BUS516 Integrative Business Strategies What is Strategy? Dr. Ellen A. Drost

The Concept of Strategy Ten schools of thought. Ten schools of thought. Ten different strategy definitions Ten different strategy definitions The evolution of strategic management. The evolution of strategic management. The Basis Framework The Basis Framework Levels of strategy Levels of strategy Strategy making: Design or process? Strategy making: Design or process? OVERVIEW

Ten Schools One Word Definitions A DESIGN A PLAN A POSITION A VISION A PATTERN A PERCEPTION A PERCEPTION AN AGENDA AN AGENDA A BELIEF AN EVOLUTION A TRANSFORMATION

Ten Schools Word Association 1.DESIGN: plan, long term, fit, SWOT, competitive advantage, deliberate 1.DESIGN: plan, long term, fit, SWOT, competitive advantage, deliberate 2.PLANNING: facts, scenarios, analysis, budgeting, scheduling, reason 2.PLANNING: facts, scenarios, analysis, budgeting, scheduling, reason 3.POSITIONING: markets, industry, generic, analytical, experience curve, portfolio, 3.POSITIONING: markets, industry, generic, analytical, experience curve, portfolio, 4.ENTREPRENEURIAL:vision, insight, leadership, simple, gut feel 4.ENTREPRENEURIAL:vision, insight, leadership, simple, gut feel 5.LEARNING: emergent, pattern, serendipitous, venturing, champion intrapreneurship, sense-making, incrementalism, decentralized 5.LEARNING: emergent, pattern, serendipitous, venturing, champion intrapreneurship, sense-making, incrementalism, decentralized 6.COGNITIVE: perception, cognition, frame, concept, interpretation, map, frame, brain 6.COGNITIVE: perception, cognition, frame, concept, interpretation, map, frame, brain 7.POWER: resistance, coalitions, stakeholders, conflict, game, bargaining, network, alliance 7.POWER: resistance, coalitions, stakeholders, conflict, game, bargaining, network, alliance 8.CULTURAL: values, beliefs, commitment, ideology, people, training 8.CULTURAL: values, beliefs, commitment, ideology, people, training 9.ENVIRONMENTAL: reaction, passive, evolutionary, contingency, selection, complexity, adaptation 9.ENVIRONMENTAL: reaction, passive, evolutionary, contingency, selection, complexity, adaptation 10.CONFIGURATIONAL SCHOOL: any of the above, at the proper time 10.CONFIGURATIONAL SCHOOL: any of the above, at the proper time

The Ten Strategy Schools 1.DESIGN: a process of conception 1.DESIGN: a process of conception 2.PLANNING: a formal process 2.PLANNING: a formal process 3.POSITIONING: an analytical process 3.POSITIONING: an analytical process 4.ENTREPRENEURIAL: a visionary process 4.ENTREPRENEURIAL: a visionary process 5.COGNITIVE: a mental process 5.COGNITIVE: a mental process 6.LEARNING: an emergent process 6.LEARNING: an emergent process 7.POLITICAL: a process of negotiation 7.POLITICAL: a process of negotiation 8.CULTURAL: a collective process 8.CULTURAL: a collective process 9.ENVIRONMENTAL: a reactive process 9.ENVIRONMENTAL: a reactive process 10.CONFIGURATIONAL: a process of transformation

