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Strategic Management





© Robert Jones 2012


Based on
Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education


Definition of Strategy

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,
7th Edition, Pearson Education

Exhibit 2.1

Layers of the business environment

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Exhibit 1.2

The vocabulary of strategy

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Exhibit 1.3

A model of the elements of strategic management

Analysis


external, internal

and stakeholders

(fairly straightforward)

Options

and selection of

option

(not so difficult)

Implementation


(now it gets tricky ! )

Based on
Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Strategy as a Subject of Study

Unique resources, core competences

Resource based
theory (Hamel,
Prahalad)

1980s

Innovation to deal with change

Firms as organisms

(Eisenhardt, Stacey)

1990s

Assessing competitive forces (5 forces) and
positioning

Market positioning
(Porter)

1980s

Complexity and uncertainty. Influence of
experience, politics, culture, history

Adaptive processes

(Quinn)

1980s

Systematised and analytical approach

Corporate planning

60/70s

What would you do if you were CEO?

Harvard case study

1960s

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Mintzberg
, H. Ten
S
trategy 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,
7th 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)


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

Contemporary Strategy Themes (1)

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education


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


Contemporary Strategy Themes (2)

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Exhibit I.i

The role of the paradigm in strategy
formulation

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Exhibit I.v

Three strategy lenses

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Macroenvironment


PESTEL (1)

Exhibit 2.2

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Government policy


The 2012 Financial Statement


How will this influence business and strategy?

http://www.youtube.com/watch?v=d0
-
V_HrrzcU


http://www.youtube.com/watch?v=RuQY_WKbHEM&feature=related


Wille

Walsh, IAG plc (British Airways) and Mike O’Leary,
Ryanair

respond to recent changes in APD Air Passenger Duty

Drivers of Globalisation

Source:

Based on G. Yip,
Total Global Strategy ll
, FT/Prentice Hall, 2003, chapter 2.

Exhibit 2.3

This is an excellent framework


we will build on this in later lectures

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Porter’s Diamond

The Determinants of National Advantage

Source:

M. Porter,
Competitive Advantage of Nations
, Macmillan, 1990.

Exhibit 2.4

This is an excellent framework

when looking at

conditions for business

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th 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,
7th Edition, Pearson Education

Strategic Capability
-

the terminology

Exhibit 3.2

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th 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,
7th 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,
7th 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

Exhibit 3.9

Source:
I. Nonaka and H. Takeuchi,
The Knowledge
-
Creating Company
, Oxford University Press Inc., © 1995. Reprinted by
permission of Oxford University Press.

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th 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,
7th Edition, Pearson Education

Expectations and

Purposes

Exhibit 4.1

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Stakeholder Mapping: the Power/Interest Matrix

Exhibit 4.5

Source:

Adapted from A. Mendelow,
Proceedings of the Second International Conference on Information Systems,

Cambridge, MA,
1991.

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

The Cultural Web

Exhibit 4.11

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Exhibit III.1

Strategic choices

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

The Strategy Clock

Exhibit 5.2a

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’.

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

The Strategy Clock

Exhibit 5.2b

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th 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,
7th Edition, Pearson Education

Competition and Collaboration

Exhibit 5.5

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Game Theory
-

Prisoner’s
Dilemma

Exhibit 5.6

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Corporate Level Issues

Exhibit 6.1

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Related Diversification

Exhibit 6.3

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Diversity and Performance

Exhibit 6.4

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th 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,
7th Edition, Pearson Education

The Growth Share (or BCG) Matrix

Exhibit 6.8

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Public Sector Portfolio Matrix

Exhibit 6.9

Source: J
.R. Montanari and J.S. Bracker,
Strategic Management Journal
, vol. 7, no. 3 (1986), reprinted by permission of
John Wiley & Sons Ltd.

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Indicators of SBU Strength and Market Attractiveness

Exhibit 6.10a

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Market Attractiveness/SBU Strength Matrix

Exhibit 6.10b

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education

Strategy Guidelines Based on Directional Policy
Matrix

Exhibit 6.10c

Johnson,
Scholes

& Whittington (2005)


Exploring

Corporate Strategy,
7th Edition, Pearson Education