Strategy

• Strategy


  The determination of the long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals
• Strategy


  A sequence of united events which amounts to a coherent pattern of business behaviour
• Strategic decisions


  Concerned with the long-term health of the enterprise
• Tactical decisions


  Deal with day-to-day activities necessary for efficient and smooth operations
• Operational effectiveness


  Performing similar activities better than rivals perform them
• Strategic positioning


  Performing different activities from rivals' or performing similar activities in different ways
• Strategy is not the same as operational effectiveness - strategy is the creation of a unique and valuable position, involving a different set of activities
• Strategy


  The means to an end
• Strategy


  A firm's theory about how to compete successfully
• Garbage Can model


  Organisations receive problems, solutions, participants, and choice opportunities, and produce a decision
• John McDonald's early interest in game theory was an important catalyst in the development of corporate strategy as an academic discipline
• Chandler's Strategy and Structure (1962) was influential in the emergence of strategic management thought
• Nature of strategy


  • Strategic decisions are not made in a vacuum
  • Organisations operate within turbulent industries where the interdependence of decision-making and the convergence on organisational isomorphism result in the need for firms to implement clever strategies in order to differentiate themselves
• Whittington's (1993) characterisation of strategy schools

  • Classical: Attachment to rational analysis, the separation of conception from execution, and the commitment to profit maximisation
  • Evolutionist: Less confident in management's ability to plan and act rationally, markets choose prevailing strategies
  • Processualist: Challenge the detached approach of the classicists, strategies emerge from intimate involvement in everyday operations
  • Systemic: Strategies must be 'sociologically efficient': appropriate to particular social contexts
• Corporate strategy


  Advantage by operating in many markets / industries simultaneously - which industries should I engage in
• Business strategy


  Advantage in a single market / industry - how do I establish competitive advantage in my industry
• Operational effectiveness (OE)


  Doing the same things better than rivals
• Strategy


  Doing things differently from competitors (positioning)
• Both operational effectiveness and strategy are essential to superior performance, but OE is not sufficient as it is easy to imitate
• The Design School (Mintzberg 1990)


  • Strategy formulation is a controlled, conscious process of human thought
  • Responsibility for this rests with CEO, who is the strategist
  • Model of formulation should be simple and informal
  • Strategies should be unique and tailored to individual case - best ones are creative
  • Strategies emerge from design process fully formulated - little room for incrementalism/emergent
  • Strategies should be explicit, and, if possible, articulated - encourages their being simple
  • Only after strategies are formed can they be implemented: the two are separate processes
• The Design School denies itself the chance to adapt - there is evidence that explicit strategy leads to tunnel vision and makes the firm resistant to change
• Structure follows strategy as the left foot follows the right
• How can you fully formulate a strategy before implementing it? How can one person formulate everything - surely collaboration gives a bigger picture
• Planned strategy


  Following rules, with guidelines for effective tactics
• Emergent strategy


  Any decisions must consider reactions of competitors
• Mintzberg (1994) identified 3 fallacies of corporate planning: predetermination, detachment, and formalisation
• Formal planning and incrementalism


  Both form part of a good strategic planning process, especially in unstable environments
• Plans can be both specific and flexible: specific plans may represent the intended strategy, while inevitable incremental changes that follow as intentions become reality represent the emergent, or realised part of the firm's deliberate strategy
• Stable environments perhaps require less planning: having refined routines to operate in the stable environment, planning is not needed until the environment changes
• Firms new to planning should expect initial efforts to be relatively poor - they must learn to plan as efficiently as possible
• Strategy must be conceived informally before it can be programmed formally
• Goold (1996) argues Mintzberg's try and see strategy is not enough - strategy must be both conceived and programmed
• Rational


  (in classical economic theory) economic agents are able to consider the outcome of their choices and recognise the net benefits of each one
• Rational agents will select the choice which presents the highest benefits
• Consumers act rationally by


  Maximising their utility
• Producers act rationally by


  Selling goods/services in a way that maximises their profits
• Workers act rationally by


  Balancing welfare at work with consideration of both pay and benefits
• Governments act rationally by


  Placing the interests of the people they serve first in order to maximise their welfare
• Rationality in classical economic theory is a flawed assumption as people usually don't act rationally
• A firm increases advertising

  Demand curve shifts right