Introduction to Strategy Lecture 1 Tahir Rashid

What is Strategy??? 5ql3EBs8 04/10/2014Tahir Rashid 2

What is Strategy 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. (J& S, 2008)

04/10/2014Tahir Rashid 4 Why do some organizations succeed while others fail? Strategy An action managers take to achieve one or more of an organization’s goals Strategic management process The process by which managers choose a set of strategies that will allow a company to achieve superior performance

Characteristics of Strategic Decisions Long-term direction Scope of an organisation’s activities Competitive advantage Strategic fit with business environment Organisation resources and competences Values and expectations of power players

Dynamic Business environment 04/10/2014Tahir Rashid 6

04/10/2014Tahir Rashid 7 Levels of Strategic Management

04/10/2014Tahir Rashid 8 Strategic Managers General managers Responsible for overall company performance or divisional performance Functional managers Responsible for supervising a particular task or operation

Vocabulary of Strategy Mission Overriding purpose Vision Desired future state Goal General statement of aim or purpose Objective Possible quantification or precise statement of the goal- SMART

Vocabulary of Strategy Strategic capability Resources, activities and processes Strategies Long term direction Business model Showing the flow of product, service and information between parties Control Monitoring of actions

Vocabulary of Strategy: Vision/Mission Nokia-Connecting is about helping people feel close to what matters. Wherever, whenever, Nokia believes in communicating, sharing, and in the awesome potential in connecting the 2 billion who do with the 4 billion who don’t. ASDA-To make goods and services more affordable for everyone. H& M- Our business concept is to offer fashion and quality at the best price Ford- To become the worlds leading consumer company for automotive products and services

Vocabulary of Strategy: Goals H&M- “Our goal is to ensure that business is operated with the minimum use of resources and with as little impact on the environment as possible” Objectives H&M-To increase the number of stores by 10-15% each year whilst maintaining increased sales in the existing stores

The Exploring Corporate Strategy Model (J& S, 2008)

What is Strategic Position? Strategic position is concerned with the impact on strategy of the external environment, an organisation’s strategic capability and the expectations and influence of stakeholders.

Strategic Position The Strategic Position Environment Culture PurposeCapability (J& S, 2008)

04/10/2014Tahir Rashid 16 Strategic analysis Information is required if Strategic decisions are to be made. Must determine current situation and strategy Must determine what change, if any, is desirable Who are we? Are we well? And who are our competitors?

04/10/2014Tahir Rashid 17 External and Internal Analysis External analysis Identify strategic opportunities and threats Industry environment National environment Socioeconomic or macroenvironment Internal analysis Identify organizational strengths and weaknesses Sources of competitive advantage: superior efficiency, quality, innovation, and responsiveness to customers

Strategic Awareness allows for the management of Strategic Change Strategic Change

04/10/2014Tahir Rashid 19 Strategic Awareness What changes are occurring in the environment? What are the resources and competencies available? Who affects the organisations i.e. the stakeholders The main aim of the analysis is to form a view of the key influences on the present and the future A lack of awareness can result in: Lost opportunities Inability to react and respond effectively

04/10/2014Tahir Rashid 20 SWOT Analysis and the Business Model Identifying strategies to align a company’s resources and capabilities to its environment in order to create and sustain a competitive advantage Functional-level strategy Business-level strategy Global strategy Corporate-level strategy

What are Strategic Choices? Strategic choices involve understanding the underlying bases for future strategy at both the business unit and corporate levels and the options for developing strategy in terms of both the directions and methods of development.

04/10/2014Tahir Rashid 22 Strategic Choice Choice of suitable courses of action based on interpretation of analysis restatement of mission and objectives generation of strategic options evaluation and selection of strategic options Logical and incremental Entrepreneurial opportunism

Strategic Choices Strategic Choices Business- level Innovation International Corporate- level Evaluation (J& S, 2008)

What is Strategy in Action? Strategy in action is concerned with ensuring that strategies are working in practice.

04/10/2014Tahir Rashid 25 Strategy Implementation After choosing strategies, managers must put them into action. The feedback loop—strategy is ongoing. Managers must monitor and reevaluate for the next round of strategy formulation and implementation.

04/10/2014Tahir Rashid 26 Strategic Implementation who is responsible?-leadership and communication adaptations of systems? resource planning and logistics Structure

04/10/2014Tahir Rashid 27 Monitoring & Evaluation Ongoing appraisal What has been successful? What needs to be changed/adjusted? Ability to be Flexible and willingness to change

Strategy in Action Strategy in Action Processes Changing Resourcing Structuring Practice (J& S, 2008)

04/10/2014Tahir Rashid 29 The Traditional Strategic Management Process Strategic Analysis Strategy Creation & Choice Strategy Implementation Evaluation

04/10/2014Tahir Rashid 30 Conclusion A strategy is an action a company takes to attain one or more of its goals Formal strategic planning models stress that an organisations strategy is the outcome of a rational planning process Strategy can emerge from deep within an organisation

04/10/2014Tahir Rashid 31 Conclusion Strategic planning often fails because top management do not plan for uncertainty and planners may be out of touch with operational reality

04/10/2014Tahir Rashid 32 References Johnson, G & Scholes, K., Whittington, R. (2008) Exploring Corporate Strategy, 8 th ed, Pearson Education Hill C. & Jones G. (2004) Strategic Management Theory New York Houghton Mifflin