D 39 BU STRATEGIC MANAGEMENT IN THE BUILT

D 39 BU – STRATEGIC MANAGEMENT IN THE BUILT ENVIRONMENT 1 sl/BMBE/2017 Lesson Three : The Strategic Management Process

D 39 BU – Strategic Management in the Built Environment sl/BMBE/2017 WHAT IS STRATEGY? WHAT IS STRATEGIC MANAGEMENT? 2

D 39 BU – Strategic Management in the Built Environment ACCORDING TO WHITTINGTON (2001)… sl/BMBE/2017 … strategy should be treated as the contested and imperfect practice it really is …. which means that strategy is elusive and abstract as it is a very long term development. 3

D 39 BU – Strategic Management in the Built Environment WHAT IS STRATEGY? sl/BMBE/2017 According to Chandler (1962) Strategy is the determination of the basic long term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary to achieve those goals …. 4

D 39 BU – Strategic Management in the Built Environment sl/BMBE/2017 Other definitions of strategy … Strategy is the skill in managing or planning… or “Strategy is the primary means of reaching the focal objective. 5

D 39 BU – Strategic Management in the Built Environment OTHER DEFINITIONS OF STRATEGY The sl/BMBE/2017 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 future growth and sustainable success- Cleggs (2005) The process of formulating, implementing of actions derived from a competitive position which is based on distinctive capabilities to have relationship with customers, suppliers, employees etc. -- Kay 1993 6

D 39 BU – Strategic Management in the Built Environment STRATEGIC MANAGEMENT THE ROLE OF EACH DIVISIONAL MANAGERS Rest of organisation sl/BMBE/2017 TOP Mgt/CEO BUSINESS POLICY Providing the road map and the destination /goals Strategic Business Unit POLICY TACTICAL OR OPERATIONAL PLANS 7

D 39 BU – Strategic Management in the Built Environment SOME OF THE COMMON STRATEGIC ISSU 1. Growth concerns sl/BMBE/2017 2. Diversification 3. issues and problems Issues of competitive advantage 8

D 39 BU – Strategic Management in the Built Environment MEANING OF STRATEGIC Knowing where your organisation PLANNING 70 sl/BMBE/2017 Setting clear objectives and mobilising resources to achieve the objectives 50 30 10 Yr 1 Yr 2 Yr 3 Is heading and how to get there? Yr 4 For example: Growth of Business Thinking in long term Taking into account the macro environment in which the organisation operates – looking at what you can do better than competitors 9

D 39 BU – Strategic Management in the Built Environment STRATEGIC ISSUES & CONCERNS Addressing and developing organisation aims & sl/BMBE/2017 goals Examining values and cultures underpinning the organisation Assessing the appropriateness of structure for future directions Exploring marketplace relationships and stakeholders’ concerns Exploring current and future expectations on ROI etc 10

D 39 BU – Strategic Management in the Built Environment STRATEGIC PLANNING IS AIMED WITH THE FOLLOWING OBJECTIVES maximise shareholders’ values To achieve competitive positioning and power To help grow profits and expand the organisation To satisfy customers To provide employment for the community sl/BMBE/2017 To (Refer to Pg 4 Unit 4 ) 11

D 39 BU – Strategic Management in the Built Environment Overview of development of strategic management … DYNAMIC FORMULATION AND IMPLEMENTATION COMPLEXITY COMPETITIVE ADVANTAGE sl/BMBE/2017 STRATEGIC PROCESSES PHASE OF GENERALISATION STRATEGIC PLANNING FORMULATION Strategic plans/SWOT Life cycle / portfolio/ PIMS Competitiveness Value chain Generic strategies IMPLEMENTATION Strategy processes Orgn learning BPR Merger and acquisition 12 TIME

D 39 BU – Strategic Management in the Built Environment Overall view of Strategic Management Environmental scanning Step 2 Opportunities & Risks –assessments By considering Resources and capability Step 3 Evaluation of Best match between Opportunities and resources Step 4 sl/BMBE/2017 Step 1 Implementing strategies and action plans 13

D 39 BU – Strategic Management in the Built Environment DIMENSIONS OF STRATEGY implementation Scope Acquisition and internal dev sl/BMBE/2017 Content Activities/resources/technology Diversification/growth process STRATEGY Central or decentral orgn/structure philosophy Method Report/plan /what model? Time framed How many year frames? Ownership Analytic/deductive/ enterpreneurial/system 14 Specialists/top mgt /employees

