Exploring Strategy Lecture 1 Slides PDF

Exploring Strategy 11th edition Text and Cases Chapter 1 Introducing strategy Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Learning outcomes Summarise the strategy of an organisation i...

Exploring Strategy 11th edition Text and Cases Chapter 1 Introducing strategy Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Learning outcomes Summarise the strategy of an organisation in a ‘strategy statement’. Distinguish between corporate, business and functional strategies. Identify key issues for an organisation’s strategy according to the Exploring Strategy Framework. Understand different people’s roles in strategy work. Appreciate the importance of different organisational contexts, academic disciplines and theoretical lenses to practical strategy analysis. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Strategy: Greek 6th Century , the art of a troop leader, English 18th Century is a high level plan to achieve one or more goals under conditions of uncertainty. In the sense of the "art of the general", which included several subsets of skills including "tactics", siegecraft, logistics etc… for victorious in one’s interaction with an adversary Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Definitions of strategy 2 Sources: A.D. Chandler, Strategy and Structure: Chapters in the History of American Enterprise, MIT Press, 1963, p. 13; M.E. Porter, ‘What is strategy?’, Harvard Business Review, November–December 1996, p. 60; P.F. Drucker, ‘The theory of business’, Harvard Business Review, September–October 1994, pp. 95–106; H. Mintzberg, Tracking Strategies: Towards a General Theory, Oxford University Press, 2007, p. 3. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Definitions of Strategy 2 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 Exploring strategy 8 ed Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved Slide 1.6 Strategic decisions Source: From G. Johnson, K. Scholes and R. Whittington. Exploring Corporate Strategy, 8th edn, Pearson Education 2008. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved Responding to any question Strategy: in case studies, practice, test, exam, assignment Background if any Framework ( applicable theoretical/conceptual framework) Define issues including elements in the framework Application and exemplifications Recommendations and Conclusion (BFDAR) Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Three horizons for strategy (1) Horizon 1: Extend and defend current core business activities( defend Shoprite‘s supermarket chain offering) Horizon 2:Build/develop emerging businesses/ activities: to generate new sources of growth and/or profit. (shoprite’s money transfer business) Horizon 3: Create viable strategic options for the future: higher risk activities that may take years to generate growth/profits. (online grocery shopping/delivery and banking) Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Three horizons for strategy (2) Source: M. Baghai, S. Coley and D. White, The Alchemy of Growth, Texere Publishers, 2000. Figure 1.1, p. 5 Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Stakeholders: What is Strategy for? To define and express the purpose of an organization to stakeholders. Stakeholders are those individuals or groups that depend on an organisation to fulfil their own goals and on whom, in turn, the organisation depends. Strategic Management – connotes the fact that strategy involves the defining and management of relationships, resources and people over the long term Four ways to define an organisation’s purpose: – Mission Statement – Vision Statement – Statement of Corporate Values – Statement of Objectives Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Key principles Focus. Effective statements do not just define what the organisation does but also excludes other activities. Motivational. Effective statements should motivate employees. They need to be distinctive, credible and authentic and should stretch performance levels. Clear. Effective statements are easy to communicate, understand and remember. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Mission statements A mission statement aims to provide employees and stakeholders with clarity about what the organisation is fundamentally there to do. ‘What business are we in?’ ‘What would be lost if the organisation did not exist?’ ‘How do we make a difference?’ Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Vision statements A vision statement is concerned with the future the organisation seeks to create. ‘What do we want to achieve?’ ‘If we were here in twenty years what do we want to have created or achieved?’ Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Statement of values Statements of corporate values communicate the underlying and enduring core ‘principles’ that guide an organisation’s strategy and define the way that the organisation should operate. NB These values do NOT change with circumstances. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Statement of objectives Objectives are statements of specific outcomes that are to be achieved. Often stated in financial terms (e.g. Profit). May also be market-based objectives (e.g. Market Share). May emphasise basis of competitive advantage. ‘Triple Bottom Line’ – economic, social and environmental objectives. