1. Strategic Management – Revision session 01
By; Nilantha Perera,

2. Strategic decisions Exhibit 1.1
Integrated approach: if the operations are not in line with strategy then the the strategy will fail
Change : heritage and culture issue in mergers and acquistions
Exhibit 1.1

3. The risk of strategic drift
Irregular surface is punctured equilibrium where punctured equilibrium is the tendency of strategy to develop incrementally with periodic transformational change
Johnson, Scholes & Whittington (2005)
Exhibit 1.4

4. The PESTEL framework (1)
The PESTEL framework categorises environmental influences into six main types: political, economic, social, technological, environmental legal Thus PESTEL provides a comprehensive list of influences on the possible success or failure of particular strategies.

5. Carrying out scenario analysis (1)
Identify the most relevant scope of the study – the relevant product/market and time span.
Identify key drivers of change – PESTEL factors that have the most impact in the future but have uncertain outcomes.
For each key driver select opposing outcomes where each leads to very different consequences.

6. Carrying out scenario analysis (2)
Develop scenario ‘stories’ - That is, coherent and plausible descriptions of the environment that result from opposing outcomes
Identify the impact of each scenario on the organisation and evaluate future strategies in the light of the anticipated scenarios.
Scenario analysis is used in industries with long planning horizons for example, the oil industry or airlines.

7. The five forces framework (1)
Figure 2.2 The five forces framework
Source: Adapted with the permission of The Free Press, a Division of Simon & Schuster Adult Publishing Group, from Competitive Strategy: Techniques for Analyzing Industries and Competitors by Michael E. Porter. Copyright © 1980, 1998 by The Free Press. All rights reserved

8. Blue ocean thinking
‘Blue oceans’ are new market spaces where competition is minimised.
‘Red Oceans’ are where industries are already well defined and rivalry is intense.
Blue Ocean thinking encourages entrepreneurs and managers to be different by finding or creating market spaces that are not currently being served.
A ‘strategy canvas’ compares competitors according to their performance on key success factors in order to develop strategies based on creating new market spaces.

9. Strategy canvas
Figure 2.9 Strategy canvas for electrical components companies
Source: Developed from W.C. Kim and R. Mauborgne, Blue Ocean Strategy, 2005, Harvard Business School Press

10. Core Competencies Resources Core Competence Capability Capability
Inputs to a firm’s production process
Core Competence
A strategic capability
YES
Does the capability satisfy the criteria of sustainable competitive advantage?
Capability
Integration of a team of resources
The source of NO
Capability
A nonstrategic team of resources 42

11. Exhibit 4.1 Influences on Strategic Purpose
Governance
structure
Strategic
Purpose
Corporate values
Mission
Objectives
Stakeholder
expectations
Social
responsibility
and ethics
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12. What is Corporate Governance?
Corporate governance is concerned with the structures and systems of control by which managers are held accountable to those who have a legitimate stake in an organisation.
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13. Exhibit 4.2 The Chain of Corporate Governance
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14. Exhibit 4.7 Stakeholders of a Large Organisation
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15. What is Stakeholder Mapping?
Stakeholder mapping identifies stakeholder expectations and power and helps in understanding political priorities.
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16. Exhibit 4.9 The Power/Interest Matrix
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17. Business Level Strategies
Exhibit 5.1

18. The Strategy Clock Exhibit 5.2a
Note: The strategy clock is adapted from the work of Cliff Bowman (see D. Faulkner and C. Bowman, The Essence of Competitive Strategy, Prentice Hall, 1995.) However, Bowman uses the dimenstion ‘Perceived Use Value’.
Exhibit 5.2a

19. The Strategy Clock
Exhibit 5.2b

20. Game Theory
The inter-relationships between the competitive moves of a set of competitors
Strategist must anticipate competitor reactions
Core assumptions:
Competitor will behave rationally and try to win
Competitor is in an interdependent relationship with other competitors
Competitors are aware of the interdependencies and of the moves that competitors could take

21. Implications of Game Theory
To benefit from game theory strategists need to:
Put themselves in the position of the competitors
Take an informed, rational view on likely competitor actions
Choose best course of action
Identify if there is any competitor strategy which might lead to their domination of the market
Take steps to eliminate the strategy

22. A Prisoner’s Dilemma
Exhibit 5.6

23. Principles of Prisoner’s Dilemma
A dominant strategy
Outperforms all other strategies whatever rivals choose
May be a lesser pay-off than could logically be achieved
A dominated strategy
A competitive strategy pursued by a competitor, which outperforms the company whatever it chooses
Equilibrium
Each competitor gets the best possible strategic solution given the response from the other

24. What is a Corporate Parent?
The corporate parent refers to the levels of management above that of the business units, and therefore without direct interaction with buyers and competitors.
Small business like a local builder……
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25. Exhibit 7.1 Strategic Directions and Corporate-Level Strategy
Value creation
Corporate
parenting
Portfolio
management
Diversification
Penetration
Consolidation
Development
Scope decisions
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26. 7-26

27. Exhibit 7.2 Strategic Directions (Ansoff Matrix)
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28. Value-Adding Activities
Envisioning
Coaching and
facilitating
Providing central
services and
resources
Intervening
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29. Exhibit 7.5 Portfolio and Synergy Managers and Parental Developers
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30. Portfolio Matrices Growth/Share (BCG) Matrix
Directional Policy (GE-McKinsey) Matrix
Parenting Matrix
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31. Exhibit 7.7 The Growth Share (BCG) Matrix
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32. Exhibit 7.8 The Directional Policy (GE-McKinsey) Matrix
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33. Exhibit 7.9 Strategy Guidelines Based on Directional Policy Matrix
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34. Exhibit 7.10 The Parenting Matrix
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