Colombo International Nautical

and Engineering College

Strategic Management

Introduction to Strategy and Strategic

Management - II
Conceptual Principles of
Strategy
Five P’s of Strategy
• Strategy as a Plan - Strategies are developed
intentionally in advance of action and are formal
activities carried out consciously and purposefully,
usually by management.
• Strategy as a position - Strategy development seeks
to match company capabilities to external
environmental opportunities in order to secure a
favourable, perhaps even, a unique position in the
industry in relation to competition.
• Strategy as a Pattern - When organisations respond
to competitive challenges in a similar manner as
before, or counteract competition by repeating
previous courses of action, strategy development
takes the form of a pattern. In this way, strategy is
mostly characterised by consistency in organisational
behaviour, regardless of deliberate actions or not.
• Strategy as a Perspective - Regardless of how
strategies are developed they are made by
individuals. Individuals, however, have their own
views which have been formed through their
perception of the world. These perceptions, on the
other hand, are subject to cognitive abilities that, in
turn, may be limited. In an organisational context,
responsiveness to competitive challenges usually
reflects the internal aspects of the company, and
action mirrors culture and core beliefs.
• Strategy as Ploy - The essence here is to mislead the
other party into a trap in order to outwit
competition.
 Types of Strategy
• Intended Strategy: Deliberate strategies that are developed
intentionally and to enhance competitive advantage.

• Unrealised strategy: These are strategies that have proven

unworkable due to environmental changes, lack of stakeholder co-
operation and unworkable plans.

• Realised strategy: This is the strategy that has proven workable and
is being implemented by the organisation. E.g. Body Shop

• Emergent strategy: This is strategy derived from unanticipated

opportunities that come as a result of daily activities, routines and
decisions. It’s implementation involves the allocation of resources
before an organisation has explicitly decided its strategies.
E.g.Google
 Intended and Emergent Strategies

Prescriptive Perspective Alternative

Strategy Formulation objectives

Original
objective

Intended Deliberate Realised Opportunity

strategies plans of action strategies cost

Descriptive perspective
Strategy Formation

Unrealised t
strategies gen s
er egie
m
E rat f
st n so
a
pl
d n
i fie ctio
od a
M

Adapted from Mintzberg and Waters (1985).

Challenges of Strategic
Management
Challenges of Strategic Management
• Prevent strategic drift
– Progressive failure to address strategic position
– Deterioration of performance
• Understand and address contemporary issues
– Globalisation
– E-Commerce
– Changing purposes
– Knowledge and learning
• View strategy in more than one way
– Three strategy lenses – Design, Experience, Ideas
 Strategic Fit, Drift & Wear out
• Strategic Fit - indicates how well the firm's
mission and strategies fit its internal capabilities
and its external environment.
• Strategic Wear out – This is where a particular
strategy has run its course and no longer works.
• Strategic Drift - strategic drift, where strategies
progressively fail to address the strategic position
of the organisation and this is frequently
followed by transformational change and
demise/ failure.
 Punctuated Equilibrium
Environmental
Change

For example
changes occurring
in the wider
economic
environment or in
the organisation’s Strategic
industry. Fit

Strategic
Wear out

Strategic
Drift
Continuous Incremental Flux Transformational
stage stage stage stage

Time

Stability and Instability and

certainty uncertainty

Adapted from Johnson, Scholes and Whittington (2005)

 Contemporary Strategy Themes
• Globalisation • E-Commerce
– Size of market – Speed and direction of
technology change
– Range of competitors
– Expectations about
– Relationships overseas how to do business
– Institutional/cultural – E-commerce capability
orientation to strategy – Service small markets
and profit orientation
 Contemporary Strategy Themes
• Changing purposes • Knowledge and
– Change from pure Learning
profit driven – Innovation
– Corporate scandals – Generate and integrate
knowledge/promote
– CSR and drive for learning
shareholder value – New ways of doing
– Public sector more business
“business-like” – target – People interactions
setting and service
orientation
The Strategy Lenses
 The Strategy Lenses
• Strategy as design
– Logical analytical process
– Planned implementation
– Top manager driven

• Strategy as experience
– Adaptation of past strategies based on experience
– Influenced by taken for granted assumptions (culture)
– Bargaining and negotiation

• Strategy as ideas
– Importance of variety and diversity for innovation
– Emergent strategy from within and around the organisation
– Top managers create the conditions for this to take place
 Modes of Strategic Decision Making
• Entrepreneurial mode
– Strategic decision making by one powerful individual in
which the focus is on opportunities.
• Adaptive mode
– Reactive solutions to existing problems rather than
proactive search for new opportunities
• Planning mode
– Systematic gathering of information, feasible alternative
strategies and rational selection of most appropriate
strategy
• Logical Incrementalism
– Synthesis of above three modes ( tendency to make
marginal change/ making strategic decisions in small
steps)
Strategic Thinking & Planning
Strategic Thinking

Thought Process:
The purpose of strategic thinking
is to discover novel, imaginative
Synthetic (man-made) strategies which can re-write rules
Divergent of the competitive game; and to
Creative envision potential futures significantly
different from the present.

Strategic
Management

The purpose of strategic planning Thought Process:

is to operationalise the strategies
developed through strategic Analytical
thinking, and to support the Convergent
strategic thinking process. Conventional

Strategic Planning
Adapted from Loizoz Heracleous, 1998
Strategic Schools of Thought
Outside-in and Inside-out Approaches to Strategy Development

The external
environment The internal
• International markets environment
• The wider economy • The firm
• The industry
• The market

Identification of
Mostly Prescriptive Mostly Descriptive company
Identification of Strategy strengths,
competitive Development
weaknesses and
challenges,
Outside-in approach Inside-out approach capabilities
opportunities and Driven by the external Driven by the internal
threats environment environment

© Dr George Panagiotou 2009

 The Prescriptive and Descriptive ‘Camps’ of Thought in Strategic Management
Prescriptive Schools of Thought Descriptive Schools of Thought

•Cognitive
•Design •Learning
•Configuration
•Planning •Power
•Positioning •Entrepreneurial
•Cultural
•Environmental

“Objective”, Outwards looking “Subjective”, Inwards looking

The external environment is seen as ‘detached’ from The company and the external environment are
the company seen as interconnected
Driven by the external environment Driven by the internal environment
“What should be” “What is”
Intended strategies , Strategy formulation Emergent strategies, Strategy formation
Highly analytical , Selective approaches Analytical but also intuitive, Integrative
approaches, Cognitive process of strategy
Technical process of strategy
Increasing acceptance
“Over-emphasised”
Strategy development is a more open activity
Strategy development is the task of analysts and
encouraging ideas from all , Open
management, Mostly top to bottom communications
communications

© Dr George Panagiotou 2009

 The three Prescriptive Schools

School Nature of Process

• Design Conception

• Planning Formal Planning

• Positioning Analysis

Source: Adapted from Mintzberg,Ahlstrand and Lampel Strategy Safari Prentice Hall (1998)
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 The Seven Descriptive Schools

School Nature of Process

• Entrepreneurial Vision
• Cognitive Mental Process
• Learning Emergent
• Power Negotiation
• Cultural Collective process
• Environmental Reactive process
• Configuration Transformational

Source: Adapted from Mintzberg,Ahlstrand and Lampel Strategy Safari Prentice Hall (1998)
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Questions and Discussions

Thank you.