Strategic Management Robert Jones 2012 Based on Johnson

Strategic Management © Robert Jones 2012 Based on Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Definition of 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, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Layers of the business environment Exhibit 2. 1 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

The vocabulary of strategy Exhibit 1. 2 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

A model of the elements of strategic management Analysis – external, internal and stakeholders (fairly straightforward) Options and selection of option (not so difficult) Exhibit 1. 3 Implementation (now it gets tricky ! ) Based on Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Strategy as a Subject of Study 1960 s Harvard case study What would you do if you were CEO? 60/70 s Corporate planning Systematised analytical approach 1980 s Adaptive processes (Quinn) Complexity and uncertainty. Influence of experience, politics, culture, history 1980 s Market positioning (Porter) Assessing competitive forces (5 forces) and positioning 1980 s Resource based theory (Hamel, Prahalad) Unique resources, core competences 1990 s Firms as organisms (Eisenhardt, Stacey) Innovation to deal with change Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Mintzberg, H. Ten Strategy Schools (The Strategy Safari) Bowman, C. Generic Strategies – a Substitute for Thinking

There are many ways of looking at strategy:

The risk of strategic drift Exhibit 1. 4 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Good strategy is in the overlap Often, the environment E moves and the organisation does not move - this can be fatal (strategic drift)

Contemporary Strategy Themes (1) • Internationalisation – Size of market – Range of competitors – Relationships overseas – Institutional/cultural orientation to strategy and profit orientation • E-Commerce – Speed and direction of technology change – Expectations about how to do business – E-commerce capability – Service small markets Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Contemporary Strategy Themes (2) • Changing purposes – Change from pure profit driven – Corporate scandals – Corporate social responsibility – AND drive for shareholder value – Public sector more “business-like” – target setting and service orientation • Knowledge and Learning – Innovation – Generate and integrate knowledge/promote learning – New ways of doing business – People interactions Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

The role of the paradigm in strategy formulation Exhibit I. i Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Three strategy lenses Exhibit I. v Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Macroenvironment – PESTEL (1) Exhibit 2. 2 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Government policy The 2012 Financial Statement How will this influence business and strategy? http: //www. youtube. com/watch? v=d 0 -V_Hrrzc. U

Wille Walsh, IAG plc (British Airways) and Mike O’Leary, Ryanair respond to recent changes in APD Air Passenger Duty http: //www. youtube. com/watch? v=Ru. QY_WKb. HEM&feature=related

Drivers of Globalisation This is an excellent framework – we will build on this in later lectures Source: Based on G. Yip, Total Global Strategy ll, FT/Prentice Hall, 2003, chapter 2. Exhibit 2. 3 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Porter’s Diamond The Determinants of National Advantage This is an excellent framework when looking at conditions for business Source: M. Porter, Competitive Advantage of Nations, Macmillan, 1990. Exhibit 2. 4 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

First test yourself – you have seen this before fill in the blanks

The Five Forces Framework Source: Adapted from M. E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors © 1980, Free Press, 1980, p. 4. Copyright 1980, 1988 by The Free Press, a division of Simon & Schuster Inc. Reproduced with permission. Exhibit 2. 5

The Life-Cycle Model Exhibit 2. 6 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Strategic Capability- the terminology Exhibit 3. 2 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

The Value Chain Source: M. E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, 1985. Used with permission of The Free Press, a division of Simon & Schuster, Inc. © 1985, 1988 by Michael E. Porter. All rights reserved. Exhibit 3. 6 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

The Value Network Source: M. E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, 1985. Used with permission of The Free Press, a division of Simon & Schuster Inc. © 1985, 1988 by Michael E. Porter. All rights reserved. Exhibit 3. 7 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

See my lecture on Competences based on application of the Value Chain With examples of Zara Ryanair Apple Honda Toyota http: //cambridgemba. wordpress. com/strategy/

Knowledge Creation Processes Source: I. Nonaka and H. Takeuchi, The Knowledge-Creating Company, Oxford University Press Inc. , © 1995. Reprinted by permission of Oxford University Press. Exhibit 3. 9 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Expectations and Purposes - Outline • • Corporate governance Organisational stakeholders Stakeholder mapping Ethical issues Culture Cultural web Communication of organisational purposes Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Expectations and Purposes Exhibit 4. 1 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Stakeholder Mapping: the Power/Interest Matrix Source: Adapted from A. Mendelow, Proceedings of the Second International Conference on Information Systems, Cambridge, MA, 1991. Exhibit 4. 5 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

The Cultural Web Exhibit 4. 11 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Strategic choices Exhibit III. 1 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

The Strategy Clock Note: The strategy clock is adapted from the work of Cliff Bowman (see D. Faulkner and C. Bowman, The Essence of Competitive Strategy, Prentice Hall, 1995. ) However, Bowman uses the dimenstion ‘Perceived Use Value’. Exhibit 5. 2 a Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

The Strategy Clock Exhibit 5. 2 b Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Competitive Strategies in Hypercompetitive Conditions • Competitive advantage is temporary – Rapid imitation – Not sustainable • Competitive advantage relates to – Organisation’s ability to change – Speed – Flexibility – Innovation – Disruption of market Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Competition and Collaboration Exhibit 5. 5 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Game Theory - Prisoner’s Dilemma Exhibit 5. 6 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Corporate Level Issues Exhibit 6. 1 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Related Diversification Exhibit 6. 3 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Diversity and Performance Exhibit 6. 4 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Reasons for International Diversity Market-based Exploit cultural/ geographic differences Globalisation of markets & competition Cash in on differences in culture Following customers Administrative differences Bypass limitations in home market Specific geographical/ economic differences Utilise strategic capabilities Economic benefits Broaden market size Economies of scale Internationalise value-adding activities Stabilisation of earnings across markets Enhance knowledge Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

The Growth Share (or BCG) Matrix Exhibit 6. 8 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Public Sector Portfolio Matrix Source: J. R. Montanari and J. S. Bracker, Strategic Management Journal, vol. 7, no. 3 (1986), reprinted by permission of John Wiley & Sons Ltd. Exhibit 6. 9 Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Indicators of SBU Strength and Market Attractiveness Exhibit 6. 10 a Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Market Attractiveness/SBU Strength Matrix Exhibit 6. 10 b Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education

Strategy Guidelines Based on Directional Policy Matrix Exhibit 6. 10 c Johnson, Scholes & Whittington (2005) Exploring Corporate Strategy, 7 th Edition, Pearson Education