MBA

CORPORATE Introduction to the Subject

LB5113
STRATEGY
© PROF KUAH 2020
ABOUT THIS SUBJECT
This subject covers the fundamentals of corporate-level strategy as opposed to
business-level strategy. Business-level strategy deals with achieving and
sustaining a competitive advantage in a discrete and identifiable business.
Corporate-level strategy deals with the way a company creates value through
the selection of a portfolio of businesses and the configuration and coordination
of these businesses.
Other than the foundational topics in (2) understanding the environment, (3) the
industry and (4) the firm’s strategic capability, the major topics we will cover
are diversification (related and unrelated), vertical integration, restructuring,
synergy, alliance strategy, and global strategy. The primary way in which
corporate strategy ultimately creates value is through increasing the ability of
businesses in the portfolio to create and sustain a competitive advantage.We
will be introducing a variety of tools to help us analyse these topics.

© PROF KUAH 2020

ABOUT THIS SUBJECT
As this is a Corporate Strategy course, you will be expected to work
effectively in achieving common goals, demonstrating both
collaboration and leadership (like members of the board of directors),
on a week by week basis with members coming with different ideas,
backgrounds and expertise in a company-like setting.
You will be given challenging task to address on a week by week
basis (i.e. tutorials) where your team will need to engage and present
your thoughts (during the tutorials). You will also be given
challenging situation to assess both as group and individual for your
three assessments.

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LEARNING OUTCOMES
Students who successfully complete this subject will be able to:
SLO1: analyse and evaluate decision-making strategies by applying the tools
and using the concepts of corporate strategy;
SLO2: critically analyse strategic approaches and sustainable practices as a
means of creating resilient, inclusive and innovative businesses and
communities;
SLO3: employ a range of methods, techniques and tools to plan and conduct
business to generate solutions to complex problems in global context.
CLO7: Communicate complex business analyses and information
appropriately to diverse audiences
CLO8: Demonstrate the ability to work effectively in achieving common
goals, demonstrating both collaboration and leadership

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SESSION TOPICS
Session 1: What is Strategy?
Session 2: Environment, Industry and Competitor Analyses
Session 3: Strategic Capability Analysis
Session 4: Stakeholders, Values, Culture And Mission
Session 5: Strategy Processes
Session 6: Delivering Competitive Advantage
Session 7: Making Strategic Choices I
Session 8: Making Strategic Choices II
Session 9: Strategic Implementation
Session 10: Strategic Evaluation

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Organisation of Topics
External Internal
appraisal appraisal
BASIC DESIGN SCHOOL MODEL
Session 2 Session3
Strengths &
Threats &
weaknesses
opportunities
of organization
in environment
Distinctive
Key success Session 7 & 8 competences
factors
Creation of
strategy
Session 4, 5 & 6
Soc
res ial gerial
pon Mana
sibi
lity values

Session 10
Evaluation
and choice
of strategy

Session 9
Implementation
of strategy

© PROF KUAH 2020

 MBA
CORPORATE What is Corporate
Strategy?
STRATEGY
© PROF KUAH 2020
STRATEGY
‘Strategy can be defined as the determination
of the basic long term goals and objectives of
an enterprise, and the adoption of course of
action and the allocation of resources
necessary for carrying out those goals.’

A Chandler
Strategy and Structure

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DIFFERENCES
Corporate Strategy –
identifying vision and general decision of organisation e.g. Divest or
Invest
Business Strategy –
relates to how organisation approach a certain market or drive a certain
business unit
Functional Strategy –
to operationalise a corporate vision/ policy or optimise performance by
a business function

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COMMON BUSINESS
STRATEGIES
 Operation Strategies
 Vertical/ Horizontal Integration, MRP, CRP and other IT processes
 Product Strategies
 Product Differentiation, Product Focus, Cost Leadership
 Marketing Strategies

 Branding, 2nd Tiering, First to Market

 Financial Strategies
 Cost Rationalization, Treasury Mgmt – risk adverse/ ascertain
 WHAT
DISCIPLINE?
Concerns with awareness of the business
environment and management theories from different
disciplines:
 External Environment Economy
 Political Climate, Economics,
 Social & Cultural Context,
Industry
 Technology Advancement,
 Marketplace / Industry
 Customer needs/ wants,
 Competitors in the marketplace, Company
 New Entry, Barriers.