D 39 BU – Strategic Management in the Built Environment HIERARCHY OF STRATEGY Business Unit Operation s Finance Business Unit Marketing Business Strategy Business Unit Research & developme nt sl/BMBE/2017 Corporate Strategy Corporate HQ Human resources Functional/ operational Strategy 15

D 39 BU – Strategic Management in the Built Environment DIFFERENCE BETWEEN STRATEGIC & OPERATIONAL MANAGEMENT Operational Mgt Broad level accountability Middle level accountability Do the right things Do the things right Concerns over future growth Concerns over dept & competitive position & performance & budgets & financial growth sales targets & quality Long term focus Short term analysis High level of complexity & uncertainty Less complex and stable sl/BMBE/2017 Strategic Mgt 16 Refer to Pg 5 Unit 4

D 39 BU – Strategic Management in the Built Environment ACCORDING TO WHITTINGTON … sl/BMBE/2017 … strategy should be treated as the contested and imperfect practice it really is …. which means that strategy is elusive and abstract as it is a very long term development. He develops what we know as the 2 x 2 framework or the 4 perspectives of management approach 17

D 39 BU – Strategic Management in the Built Environment 4 PERSPECTIVES ON STRATEGY – sl/BMBE/2017 EACH WILL HAVE DIFFERENT IMPACT ON MANAGEMENT STYLE OF ORGANISATION LEADERSHIP Classical Evolutionary Processual Systematic 18

D 39 BU – Strategic Management in the Built Environment DIAGRAM ON THE 4 PERSPECTIVES ON STRATEGY Outcomes profit maximisation EVOLUTIONARY Processes Deliberate SYSTEMATIC sl/BMBE/2017 CLASSICAL emergent PROCESSUAL plural /mixed 19

D 39 BU – Strategic Management in the Built Environment DIAGRAM ON THE CLASSICAL APPROACH ON STRATEGY Outcomes profit maximisation sl/BMBE/2017 CLASSICAL X Processes Deliberate emergent plural /mixed 20

D 39 BU – Strategic Management in the Built Environment Classical Perspective Rational sl/BMBE/2017 planning because profitability is the supreme goal of business ; Strategic position of the firm is vital to achieve profit maximisation as it is the aim of business to earn a return on capital Top down , rational management approach to decision making and focus on long term goals through logical cascading of actions and resource Refer to the supplementary notes “ British Library : the world’s knowledge” 21

D 39 BU – Strategic Management in the Built Environment ADVANTAGES OF CLASSICAL APPROACH and control by top management so that middle management can concentrate on operational matters; Military tradition of strategy means that decision making is centred on the leader who has the foresight and the experience to plan and execute proper command Rational and well thought long term planning focussed on fulfilling objectives set sl/BMBE/2017 Accountability 22

D 39 BU – Strategic Management in the Built Environment DISADVANTAGE OF CLASSICAL PLANNING management may not be able to know all the issues at hand act rationally Bureaucratic and slow process thus causing time wastage Decision making may not be for the benefit of all stakeholders as it is too rigid sl/BMBE/2017 Top 23

D 39 BU – Strategic Management in the Built Environment DIAGRAM ON THE EVOLUTIONARY APPROACH ON STRATEGY Outcomes profit maximisation X Processes Deliberate sl/BMBE/2017 EVOLUTIONARY emergent plural /mixed 24

D 39 BU – Strategic Management in the Built Environment EVOLUTIONARY APPROACH TO STRATEGY on groups of managers to plan and strategize using the best possible methods such as cost-benefit analysis and other ways to map out resources and strategies for business development and growth sl/BMBE/2017 Based Decision making is based on various options and consensus by managers and experts in the field , taking into account competition in the market place 25

D 39 BU – Strategic Management in the Built Environment ADVANTAGES OF EVOLUTIONARY PERSPECTIVE Take sl/BMBE/2017 into consideration competitive environment in which business operates; Let nature takes its course so the decision makers consider many factors in the ecology of business and select the best alternative for survival and growth 26

