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a material helping you study business

1. 1-1
INTRODUCTION
TO BUSINESS STRATEGY
1
Chapter

2. 1-2
Quote . . .
“Without a strategy the organization
is like a ship without a rudder,
going around in circles.”
Joel Ross and Michael Kami

3. 1-3
Military influences in strategy
u“Strategos” referred to a general in command of an
army
uThe art of the general
èBy 450 B.C. it came to mean managerial skill
èBy 330 B.C. it referred to the skill of employing forces to
overcome positions to create a system of global governance
uCarl von Clausewitz “tactics…(involve) the use of
armed forces in the engagement, strategy (is) the
use of engagements for the object of war” 1838 On
War
Formation and development
of business strategy

4. 1-4
Academic influences in strategy
u1911 Scientific management (Taylor) –Still in place today
(UPS), some consider it micromanaging
uHBS requires a class in Business Policy in 1912
uAdam Smith’s “invisible hand” (the market) gives way to Alfred
Sloan (GM CEO from 1923-1946) concept of the “visible
hand”—middle manager
uChester Bernard influential book “The Executive” argues that
managers should pay attention to “strategic factors”
uRonald Coase’s1937 article “why firms exist” (Nobel Prize in
economics) and Joseph Schumpter’sconcept of “disruptive
technologies” written in 1942 bring in organizational economics
uMax Weber warns against bureaucratic organizations but sees a
shift toward this way of organizing
Formation and development
of business strategy

5. 1-5
Recent influences in strategy
u1960s (Strategy and structure; Corporate Strategy)
n1963 Harvard business conference leads to SWOT
analysis
nBCG founded in 1963 “strategy boutique”
lCreated the portfolio analysis
nStars, dogs, cash cows, question marks
u1980s (Porter’s 5 forces)
u1990s (Resource based view of the firm)
Formation and development
of business strategy

6. 1-6
Formation and development
of business strategy
Ø1911: it was taught at Harvard University with the
name “The policy of enterprise”.
Ø1911-1960: it was applied.
Ø1960s-1970s: it was actually applied into
enterprises and taught in universities.
ØCurrently, it was taught in all universities related
to economics and business.

7. 1-7
What is strategy?
Ø“Strategy is what an organization must make based on their strength and weaknesses in context with all the opportunities and threats” (Kenneth Andrew, The concept of corporate strategy)
Ø“Strategy is the process to identify the long-term objectives, select methods or processes of action and allocate necessary resources to achieve the goals”(Alfred Chandler, Strategy and structure).
Ø“Strategy is to determine the allocation of available resources to change the competitive balance and move competitive advantage to their side” (Boston Consulting Group –BCG).
Ø“Strategy to cope with competition is the combination of objectives needed to achieve and means that enterprises need to find to achieve the goals(Michael Porter).

8. 1-8
Intended, Emergent & Realized
Strategies
Intended
StrategiesRealized
StrategiesDeliberate
Strategies
Emergent
Strategies
Unrealized
Strategies
Thus, strategy can emerge from
“a Pattern in the stream of decisions or actions”

9. 1-9
Intended, Emergent & Realized Strategies
Company’s realized strategy is the product of
whatever planned (intended strategies) are actually
put into action and of any unplanned strategies
(emergent strategies)

10. 1-10
What is strategic management?
“Strategic management is the process of analysing
the current and future situation of enterprises,
planning objectives/goals, setting out the
implementation and monitoring the implementation to
achieve the goals/objectives”

11. 1-11
Process of strategic management
1. Strategic
goals/
objectives
a.Externa
l analysis
b. Identifying
opportunities
and Threats
c. Internal
analysis
d. Identifying
strengths
and
weaknesses
4.
Implementing
strategy
3. Analysis and Strategic choice
5. Controlling, evaluating and adjusting strategy
2. External and Internal Analysis(SWOT)
Strategy formulationStrategy
Implementation
Strategy
Control

12. 1-12
Strategy vs. Strategic
Management
uStrategy
vA series of goal-
directed
decisions and
actions matching
an organization’s skills and
resources with
the opportunities
and threats in its
environment
uStrategic management
vAnalyze current situation
vDevelop appropriate strategies
vPut strategies into action
vEvaluate, modify, or change strategy

13. 1-13 1-13
Strategic Management Process
uStep 1: Identifying the organization's strategic goals and objectives
vOrganization philosophy
vMission
vVision
vLong and short range objectives/Goals: the foundation for further planning
13

14. 1-14
Organization’s Philosophy
Organizational Philosophy establishes the values,
beliefs and guidelines for the manner in which the
organization is going to conduct its business.
-> relationship between the
organization and its stakeholders

15. 1-15
Organization’s Mission/Vision
ØOrganizational mission:
vline or lines of business,
vproducts and services
vthe markets
ØStrategic vision: Involves thinking
strategically about
vFuture of company
vWhere are we going?