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  G4S Secure Solutions Zambia Ltd G4S is the leading global integrated security company, specialising in the provision of security products, services and solutions…provides a broad range of solutions to both commercial, individual and government customers. Slogan: G4S Secure your World Vision/Mission? To be recognised as the global leader in providing security solutions Values: Customer Focus, Performance, Best People, Integrity, Teamwork & collaboration, Expertise Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Values in detail Customer focus- we have close, open relationships with our customers which generate trust and we work in partnership for the mutual benefit of our organisations Expertise- we develop and demonstrate our expertise through our innovative approach in creating and delivering the right solutions Safety First- we prioritise safety management to protect the health and well being of our colleagues and those around us Performance- We seek to improve performance year on year to create long term sustainability Integrity- we can always be trusted to do the right thing Best people- we employ the best people, develop their competence, provide opportunity and inspire them to live our values Team work and collaboration- we collaborate for the benefit of our customers and this firm Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  2017 reduced to 3 value-groups Values are the standards we set for ourselves and the culture of the organisation is the way those values are reflected in our behaviours and actions Being a service business, people are at the heart of our business. We rely on them to provide excellent customer service and to behave in line with the company’s values and standards. They rely on the company to provide a safe place to work and for development, support and guidance throughout their career. We act with Integrity and Respect We are passionate about safety, security and service excellence We achieve this through team work and innovation Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Strategy statements Entrepreneurs and managers should reduce their strategy into a Strategy statement (35 words) should have three main themes: Fundamental goals that the organisation seeks, which reflect the stated mission, vision and objectives. The scope or domain of the organisation’s activities (customers, geographical focus and internal activities – what do we do internally and what do we outsource); The particular advantages or capabilities it has to deliver all of these (by being different, superior, better than our competitors- competitive advantage Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Example of SS Vice media who business started in print media (magazine), spreading into fashion, music, lifestyle, retailing and current affairs. SS “To build the world’s largest online media group, focused on youth and with competitive advantages in terms of the diversity and international range of our business and the strength of our relationships with our key partners” Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Example of SS The strategy statement of American financial advisory firm Edward Jones is more specific: ‘to grow to 17,000 financial advisers by 2012 by offering trusted and convenient face-to- face financial advice to conservative individual investors through a national network of one- financial adviser offices’. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Levels of strategy (2 of 2) Corporate-level strategy is concerned with the overall scope of an organisation and how value is added to the constituent business units. Business-level strategy is concerned with the way a business seeks to compete successfully in its particular market. Functional strategy is concerned with how different parts of the organisation deliver the strategy effectively in terms of managing resources, processes and people. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Strategic Business Unit (SBU) A strategic business unit (SBU) is a part of an organisation for which there is a distinct external market for goods or services that is different from another SBU Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved Levels of strategy (1 of 2) Diversifying from the organisation’s original Corporate- activities into other level activities (e.g. Tesla strategy selling batteries for home use.) Marketing and product improvement strategies Business-level (e.g. Developing a lower strategy cost, volume car for Tesla.) Tesla’s functional strategies are geared Functional strategies to meeting its investment needs and raising finance. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved The exploring strategy framework Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved The exploring strategy framework The Exploring Strategy Framework includes understanding the strategic position of an organisation; assessing strategic choices for the future; and managing strategy in action. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Strategic position (1 of 3) The strategic position is concerned with the impact on strategy of the macro-environment, the industry environment, the organisation’s strategic capability (resources and competences), the organisation’s stakeholders and the organisation’s culture. