Lesson Three : Strategy In Action Part One : The Strategic ... · PDF fileD39BU – STRATEGIC MANAGEMENT IN THE BUILT ENVIRONMENT Lesson Three : Strategy In Action Part One : The Strategic

D39BU – STRATEGIC MANAGEMENT IN THE BUILT ENVIRONMENT

Lesson Three : Strategy InAction Part One :

The Strategic ManagementProcess

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Lesson Three : Strategy InAction Part One :

The Strategic ManagementProcess

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REFERING TO TEXTBOOK UNIT 4WHAT IS STRATEGY?WHAT IS STRATEGIC MANAGEMENT?

D39BU – Strategic Management in the Built Environment

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REFERING TO TEXTBOOK UNIT 4WHAT IS STRATEGY?WHAT IS STRATEGIC MANAGEMENT?

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ACCORDING TO WHITTINGTON (2001)…… strategy should be treated as the contestedand imperfect practice it really is ….whichmeans that strategy is elusive and abstract asit is a very long term development.

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… strategy should be treated as the contestedand imperfect practice it really is ….whichmeans that strategy is elusive and abstract asit is a very long term development.

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WHAT IS STRATEGY?

According to Chandler (1962)Strategy is the determination of the basic longterm goals and objectives of an enterprise andthe adoption of courses of action and theallocation of resources necessary to achievethose goals ….


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According to Chandler (1962)Strategy is the determination of the basic longterm goals and objectives of an enterprise andthe adoption of courses of action and theallocation of resources necessary to achievethose goals ….

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Other definitions of strategy …

Strategy is the skill in managing orplanning… or

“Strategy is the primarymeans of reachingthe focal objective.

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Other definitions of strategy …

Strategy is the skill in managing orplanning… or

“Strategy is the primarymeans of reachingthe focal objective.

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OTHER DEFINITIONS OF STRATEGYThe art or science of the planning and conduct of

war – Collins (1995)Strategy is supposed to lead an organisation

through changes and shifts to secure its futuregrowth and sustainable success- Cleggs (2005)

The process of formulating, implementing ofactions derived from a competitive position whichis based on distinctive capabilities to haverelationship with customers, suppliers, employeesetc. -- Kay 1993


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The art or science of the planning and conduct ofwar – Collins (1995)

Strategy is supposed to lead an organisationthrough changes and shifts to secure its futuregrowth and sustainable success- Cleggs (2005)

The process of formulating, implementing ofactions derived from a competitive position whichis based on distinctive capabilities to haverelationship with customers, suppliers, employeesetc. -- Kay 1993

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STRATEGIC MANAGEMENTBUSINESS POLICYProviding the road map andthe destination /goals

TOPMgt/CEO

DIVISIONALMANAGERSTHE ROLE

OF EACH Strategic BusinessUnit POLICY


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Rest oforganisation

THE ROLEOF EACH Strategic Business

Unit POLICY

TACTICAL OROPERATIONALPLANS

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SOME OF THE COMMON STRATEGIC ISSUES

1. Growth concerns -


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2. Diversification issues and problems

3. Issues of competitive advantage

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MEANING OF STRATEGICPLANNING

3050

70

Knowing where yourorganisationIs heading and how to get there?

Setting clear objectives andmobilising resources to achievethe objectives

Thinking in long termTaking into account the macro -environment in which theorganisation operates – lookingat what you can do better thancompetitors


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For example:Growth of Business

Yr 1 Yr 2 Yr 3 Yr 4

1030

Knowing where yourorganisationIs heading and how to get there?

Setting clear objectives andmobilising resources to achievethe objectives

Thinking in long termTaking into account the macro -environment in which theorganisation operates – lookingat what you can do better thancompetitors

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STRATEGIC ISSUES & CONCERNSAddressing and developing organisation aims &

goalsExamining values and cultures underpinning the

organisationAssessing the appropriateness of structure for

future directionsExploring marketplace relationships and

stakeholders’ concernsExploring current and future expectations on ROI etc


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Addressing and developing organisation aims &goals

Examining values and cultures underpinning theorganisation

Assessing the appropriateness of structure forfuture directions

Exploring marketplace relationships andstakeholders’ concerns

Exploring current and future expectations on ROI etc

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STRATEGIC PLANNING IS AIMED WITH THEFOLLOWING OBJECTIVES

To maximise shareholders’ valuesTo achieve competitive positioning and powerTo help grow profits and expand the organisationTo satisfy customersTo provide employment for the community

(Refer to Pg 4 Unit 4 )