Ten Different Strategy Definitions 1.DESIGN SCHOOL: a carefully tailored, explicit (unique) plan 1.DESIGN SCHOOL: a carefully tailored, explicit (unique) plan 2.PLANNING SCHOOL: a systematic, formal plan for five to ten years 2.PLANNING SCHOOL: a systematic, formal plan for five to ten years 3.POSITIONING SCHOOL: a tangible position fitted to context 3.POSITIONING SCHOOL: a tangible position fitted to context 4.ENTREPRENEURIAL SCHOOL: a leader’s perspective or intuition on a vague vision 4.ENTREPRENEURIAL SCHOOL: a leader’s perspective or intuition on a vague vision 5.LEARNING SCHOOL: a pattern that emerges from behavior 5.LEARNING SCHOOL: a pattern that emerges from behavior 6.COGNITIVE SCHOOL: a (creative) interpretive or constructivist view of what is happening or must happen (strategy) 6.COGNITIVE SCHOOL: a (creative) interpretive or constructivist view of what is happening or must happen (strategy) 7.POWER SCHOOL: an agenda, a compromised position, often a ploy resulting from bargaining among competing actors 7.POWER SCHOOL: an agenda, a compromised position, often a ploy resulting from bargaining among competing actors 8.CULTURAL SCHOOL: strategy as a social process or set of key values and beliefs on common interest and integration 8.CULTURAL SCHOOL: strategy as a social process or set of key values and beliefs on common interest and integration 9.ENVIRONMENTAL SCHOOL: a position as a necessary response to external factors 9.ENVIRONMENTAL SCHOOL: a position as a necessary response to external factors 10.CONFIGURATIONAL SCHOOL: any of the above, at the proper time

What are the leading perspectives on what determines how firms compete? Prescriptive School Descriptive Schools a designa vision a plana perception a positiona pattern an agenda a belief a response a stage

What are the leading perspectives on what determines how firms compete? Industrial Organization external focus analytical approach Focus on: firm’s position, competitiveness in an industry/market Creation of a unique position, valuable position in industry/market Resource-Based View internal focus learning approach core competence How valuable are the firm’s resources Depends on unique resources and capabilities of the firm Look inside the firm valuablerare costly to imitate

The Evolution of Strategic Management Themes & Issues Concepts Techniques Organization implication 1950s1960s1970sLate1980s1990s Late 90s BudgetaryCorporateCorporate Industry analysisResource Innovation Planning&controlplanningstrategy& competitionbased view of the firm Financial ControlGrowthDiversificationPositioning, marketCore Strategic Portfolio Planningsegmentation competency capabilities Budget&planningforecastingStrategic fitIndustry StructureResources Knowledge modelingcompetitor Capabilities creation analysisLearning Financial mgt keyCorporate planningMultidivisional/Industry Outsourcing Alliances/ matrix structures consolidation redefining Networks globalizationDownsizing strategy Virtual org. TQMReengineering for growth operational asset mgt improvement

The Basic Framework: Strategy is the Link between the Firm And its Environment THE FIRM Goals and Values Resources And Capabilities Structure and Systems GENERAL ENVIRONEMNT Political Economy Technology Socio-cultural THE INDUSTRY ENVIRONMENT Competitors Customers Suppliers STRATEGY

Sources of Superior Profitability How do we obtain superior profitability? How do we make money? INDUSTRY ATTRACTIVENESS Which industries/businesses should we be in? COMPETITIVE ADVANTAGE How should we compete? CORPORATE STRATEGY BUSINESS STRATEGY

Levels of Strategy and Organization Structure Corporate Strategy Business Strategy Functional Strategies Corporate Head Office Division A Division B R & D H R Finance Production Marketing/Sales R & D HR Finance Production Mkt/sales

The Multiple Roles of Strategy Strategy as Decision Support Strategy as Coordination and Communication Strategy as Target Improves the quality of decision making Creates consistency and unity Improves performance by setting high aspirations

The Role of Analysis Strategy analysis improves decision processes, but doesn’t give answers. Strategy analysis improves decision processes, but doesn’t give answers. Strategy analysis assists us to identify and understand the main issues. Strategy analysis assists us to identify and understand the main issues. Strategy analysis helps us to manage complexity. Strategy analysis helps us to manage complexity. Strategy analysis can enhance flexibility and innovation by supporting learning. Strategy analysis can enhance flexibility and innovation by supporting learning.

Strategy: Design or Process? You Decide………… Strategy as design Planning and rational choice INTENDED STRATEGY Many decision makers responding to multitude of external and internal forces REALIZED STRATEGY EMERGENT STRATEGY Strategy as process