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What Is Strategy?

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5 views

What Is Strategy?

strategy notes

Uploaded by

paperrpathak4
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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What is Strategy?

What is Strategy
• Analyze your own strength, as well as of your competitor
• Go-to market plan
• Plan resources for future growth
• Long term plan for achieving firm’s objectives
• Strategy making process depends on vision, mission, goals
• Plan to win in the market
• Achieve competitive advantage (market share, ROA, patents, profitability)
• Adaptive as external environment changes
• Work within ethical boundaries
• Getting stakeholders aligned and their buy-in
• A pattern of resource allocation that enables firms to create and sustain a
competitive advantage
Definitions of Strategy
• The determination of long-range objectives of a firm, the adoption of courses of
action, and the allocation of resources to achieve its goals (Chandler, 1962)
• Business histories of General Motors, Standard Oil, Sears, Dupont
• Structure follows Strategy
• Covers both formulation and execution
• Does not cover uncertainties in the environment
• Strategy is concerned with the development of a viable match between the
opportunities and risks present in the external environment and the
organization’s capabilities and resources for exploiting these opportunities (Hofer,
1973)
• Interface between the organization and the environment. The role of strategy is
to orient the organization
• SWOT
Emergent Strategy
• Detect a pattern in a stream of decisions and actions (Mintzberg, 1973)

Intended Strategy Realized Strategy


Deliberate Strategy

Unrealized Strategy Emergent Strategy


5 Ps of Strategy
Mintzberg (1987):
• Plan - Is there a clear plan?
• Ploy - Should the company use a ploy to bring in competitors?
• Pattern - Is there a way to detect and use effective patterns within the company?
• Position - Where does the company stand now and where may it stand in the
future?
• Perspective - Can the company implement this strategy successfully?
Strategy is….
• Top management perspective but everyone like middle managers need to
understand firm’s strategy
• Explains why some firms succeed and others fail. How strategy impacts
performance
• Strategy is inherently competitive – winning and beating competition
• Analyses, decisions (formulation) and actions (implementation) an organization
undertakes in order to create and sustain competitive advantage
Strategy is…
• Strategy is integrative – focus is not on functional strategy, but business
strategy/firm strategy
• Directs the organization towards overall goals and objectives
• Includes multiple stakeholders who need to be aligned
• Long term vs. short term - simultaneously manage both
• Recognizes trade offs between effectiveness (doing the right thing) and efficiency
(doing things right)
• Three levels of Strategy – corporate strategy (manage a portfolio of businesses),
business strategy, functional strategy
Key stakeholders and Nature of Claims
Stakeholder Nature of Claim
Stockholders Dividends, capital appreciation
Employees Wages, job security, safe working env, benefits
Suppliers On time payment, continued relationship
Creditors Payment of interest, repayment of principal
Customers Value, warranties
Government Tax, compliance with regulations
Communities Good corporate citizenship behavior
Why do firms fail
• Firms that fail to see a problem
• Internally focused
• Head in the sand
• See a problem but do not understand it
• Lack analytical abilities
• Problem complexity outside traditional paradigms
• Develop a response but fail to implement
• Conflicting, short-term pressure
• Risk aversion, slow response
Vision, Mission, Strategic Objectives

Long time Vision is an inspiring and long-term goal


General
horizon
Vision
Mission statement – encompasses the
purpose as well as basis of competition
Mission statement and competitive advantage

Strategic objectives Strategic objectives – operationalize the


Specific
Short time mission statement
horizon
Putting Strategy in its Place

Source: (Hambrick and Frederickson, 2001)


Strategy: Integrated Set of Choices

Source: (Hambrick and Frederickson, 2001)


Strategy: Integrated Set of Choices
• All five elements are equally important
• The five elements call not only for choice, but also for preparation, investment
and capabilities
• All five elements must align with and support each other
• Only after the specification of all five strategic elements, the firm is in a position
to turn to designing all the other supporting activities
IKEA’s Strategy

Source: (Hambrick and Frederickson, 2001)

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