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To maximise shareholders’ valuesTo achieve competitive positioning and powerTo help grow profits and expand the organisationTo satisfy customersTo provide employment for the community

(Refer to Pg 4 Unit 4 )

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COMPLEXITY

COMPETITIVE ADVANTAGE

STRATEGIC PROCESSES

DYNAMIC FORMULATION ANDIMPLEMENTATION


Overview of development of strategic management …sl/B

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STRATEGIC PLANNING

PHASE OF GENERALISATION

TIME

FORMULATION IMPLEMENTATIONStrategic

plans/SWOTLife cycle /portfolio/

PIMS

CompetitivenessValue chain

Generic strategies

Strategyprocesses

Orgn learningBPR

Merger and acquisition

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Overall view of Strategic Management


Step 1 Step 2 Step 3 Step 4

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Environmentalscanning

Implementingstrategies andaction plans

Opportunities &Risks –assessments

By consideringResources and

capability

Evaluation ofBest match betweenOpportunities and

resources

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DIMENSIONS OF STRATEGY

Content

Scope

process

implementation


Diversification/growth

Acquisition and internal dev

Activities/resources/technology

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process

Time framed

Methodphilosophy

Ownership

STRATEGYCentral or decentral orgn/structure

Analytic/deductive/enterpreneurial/system

Specialists/top mgt /employeesHow many year frames?

Report/plan /what model?

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HIERARCHY OF STRATEGY

Corporate HQ CorporateCorporateStrategyStrategy


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Functional/Functional/operationaloperationalStrategyStrategyOperations Finance Research &

developmentHuman

resourcesMarketing

BusinessBusinessStrategyStrategy

BusinessUnit

BusinessUnit

BusinessUnit

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DIFFERENCE BETWEEN STRATEGIC & OPERATIONAL MANAGEMENT

Strategic Mgt Operational MgtBroad level accountability Middle level accountabilityDo the right things Do the things rightConcerns over futuregrowth & competitiveposition & financial growth

Concerns over deptperformance & budgets &sales targets & quality


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Concerns over futuregrowth & competitiveposition & financial growth

Concerns over deptperformance & budgets &sales targets & quality

Long term focus Short term analysisHigh level of complexity &uncertainty

Less complex and stable

Refer to Pg 5 Unit 4

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ACCORDING TO WHITTINGTON …… strategy should be treated as the contested andimperfect practice it really is ….which means thatstrategy is elusive and abstract as it is a very longterm development.He develops what we know as the2 x 2 framework or the 4 perspectives ofmanagement approach


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… strategy should be treated as the contested andimperfect practice it really is ….which means thatstrategy is elusive and abstract as it is a very longterm development.He develops what we know as the2 x 2 framework or the 4 perspectives ofmanagement approach

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4 PERSPECTIVES ON STRATEGY –

EACH WILL HAVE DIFFERENT IMPACT ONMANAGEMENT STYLE OF ORGANISATIONLEADERSHIP

ClassicalEvolutionaryProcessualSystematic


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ClassicalEvolutionaryProcessualSystematic

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DIAGRAM ON THE 4 PERSPECTIVES ON STRATEGYOutcomes

profit maximisation

CLASSICAL EVOLUTIONARY

ProcessesDeliberate emergent

SYSTEMATIC PROCESSUAL

plural /mixed


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Outcomesprofit maximisation

CLASSICAL EVOLUTIONARY

ProcessesDeliberate emergent

SYSTEMATIC PROCESSUAL

plural /mixed

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Rational planning because profitability is the supremegoal of business ;

Strategic position of the firm is vital to achieve profitmaximisation as it is the aim of business to earn areturn on capital

Top down , rational management approach to decisionmaking and focus on long term goals through logicalcascading of actions and resource

Refer to the supplementary notes “ British Library :theworld’s knowledge”

D39BU – Strategic Management in the Built EnvironmentClassical Perspective

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Rational planning because profitability is the supremegoal of business ;

Strategic position of the firm is vital to achieve profitmaximisation as it is the aim of business to earn areturn on capital

Top down , rational management approach to decisionmaking and focus on long term goals through logicalcascading of actions and resource

Refer to the supplementary notes “ British Library :theworld’s knowledge”

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ADVANTAGES OF CLASSICAL APPROACH

Accountability and control by top management so thatmiddle management can concentrate on operationalmatters;

Military tradition of strategy means that decisionmaking is centred on the leader who has the foresightand the experience to plan and execute propercommand

Rational and well thought long term planning focussedon fulfilling objectives set


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Accountability and control by top management so thatmiddle management can concentrate on operationalmatters;

