What is Strategy? Process and Content

History of Strategy? Rooted in the Military Originated in business with the emergence of the business schools (Wharton and Harvard) First known as Business Policy Used as a capstone course to bring business functions together Had little grounding in its own theory Real research in the area of “strategic management” only really began to take shape in the 1970’s Technically economics is the grounding for strategic management theory Rigid 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 strategy History leads to a very young field of research with little in the way of “accepted” principles and theories

Purpose of Strategy? What is the ultimate goal of strategy for a firm? Maximize shareholder value “Monopoly” power Bigger can be better Profits – above average Success – but what is success? Staying in business/survival Does strategy imply or require exploitation of other? Tactics Defn How do we position ourselves to achieve sustainable above average profits in the long run

What is Strategy? Hierarchical Definition What is it? Strengths Part of a 4 stage model Defines how you achieve mission/objectives Plan – write it down/implement/achieve objectives Strengths Specific goals Less abstract Provides structure Context to take great ideas to action Pushes you toward implementation – attention to resource allocation Weaknesses Excludes external environment More static than dynamic Less flexibility

What is Strategy? Eclectic Definition What is it? Strengths Weaknesses Multiple aspects – plan, ploy (tactics), pattern, perspective/perception (how you see yourself), position Strengths Weaknesses

What 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 weaknesses Strengths Not just considering inside firm, also looking at environment Makes you look at your strengths/weaknesses Effective at helping make decisions Weaknesses Assumes firms can predict environment Leaves a void of “what to do about SWOT”

Deliberate versus Emergent Strategies Intended Strategy Unrealized Strategy Deliberate Strategy Sustained Superior Performance Realized Strategy Emergent Strategy Adapted from: Mintzberg, H. “The Strategy Concept I: Five Ps for Strategy” California Management Review. Volume 30 Number1, Fall 1987.

Opportunities and Threats Internal Analysis Strengths and Weaknesses Vision and Mission External Analysis Opportunities and Threats Internal Analysis Strengths and Weaknesses Strategic Choice SWOT Organizational Structure Designing Control Systems Business Strategy Strategy Implementation/Tactics Feedback Succession Planning

Where Are We Headed? Not focused on business strategy research Theory development Empirical testing of Theory Application of Strategy and Strategic Management Process to Decision-making How Mike, Allan, and others use strategy concepts to help firms improve decision-making Expect you to do some reading on the theory to help with background as we explore application of the concepts