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Chap 1 - Introducing Strategy

The chapter introduces key concepts of strategy, including defining strategy as the long-term direction of an organization formed through choices about resources and scope. It distinguishes corporate, business, and functional strategies and outlines the Exploring Strategy Framework which examines an organization's strategic position, choices, and implementation through three elements. The chapter also discusses strategy statements, the purpose of strategy, and levels of strategy.

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Woo Johnson
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77 views

Chap 1 - Introducing Strategy

The chapter introduces key concepts of strategy, including defining strategy as the long-term direction of an organization formed through choices about resources and scope. It distinguishes corporate, business, and functional strategies and outlines the Exploring Strategy Framework which examines an organization's strategic position, choices, and implementation through three elements. The chapter also discusses strategy statements, the purpose of strategy, and levels of strategy.

Uploaded by

Woo Johnson
Copyright
© © All Rights Reserved
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Fundamentals of Strategy

Fifth Edition

Chapter 1
Introducing strategy

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Learning outcomes

• Summarise the strategy of an organisation in a ‘strategy


statement’.
• Distinguish between corporate, business and
functional strategies.
• Identify key issues for an organisation’s strategy
according to the Exploring Strategy Framework.

• https://www.youtube.com/watch?v=_BajRnOCSKk

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Definitions of strategy

Sources: A.D. Chandler, Strategy and Structure: Chapters in the History of American Enterprise, MIT Press, 1963, p. 13; M.E. Porter, ‘What is strategy?’,
Harvard Business Review, November–December 1996, p. 60; P.F. Drucker, ‘The theory of business’, Harvard Business Review, September–October
1994, pp. 95–106; H. Mintzberg, Tracking Strategies: Towards a General Theory, Oxford University Press, 2007, p. 3.

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Three horizons for strategy

Source: Adapted from M. Baghai, S. Coley and D. White, The Alchemy of Growth, Texere Publishers, 2000. Figure 1.1, p. 5..

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The purpose of strategy

• What is Strategy for?


• To define and express the purpose of an organization to
stakeholders.
• Stakeholders are those individuals or groups that
depend on an organisation to fulfil their own goals and on
whom, in turn, the organisation depends.
• Four ways to define an organisation’s purpose:
– Mission Statement
– Vision Statement
– Statement of Corporate Values
– Objectives

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Mission statement

A mission statement provides employees and


stakeholders with clarity about what the
organisation is fundamentally there to do.
•‘What business are we in?’
•‘What would be lost if the organisation did not
exist?’
•‘How do we make a difference?’

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Vision statement

A vision statement is concerned with the future


the organisation seeks to create.
•‘What do we want to achieve?’
•‘If we were here in twenty years what do we want
to have created or achieved?’

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Statement of values

Statements of corporate values communicate


the underlying and enduring core ‘principles’ that
guide an organisation’s strategy and define the
way that the organisation should operate.
NB These values do NOT change with
circumstances.

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Objectives

Objectives are statements of specific outcomes


that are to be achieved.
•Often stated in financial terms (e.g. Profit).
•May also be market-based objectives (e.g. Market
Share).
•May emphasise basis of competitive advantage.
•‘Triple Bottom Line’ – economic, social and
environmental objectives.

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Strategy statements

Strategy statements should have three main


themes:
•Fundamental goals that the organisation seeks,
which reflect the stated mission, vision and
objectives.
•The scope or domain of the organisation’s
activities.
•The particular advantages or capabilities it has
to deliver all of these.

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Levels of strategy (1 of 2)
Diversifying from the
organisation’s original activities
Corporate- into other activities
level e.g. Tesla selling batteries for home use.

strategy
Marketing and product
improvement strategies
Business-level e.g. Developing a lower cost, volume car for
Tesla.
strategy

Tesla’s functional
strategies are
Functional strategies geared to meeting
its investment
needs and
raising finance.

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The Exploring Strategy framework

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Strategic position (1 of 2)

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Strategic position (2 of 3)

Fundamental questions for Strategic position:


• What is the purpose of the organisation?
– What are the macro-environmental opportunities and
threats?
– How can the organisation manage industry forces?
– What resources and capabilities support
the strategy?
– How are stakeholders aligned to the organisational
purpose?
– How does history and culture fit the strategy?

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Strategic choices (1 of 3)

Strategic choices involve the options for strategy


in terms of both the directions in which strategy
might move and the methods by which strategy
might be pursued.

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Strategic choices (2 of 3)

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Strategic choices (3 of 3)

Fundamental questions for Strategic choice:


• How should individual business units compete?
• Which businesses to include in the portfolio?
• Where should the organisation compete
internationally?
• Is the organisation innovating appropriately?
• Should the organisation buy other
companies, form alliances or go it alone?

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Strategy in action (1 of 3)

Strategy in action is about how strategies are


formed and how they are implemented.
The emphasis is on the practicalities of managing.

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Strategy in action (2 of 3)

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Strategy in action (3 of 3)

Fundamental questions for Strategy in action:


• How centralised or structured should an
organization be?
• What are the required organisational systems?
• How should the organisation manage necessary
changes and what sort of leadership is necessary?

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Key elements in a strategic plan

Source: A practical introduction to strategic planning is V. Evans, FT Essential Guide to Developing a Business Strategy:
How to Use Strategic Planning to Start Up or Grow Your Business, FT Publishing International, 2013.

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Summary (1 of 2)
• Strategy is defined as:
‘the long-term direction of an organisation, formed by choices and actions about its
resources and scope, in order to create advantageous positions relative to
changing environment and stakeholder contexts’
• The work of strategy is to define and express the purpose of an
organisation through its mission, vision, values and objectives.
• Ideally a strategy statement should include an organisation’s
goals, scope of activities and the advantages or capabilities it
brings to these goals and activities.
• Corporate-level strategy is concerned with an organisation’s
overall scope; business-level strategy is concerned with how to
compete; and functional strategy is concerned
with how corporate- and business-level strategies are
actually delivered.

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Summary (2 of 2)

• The Exploring Strategy Framework has three major


elements:
1. understanding the strategic position,
2. making strategic choices for the future
3. managing strategy in action.
• Strategy develops through rational-analytic and emergent
processes

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