Military tradition of strategy means that decisionmaking is centred on the leader who has the foresightand the experience to plan and execute propercommand

Rational and well thought long term planning focussedon fulfilling objectives set

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DISADVANTAGE OF CLASSICAL PLANNINGTop management may not be able to know all the

issues at hand and act rationallyBureaucratic and slow process thus causing time

wastageDecision making may not be for the benefit of all

stakeholders as it is too rigid


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Top management may not be able to know all theissues at hand and act rationally

Bureaucratic and slow process thus causing timewastage

Decision making may not be for the benefit of allstakeholders as it is too rigid

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EVOLUTIONARY APPROACH TO STRATEGY

Based on groups of managers to plan and strategizeusing the best possible methods such as cost-benefitanalysis and other ways to map out resources andstrategies for business development and growth

Decision making is based on various options andconsensus by managers and experts in the field ,taking into account competition in the market place


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Based on groups of managers to plan and strategizeusing the best possible methods such as cost-benefitanalysis and other ways to map out resources andstrategies for business development and growth

Decision making is based on various options andconsensus by managers and experts in the field ,taking into account competition in the market place

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ADVANTAGES OF EVOLUTIONARY PERSPECTIVE

Take into consideration competitive environment inwhich business operates;

Let nature takes its course so the decision makersconsider many factors in the ecology of business andselect the best alternative for survival and growth


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Take into consideration competitive environment inwhich business operates;

Let nature takes its course so the decision makersconsider many factors in the ecology of business andselect the best alternative for survival and growth

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PROBLEMS ENCOUNTERED USINGEVOLUTIONARY PERSPECTIVE

Organisations may lack capacity to achievedifferentiation and adaptation to sustaincompetition;

Markets are unpredictable and the environment canbe dynamic and turbulent which results in changeswhich may be too rapid for the organisations toslowly evolve..


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Organisations may lack capacity to achievedifferentiation and adaptation to sustaincompetition;

Markets are unpredictable and the environment canbe dynamic and turbulent which results in changeswhich may be too rapid for the organisations toslowly evolve..

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PROCESSUAL APPROACH TO STRATEGY

Similar to evolutionary approach but morecautious by taking small steps procedurally andcarefully to achieve objectives ;

Internal procedures and external complexities areweighed by managers in decision making

Taking feedback from the ground and enablingpeople’s opinion so that a satisfactory option ispresented for implementation


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Similar to evolutionary approach but morecautious by taking small steps procedurally andcarefully to achieve objectives ;

Internal procedures and external complexities areweighed by managers in decision making

Taking feedback from the ground and enablingpeople’s opinion so that a satisfactory option ispresented for implementation

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ADVANTAGES OF PROCESSUAL APPROACH

This kind of management takes into considerationindividual interest via the bounded rationality toderive at a decision

Strategies are chosen not programmed –depending on the emergent issues that arise

Decisions are made after considering humanfactors and behaviours to integrate best decisions


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This kind of management takes into considerationindividual interest via the bounded rationality toderive at a decision

Strategies are chosen not programmed –depending on the emergent issues that arise

Decisions are made after considering humanfactors and behaviours to integrate best decisions

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THE CHALLENGES OF PROCESSUAL APPROACH

Time consuming due to the need to consider manyvariables and could endanger the organisation’slong term survival;

Does not take rational thinking seriouslyLack of sufficient managers with the right skills and

knowledge to ensure success of this kind ofstrategy so decisions may not be the optimalsolutions – may just be satisfying ones only


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Time consuming due to the need to consider manyvariables and could endanger the organisation’slong term survival;

Does not take rational thinking seriouslyLack of sufficient managers with the right skills and

knowledge to ensure success of this kind ofstrategy so decisions may not be the optimalsolutions – may just be satisfying ones only

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SYSTEMIC PERSPECTIVE ON STRATEGY

Examines the various social systems within theorganisation and evolve decisions that considerboth economic and social implications

Depending on the internal corporate culture, thedecision makers go by the rules of the majority soas to get viable goals achieved which may not bethe profit maxmisation objective but achieveoverall stakeholders’ satisfaction


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Examines the various social systems within theorganisation and evolve decisions that considerboth economic and social implications

Depending on the internal corporate culture, thedecision makers go by the rules of the majority soas to get viable goals achieved which may not bethe profit maxmisation objective but achieveoverall stakeholders’ satisfaction

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ADVANTAGES OF SYSTEMS VIEW

All stakeholders are involved in the social systemsof the organisation ;

Take into embedded systems within the organisationand consider all social groups’ inputs such as cultureand values


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All stakeholders are involved in the social systemsof the organisation ;