D 39 BU – Strategic Management in the Built Environment PROBLEMS ENCOUNTERED USING EVOLUTIONARY PERSPECTIVE sl/BMBE/2017 Organisations may lack capacity to achieve differentiation and adaptation to sustain competition; Markets are unpredictable and the environment can be dynamic and turbulent which results in changes which may be too rapid for the organisations to slowly evolve. . 27

D 39 BU – Strategic Management in the Built Environment DIAGRAM ON THE PROCESSUAL APPROACH ON STRATEGY Outcomes profit maximisation sl/BMBE/2017 Processes Deliberate emergent x PROCESSUAL plural /mixed 28

D 39 BU – Strategic Management in the Built Environment PROCESSUAL APPROACH TO STRATEGY to evolutionary approach but more cautious by taking small steps procedurally and carefully to achieve objectives ; Internal procedures and external complexities are weighed by managers in decision making Taking feedback from the ground and enabling people’s opinion so that a satisfactory option is presented for implementation sl/BMBE/2017 Similar 29

D 39 BU – Strategic Management in the Built Environment ADVANTAGES OF PROCESSUAL APPROACH kind of management takes into consideration individual interest via the bounded rationality to derive at a decision sl/BMBE/2017 This Strategies are chosen not programmed – depending on the emergent issues that arise Decisions are made after considering human factors and behaviours to integrate best decisions 30

D 39 BU – Strategic Management in the Built Environment THE CHALLENGES OF PROCESSUAL APPROACH consuming due to the need to consider many variables and could endanger the organisation’s long term survival; Does not take rational thinking seriously Lack of sufficient managers with the right skills and knowledge to ensure success of this kind of strategy so decisions may not be the optimal solutions – may just be satisfying ones only sl/BMBE/2017 Time 31

D 39 BU – Strategic Management in the Built Environment DIAGRAM ON THE SYSTEMIC APPROACH ON STRATEGY Outcomes profit maximisation sl/BMBE/2017 Processes Deliberate emergent X SYSTEMATIC plural /mixed 32

D 39 BU – Strategic Management in the Built Environment SYSTEMIC PERSPECTIVE ON STRATEGY the various social systems within the organisation and evolve decisions that consider both economic and social implications Depending on the internal corporate culture, the decision makers go by the rules of the majority so as to get viable goals achieved which may not be the profit maxmisation objective but achieve overall stakeholders’ satisfaction sl/BMBE/2017 Examines 33

D 39 BU – Strategic Management in the Built Environment ADVANTAGES OF SYSTEMS VIEW stakeholders are involved in the social systems of the organisation ; sl/BMBE/2017 All Take into embedded systems within the organisation and consider all social groups’ inputs such as culture and values 34

D 39 BU – Strategic Management in the Built Environment DEMERITS OF THE SYSTEMIC PERSPECTIVE social and cultural systems may have conflicts with each other causing dissent and unhappiness within the organisation; sl/BMBE/2017 Various May result in some dominant decision makers who may push through their ideas and decisions 35

D 39 BU – Strategic Management in the Built Environment TABLE SHOWING THE VARIOUS ELEMENTS ASSOCIATED WITH THE 4 PERSPECTIVES ON STRATEGY Processual Evolutionary systemic Strategy Formal Crafted Efficient Embedded Goals Profit Max Mixed goals of both profit and satisfaction Survival Stakeholders’ satisfaction Focus Internal planning Political planning External market External planning societal cultures Processes Analytical Learning Darwinian evolution Social creation Key influences Military Psychology Economics Sociology Key gurus Chandler/Porte Mintzberg r Hannan & Freeman Granovetter& Whitley Period of emergence 1960 s 1980 s 1990 s 1970 s sl/BMBE/2017 Classic 36

D 39 BU – Strategic Management in the Built Environment IN ESSENCE … The sl/BMBE/2017 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 strategic management; The evolutionary and processual perspectives are more cautious and plan according to hierarchy which work well in stable environments while the systems approach is more relativistic taking into account the social systems and the environment interaction 37

EXAM QUESTIONS ON WHITTINGTON sl/BMBE/2017 Explain what do you understand by Richard Whittington’ 2 x 2 framework of generic perspective on strategy. Draw the diagrams depicting the 4 perspectives relating to his theory 38

