Welcome to Business Management 3A
BMNG7321
Lecturer: Lubinda Mubita
Email:
[email protected] Learning Unit 1
Strategic Management – An Overview
Learning outcomes
Theme 1: What is strategy?
• LO1: Explain the concept of strategy;
• LO2: Explain the development of strategy in the twentieth and twenty-
first century;
• LO3: Discuss the nature of strategy;
• LO4: Discuss the role of strategy;
Theme 2: Understanding strategic management
• LO5: Explain the concept of strategic management;
• LO6: Compare the two perspectives on managing strategically;
• LO7: Summarise the concept of the strategic link;
Theme 3: Strategy in practice
• LO8: Examine the tests for a winning strategy;
• LO9: Critique strategic paradoxes.
Key terms
§ Business model
§ Competitive advantage
§ Complexity theory
§ Dynamic capabilities
§ Multiple connections
§ Strategic flexibility
§ Strategic frames
§ Sustainability
§ Values
1.1 Introduction
• Managing an organisation:
• Complex task in the 21st century
• Impacts organisational leadership, strategies, and
organisational architecture
• Meaning of sustainable global organisation and its
contribution towards strategic development, change,
and transformation
• Thinking strategically about an organisation:
• Where are we now?
• Where do we want to go?
• How will we get there?
• How are we doing?
1.1 Introduction (cont.)
• Organisation’s approach to sustainability
determines successful implementation of strategy
• All organisations require strategy to achieve their
purpose
• Business models are important to ensure
sustainability of an organisation
• Better understanding of markets leads to
continuous rethinking of every element of business
models
1.2 Essence of strategy
§ 1.2.1 Strategy conceptualised
• Strategy is considered a key element of
managerial activity
• Strategy is important for competitive advantage
• Strategy is a very complex concept
• There are numerous attempts to define strategy
1.2.2 The historical origins of
the concept of strategy
• Derived from the Greek word strategos, meaning ‘a
general’
• Strategos is derived from stratos (the army) and
agein (to lead)
• First formal article on strategy: Sun Tzu’s seminal
work, The art of war
• Only became popular in the business world in the
20th century
• Military and business operations share some
common concepts and principles, for example,
strategy and tactics
1.2.3 Strategy development
in the 20th and 21st centuries
• Defining management tasks in the 20th century.
Authors Contributions in defining management tasks
F.W. Taylor Identify the best way for employees to perform a task
Henri Fayol Emphasised formal structures and processes for the
adequate performance of all important tasks
Henry Ford (1908–1915) innovative technology, mechanisation, quality standards,
redesign, and cost cutting
Alfred Sloan Emphasised rapid model changes, niche marketing
The Harvard Business School Introduced a capstone course in business policy
1.2.3.1 Strategy in the 20 th
century
• Accelerated by: rate of change, pressure to
analyse external environment and focus on
internal organizational environment, etc.
• Strategy defined
Identify and analyse
Implement strategic
threats and
plans
opportunities
Strategy
Design control
systems for
implementation Respond to threats and
process opportunities
1.2.3.2 Strategy into the 21st
century
• Application of
game and
complexity
Scenario theories
planning? Incorporate
unpredictable • Analysis of
conditions into disruptive effects
Rethinking of technology
an business
organisation’s • 2008-2009
models recession
strategy
• Renewed interest
in incorporating
corporate social
responsibility,
business ethics,
and sustainability
• Competitive
advantage using
blue ocean
strategies
1.3 The nature and role of
strategy
§ 1.3.1 The five Ps of strategy (Mitzberg’s 5Ps of strategy)
1.3.1 The five Ps of strategy (cont.)
• The 5Ps:
• Each defines strategy
• Are complementary and interrelated
• Strategy as a plan: Overall direction and a course of
action
• Strategy as a position: Determination of particular
products in particular markets
• Strategy as a perspective: Organisation’s way of doing
things
• Strategy as a ploy: Specific manoeuvre to outwit a
competitor
• Strategy as a pattern: Consistent behaviour over time
1.3.1 The five Ps of strategy (cont.)
1.3.2 Levels of strategy
• Corporate level strategy:
• Sets the direction of the organisation. Determines how
value can be added at all business levels and lines.
• Business level strategy:
• How to compete to strengthen market position and
attain a competitive advantage in each area of its
business units.
• Functional level strategy:
• Underpins business-level strategy by implementing
business strategies through the functional areas
1.4 Strategic management
• Strategic management:
• Define organisation’s goals for value creation and how to
structure organisation in pursuing those goals.
