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 GapSa
les
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
ViewEmployee
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
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