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 MBA
CORPORATE Strategy in Context

STRATEGY
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THE SMALL BUSINESSES
SME and small private companies usually operate in a
single market or single country, and therefore subject to less
complexity and less dynamic environment.
No manpower available for market research, solely
dependent on senior manager/ founder’s direction and
experiential learning (Entrepreneurial School, Learning
School)
Hence, the culture in the organisation is determined by that
of the founder/ senior members

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THE SMALL BUSINESSES:
STRATEGIC ISSUES
Issues faced by the small business include:
 Coping with rivalry in the marketplace (consolidation,
monopolistic comp) –emergent?
 Raising capital (for growth) from public and private entities
 Maintaining good personal relationships / linkages with
suppliers, customers, government, financiers..etc

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MULTI-NATIONAL
CORPORATION
American MNCs in 60’s and 70’s (e.g. AT&T, GE)
Japanese conglomerates or Keiretsu in 80’s & 90’s
(NTT, Sony, Toyota)
Korean Chaebol (Daewood, Hyundai, Samsung)
MNCs are rationalising their empires to accommodate
increased domestic competition

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CASE STUDY 1:
BATA
Multidomestic Strategy
manage its international activities as a
portfolio of domestic operations with
autonomous domestic strategies
Country strategies enable domestic entity to
tap on their competitive local conditions.

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CASE STUDY 2:
SEAGATE
TECHNOLOGY
Global Strategy
Integrated activities on worldwide linkages
tapping on the comparative advantages of
countries/ resources.
Competitive overall system of network
which forces competitor/s to compete on
similar basis.

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THE MULTI-
NATIONALS :
STRATEGIC ISSUES
Issues faced by the MNCs include:
 Organisational structure (matrix, flat/ bureaucratic, circular)
and control
 Linkages between suppliers and subsidiaries (who are
internal suppliers) – Material Requirement Planning
(MRP), Manufacturing Resource Planning (MRP II),
 Logistics coordination
 Imposed legislation (e.g. trade tariff in emerging
economies)

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MULTI-NATIONAL
CORPORATION
MNCs operate in many markets and has a few
products in many countries, hence subjected to
complexity and dynamic environment.
Analysts dedicated to market research (Design,
Planning Schools) in different businesses/
divisions, and each SBU may strategise to tap on
local resources
May faced imposed strategy

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MANUFACTURING
VERSUS SERVICE
CO.
Services has less to depend on with no physical product :
has purely depend on intangibles like ambience,
friendliness, professionalism e.g. consultancy, insurance.
Competitive advantage lies on getting right what the
customer value most!
Product alone does not attract customer, especially
commodities e.g. rice or computer hardware.
Provide fringes like : Customer Helpline, Intl Warranty/
Support, Free Software Upgrade..etc

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INNOVATIVE
ORGANIZATIONS
Some organizations depend on the constant drive in
innovation for continuing success, especially those in
 high tech related (dot com)
 food technology (GM products, innovative use of flavourings)
 pharmaceutical and R&D (patents)

Issues faced by innovative organization include:

 Flat or Blurred organization structure
 Constantly creating new ways of doing businesses – emergent strategy?
 First to Market, Compete on speed

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PUBLIC
SECTOR
Phenomenon of privatisation of agencies to differing levels like
Statutory Boards, Commissions and Autonomous Agencies to
improve services and shorten lead times in dealing with public
However, planning and strategy are still influenced at political
level rather than market conditions. (Power School and
Environmental School)
Competition for resources within public sector (i.e. Govt yearly
budget) Justification usually comes from precedent actual
spending.
More attempts of inter-agency collaboration (i.e. strategic
alliances forming new committees) on ideal social outcomes and
directions comes from more important Govt agency - Power
School
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 MBA
CORPORATE What is Strategy?

STRATEGY
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INTENDED, DELIBERATE
TO
REALISED STRATEGY

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INTENDED, DELIBERATE
TO
REALISED STRATEGY
Intended strategy is strategy as conceived of by the
top management team. The intended strategy is the
result of a process of negotiation, bargaining, and
compromise, involving many individuals and groups
within the organization.
Deliberate strategies provide the organization with a
sense of purposeful direction.
Finally, Realized strategy is a blend of intentions and
emergence which can be interpreted by reference to
the strength of pressure from the external
environment—a kind of environmental determinism.
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INTENDED OR
EMERGENT?

