Strategic Management THE STRATEGY PROCESS Strategic Management GJW
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Strategic Management THE STRATEGY PROCESS Strategic Management (GJW 2009 -10) 1
THE STRATEGY PROCESS Stages 1. Strategic Position Analysis External Environment Internal Environment Stakeholder Analysis 2. Strategic Choices How do we compete? Which products/markets do we choose? How do we get where we want to be? 3. Strategy into Action (Implementation) Change Management Marketing Technology Culture R&D Finance HRM Structure Production Project Management MBA Strategic Management (GJW 2008 -09) 2
THE STRATEGY PROCESS Approaches 1. Prescriptive – strategy prescribed in advance Single Long-Term Plan Scenario Plans 2. Emergent – an experimental process – trial and error MBA Strategic Management (GJW 2008 -09) 3
THE STRATEGY PROCESS Influences on Choice of Approach (1) Risk of Strategic Drift The risk that a logical, incremental implementation of prescribed strategies will lead to A widening gap between the organisation’s resource capability and market conditions The risk of this strategic drift is especially strong when the pace of change of market conditions is rapid. Strategic Drift results in a weakening Strategic Fit, a loss of competitive advantage, and companies being left behind their rivals MBA Strategic Management (GJW 2008 -09) 4
Strategic Drift The result of an inappropriate strategic management style Exhibit 1. 4 MBA Strategic Management (GJW 2008 -09) 5
THE STRATEGY PROCESS Influences on Choice of Approach (2) Nature of Environment Simple/Stable Complex/Stable Simple/Dynamic Complex Dynamic MBA Strategic Management (GJW 2008 -09) Prescriptive v v v Emergent 6
Nature of Business Environment (Emery and Trist) Many NUMBER OF INFLUENCES Few Complex Stable Complex Dynamic Simple Stable Simple Dynamic Slow SPEED OF CHANGE MBA Strategic Management (GJW 2008 -09) Fast 7
THE STRATEGY PROCESS Prescriptive Approach Intended strategies Deliberate management intent Three Stages are Linear (sequentially linked) and rational • Position (where are we now)? • Choice (where do we want to go)? • Action (how do we get there)? MBA Strategic Management (GJW 2008 -09) 8
THE STRATEGY PROCESS Prescriptive Approach Position Analysis Mission/Objectives Environment Resources Strategic Fit MBA Strategic Management (GJW 2008 -09) 9
THE STRATEGY PROCESS Prescriptive Approach Choices Generate Rational Options Select from Options MBA Strategic Management (GJW 2008 -09) 10
THE STRATEGY PROCESS Prescriptive Approach Action Change Management Resource Needs MBA Strategic Management (GJW 2008 -09) 11
THE STRATEGY PROCESS Emergent Approach Develops out of economic, social and political processes in and around organisations Three Stages are not linear (not sequentially linked) • Position (where are we now)? • Choice (where do we want to go)? • Action (how do we get there)? MBA Strategic Management (GJW 2008 -09) 12
THE STRATEGY PROCESS Emergent Approach Analysis, Choice and Action Experiment Trial and Error Crafting/Testing Action often comes first No Formal/Agreed Strategy MBA Strategic Management (GJW 2008 -09) 13
THE STRATEGY PROCESS Prescriptive & Emergent Approaches Which is the better? Complement each other Both relevant to strategy process MBA Strategic Management (GJW 2008 -09) 14
THE STRATEGY PROCESS Prescriptive & Emergent Approaches Which is the better? Nature of Environment Complex/Dynamic = Emergent Simple/Stable = Prescriptive Complex/Stable or Simple Dynamic = ? ? ? ? ? MBA Strategic Management (GJW 2008 -09) 15
THE STRATEGY PROCESS Prescriptive & Emergent Approaches Which is the better? In practice, most companies employ a blend of prescriptive and emergent approaches. But emergent approaches tend to dominate in successful companies that occupy complex/dynamic markets MBA Strategic Management (GJW 2008 -09) 16