16. 1-16
Mission Vs. Strategic Vision
uA mission statementfocuses
on currentbusiness activities
--“who we are and what we
do”
vCurrent product and
service offerings
vCustomer needs being
served
vTechnological and
business capabilities
uAstrategic visionconcerns a
firm’s futurebusiness path -
-“where we are going”
vMarkets to be pursued
vFuture technology-
product-customer focus
vKind of company
management is
trying to create

17. 1-17
Empower people through great
software anytime, anyplace,
and on anydevice.
Microsoft
Corporation
Examples of Missions

18. 1-18
-Value proposition: Empowerment to
achieve more (its information technology
products provide empowerment to customers).
-Target market: All persons and
organizations in the global market
(maximize market penetration to reach all
potential users of the company’s computing
products)
Microsoft Corporation
Examples of Missions

19. 1-19
Examples of Vision
To help people and businesses
throughout the world realize their
full potential
Microsoft
Corporation

20. 1-20
Long and Short-range Objectives
ØLong-range objectives:
vresults desired in pursuing the
organization’s mission
vextend beyond the current fiscal year
ØShort-range objectives:
èperformance targets
èless than one year’s duration

21. 1-21
Strategic Management Process (cont’d)
Step 2: Conducting external and internal analysis
ØExternal analysis:
vThe environmental scanning of specific and general environments
vFocuses on identifying opportunities and threats
ØInternal analysis:
vAssessing organisationalresources, capabilities, activities and culture:
oStrengths (core competencies) create value for the customer and strengthen the competitive position of the firm.
oWeaknesses (things done poorly or not at all) can place the firm at a competitive disadvantage.
ècalled SWOT analysis

22. 1-22
uStep 3: Analysis and strategic choice
vDevelop and evaluate strategic alternatives
vSelect appropriate strategies for all levels in the organisationthat provide relative advantage over
competitors
vMatch organisationalstrengths to environmental
opportunities
vCorrect weaknesses and guard against threats
Strategic Management Process (cont’d)

23. 1-23
uStep 4: Implementing strategies
vDesigning organizational structure
vDesigning control systems
oMarket and output controls
oBureaucratic controls
oControl through organizational culture
oRewards and incentives
vMatching strategy, structure, and controls
oCongruence (fit) among strategy, structure, and controls
uStep 5: Controlling, evaluating and adjusting strategy
vHow effective have strategies been?
vWhat adjustments, if any, are necessary?
Strategic Management Process (cont’d)
Structure
Strategy
Controls

24. 1-24
Hierarchy of Strategies
ØLevels of strategy-making in a diversified company
. Corporate
Strategy
Business Strategies
Functional Strategies
Two-Way Influence
Corporate-Level
Managers
Business-Level
Managers
Functional
Managers
Two-Way Influence

25. 1-25
Hierarchy of Strategies
ØLevels of strategy-making in a single-business company
.
Business
Strategy
Two-Way Influence
Functional Strategies
Business-Level
Managers
Functional
Managers

26. 1-26
Corporate-Level Strategies
uVertical integration
uDiversification
uBusiness portfolio
restructuring

27. 1-27
Business-Level Strategies
uCost leadership
èAttaining, then using the lowest total cost basis as a
competitive advantage.
uDifferentiation
èUsing product features or services to distinguish the
firm’s offerings from its competitors.
uFocus
èConcentrating competitively on
a specific market segment.

28. 1-28
Functional-Level Strategies
uFocus is on improving the effectiveness of
operations within a company.
èManufacturing
èMarketing
èMaterials management
èResearch and development
èHuman resources

29. 1-29
Global-Level Strategies
uMultidomestic
uGlobal
uTransnational

30. 1-30
Strategic Management Process
Analyzing
Current
Situation
Deciding
on
Strategies
Putting
Strategies
in Action
Evaluating and
Changing
Strategies
Situation
Analysis
Strategy
Formulation
Strategy
Implementation
Strategy
Evaluation
Chapter 1Chapter 2
Chapter3
External
Analysis
Internal
Analysis
Chapter 4Chapter 5, 6
Chapter 7
Business-level
Strategy
Corporate-level;
International
Strategy
Strategy
Implementation