Take into embedded systems within the organisationand consider all social groups’ inputs such as cultureand values

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DEMERITS OF THE SYSTEMIC PERSPECTIVE

Various social and cultural systems may haveconflicts with each other causing dissent andunhappiness within the organisation;

May result in some dominant decision makers whomay push through their ideas and decisions


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Various social and cultural systems may haveconflicts with each other causing dissent andunhappiness within the organisation;

May result in some dominant decision makers whomay push through their ideas and decisions

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TABLE SHOWING THE VARIOUS ELEMENTS ASSOCIATED WITH THE 4PERSPECTIVES ON STRATEGY

Classic Processual Evolutionary systemicStrategy Formal Crafted Efficient EmbeddedGoals Profit Max Mixed goals of

both profit andsatisfaction

Survival Stakeholders’satisfaction

Focus Internalplanning

Politicalplanning

Externalmarketplanning

Externalsocietalcultures


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Internalplanning

Politicalplanning

Externalmarketplanning

Externalsocietalcultures

Processes Analytical Learning Darwinianevolution

Social creation

Key influences Military Psychology Economics SociologyKey gurus Chandler/Port

erMintzberg Hannan &

FreemanGranovetter&Whitley

Period ofemergence

1960s 1970s 1980s 1990s

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IN ESSENCE …The 4 approaches/theories or perspectives show different

ways in which management look at strategic decisions.The classical school confidently prescribes a rational

detached and sequential approach to long term strategicmanagement;

The evolutionary and processual perspectives aremore cautious and plan according to hierarchywhich work well in stable environments whilethe systems approach is more relativistic taking into

account the social systems and the environment interaction


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The 4 approaches/theories or perspectives show differentways in which management look at strategic decisions.The classical school confidently prescribes a rational

detached and sequential approach to long term strategicmanagement;

The evolutionary and processual perspectives aremore cautious and plan according to hierarchywhich work well in stable environments whilethe systems approach is more relativistic taking into

account the social systems and the environment interaction

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AS ORGANISATIONS ARE OPERATING IN ACOMPETITIVE WORLD, STRATEGIES AREDEVELOPED TO COPE WITH THE NEED TOSURVIVE IN THE MARKETPLACE.

STRATEGIC MANAGEMENT IS SUPPOSED TOHELP ORGANISATIONS STEER THROUGHCHANGES AND SHIFTS IN THE ENVIRONMENT TOSECURE FUTURE GROWTH AND SUSTAINABLESUCCESS .

Another look at strategic positioning in reality …D39BU – Business Management in the Built Environment

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AS ORGANISATIONS ARE OPERATING IN ACOMPETITIVE WORLD, STRATEGIES AREDEVELOPED TO COPE WITH THE NEED TOSURVIVE IN THE MARKETPLACE.

STRATEGIC MANAGEMENT IS SUPPOSED TOHELP ORGANISATIONS STEER THROUGHCHANGES AND SHIFTS IN THE ENVIRONMENT TOSECURE FUTURE GROWTH AND SUSTAINABLESUCCESS .

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Just like you and I, without a long term goal,we will be aimless, so organisations needgoals, vision, mission to enable them to sailthrough the storms of competition, changesin the market etc..

In fact, strategic planning is similar to theart of war (Sun Tze) – you need tounderstand strategic positioning and alsothe process of analysis, formulation andthen implementation of your tactics andoperations in order to succeed in business

Strategic positioning in reality …D39BU – Business Management in the Built Environment

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Just like you and I, without a long term goal,we will be aimless, so organisations needgoals, vision, mission to enable them to sailthrough the storms of competition, changesin the market etc..

In fact, strategic planning is similar to theart of war (Sun Tze) – you need tounderstand strategic positioning and alsothe process of analysis, formulation andthen implementation of your tactics andoperations in order to succeed in business

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STRATEGIES ARE BASED ON CERTAINSCHOOLS OF THOUGHTS ON WHICH DIFFERS INTHE WAY STRATEGIC PLANNING IS DONE

3 basic thoughts via …1. Classical or rational planning school2. The design school3. The positioning school

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1. Classical or rational planning school2. The design school3. The positioning school

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1. CLASSICAL OR RATIONAL PLANNING SCHOOL is fashioned after Alfred Chandler’s model, where

planning is top down, bureaucratic approach ofcentral decision which is cascaded down to thebottom of the hierarchy in the organisation

Igor Ansoff’s model of 3 levels of decisions:Strategic --- then Operational --- Administrative in

a pyramidal format like this below:


