2History of Strategy? Rooted in the Military Originated in business with the emergence of the business schools (Wharton and Harvard)First known as Business PolicyUsed as a capstone course to bring business functions togetherHad little grounding in its own theoryReal research in the area of “strategic management” only really began to take shape in the 1970’sTechnically economics is the grounding for strategic management theoryRigid structure of neoclassical economics did not serve empirical evidence of firm performance well which lead to other disciplines such as sociology, Pyschology, political sceince, and institutional theory as “alternative” explanations for strategy.Relaxation of the the rigidities in economics in the 1980’s has put economics back in the forefront as a solid theoretical foundation for strategyHistory leads to a very young field of research with little in the way of “accepted” principles and theories
3Purpose of Strategy? What is the ultimate goal of strategy for a firm? Maximize shareholder value“Monopoly” powerBigger can be betterProfits – above averageSuccess – but what is success?Staying in business/survivalDoes strategy imply or require exploitation of other?TacticsDefnHow do we position ourselves to achieve sustainable above average profits in the long run
4What is Strategy? Hierarchical Definition What is it? Strengths Part of a 4 stage modelDefines how you achieve mission/objectivesPlan – write it down/implement/achieve objectivesStrengthsSpecific goalsLess abstractProvides structureContext to take great ideas to actionPushes you toward implementation – attention to resource allocationWeaknessesExcludes external environmentMore static than dynamicLess flexibility
5What is Strategy? Eclectic Definition What is it? Strengths Weaknesses Multiple aspects – plan, ploy (tactics), pattern, perspective/perception (how you see yourself), positionStrengthsWeaknesses
6What is Strategy? Matching Definition What is it? Strengths Weaknesses Take a look at threats/opportunities and define strategies to take advantage of threats and minimize weaknessesStrengthsNot just considering inside firm, also looking at environmentMakes you look at your strengths/weaknessesEffective at helping make decisionsWeaknessesAssumes firms can predict environmentLeaves a void of “what to do about SWOT”
7Deliberate versus Emergent Strategies IntendedStrategyUnrealizedStrategyDeliberate StrategySustainedSuperiorPerformanceRealizedStrategyEmergent StrategyAdapted from: Mintzberg, H. “The Strategy Concept I: Five Ps for Strategy” California Management Review. Volume 30 Number1, Fall 1987.
8Opportunities and Threats Internal Analysis Strengths and Weaknesses Vision and MissionExternal AnalysisOpportunities and ThreatsInternal AnalysisStrengths and WeaknessesStrategic ChoiceSWOTOrganizationalStructureDesigning ControlSystemsBusiness StrategyStrategy Implementation/TacticsFeedbackSuccessionPlanning
9Where Are We Headed? Not focused on business strategy research Theory developmentEmpirical testing of TheoryApplication of Strategy and Strategic Management Process to Decision-makingHow Mike, Allan, and others use strategy concepts to help firms improve decision-makingExpect you to do some reading on the theory to help with background as we explore application of the concepts