A Brief History Of Strategic Thought

Corporate Reputation and Competitiveness

Gary Davies: Session 1

Course Aims and Outcomes• Course Aims• For students to understand the role of

corporate reputation as a strategic framework.

• Learning Outcomes• Students will understand how to define and

measure the reputation of an organisation, how to manage a corporate reputation and what linkages there are between reputation and company performance

Lecture Aims

• To review the development of Strategic Thinking and to locate Reputation within this

• To make the case for Reputation as a Strategic Framework

What is Strategy?

• Strategy is about matching the competencies of the organization to its

environment.

• A Strategy describes how an organization aims to meet its objectives.

• A successful Strategy is one that achieves an above average profitability in its sector.

Early Tools

• Anecdotal comment (war stories) from ‘captains of industry’

• Simple frameworks: SWOT, PEST

• Early proscriptive models, eg gap analysis

Gap Analysis

Goal

Forecast

The Planning GapS

ales

Time

The Two Planning Flows

VISION

STRATEGY

TACTICS

STRATEGIC FINANCIAL

OBJECTIVE

GOAL

BUDGET

MODEL

The Five Forces Model

SUPPLIERS CUSTOMERS CONSUMERS

SUBSTITUTES

NEW ENTRANTS

RIVALRY

Adapted from Porter 1988

Generic Strategies

• The idea that strategic frameworks and options can be defined that fit all companies/organisations in all circumstances

• Porter’s 3 generic strategies: Cost leadership, Focus, Differentiation

The PIMS ParadigmMarket Structure

Competitive Position

Relative perceived quality

Relative market share

Relative capital intensity

Relative cost

Strategy and Tactics

Performance

Market Differentiation

Market Growth Rate

Purchase Quantity

Adapted from Buzzel & Gale (1987)

The New Economy

• Growing emphasis on the service sector and manufacturers adding value by adding services e.g. ‘IBM selling solutions’

• Need to define new models to guide the management of service business

The Serqual Gaps Model

Expected Service

Perceived Service

External Communications to

Customers

Service Delivery

Service Quality Specification

Management Perceptions of Customer Expectations

CUSTOMER

PROVIDER

Dimensions of Service Quality

• Access (can the customer obtain the service easily) Credibility (can you trust the company?) Knowledge (does the supplier understand the customer’s needs?)

Reliability (is the service dependable and consistent?)

Security (is the service free from risk?) Competence (how knowledgeable and skilled are staff?)

Dimensions of Service Quality

Communication (is the service well explained?)

Courtesy ( are staff considerate and polite) Responsiveness (are staff quick to respond?)

Tangibles associated with the service (buildings, uniforms).

The Service Profit Chain

Source: Adapted from Heskett et al (1994)

Internal Service Quality

Employee Satisfaction

Employee Retention

Employee Productivity

External Service Value

Customer Satisfaction

Customer Loyalty

Revenue Growth

Profitability

The Business Excellence Model

Leadership

People Management

Policy & Strategy

Resources

Processes

People Satisfaction

Customer Satisfaction

Impact on Society

Business Results

Enablers Results

Concern about Strategic Models

• Can you plan a modern, complex company from the top even using a strategic planning team as advisors?

• Why do strategic models conflict (PIMS and stuck in the middle)?

• Should strategy start from the market place not from the strategy team? Isn’t it time we distinguished between strategic analysis and strategy itself?

Emergent Strategy

• Henry Mintzberg’s thinking that few strategies come from the top and that most emerge changes our view of ‘strategising’.

• The role of senior manager changes from ‘deciding what to do and finding someone else to do it’ to ‘coach, filter, enabler’.

Top down v Bottom up?

The Customer

The Customer

Management

ManagementStaff

Staff

MARKET-FOCUSSED COMPANIES

Understanding the CustomerDirect customer contact at many levelsWidely disseminated and understood research on who the core customer is and on the market structure, e.g. on market segmentation

Responsiveness of the organisation to customer needsRegularly receive and act upon customer satisfaction surveysResponsive to customer complaints and suggestionsTrack key customer data on company image

MARKET-FOCUSSED COMPANIES

Provision of real value for moneyMonitor aspects of quality relevant to the marketplaceConduct comparative surveys of competitive prices and servicesReward inside the organisation based on performancewith customers

Source: Corporate Strategy, Richard Lynch, Pitman 1997, p.198

CUSTOMER FOCUS

Customer focus goes beyond market focus. The company is managed totally from the customers’ point of view. Key features of customer focused companies are:

• The business is led by someone who is a fanatic about the customer and able to model the desired behaviours

• Customer facing employees are empowered to react to what the customer wants.

• Employees have a stake in the business (usually share or other form of ownership)

• Employees feel trusted to run the business.

• Customers are regularly asked for ideas as to how the business should be run.

• Achieving a customer focus is a cultural issue (not an organisational issue). Changing to a customer focus is neither easy nor comfortable.

CUSTOMER FOCUS [cont …]

Mission and Vision

PURPOSE

( Why the Company Exists)

COMPANY VALUES

(What senior management believe in)

STRATEGY

(The commercial rationale)

STANDARDS and BEHAVIOUR(Policies and behaviour patterns that guide how the

company operates)The Ashridge model from Campbell &Tawaday (1990)

Analysis and Implementation

Model One: Two discrete stages

Time

Analysis

Implementation

Model Two: Two overlapping stages

Analysis

Implementation

A New Approach?

• Should meet the basics of strategy: link to profit, clear direction etc

• Should be generic (applicable to any organisation)

• Should reflect the trend towards service business

• Should be bottom up/emergent in focus• Should be implementable

Aims and Objectives

• To present the case for Reputation as a paradigm for managing the strategic direction of an organisation

• To explore how reputation management has emerged from PR and Communications

• To demonstrate how Reputation can meet the criteria for being a strategic tool

What is Strategy?

• Strategy is about matching the competencies of the organization to its

environment.

• A Strategy describes how an organization aims to meet its objectives.

• A successful Strategy is one that achieves an above average profitability in its sector.

What Is Reputation?

• The net result of the interaction of all the experiences, impressions, beliefs, feelings and knowledge that people have about an organisation

The Corporate Reputation Chain

Customer

View

Employee

View

Satisfaction

Loyalty

Revenue

Satisfaction

Retention

ImageIdentity

Reputation

Other External Stakeholders: Suppliers,

InvestorsRecruitment

Corporate Personality

Agreeableness

Enterprise

Competence

Chic

Ruthlessness

Machismo

Informality

The 7 Dimensions of Corporate Personality

Summary

• Reputation can be considered as a useful strategic framework

• It is particularly useful for service companies

• It can be used to direct the strategy for no for profit as well as for profit seeking organisations