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1. CLASSICAL OR RATIONAL PLANNING SCHOOL is fashioned after Alfred Chandler’s model, where

planning is top down, bureaucratic approach ofcentral decision which is cascaded down to thebottom of the hierarchy in the organisation

Igor Ansoff’s model of 3 levels of decisions:Strategic --- then Operational --- Administrative in

a pyramidal format like this below:

Strategic levelOperational levelAdministrative level

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2. THE DESIGN SCHOOL OF THOUGHT

Fashioned like the planning school exceptthat there is internal focus on SWOT andexternal analysis of the environment

This process is adopted by mostorganisations today -

7 steps to strategic planning will bediscussed ………next slide


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Fashioned like the planning school exceptthat there is internal focus on SWOT andexternal analysis of the environment

This process is adopted by mostorganisations today -

7 steps to strategic planning will bediscussed ………next slide

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DIAGRAM SHOWING THE PROCESS OF STRATEGIC PLANNING –A 7-STEP MODEL

Vision &mission Swot analyss

STEEP & Scenarios Planning

D39BU – Business Management in the Built Environment

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Strategic analysis & optionsdecision making

implementation

Evaluation & monitoring

Discuss in pairs the various vision and missionof these organisations given in the exercise(5 minutes )

Write your own vision and mission for 2015 &beyond

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VISION AND MISSION

D39BU – Business Management in the Built Environment

Discuss in pairs the various vision and missionof these organisations given in the exercise(5 minutes )

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3. THE POSITIONING SCHOOL :MICHAEL PORTER’S MODEL – ALSO PART OF THEEVOLUTIONARY/COMPETITIVE PERSPECTIVE

This is the strategic approach based oncompetition –survival of the fittest. Porter arguesthat profitability of an organisation lies in the powerof the organisation to position itself against theothers in the industry and how it uses itscapabilities to handle its bargaining position tosustain growth and success.


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This is the strategic approach based oncompetition –survival of the fittest. Porter arguesthat profitability of an organisation lies in the powerof the organisation to position itself against theothers in the industry and how it uses itscapabilities to handle its bargaining position tosustain growth and success.

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MICHAEL PORTER: GURU OF STRATEGICMANAGEMENT

His theories include:Diamond ModelGeneric Business strategies5 Forces ModelValue Chain Analysis etc..


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His theories include:Diamond ModelGeneric Business strategies5 Forces ModelValue Chain Analysis etc..

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MICHAEL PORTER’S STRATEGIES

Will be discussed in detail in Lesson 4

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DISCUSS THE FOLLOWING QUESTIONS :

Assignment1. What are the environmentalissues that will affect the Built EnvironmentIndustry? List and describe at least 3 of them

2. Which strategic approach do you think is adopted byyour senior management?

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Assignment1. What are the environmentalissues that will affect the Built EnvironmentIndustry? List and describe at least 3 of them

2. Which strategic approach do you think is adopted byyour senior management?

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CORE READING FOR MODULE

Useful reading material◦ Carter, C., Clegg, S., Kornberger, M (2008) A very short,

fairly interesting and reasonably cheap book about studyingorganisations, Sage, London

◦ Clegg, S., Kornberger, M., Pitsis, T. (2005) Managing andOrganisations: An introduction to theory and practice, Sage,London

◦ Whittington, R. (2001) (2nd Ed.) What is Strategy – and doesit matter?, Thomson, London

◦ Mintzberg, H., Ahlstrand, B., Lampel, J. (1998) StrategySafari: the complete guide through the wilds of strategicmanagement, Prentice Hall, London

◦ Langford, S., Male, S. (2001) Strategic Management inConstruction, Blackwell, Oxford

◦ Journal papers.....................


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Useful reading material◦ Carter, C., Clegg, S., Kornberger, M (2008) A very short,

fairly interesting and reasonably cheap book about studyingorganisations, Sage, London

◦ Clegg, S., Kornberger, M., Pitsis, T. (2005) Managing andOrganisations: An introduction to theory and practice, Sage,London

◦ Whittington, R. (2001) (2nd Ed.) What is Strategy – and doesit matter?, Thomson, London

◦ Mintzberg, H., Ahlstrand, B., Lampel, J. (1998) StrategySafari: the complete guide through the wilds of strategicmanagement, Prentice Hall, London

◦ Langford, S., Male, S. (2001) Strategic Management inConstruction, Blackwell, Oxford

◦ Journal papers.....................

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Lesson Three : Strategy In Action Part One : The Strategic ... · PDF fileD39BU – STRATEGIC MANAGEMENT IN THE BUILT ENVIRONMENT Lesson Three : Strategy In Action Part One : The Strategic

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