 5/14/2023 155
- 156. Strategy at differentstages of the life cycle O The introduction phase – born global companies, de novo entrants O The growth phase – manufacturing capability O The maturity phase – cost efficiency, developing markets entry strategies O The decline phase – capacity and output 5/14/2023 156
- 157. Evaluating options forgrowth O PESTEL O Strategic Groups O Market Segments O Blue Ocean Thinking O Life Cycle Analysis 5/14/2023 157
- 158. Example of strategicgroup 5/14/2023 158
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- 160. The evolution ofindustry structure and competition over the life cycle 5/14/2023 160
- 161. Discussion Choose a specificcompany and: - Make short introduction about this company. - Analyse strategies at different stages of the life cycle of this company 5/14/2023 161
- 162. Strategic thinking by PhamHung Cuong Chapter 7 Innovation and strategic thinking in changing environment 5/14/2023 162
- 163. Questions 1. What areskills of strategic thinking? 2. What is the process of creativity? 3. What is the process of strategic thinking? 4. What is the innovation? 5. What is the creativity? 5/14/2023 163
- 164. Strategic thinking skills OYour title makes you manager. People decide if you are a leader. O Five keys to being a great leader: O Think strategically. O Results oriented. O Adapt and improve. O Building strong teams. O Inspire. O Honesty & Integrity. 5/14/2023 164
- 165. Strategic thinking skillsactivities O Permanent and rapid change of business environment and broad range of information available Managers need a strategic mindset to be successful leaders. O Activities determining success: O Think Strategically: Consider broad range of internal and external factors when solving problems and making decisions with focus on long term business perspective. O Analyze Issues: Gather relevant information systematically, grasp complexities and perceive relationships among problems to bring clarity into issues solving. O Use Sound Judgement: Make timely and sound decisions. O Innovate: Encourage flexibility and creativity to generate new ideas to challenge status quo. 5/14/2023 165
- 166. Think and actstrategically motto “Your time is limited, don’t waste it living someone else’s life. Don’t be trapped by dogma, which is living the result of other people’s thinking.” Steve Jobs 5/14/2023 166
- 167. Think and actstrategically long-term focus 5/14/2023 167
- 168. Think and actstrategically developing strategic mindset O Strategic planning is an event, while strategic thinking is a process and an approach. O Part 1: Developing a Strategic Mindset: O Evaluating your strategic-thinking skills. O Enhancing your strategic thinking. O Recognizing the broad implications of issues. O Developing a strategic perspective of your own area. O Seeing the relationships. O Analyzing factors outside the business. 5/14/2023 168
- 169. Think and actstrategically applying strategic thinking skills O Successful leaders focus the energy of their organization on the initiatives that will have the greatest strategic impact. O Part 2: Applying strategic-thinking skills: O Identify key strategic opportunities. O Capitalizing on strategic opportunities. O Developing strategic alliances to increase competitive advantage. 5/14/2023 169
- 170. Innovation and creativitymotto “The best way to predict the future is to create it.” Peter Drucker 5/14/2023 170
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- 173. Innovation and creativity innovationin business O The ability to generate creative solutions is essential in business to survive and success depends on how quickly it can respond to a changing world. O Creativity involves not only coming up with original and innovative solutions, but also making existing solutions better. O Implement the innovative solutions quickly. 5/14/2023 173
- 174. Innovation and creativity developingpersonal creativity O Creativity is a process that requries personal commitment and effort. O Part 1: Developing personal creativity: O Increasing your mental flexibility O Determinig when to use creative thinking O Approaching problems with curiosity and open- mindedness O Making use of existing information O Generating innovative ideas and solutions O Thinking positively when faced with obstacles 5/14/2023 174
- 175. Innovation and creativity encouraginginnovation in others O Increasing the innovation of your people to improve the quantity and quality of the creative ideas. O Part 2: Encouraging innovation in others: O Encouraging Innovation in your department O Using logical and intuitive approaches O Brainstorming O Stimulating creative ideas in others O Challenging “the way it has always been done” 5/14/2023 175
- 176. Discussion Choose a specificcompany and: - Make short introduction about this company. - Analyse the process of the strategic thinking of this company 5/14/2023 176
- 177. PROJECT Choose a specificcompany: Introduce the company chosen Analyse key issues in industry Analyse the main elements of the environment (PESTEL) Analyse the link between resources, capabilities and competitive advantage Analyse features of this company’s strategy REQUIREMENTS: O Hard-copy and solf-copy O 3500 – 4000 words O Submit to teacher-in-charge by… 5/14/2023 177
Editor's Notes
- #19 In organizations like ours, the word strategy gets thrown around an awful lot. We all know strategies are essential. But the meaning can be frustratingly elusive. What do we mean by strategy? What does the word mean in the context of our organizations? A plan to achieve our goals Actually, strategy implies plans that exist at many levels (sectors, programs, strategies, projects – annual and five year) – all interlinked What are strategies good for? Helping people work together Helping everyone see how their work is connected Helping us make choices as conditions change Helping us evaluate effectiveness and learn Helping us marshall the resources we need to be effective What makes creating and implementing shared strategies hard? It’s overwhelming It’s hard to see all the pieces at one time and keep them in mind It’s really hard to figure out what the most appropriate and useful goals should be It’s hard to make choices and prioritize We never have full information and the conditions are always changing. Nearly of the reasons why it is hard to create and implement strategy are actually due to the fact that strategy is about making choices, and we never have perfect or complete knowledge. We have to do our best to make good choices given the data we have. The process of making choices today in order to achieve desired outcomes in the future is often called strategic thinking.
