Strategic Management

Aims of this session• Understand the concepts of Strategy, Strategic

Management and other basic vocabulary of strategy;

• Identify the characteristics of strategic decisions;

• Identify the various levels of strategic decision making;

• Understand the various elements of the Strategic Management process.

• Understand different approaches to strategy

What is Strategy?

Understanding the Origin

“Strategos”The main task of the general – to lead,

to direct, to show the way to the army.

Understanding the Origin

“The Art of War” - the oldest military manual written approximately 400-320 b.C. by an ancient Chinese general, Sun Tzu.

• “Sun Tzu and the Art of Business” (Mark McNeilly).

• “Sun Tzu: War and Management” (Hou, W., Sheang, L. And Hidajat, B.)

• “Sun Tzu: the Art of War for Managers: 50 Strategic Rules” (Gerald Michaelson).

• “The Art of Strategy: A New Translation of Sun Tzu’s ‘The Art of War’” (Wing).

Sun Tzu’s Military Strategy and Management

“An army shouldn’t go to war, unless it is certain that it has an advantage over the enemy.”

• Lesson: Management should not only know their own internal capability but also the resources and competences of their competitors.

“A territory must be conquered as quickly as possible, and unnecessary blood shed should be avoided.”

Lesson: Management should avoid unnecessary waste of time and resources.

Military Strategy and a Business Strategy

Business strategy Military strategy

Objective •To conquer and control markets

•To conquer and control territories

Analysis •Of the macro environment

•Of the industry (microenvironment)

•Resources and competences

•Organisational structure

•Control and co-ordination

•Of the environmental conditions

•Enemy’s strengthens and weaknesses

•Own capabilities and limitations

•Command structure

•Leadership and co-ordination

Results •Business strategy

•Strategic plan

•Military strategy

•Plan of campaign

Levels of Strategy

• Corporate Level

• Business Unit Level (Strategic Business Unit)

• Operational Strategies

Levels of Strategy

Strategy and Tactics – War and batles

• Without winning the battles we cannot win the war, but without determining first which victories are really critical to succeed, we cannot determine which battles are really necessary.

Definition of Strategy

“Strategy is the direction and scope of an organisation over the long term: which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations.” (Johnson and Scholes, 2005:9).

Another definition (cont.)

“The strategy of the firm is the match between its internal capabilities and its external relationships. It describes how it responds to its suppliers, its customers, its competitors and the social and economic environment within which it operates.”

Strategy is basically the way Strategy is basically the way

The 5 P’s of StrategyHenry Mintzberg, 1987

PLAN: Consciously intended course of action

PATTERN: Consistency in behavior

POSITION: Where in its environment?

PERSPECTIVE: Ingrained way of perceiving the world

PLOY:

The Strategic Management Process

The managerial functions Henri Fayol 1841 - 1925

The managerial functions Henri Fayol 1841 - 1925

To PLAN

To ORGANISE

To COORDINATE

To COMMAND

To CONTROL

But Management isn’t Strategic Management

What is Strategic Management?

“Strategic Management can be defined as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organisation to achieve its objectives” David Fred (2003: 5).

 “Strategic Management is a process of formulating,

implementing, and evaluating cross-functional decisions that enable the organisation to define and achieve its mission, and ultimately to create value” Stephen Porth (2003: 2).

The Strategic Management Process

Prescriptive Strategy vs.

Emergent StrategyPrescriptive Strategy• “Is one whose objective has been defined in

advance and whose main elements have been developed before the strategy commences.”

Emergent Strategy• “Is a strategy whose final objective is unclear and

whose elements are developed during the course of its life, as a strategy proceeds.” (Lynch, 2006:16)

The Strategy LensesStrategy - deliberate or emergent ?

The Strategy LensesStrategy - deliberate or emergent ?

deliberate

Unrealizedstrategy Realized

strategy

Centrally controlledor

loosely coupled ?

Intended strategy

Emergentstrategy

Strategic Management in Different Contexts

• Small business context

• The multinational corporation

• Manufacturing and services organisations

• Strategy in the public sector

• The voluntary and not-for-profit sectors

Nine Dot Puzzle - 1

Draw four straight lines through all nine dots without lifting your pen/pencil from the paper.

Nine Dot Puzzle - 1 solution

Draw four straight lines through all nine dots without lifting your pen/pencil from the paper.

Nine Dot Puzzle - 2

NOW Draw three straight lines through all nine dots without lifting your pen/pencil from the paper.

Nine Dot Puzzle – 2 solution

NOW Draw three straight lines through all nine dots without lifting your pen/pencil from the paper.

Nine Dot Puzzle - 3

AND NOW DO IT WITH ONLY ONE LINE !!!!

Nine Dot Puzzle – 3 solution

Use a VERY BROAD pen.

AND NOW DO IT WITH ONLY ONE LINE !!!!

References• Johnson, G. Scholes, K. and Whittington, R.

(2005). Exploring Corporate Strategy. 7th Edition. Harlow: Financial Times Prentice Hall.

• Lynch, R. (2006). Corporate Strategy. 4th Edition. Harlow: Financial Times Prentice Hall.

• Porth, S. (2003). Strategic Management: A Cross Functional Approach. New Jersey: Prentice Hall.

• Stonehouse, G., Hamill, J., Campbell, D. and Purdie, T. (2000). Global and transnational Business: Strategy and Management. Chichester: John Wiley and Sons Ltd.

Readings and preparations• Part II - Chapter 2: Johnson, G. and Scholes, K.

(2005) “Exploring Corporate Strategy”. 7th Edition

• Part 2 - Chapter 3: Lynch, R. (2006) “Corporate Strategy”. 4th Edition

Next Session:• External analysis• The Macro environemnt (PESTEL model) • Case Study: • Exercise: “Doom and Gloom”