Session 1 Ricardo - Intro to Corporate Strategy

RICARDO BUSINESS LEADERS PROGRAMME

SESSION 1 - INTRODUCTION TO CORPORATE

STRATEGY Tom Elsworth

Johnson, G., Scholes, K., & Whittington R. (2012),

Exploring Strategy (9th ed.) Harlow: Financial

Times Prentice Hall.

(8th edition available as an ebook)

Useful text book

PROGRAMME FOR TODAY

Introduction to Corporate Strategy Issues and

perspectives on strategic management for discussion

today

Strategic Analysis

Strategic Choice

Corporate portfolio, governance and CSR and ethical

issues plus group work sessions in which ideas are applied to our case today (IBM

Turnaround)

Plus input from Martin Fausset on the Ricardo perspective on all this

Plus the occasional break!

Strategy is the means by which individuals or organisations achieve their objectives

Strategy is not about doing things better – this is the concern of operational effectiveness. Strategy is about doing things differently Hence the essence of strategy is doing things differently

What is Strategy?

CENTRAL ELEMENTS OF STRATEGIC

MANAGEMENT (JOHNSON AND SCHOLES)

The

strategic

position

Strategic

choices

Strategy

into

action

The environment

Expectations

and purposes Resources

and

competences

Corporate

-level

strategies

Business-

level

strategies

Development

directions and

methods

Organising

Enabling

Managing

change

Strategy

development

LEVELS OF STRATEGY

Corporate

level

strategy

Business unit strategy

Operational strategy

At the corporate level

What business are we in? What business should we be in? What are our basic directions for the future? Are these correct? What is our culture and leadership style? Does it need to be different? What is our attitude to strategic change? What should it be?

At the

business level

How can we compete successfully? Who are our key competitors? What is our sustainable competitive advantage?

How can we innovate?

What value do we add? How can we add more?

What strategic changes are needed? How can they be implemented?

What is the purpose of the organisation? And what are our strategies

to achieve this?

(adapted from Lynch, R, 2003)

STRATEGIC PLANNING PROCESS – THE

STANDARD VIEW

Existing

business

model

External

Analysis:

Opportunities

and Threats

Internal Analysis:

Strengths and

Weaknesses

Strategic

Position:

SWOT

Strategic

choice Implementation

Feedback

THE EMERGENT (OPEN SYSTEM) VIEW OF

STRATEGY DEVELOPMENT

Learning and

logical

incrementalism

Cultural and

political

processes

Unrealised

strategy

Planned

strategy The actual

or

realised

strategy

Externally

imposed

strategy

Emergent

strategy

1

2

3

4

5

events

DEVELOPMENT DIRECTIONS

Development directions are the strategic

options available to an organisation, in terms

of products and market coverage, taking into

account the strategic capability of the

organisation and the expectations of

stakeholders

What possible strategic directions are there?

Markets – expand/contract existing, add/substitute new

Products – abandon/use existing, develop new

Type of development – exit, organic growth, partnerships/joint ventures, mergers and acquisitions, national/international/global

METHODS OF STRATEGY

DEVELOPMENT

Internal Development

Build on and develop an organisation’s own

capabilities

Organic development

Mergers and Acquisitions

Take over ownership of another organisation

Strategic Alliances

Two or more organisations share resources and

activities

SUCCESS CRITERIA FOR

STRATEGIC OPTIONS Suitability

Whether strategy addresses circumstances in which

organisation is operating

Linked to strategic position

Rationale of strategy

Acceptability The expected performance outcomes (e.g. risk/return)

Meeting expectations of stakeholders

Feasibility Whether strategy can be made to work in practice

Linked to strategic capability

SOME READINGS TO ADD

FLAVOUR Bilton, C. & Cummings, S., (2010) Creative strategy: Reconnecting Business and

Innovation, Chichester, Wiley

Eisenhardt, K M, (1989) ‘Agency Theory: An Assessment and Review’, Academy of Management Review, Vol 14, No 1

Grant, R. M. (2010), Contemporary Strategy Analysis. Text and cases (7th ed.) Wiley: Chichester

Haberberg, A and Rieple, A (2008) Strategic Management Theory and Application Oxford: OUP

Hamel, G. and Prahalad, C.K. (1996) Competing for the Future. Boston: Harvard Business School Press.

Henry, A (2008) Understanding Strategic Management Oxford: OUP

Hill, C and Jones, G (2006) Strategic management: an Integrated Approach. (7th ed) Boston: Houghton Mifflin

Johnson, G, Scholes, K, Whittington, R (2012) Exploring Corporate Strategy, Harlow: FT Prentice Hall

Lynch, R (2003) Corporate Strategy, Harlow: Pearson

Ohmae, K. (1991), The Mind of the Strategist. New York and London: McGraw Hill.

Wickham, P. (2006), Strategic Entrepreneurship, (4e) Harlow: Financial Times Prentice Hall.

CORPORATE STRATEGIC CONTEXT OF

RICARDO

Martin Fausset

INITIAL GROUP WORK ON THE CASE

Get to know each other in your groups

Exchange contact details

Have a break but also consider:

What methods of strategy development do we

observe in the case?

One group volunteers to tell us their conclusions