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved Strategic position (2 of 3) Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Strategic position (3 of 3) Fundamental questions for Strategic position: What are the macro-environmental opportunities and threats? How can the organisation manage industry forces? How are stakeholders aligned to the organisational purpose? What resources and capabilities support the strategy? How does culture fit the strategy? Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Strategic choices (1 of 3) Strategic choices involve the options for strategy in terms of both the directions in which strategy might move and the methods by which strategy might be pursued. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved Strategic choices (2 of 3) Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Strategic choices (3 of 3) Fundamental questions for Strategic choice: How should individual business units compete? Which businesses to include in the portfolio? Where should the organisation compete internationally? Is the organisation innovating appropriately? Should the organisation buy other companies, form alliances or go it alone? Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Strategy in action (1 of 3) Strategy in action is about how strategies are formed and how they are implemented. The emphasis is on the practicalities of managing. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved Strategy in action (2 of 3) Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Strategy in action (3 of 3) Fundamental questions for Strategy in action: Which strategies are suitable, acceptable and feasible? What kind of strategy-making process is needed? What are the required organisation structures and systems? How should the organisation manage necessary changes? Who should do what in the strategy process? Which people and what activities? Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved The strategy checklist Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Modified framework for Exploring Strategy Where do we compete? Strategic Position- given SWOT/PESTEL/5 forces/Culture/capabilities/stakeholders How do we compete? Choices (SBU level: different, lowest cost, focus or hybrid… Corporate level: Penetration, diversification, product or market development) and methods (organic- innovation/entrepreneurship/EO, acquisitions, alliances) With what do we compete? Systems and structures to support Strategy : configuration/re-configuration/ change Is it working? Evaluating and modifying strategy… if configurations and culture are OK. Which processes in all this? Is strategy emergent/deliberate (strategy lenses), who are the strategists and their activities/methods /outputs Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Simplified framework for Exploring Strategy 1 1. Where are we now? Strategic Position (where do we compete)-assessing strategic potential i.e. what is possible for us to do (PESTEL/5 forces/Culture/SWOT/ capabilities) 2. Where do we want to be? Given the strategic potential, is our Strategic ambition appropriate i.e. goals/ stakeholders influencing those goals 3. How do we get there? Strategic Choices a) how do we compete? (SBU level: different, lowest cost, focus or hybrid… Corporate level: Penetration, diversification, product or market development) b) what methods to get the capabilities(organic- innovation/entrepreneurship/EO, acquisitions/mergers,alliances) c) With what do we compete? Systems and structures to support Strategy : configuration/re-configuration/ change Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Simplified framework for Exploring Strategy 2 4. Is it working? Evaluating and modifying strategy… if configurations and culture are OK. 5. Which processes in all this? Is strategy emergent/deliberate (strategy lenses), who are the strategists and their activities/methods /outputs Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Working with strategy (1 of 2) All managers are concerned with strategy: Top managers frequently formulate and control strategy but may also involve others in the process. Middle and lower level managers have to meet strategic objectives and deal with constraints. All managers have to communicate strategy to their teams and can contribute to the formation of strategy through ideas and feedback. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Working with strategy (2 of 2) Organisations may also use strategy specialists: Many large organisations have in-house strategic planning or analyst roles. Strategy consultants can be engaged from management consulting firms (e.g. Accenture, IBM Consulting, PwC). There are a growing number of specialist strategy consulting firms (e.g. McKinsey & Co., The Boston Consulting Group). Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Strategy’s three branches (1 of 2) CONTEXT – internal and external. CONTENT – strategic options. PROCESS – formation and implementation. