Exploring Strategy

Twelfth 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.
• Understand different people’s roles in strategy work.
• Appreciate the importance of different organisational
contexts, academic disciplines and theoretical
lenses to practical strategy analysis.

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Strategy: its definition, purpose,
analysis and work

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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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 Strategic decisions

Source: From G. Johnson, K. Scholes and R. Whittington. Exploring Corporate Strategy, 8th edn, Pearson Education 2008.

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 Three horizons for strategy (1 of 2)

• Horizon 1:
Current core activities – extend and defend these
activities.
• Horizon 2:
Develop emerging activities – to generate new
sources of growth and/or profit.
• Horizon 3:
Create viable strategic options for the
future – higher risk activities that may take
years to generate growth/profits.

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 Three horizons for strategy (2 of 2)

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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 Stakeholders

What is Strategy for?

• To define and express the purpose of an organisation 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
– Statement of Objectives

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 Mission statements

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 statements

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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 Statement of 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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 Levels of strategy (2 of 2)

• Corporate-level strategy is concerned with the

overall scope of an organisation and how value
is added to the constituent business units.
• Business-level strategy is concerned with the
way a business seeks to compete successfully
in its particular market.
• Functional strategy is concerned with how
different parts of the organisation deliver the
strategy effectively in terms of managing
resources, processes and people.

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The Exploring Strategy framework

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 The Exploring Strategy framework

The Exploring Strategy Framework includes

understanding
−the strategic position of an organisation;
−assessing strategic choices for the future;
−managing strategy in action.

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 Strategic position (1 of 3)

The strategic position is concerned with the

impact on strategy of the macro-environment, the
industry environment, the organisation’s
strategic capability (resources and competences),
the organisation’s stakeholders and the
organisation’s culture.

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Strategic position (2 of 3)

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 Strategic position (3 of 3)

Fundamental questions for Strategic position:

• 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:

• Which strategies are suitable, acceptable and feasible?
• What kind of strategy-making process is needed?
• What are the required organisation structures and
systems?
• How should the organisation manage necessary
changes and what sort of leadership is
necessary?
• Who should do what in the strategy process?
Which people and what activities?

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The strategy checklist

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 Working with strategy (1 of 2)

All managers are concerned with strategy:

• Top managers frequently formulate and control
strategy but may also involve others in the
process.
• Middle- and lower-level managers have to meet
strategic objectives and deal with constraints.
• All managers have to communicate
strategy to their teams and can contribute
to the formation of strategy through ideas
and feedback.

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 Working with strategy (2 of 2)

Organisations may also use strategy specialists:

• Many large organisations have in-house
strategic planning or analyst roles.
• Strategy consultants can be engaged from
management consulting firms (e.g. Accenture,
IBM Consulting, PwC).
• There are a growing number of specialist
strategy consulting firms (e.g. McKinsey &
Co., The Boston Consulting Group).

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Strategy’s three branches (1 of 2)

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 Exploring strategy in different
contexts
The Exploring Strategy Framework can be applied in many contexts.

In each context the balance of strategic issues differs:

•Small businesses (e.g. strategic purpose, growth issues and
retaining independence).
•Multinational corporations (e.g. geographical scope; cultural issues
and structure/control issues).
•Family Businesses: family concerns, strategic change and leadership.
•Public sector organisations (e.g. service/quality and
managing change issues).
•Not-for-profit organisations (e.g. purpose and funding
issues).

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 Summary (1 of 3)

• 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 3)

• 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 work is done by managers throughout an
organisation, as well as specialist strategic planners and
strategy consultants.
• Research on strategy context, content and process shows
how the analytical perspectives of economics, sociology
and psychology can all provide practical insights for
approaching strategy issues.

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 Summary (3 of 3)

• Although the fundamentals of strategy may be similar,

strategy varies by organisational context, for example,
small business, multinational or public sector.
• Strategic issues can be viewed critically from a variety of
perspectives, as exemplified by the four strategy lenses
of
1. design,
2. experience,
3. variety
4. discourse.
See also slide set for Commentary to
Part 1: The Strategy Lenses.

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