101 lect7 strategy
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Transcript of 101 lect7 strategy
BUSINESS STRATEGYDR DOUGLAS NISBET
PGDBA 101 Strategic Leadership and Management Skills
Learning Objectives
Following study of this topic you should understand the following:•Strategy: decisions that add value in the long run •Reasons for studying managing strategy•How managers develop strategies•Planning, learning and political views•Tools for external and internal analysis•Levels of strategy – corporate and business unit•Ways to deliver strategy
Strategic decisions
• What is to be achieved, for whom and how?• Decisions that commit substantial resources and
shape long-term future• Examples:
– P&G – changed focus form rich to poor economies– Nestlé – increased emphasis on healthy foods
• Not-for-profits (NFP) bodies also need strategies
What is Strategy?Strategy is about how people decide to organise major resources to enhance performance:•Typically the responsibility of senior management•Decisions are part of the formal planning process•Includes how to organise activities to add most value•Major decisions with long term implications
Strategy• Process
– Gathering information– Strategic Analysis– Strategy Formulation
• Content– What products? What markets? What resources?– Competitive Advantage
• Context– Type of organisation– External Environment (PESTEL)
Why study managing strategy?
Sets direction and scope of the enterprise, issues vary with setting, for example:
– MNCs – structure and control of global activities– SMEs – influence of founders, lack of capital– Operations – competitive advantage of products or
services– Innovative firms – speed of NPD and culture of
questioning and challenge– Public Sector – competing for resources to create
best value– Voluntary and NFP – ideology and funding
Perspectives on the strategy process
• Planning view– Prescriptive; belief that complexity requires
formalised approach• Learning view
– strategy is an emergent or adaptive process• Political view
– ‘bounded rationality’ recognises human limits– subjectivity influences behaviour– ‘satisficing’, incremental behaviour
A linear view
Figure 8.1 The planning view of strategy
An emergent view
Forms of strategySource: Mintzberg (1994a)
Making sense – external and internal analysis
Strategy matches external conditions and internal capabilities• External environment• Internal environment
– Aim for strategic capability by combining• Resources (tangible, intangible, unique?) AND• Competences – activities and processes that enable it to
use resources effectively– Core competences – those that others cannot imitate
SWOT analysis
• Draws out strategic implications
• Strengths,Weaknesses, Opportunities, Threats
• Internal S & W(compare with competition)
• External O & T (Five Forces and PESTEL)
Strengths
Opportunities Threats
Weaknesses
Making sense – value chain analysis
• Analysing value chain activities – Activities most critical in reducing cost or adding
value (e.g. quality)– Key cost or value drivers in the value chain
• Focus on linkages which most– Reduce cost– Enhance value– Discourage imitation
Identifying the opportunities
Identifying the organisation’s opportunities (Boddy, 2011)
Levels of strategy
Figure 8.7 Levels of strategy
Identifying mission as a basisfor goals and strategies
• Mission statements clarify principal activities, aims, values and stakeholders
• Weaknesses – Can be unrealistic– Management fails to develop wide belief in
the mission– Fail to recognise capabilities
The Strategy Cycle
Business unit strategies
• Cost leadership• Differentiation• Focus
• All need support of suitable functional strategies
Generic Strategy Links
Mass Focus
Cost Leader-ship
MRP Lean
Differentiation J ITECR
FMSAgile
Trade-off Paradigm
Capacity Fixed Costs Variable Costs
Process Labour Capital
Inventory Hold Make toorder
Quality Design Inspection
Operations performance
objectives
The impact of the product life cycle
Introduction Growth Maturity DeclineStage
Low Rapid growth High and level DecliningVolume
Innovators Early adopters Bulk of market LaggardsCustomers
Few/noneIncreasing
number Stable numberDeclining numberCompetitors
High customization
Increasingly standardised
Emerging dominant types
Commodity standardization
Variety of product or
service
Performance or novelty
Low price, dependable
supplyLow priceLikely order
winners
Quality, product range
Price, product range
Product range, quality
Dependable supply
Likely order qualifiers
FlexibilityQuality
Speed Dependability
Quality
CostDependability
Cost
Availability ofquality products
and services
OHP15
The operation’s strategic performance objectives
The activities of operations managers
Input Output
Transformed resources
MaterialsInformationCustomers
Transforming resources
FacilitiesStaff
Design
Planning & control
Improvement
Operations strategy
The operation’s competitive role and position
OHP7
Links: Corporate>Ops: Strategy Implementation
• CORPORATE• Structures
• Resource Plans
• Managing Change
• OPERATIONS• Global Manufacturing• Global Logistics• Technology• Global Structures• Quality Improvement• Supply Chain
Imporvement
Making things happen – deciding how to deliver strategy
• Internal development– Expand or redeploy resources – retains control
(HMV)• Merger and acquisition
– Allow rapid entry into new areas, though difficultyof merging cultures (Google buying up smallplayers for expertise – also HMV bought MAMA)
• Joint developments and alliances– Limits risk, allows learning (GSK’s drug strategy)
Ansoff MatrixAnsoff Matrix
Making revisions – implementing and evaluating
• Implementing turns strategic plan into action – which may demonstrate opposition
• Financial analysts routinely compare achievements with plans, and are critical if they vary
• Ideally, evaluation leads to learning
Integrating themes
Sustainable performanceSustainable environmental performance only commercially sustainable if part of strategy
Governance and controlEvidence of directors now taking more responsibility for strategy, as well as for narrow governance responsibilities
InternationalisationInternational strategies often fail as directors underestimate complexity of working overseas
Conclusion
• Adding value depends on strategy• Process, Content and Context• Requires External and Internal Analysis• Making Choices –Strategic Direction (Porter’s 5
Forces, Porters Generic Strategies, Ansoff Matrix) • Implementing Strategy – internal development,
mergers/acquisitions, joint developmnet/alliances