General and Strategic Management (GSM1): Dr Kevan Williams 6 December 2005

What happened this week?

ITV may be forced to scrap news channel …have lost about £30m since it was launched in August In October its share of the total television audience was just 0.1% compared with 0.5% each for the other two broadcasters. The channel has been a serious drain on the main ITV network.

Today Recent developments in strategy …towards the end of the course Beginning of the course review Thoughts on the exam

Recent Developments Leadership Governance Managing change Technology International

Leadership

The growing emphasis on leadership including the cult of celebrity in leadership? Management is doing things right; leadership is doing the right things. Peter Drucker Leadership is practiced not so much in words as in attitude and in actions. Harold Geneen, Chairman, ITT Corp See leadership in earlier lectures (and in GSM2)

Leadership "It's not going bust and it doesn't have outrageous debts but it's in a cycle of decline and it's hard to see where that's going to stop," Marks & Spencer in 2004 Good example of different leadership styles - See previous articles / studies

Leadership Mistakes The chief executive of Barclays Bank has done a Gerald Ratner. He went before a select committee of MPs and - in front of a battery of TV cameras and newspaper reporters - admitted that he doesn't own a credit card because it's too expensive.

Governance The chairman will get his way BSkyB shareholders are unlikely to prevent James Murdoch's appointment Slow progress expected to end white, male dominance NYSE plans independent board GRASSO RESIGNATION

Managing Change BMWs Coup: It Outsourced a Whole New Car

Technology Research offers cancer drug hope US scientists plan to create new life form

International – a multidimensional issue A global shift in power Easier to trade globally – technology driven Threat and opportunity Italian lingerie maker [SG3]dodges China threat Journal of International Business Studies – going since 1970! – some people now waking up! The Great Reverse – Part III Burgeoning Sino-Indian trade ties may significantly alter the world economic balance Anna Greenspan YaleGlobal, 8 September 2004 Other issues…?

International - Tesco Sales across the group jumped 13.9% during the 14 weeks to 19 November, led by a 23.3% surge in international sales. UK sales grew by 11.6%. Analysts say it plans to increase its global presence to offset a lack of growth opportunities in the UK. In the past four weeks, the firm has opened 25 stores in eight countries, including its first store in Guangzhou, southern China. Tesco said it was on track to open 150 stores abroad in the second half of the year.

Review: What is Strategy About? Different schools and expert opinions (Porter, Hamel, Mintzberg etc) Different ways in which strategy gets created and implemented (Design, experience, ideas)

Strategy Development - Strategy as Design - Strategy as Experience - Strategy as Ideas Three Viewpoints or Lenses - Strategic Planning - Strategic Leadership - Organisational Politics - Logical Incrementalism - The Learning Organisation - Imposed Strategy Six ways in which strategy can be developed in practice

Current Mission, Vision, Strategy, Objectives Current Mission, Vision, Strategy, Objectives Desired Future Mission, Vision, Strategy, Objectives Desired Future Mission, Vision, Strategy, Objectives Organisational Competencies, Strengths and Weaknesses Organisational Competencies, Strengths and Weaknesses External, Economic Industry and Market Environments External, Economic Industry and Market Environments Strategic Plans Action Programmes Strategic Plans Action Programmes I. Strategy Development II. Strategy Implementation Organization & Systems Organization & Systems People Resources Strategic Management: the Design Viewpoint Stakeholder Needs

Some Tools and Techniques of the Design Viewpoint MOST: Analysis - Mission - Objectives - Strategies - Tactics Organisational purpose Situation Analysis SWOT: Analysis -Strengths -Weaknesses -Opportunities -Threats PEST: Analysis - Political - Economic - Social - Technological Industry Analysis: -5 Forces - Strategic groups

What are the Most Common Causes of Strategic Failure? Bad luck Inward perspective Failure to generate a coherent strategy Poor top management Poor corporate governance Complacency Short term focus Poor timing Examples?

Most Widely Used Management Tools What are they? When should they be used? When should they not be used? How should they be used properly?

