Concepts and process od strategic management Lecture 1. Concepts and process od strategic management

Schedule Sept. 11. Introduction, concepts, process of strategy Sept. 18. Analysis of the environment Sept. 25. Resources and capabilities Oct. 2. Seminar: environment and resource analysis Oct. 9. Competive advantages, and strategic alternatives Oct. 16. Seminar: Strategic options Nov. 6. Stakeholders, and corporate governance Nov. 13. Portfolio-models, diversification Nov. 20 Decision, and strategic goals Nov. 27. Seminar: Stakeholders, and goals Dec. 4. Implementation of the strategy Dec. 11. Organization, culture, and change management Dec. 18 Seminar or exam

Gerry Johnson, Kevan Scholes, Richard Whittington. Course textbooks Essential: Gerry Johnson, Kevan Scholes, Richard Whittington. Exploring Corporate Strategy. 7th ed, 2005 Or any other books from Johnson, and Scholes Exlporing Corporate Strategy.

Workbook: submitt et the end of the semester (50%) Assessment Written exam (50%) Workbook: submitt et the end of the semester (50%)

Strategy The strategy is about winning !

The early days … “Initially strategos refered to a role (a general in command of an army). Later it came to mean ‘the art of the general‘, which is to say the psychological and behavioral skills with which he occupied the role. By the time of Pericles (450 BC) it came to mean managerial skill (administration, leadership orienta-tion, power). And by Alexander‘s time (330 BC) it refered to the skill of employing forces to overcome opposition and to create a unified system of global governance“

The strategy and tactics by Clausewitz The tactics: using the army to win the battle. The strategy: using the battles to win the war.

A Definition of Strategy Strategy is: the direction and scope of an organisation, over the long term, which achieves advantage for the organisation, through configuration of its resources, within a changing environment, to meet the needs of markets, and to fulfill stakeholder expectations.

The purpose of the strategy? The strategy are likely to be concerned with scope of an organization’s activities, The strategy is to do with the maching of activities of an organizaton to the environment in which operat The strategy is also to do with the maching of the organizaton’s activities to its resource capability, The strategy have major resource implications for the organization The strategy are likely to affect operational decisions, The strategy will be affected by values and expectations of those who have power in and around the organizaton, The strategy likely to affect the long term direction of an organization

Different types of managerial problem Important problems: changing of established rules and processes Urgent problems: maintaining the established rules and processes Urgent problems Not urgent problems Important problems Crisis management (I have to do..) Strategic management (I really must get around to doing) Not important problems Tactical management (I always seems to get trapped doing..) Operational management (I’ll probably ende up just doing..)

The difference between the strategic and operational types of management Strategic management Operational management Ambiguity, Complexity, Non-rutine decisions Simple modells, and Routinised decisions Organization-wide Operationally specific Fundamental, and significant change Small-scale change Envirionment or expectation driven Resource driven

The difference of the strategic and traditional approache Strategic approache Traditional approache Concentrate on the environment Concentrate on the company Built on appraisal of the market and competition Built on appraisal of the past achievement of the company Aims to utilize of the competitive advantages Aims to continue of the past trends

Competitive & Industry Analysis Implementation and Control The Process View: Competitive Strategy as a Sequence of Steps that may overlap 1 Tasks : Key Questions ... Competitive & Industry Analysis Where do we stand ? Where do we want to go ? Strategy formulation Implementation and Control How do we get there ? BBA_Str1v 13

Basic model of the strategic management process analysis Strategy implementation Strategic choice 11

The strategic analysis The strategic analysis is concerned with understanding the strategic position of an organizaton. The main factors of the strategic analysis: organization. The environment: provide on one hand threats upon the firm, and the same environment provide opportunities. The resources: provide tools to ansvere the environmantal challenges, and determine strengths and weaknesses of the organizations, Culture and expectations: determine values and expectations of those who have power in and around the organizaton,

The strategic choice and decision The strategic choice is concerned with the strategic options, and a series of strategic decisions. The main factors of the strategic choice: Identifying and generating strategic options, Evaluate of the strategic options in the context of the strategic analysis to assess their relaitive merits Selection of new strategy, selectiong those option which the organization (and the main stakeholders) will pursue

The strategic implementation The strategic implementation is concerned with the translation of strategy into action, projects, and programms. The main factors of the implementation process: Planning and allocating resources, and set up the controll systems Re-form the organizational structure, design a new culture if it needs. Managing strategic change

Strategy development routes as outcome (of cultural and political processes) Imposed strategy Intended strategy Realised strategy Unrealised strategy

Patterns of strategy development Continuity Incremental Flux Transformational

Strategic evolution and consolidation Strategic decisions eg Product launch Acquisition Divestment Overseas expansion Evolving strategic direction Strategies evolve and inform strategic decisions, which in turn consolidate strategic direction

The dynamics of paradigm change Development of strategy Implementation Corporate performance The paradigm if unsatisfactory Step 1 Tighter control Step 2 Reconstruct or develop new strategy Step 3 Abandon paradigm and adopt a new one Source: Adapted from P. Grinyer and J.-C. Spender,Turnaround: Managerial recipes for strategic success, Associated Business Press, 1979, p. 203

1 Industry and Competitive Analysis - Questions Tasks : What is our business ? How do we create value ? What are our organizational and/or technological capabilities ? Who are we in business with ? How is our business/industry changing ? What drives this change ? What are our strengths and weaknesses ? What opportunities open up, and what threats exist ? Competitive & Industry Analysis ("Where do we stand?") Strategy formulation ("Where do we want to go ?") Implementation and Control ("How do we get there?") BBA_Str1v 23