D 39 BU – Business Management in the Built Environment sl/BMBE/2017 AS ORGANISATIONS ARE OPERATING IN Another look at strategic positioning in reality … A COMPETITIVE WORLD, STRATEGIES ARE DEVELOPED TO COPE WITH THE NEED TO SURVIVE IN THE MARKETPLACE. STRATEGIC MANAGEMENT IS SUPPOSED TO HELP ORGANISATIONS STEER THROUGH CHANGES AND SHIFTS IN THE ENVIRONMENT TO SECURE FUTURE GROWTH AND SUSTAINABLE SUCCESS. 39

D 39 BU – Business Management in the Built Environment Strategic positioning in reality … Just In fact, strategic planning is similar to the art of war (Sun Tze) – you need to understand strategic positioning and also the process of analysis, formulation and then implementation of your tactics and operations in order to succeed in business sl/BMBE/2017 like you and I, without a long term goal, we will be aimless, so organisations need goals, vision, mission to enable them to sail through the storms of competition, changes in the market etc. . 40

D 39 BU – Business Management in the Built Environment 3 basic thoughts via … 1. Classical or rational planning school 2. The design school 3. The positioning school sl/BMBE/2017 STRATEGIES ARE BASED ON CERTAIN SCHOOLS OF THOUGHTS ON WHICH DIFFERS IN THE WAY STRATEGIC PLANNING IS DONE 41

D 39 BU – Business Management in the Built Environment Strategic level Operational level Administrative level sl/BMBE/2017 1. CLASSICAL OR RATIONAL PLANNING SCHOOL is fashioned after Alfred Chandler’s model, where planning is top down, bureaucratic approach of central decision which is cascaded down to the bottom 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: 42

D 39 BU – Business Management in the Built Environment 2. THE DESIGN SCHOOL OF THOUGHT Fashioned sl/BMBE/2017 like the planning school except that there is internal focus on SWOT and external analysis of the environment This process is adopted by most organisations today 7 steps to strategic planning will be discussed ………next slide 43

D 39 BU – Business Management in the Built Environment DIAGRAM SHOWING THE PROCESS OF STRATEGIC PLANNING – A 7 -STEP MODEL Vision & mission Swot analyss Strategic analysis & options decision making implementation Evaluation & monitoring sl/BMBE/2017 44 STEEP & Scenarios Planning

D 39 BU – Business Management in the Built Environment VISION AND MISSION in pairs the various vision and mission of these organisations given in the exercise (we did it in the last lesson) Write your own vision and mission for 2015 & beyond sl/BMBE/2017 45 Discuss

D 39 BU – Business Management in the Built Environment 3. THE POSITIONING SCHOOL : MICHAEL PORTER’S MODEL – ALSO PART OF THE EVOLUTIONARY/COMPETITIVE PERSPECTIVE sl/BMBE/2017 This is the strategic approach based on competition –survival of the fittest. Porter argues that profitability of an organisation lies in the power of the organisation to position itself against the others in the industry and how it uses its capabilities to handle its bargaining position to sustain growth and success. 46

D 39 BU – Business Management in the Built Environment MICHAEL PORTER: GURU OF STRATEGIC MANAGEMENT sl/BMBE/2017 His theories include: Diamond Model Generic Business strategies 5 Forces Model Value Chain Analysis etc. . 47

MICHAEL PORTER’S STRATEGIES Will be discussed in detail in Lesson 4 sl/BMBE/2017 48

DISCUSS THE FOLLOWING QUESTION : sl/BMBE/2017 Which strategic approach do you think is adopted by your senior management? 49

D 39 BU – Strategic Management in the Built Environment CORE READING FOR MODULE Useful reading material ◦ ◦ ◦ Carter, C. , Clegg, S. , Kornberger, M (2008) A very short, fairly interesting and reasonably cheap book about studying organisations, Sage, London Clegg, S. , Kornberger, M. , Pitsis, T. (2005) Managing and Organisations: An introduction to theory and practice, Sage, London Whittington, R. (2001) (2 nd Ed. ) What is Strategy – and does it matter? , Thomson, London Mintzberg, H. , Ahlstrand, B. , Lampel, J. (1998) Strategy Safari: the complete guide through the wilds of strategic management, Prentice Hall, London Langford, S. , Male, S. (2001) Strategic Management in Construction, Blackwell, Oxford Journal papers. . . . . 50 sl/BMBE/2017 ◦