• Strategic Management entails:
• Strategic decision making
• Strategic planning-strategic direction, analysing the external
and internal environment etc.,
• Effective strategy implementation-organisational architecture
integrated to achieve effective performance
• Integrating sustainability into all the strategies
• Good strategic management = good strategic planning +
good strategy implementation
1.5 Perspectives on managing
strategically
• Our perspectives for managing strategically view
strategy as a link between the organisation’s
internal environment (the inside-out perspective)
and its external environment (the outside-in
perspective)
1.5 Perspectives on managing
strategically (cont.)
1.5.1 The inside-out perspective
• Grounded in the resource-based and
dynamic capabilities viewpoints
• Also known as strategic stretch
Organisation’s
resources, dynamic
capabilities, Opportunities
strategic In the external
architecture, goals environment
and values, and
business
intelligence
strategy
1.5.1.1 Resource-based and
dynamic capabilities viewpoints
• Resource-based viewpoint (RBV):
• Focuses on organisation’s resources, which answers the
question ‘What can this organisation do for me?’
• Assists organisations to achieve and sustain competitive
advantage over time
• Assumes organisation can use its unique resources to
implement value-creating strategies
• Value refers to contributions made to the organisation’s
products, customers, and stakeholders
• Organisations create value through flexibility and
innovation
1.5.1.1 Resource-based and
dynamic capabilities viewpoints
(cont.)
• Distinctive capabilities: unique skills that lead to
competitive advantage and are difficult to imitate
• Distinctive capabilities are process-based
• Dynamic capabilities: activities and processes to
integrate internal and external competencies in
rapidly changing environments
• Strategic architecture: helps organisations stretch
resources and capabilities
• Organisation’s resources and capabilities can also
be a threat to an organisation
1.5.1.2 The importance of goals
and values
• Values: standards by which employees set priorities
and define the rules to follow in order to achieve
sustainable competitive advantage
• Values in the hyper competitive 21st century
• Values as determinants of ‘good’ strategic
management
• Value systems are important to support the successful
creation of an organisational culture that embraces
change
• Values are part of an organisation’s internal capability
1.5.2 The outside-in perspective
• Market driven strategy
• Strategic fit
Opportunities in
Resources the external
and internal environment
capabilities Environmental
scanning
Strategy
1.5.2 The outside-in
perspective (cont.)
1.6 The strategic management
process
• Series of decisions on strategic direction, planning,
and implementation facilitated by strategic decision
enablers
1.6 The strategic management process
(cont.)
1.6.1 Strategic direction
• Grounds strategic management process
• Direction in which an organisation wants to
advance
• Type of organisation it wants to be
• How it proposes to achieve this direction
• Influences strategy design and implementation
• Tools: strategic intent, vision statements, mission
statements, value statements, balanced scorecards
1.6.2 Strategic analysis
• What is our current situation?
• Analysing and evaluating strategic link between the
outside-in perspective and the inside-out
perspective
• Facilitated by strategic decision-making
• External environment (political-legal, economic,
sociocultural, demographic etc.)
• Internal environment (resources and capabilities)
1.6.3 Strategy development
and formulation
• ‘Where are we going?’
• First develop and formulate business level
strategies
• Operating several lines of businesses nationally and
internationally (corporate-level strategies)
• Strategic choices in strategy development and
formulation
1.6.4 Strategy implementation
• Requires;
-Strategic leadership (key driver)
-Sound organisational architecture, and
strategic performance and control
• How will we get there? (Strategic
leadership and organisational
architecture)
• How are we doing? (strategic
performance and control)
1.7 Tests for a winning strategy
• Goodness of fit test: How well strategy fits
organisation’s situation
• Competitive advantage test: Does it help achieve
competitive advantage?
• Performance test-result to above average performance
• Social impact test: Contributes towards stakeholder’s
expectations
• Environmental system test: Protection and sustainable
use of natural resources
• Characteristics of a winning strategy
1.8 Strategic paradoxes
• Two opposite facts, or qualities, which you would
think could not both exist at the same time
• Paradox 1: Past and future
• Paradox 2: Intended and emergent strategy
• Paradox 3: Reactive or proactive approach to
strategy
• Paradox 4: Inside-out or outside-in driven strategies
• Paradox 5: Profitability versus sustainability
1.9 Summary
• Globalisation and technological innovation drives
competition
• Strategy must be grounded in competitive
advantage
• Strategic analysis is fundamental to achieving
strategic competiveness and sustainability
• Strategic competitiveness = Formulate + implement
value/creating strategies while being sustainable
• Main challenge: achieving strategic
competitiveness while being sustainable