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved Strategy’s three branches (2 of 2) Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Strategy’s 3 branches Strategy as Context (where are we/to be) a)assessing strategic potential i.e. what is possible for us to do (PESTEL/5 forces/ Culture/ SWOT/ capabilities). b) Given the strategic potential, is our Strategic ambition appropriate i.e. goals/ stakeholders influencing those goals Strategy as Content- – a) how do we compete? (SBU level: different, lowest cost, focus or hybrid… Corporate level: Penetration, diversification, product or market development) – b) what methods to get the capabilities(organic- innovation/entrepreneurship/EO, acquisitions/mergers,alliances) – c) With what do we compete? Systems and structures to support Strategy : configuration/re-configuration/ change Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Strategy’s 3 branches2 Strategy as Process- Is it working? Evaluating and modifying strategy… if configurations and culture are OK. In all this what the processes? Is strategy emergent/deliberate (strategy lenses), who are the strategists and their activities/methods /outputs Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Exploring strategy in different contexts The Exploring Strategy Framework can be applied in many contexts. In each context the balance of strategic issues differs: Small businesses (e.g. strategic purpose, growth issues and retaining independence). Multinational corporations (e.g. geographical scope; cultural issues and structure/control issues). Public sector organisations (e.g. service/quality and managing change issues). Not-for-profit organisations (e.g. purpose and funding issues). Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  The strategy lenses (1) The strategy lenses are ways of looking at strategy issues differently in order to generate additional insights. Looking at problems in different ways will raise new issues and new solutions. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  The strategy lenses (2) Strategy can be seen as: Design Experience Variety Discourse Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  The strategy lenses (3) Strategy as design Strategy can be designed in advance and a detailed plan conceived by strategists. This approach is rational and objective. Little attention is paid to cultural, political or unpredictable aspects of strategy. The design lens is systematic, analytical and logical. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  The strategy lenses (4) Strategy as experience Strategy is influenced by the experience of managers. The organisation’s culture and the taken- for-granted assumptions and ways of doing things are key drivers of strategy. Strategy is likely to build on and continue what has gone before. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  The strategy lenses (5) Strategy as variety Strategy ‘emerges’ from an uncertain and changing environment. Strategy comes from a variety of initiatives. New ideas ‘bubble up’ from unpredictable sources and not just the top. Organisations need to encourage diversity and look for initiatives at the bottom or the periphery of the organisation. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  The strategy lenses (6) Strategy as discourse Attention is focused on the way managers use language to frame strategic problems, make strategy proposals, debate issues and communicate strategic decisions. The way managers ‘talk’ about strategy matters – it influences decisions. The discourse lens helps to uncover the personal interests and ‘politicking’ of managers. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Summary (1 of 3) Strategy is the long-term direction of an organisation. The work of strategy is to define and express the purpose of an organisation through its mission, vision, values and objectives. Ideally a strategy statement should include an organisation’s goals, scope of activities and the advantages or capabilities it brings to these goals and activities. Corporate-level strategy is concerned with an organisation’s overall scope; business-level strategy is concerned with how to compete; and functional strategy is concerned with how corporate- and business-level strategies are actually delivered. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Summary (2 of 3) The Exploring Strategy Framework has three major elements: understanding the strategic position, making strategic choices for the future and managing strategy in action. Strategy work is done by managers throughout an organisation, as well as specialist strategic planners and strategy consultants. Research on strategy context, content and process shows how the analytical perspectives of economics, sociology and psychology can all provide practical insights for approaching strategy issues. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Summary (3 of 3) Although the fundamentals of strategy may be similar, strategy varies by organisational context, for example, small business, multinational or public sector. Strategic issues can be viewed critically from a variety of perspectives, as exemplified by the four strategy lenses of design, experience, variety and discourse. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Class Activity Illustration 1.2 Samsung and Southampton University strategy statements: students to work in groups of 10 Presentation based on handwritten agreed notes by each group. This will help students understand how to use the BFDAR framework. 2 minutes 1 presenter from each group. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Assignment Due 10th January 2019. page 24 to 27 Airbnb case. Write a paper exploring strategic issues in line with the questions on page 27. Textbook: 11th edition https://drive.google.com/open?id=1qlzoQ4tr0kdbxN5Qg7 jmbQIFduAo_VCp Assignment Specifications: https://sites.google.com/site/entrepreneurshipcbu/home /assignments-and-guides Course site: https://sites.google.com/site/entrepreneurshipcbu/home /strategy-notes Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved