8/4/2019 The Nature the Value of Strategic Management
1/11
Lecture 1
The Nature and the Value ofStrategic Management
8/4/2019 The Nature the Value of Strategic Management
2/11
Without a strategy theorganization is like a ship
without a rudder.
Joel Ross and Michael Kami
2
8/4/2019 The Nature the Value of Strategic Management
3/11
What is Strategy? "Strategy is the direction and scope of an
organization over the long-term: which
achieves advantage for the organizationthrough its configuration of resourceswithin a challenging environment, to meetthe needs of markets and to fulfill
stakeholderexpectations".
Johnson and Scholes (2008)
8/4/2019 The Nature the Value of Strategic Management
4/11
So Strategy Includes..DirectionWhere is the businesstrying to get in the long term Markets & scope
Which markets should a businesscompete in and what kind of activitiesare involved in such markets?
Advantage
How can the business performbetter than the competition inthose markets?
ResourcesWhat resources are requiredin order to be able to compete?(skills, assets, finance,relationships,& technicalCompetencies etc.)
8/4/2019 The Nature the Value of Strategic Management
5/11
So Strategy Includes..StakeholdersWhat are the values & expectationsOf those who have power in and
Around the business?
EnvironmentWhat external environmental factorsAffect the businesses ability to compete?
8/4/2019 The Nature the Value of Strategic Management
6/11
Strategy Development
A simple process
Includes three elements
StrategicAnalysis
Strategic
Choice
Strategic
Implementation
8/4/2019 The Nature the Value of Strategic Management
7/11
Strategy and Operations
RoutinisedOrganisation-wide, holistic
Day to day issuesLong term
Operationally specificAmbiguous/uncertain
Operating within existing strategyDeveloping new resources
Managing existing resourcesCreating new directions
Techniques and actionsConceptualisation of issues
Operational ManagementStrategic Management
7
8/4/2019 The Nature the Value of Strategic Management
8/11
Levels of Strategy
Corporate
strategyBusiness
strategy
Functional strategy
8/4/2019 The Nature the Value of Strategic Management
9/11
Why Strategy is Important? Motivate managers to proactively shape how the
firms business will be conducted
Achieve higher performance levels relative tocompetitors
Provides a systematic approach to uncertainties
Coordinates and focuses employees
9
8/4/2019 The Nature the Value of Strategic Management
10/11
Making a Winning Strategy GOODNESS OF FIT TEST
How well does strategy fit the firms situation?
COMPETITIVE ADVANTAGE TEST
Does strategy lead to sustainable competitive advantage?
PERFORMANCE TEST
Does strategy boost firm performance?
OTHER CRITERIA:
Internal consistency and unity among all pieces of the strategy
Degree of risk the strategy poses as compared to alternativestrategies
Degree to which the strategy is flexible and adaptable to changing
circumstances 10
8/4/2019 The Nature the Value of Strategic Management
11/11
Strategies Evolve Over Time
A companys strategy is awork in progress
Changes may be necessary to react to Shifting market conditions
Technological breakthroughs
Fresh moves of competitors
Evolving customer preferencesEmerging market opportunities
New ideas to improve strategy
Crisis situations
11