Usage of Management Tools

Most Popular Management Tools

When to Use the Tools? Corporate Strategy - Developing Strategy for the Whole Organisation Value chain integration Portfolio analysis (BCG, Directional Policy Matrix) Directional policy matrix Mergers and acquisitions Corporate parenting styles Core competencies (corporate) Business Strategy – Developing Strategy for a Strategic Business Unit Single value chain analysis Resource analysis Porter 5 forces PEST analysis SWOT analysis Generic business strategy analysis (strategy clock) Core competencies (business) Functional/Operations Strategy – Developing Strategy for a Function e.g. Supply chain strategy

Questions to ask When Using Strategy Tools? Is the tool intended to be used at the level of strategy at which I am operating? Some tools can be used at different levels, in different ways. Am I using such a tool in the right way? If multiple tools are available for the same situation, which one is the right one for the job?

What Does it Take to be a Good Strategist? Mindset Competencies Training Experience Knowledge

GSM1...the early days What is strategy? The direction and scope of an organisation over the long term, which achieves advantage for the organisation through its configuration of resources within a changing environment and to fulfil stakeholder expectations Fit or Stretch (leverage)? Language of strategy Levels of strategy Environmental uncertainty (forecasting / scenarios Elements of Strategic Management

GSM1...understanding strategy development Strategy development – seen, understood, implications Three strategy lenses – design, experience, ideas Strategy development process in organisations Implications for Strategy Development Some types of strategy

GSM1...The Environment PESTEL SWOT Forecasting and Scenarios Industry Analysis Porters 5-forces Life cycle Competitive Advantage Strategic Groups

GSM1...Strategic Capability Roots of strategic capability Types of resources Nature of competencies, core competencies, distinctive capabilities [Kay], dynamic capabilities [Teece et al, Eisenhardt & Martin] and critical success factors (CSFs) Competitive advantage and capabilities Framework for analysis: VRIO [Barney 1997]- resources and capabilities should be o Valuable o Rare o Inimitable o Organization can effectively exploit them [

GSM1...Strategic Capability…continued … Experience curve effects Value chain analysis Benchmarking and Knowledge management Resource-based approach to strategy-development

GSM1...Expectations and Purposes Organisational expectations and purpose Importance of corporate governance Stakeholders and stakeholder mapping Ethical issues and their impact on strategy Meaning and importance of legitimacy Culture and its impact on strategy Communicating organisational purpose

GSM1...at the Corporate Level Nature of strategic choices – Corporate, Business or Competitive, Directions and Methods of Development Corporate level strategy and multi-business organisations Creating value through corporate strategy Different styles of corporate parenting – portfolio, restructurer, synergy manager, parental developer Frameworks for portfolio analysis of corporate strategy – balance, attractive, fit Diversification strategies The corporate portfolio and the nature of corporate control

GSM1...and at the Business Level Strategic Business Units (SBUs) and business unit strategy Competitive advantage Different ways of achieving competitive advantage – the strategy clock The meaning and importance of differentiation strategies – cost leadership, differentiation, focus Relation of differentiation strategies to core competencies Sustainability of competitive advantage Cooperation versus competition Principles of game theory Fast-paced environments: hypercompetition

GSM1...finally Directions and Methods of Development Identify development directions (new / existing, markets, products) open to an organisation – available, preferred, succeed better Compare three methods of development (internal, acquisitions, alliances) Understand the different forms of strategic alliance and the conditions for successful alliances Strategic evaluation: what makes a good strategy? Understand suitability, acceptability and feasibility Selecting strategies for implementation

Readings for Exam Preparation Read…review…and read again chapters 1 – 8 of Johnson and Scholes textbook Work through case studies in Johnson & Scholes Review of slides and lecture notes Read in Management journals – follow-on from the Authors given in the lecture notes Consider other peoples points of view Newspapers/Journals – e.g. Financial Times, Economist, Business Week Visit the Website of Bain and Co to review the management tools ( Visit the Website that goes with the textbook by Johnson and Scholes Look for real world examples – you must have a few in mind

…final thoughts Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things. Miyamoto Musashi I don't want any yes-men around me. I want everybody to tell me the truth even if it costs them their jobs. Samuel Goldwyn US (Polish-born) movie producer ( )