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HOW ENVIRONMENT STIRS
INTENDED STRATEGY
Economy
External Environment
 Political Climate, Economics,
 Social & Cultural Context,
 Technology Advancement,
Industry
• Marketplace / Industry
– Customer needs/ wants,
– Competitors in the marketplace,
– New Entry, Barriers.

Company

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EVOLUTION OF
STRATEGIC
MANAGEMENT
1970s 1980s 1990s
Dominant Corporate planning Corporate Quest for competitive
Market led strategy advantage
theme Market led Resource led

Main Forecasting Analysis of Resource analysis

Investment appraisal industry and Competence analysis
techniques competitors Cost cutting

Outcomes Corporate plan Acquisition and Corporate

divestment restructuring.
Business process Building capabilities
engineering and innovation

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HISTORICAL DEVELOPMENT
Schools have appeared at different times and some have been
‘superceded’ by others
Schools may exist side by side in some organisations:

Design School - 1960s

- design orientated/conceptual approach
Planning School - 1960s/1970s
- ‘scientific’ view of planning
Positioning School - 1980s
- selection of strategic positions in the economic market place

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DESIGN SCHOOL – A
SUMMARY
The Design School
 Chandler (1962); Andrews et al (1965)
 Key Contribution: ‘Strategy represents a fundamental fit between
external environment and internal capability’.

Problems:
 Not a SWOT analysis as assessment of strengths and weaknesses
bypass learning
 Organisation structure need to follow strategy
 Inflexible and static, not applicable in times of uncertainty

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THE DESIGN SCHOOL Internal
External
appraisal appraisal

Threats & Strengths &

opportunities weaknesses
in environment of organization
Key success Distinctive
factors competences
Creation
of
Soc strategy
i erial
resp al Manag
ons
ibil
ity values

Evaluation
and choice
of strategy

Implementation
of strategy
© PROF KUAH 2020
PLANNING SCHOOL – A
SUMMARY
Strategies result from a controlled, conscious process of
formal planning, decomposed into distinct sets, each
delineated by checklists and supported by techniques.
Responsibility for that overall process rests with the Chief
Executive in principle; responsibility for its execution
rests with staff planners in practice.
Strategies appear from this process full blown, to be made
explicit so that they can then be implemented through
detailed attention to objectives, budget programmes, and
operating plans of various kinds.

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THE PLANNING SCHOOL
Premises Planning Implement
and Review

Planning
Studies

Fundamental
Organisational
Socio-Economic
Purpose Strategic Medium-Range Short-Range
Planning Programming Planning and
and Plans and Programs Plans
Organisation Review
Values of Company and
Goals/Targets For
Top Managers Missions Subobjectives Evaluation
Procedures Implementation
Long-Range Subpolicies of of
Tactical Plans
Objectives Subsstrategies Plans Plans
Programmed
Policies
Evaluation of Plans
Strategies
External
and Internal
Opportunities and
Problems; and
Company Strengths
and Weaknesses

Feasibility
Testing

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POSITIONING SCHOOL - A
SUMMARY
Strategies are generic, specifically common, identifiable positions
in the marketplace.
That marketplace (the context) is economic and competitive.
The strategy formation process is based on the selection of
generic positions based on analytical calculation.
Analysts play a major role in this process,feeding the results of
their calculations to managers who officially control the choices.
Strategies thus come out from this process full blown and are then
articulated and implemented; in effect, market structure drives
deliberate positional strategies that drive organisational structure.

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THE POSITIONING SCHOOL

Strategy formulation as an
analytical process
The influence of industrial
economics, e.g. Porter (1980)
Examples include BCG Matrix,
Opp Risk Matrix.

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 STRATEGIC
PROCESSES
Mintzberg’s Strategy Safari (1998) consolidated ten
facets of strategic management.

Deductive Inductive Process

 The Design School - a process of conception;
 The Planning School - a formal process;
 The Positioning School - an analytical process (econ);
 The Entrepreneurial School - a visionary process;
 The Cognitive School - a mental process (psy);
 The Learning School - an emergent process;
 The Power School - a process of negotiation (polit);
 The Cultural School - a collective process;
 The Environmental School - a reactive process (bio, polit socio);
 The Configuration School - a transformation process (his).
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 SUMMARY
Why is this course important to you?
 Integrative module; ability to assess strategic context; ability to make strategic judgements.

What are the skills it will provide?

 Presentation, logical argumentative and analytical skills

Requirements: Fully participative, demanding BUT rewarding in the end.

© PROF KUAH 2020