- #23 A lot of my own thoughts about strategic thinking were developed about 10 years ago when I did a pretty thorough review about what the business world and fields of cognitive psychology and economic decision theory could teach social change organizations about strategic thinking. So, as I gathered my thoughts before this training, I did some quick internet searches to learn what new developments there might be. A quick stop at Wikipedia was not at all encouraging. This slide is a direct quote from one of the first paragraphs of the entry on strategic thinking. In fact, the entry goes on to say that about the only thing most experts agree upon is that traditional models of strategy making (primarily based on strategic planning processes) are not working.
- #24 It didn’t get much better from there. I found these two sensible but contradictory statements in a short article by Gregory Foster, a professor who teaches strategic thinking skills to America’s top military brass at one of our nation’s war colleges. His article summarized five points he has learned about strategic thinking over many years. These were two of his top five. It’s a fairly sobering assessment. Stepping back from the obvious ironies, there is an important lesson to be drawn. This fellow argues, and I think I agree, that strategic thinking is only learned experientially. Trainings like this may provide some useful frameworks and may help us become more conscious of some of the things we do that limit our ability to think strategically. In other settings we can use scenarios to practice and evaluate the outcomes of our choices. But primarily we learn how to think strategically over time through the real-world process of thinking, doing and evaluating.
- #25 Despite my failed attempt to find wisdom through wikipedia, I do have some thoughts – some borrowed and some new – about what strategic thinking is and what it requires. Strategic thinking, in my book, is the ability to see both what is and what could be – and then make choices that lead to desired outcomes. If I had to boil strategic thinking down to just three components, here are a few big ones: Strategic thinking is first and foremost future oriented and focused on achieving long-term vision and goals. Strategic thinking is the ability to see entire systems – or at least as much of them as we can know – including underlying causes, inter-relationships and leverage points in a within a system. Strategic thinking involves the careful analysis and interpretation of data.
- #83 Honest to goodness, I don’t know any other method for thinking strategically other than taking the time – individually and/or collectively – to think through a series of questions each time we are faced with a changing circumstances and are trying to settle on a course of action. When in doubt…ask yourselves what’s the goal? What’s our purpose. Even when the answer seems obvious. Even when the need for action seems crushingly urgent. What’s our goal. Some of the questions on this page don’t get asked fresh each time there is a decision to be made, but they serve as reference points that we should review and take into account.
- #105 We’ve all heard the expression “To a person with a hammer, every problem looks like a nail.” It’s a familiar expression that describes a failure to think strategically – a failure to adequately assess the current reality and to question our own assumptions. And it contains some useful wisdom for anyone who wants to avoid falling into the trap of hammering something when another tool would be more effective. In fact, I think there is a lot of wisdom to be gained by looking at the question of strategic thinking from the other end of the telescope. Instead of trying to define precisely what strategic thinking is, let’s take a look at what it is NOT. Once we understand some of the things that limit our ability to think strategically, we can make important adjustments as individuals and groups.
- #106 A major stumbling block for any group of people who is trying to make good strategic decisions together is a lack of shared analysis about the world we live in, how it operates, and how we hope to change it. If you and I have a fundamentally different understanding about the major problems and causes we are working to address, we aren’t going to be able to make choices based on a coherent analysis. We may argue over different ideas or positions, but our lack of agreement is often much deeper. In KFTC we deal with this all the time. If we are doing our jobs, we have new members every day, and new staff members several times a year. Those individuals come into the work with fresh and important ideas. But they have no real experience with or understanding of the power relationships we have to contend with. They may have very different assumptions about what the underlying problems and causes are that we are working to address. In order for anyone to contribute their ideas in a strategic way, we have to take time together to review and refresh our shared vision and analysis. This is a constant process. It requires us to develop and use good “reference points” so that we don’t have to start from scratch with each conversation. And it requires us to be open to re-thinking pieces of our analysis as circumstances change and new people bring new input. Our organizational analysis is fairly durable, but never fixed. People working within the organization are always questioning and working to deepen the shared analysis story, but it’s a problem if some folks are operating with an analysis that is fundamentally in conflict with the group’s.
