Exploring Strategy

Chapter 1
Introducing strategy
 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.
Definitions of strategy
 Strategy

Strategy is to do things differently in the context

of operations of present and future for long term
sustainability.
-Why are you different for the customer
-Invest in what matters
-Manage what matters.

The match an organization makes

between its internal resources
and skills…..and the opportunities
and risks created by its external
environment.
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Slide 1.5

Strategic decisions

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

Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved
 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.
 Three horizons for strategy (2 of 2)

Note: ‘profit’ on the vertical axis can be replaced by non-profit objectives; ‘business’ can refer to any set of activities; ‘time’
can refer to a varying number of years.
Source: M. Baghai, S. Coley and D. White, The Alchemy of Growth, Texere Publishers, 2000. Figure 1.1, p. 5.
 Stakeholders
What is Strategy for?
• To define and express the purpose of an organization
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
 Mission statements
A mission statement aims to provide
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?’
 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?’
 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.
 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.
 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.
Levels of strategy (1 of 2)
Diversifying from the
organisation’s original
Corporate- activities into other
level activities (e.g. Tesla
strategy selling batteries for home
use.)
Marketing and product
improvement strategies
Business-level (e.g. Developing a lower
strategy cost, volume car for
Tesla.)
Tesla’s functional
strategies are geared
Functional strategies to meeting its
investment needs
and raising finance.
Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved
 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.
The exploring strategy framework
The exploring strategy framework

The Exploring Strategy Framework includes

understanding the strategic position of an
organisation; assessing strategic choices for
the future; and managing strategy in action.
 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.
Strategic position (2 of 3)

Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved
 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?
• How are stakeholders aligned to the organisational
purpose?
• What resources and capabilities support the strategy?
• How does culture fit the strategy?
 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.
Strategic choices (2 of 3)

Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved
 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?
 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.
Strategy in action (2 of 3)

Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved
 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?
• Who should do what in the strategy process? Which
people and what activities?
The strategy checklist
 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.
 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).
 Strategy’s three branches (1 of 2)
• CONTEXT – internal and external.

• CONTENT – strategic options.

• PROCESS – formation and implementation.

Strategy’s three branches (2 of 2)
 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).
•Public sector organisations (e.g. service/quality and managing
change issues).
•Not-for-profit organisations (e.g. purpose and funding issues).
 Summary (1 of 3)
• Strategy is the long-term direction of an organisation.
• 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.
 Summary (2 of 3)
• The Exploring Strategy Framework has three major
elements: understanding the strategic position, making
strategic choices for the future and 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.
 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 design, experience, variety and
discourse.
See also slide set for Commentary to Part 1: The
Strategy Lenses.