- #107 Uneven power relationships are a fact of life – both within and beyond our organizations. For those of us who are charged with thinking strategically (and all of us are) its important to understand that uneven power relationships can impact how we think about and make choices about the world we live in. The amount of relative power you have can affect the solutions you think are possible and the goals you are willing to aspire to. Our analysis of the primary problems that exist and the causes of those problems is certainly informed by the power we have, or feel we have, in society. And the input and data we consider when making decisions can also be affected unconsciously by our own assumptions about whose voice matters, who we think is credible, and who had input into the process. Simply being conscious and aware of some of these impacts can help us find ways to incorporate diverse perspectives, see the world more fully and accurately, and evaluate our choices more strategically.
- #108 Here are two familiar tendencies that can limit strategic thinking. Some leaders may tend over-emphasize or focus on the importance of the long term goals, without taking into account current power relationships, organizational capacity, design and implementation challenges, and other important realities. This can lead others to feel the organization is just “tilting at windmills” and can leave people feeling ineffective. On the other hand, some of us may tend to zero in on activities or next steps as ends unto themselves – without thinking deeply about how those steps align with larger goals and strategy. This can lead to decisions that are not well connected – or worse in conflict with – the organization’s long-term goals. It can also result in individuals and organizations that are so busy pursuing the “urgent” and “immediate” tasks that we don’t take the time to step back, evaluate and realign our work with the larger goals. Strategic thinking requires a balance that leans towards the long-term, but is mindful and respectful of the importance of effective implementation.
- #109 There are two more tendencies that can limit strategic thinking. One is called ANCHORING. It’s what happens when we settle – often very quickly – on an idea as the best approach. If we anchor ourselves to that position without being open to the full implications or without considering other options, we can miss very important alternatives. In my experience, anchoring is often the result of an over-done sense of urgency. “We have got to do something!” It’s especially common in coalition work, where we rarely devotes the time to developing a shared analysis. Instead we get on conference calls and people anchor on their preferred idea for how to move forward. It can be hard – but important – to invite people in these moments to revisit our goals and then take time to brainstorm and evaluate a range of possibilities. Here’s a common example of anchoring from KFTC: Any time 2 or more KFTC members have gotten together in the past ten years, at least one person has wanted the organization to pay for large billboards to promote ourselves. There seems to be a commonly held view that if we only did that, we would get lots of new members, our issues campaigns would be successful, and all would be well with the world. It may be a very good idea. It may even be a strategic choice. But we are engaged in “anchoring” if there is no thought given to a) what’s the goal? B) what other options exist to achieve that goal, C) What are our projections/assumptions about the benefits of bill board advertising vs other options, and can we test those? (For example, how realistic is it to think that bill boards could they really pay for themselves with new memberships?).
- #110 Lastly, it’s important to point out that we all carry around biases that influence how we see the world and make sense of new information. Our underlying values and life experiences shape how we interpret data and the conclusions we reach. To a great extent, we aren’t even conscious of the layers of meaning and assumptions upon which our choices and actions are based. Author Peter Senge has created a metaphor and image he calls the “ladder of inference” to describe how it works. Here’s how the ladder works: I observe the world before me. I select data from what I observe. I add meaning to what I have selected. I make assumptions based upon the meaning I’ve added. I draw conclusions, which prompts feelings. I adopt beliefs about how the world works. I make choices and take action based on those beliefs. And most of that is unconscious and takes place in just a millisecond. On the one hand, this ladder is a necessary process for dealing with a complex world. But it can also limit our ability to think and respond to the world with a full and fair understanding of reality. Senge suggests some ways we can strive to avoid making unwise leaps up this ladder: Make your own thinking clear and transparent: here are my assumptions and conclusions Invite others to test your assumptions and conclusions Respectfully inquire about the thought process that others are using. In non-judgmental ways, invite people to make their own thinking transparent, and encourage people to revisit the lower rungs of their own ladder.
- #111 Overemphasis on short-term or long-term? Anchoring out of fear/anxiety or extreme sense of urgency Unwillingness to examine bias?