Strategy & Controls #1

Mr Mansoor Ahmed
Comsats Business School
e.mail: mansoorlse@yahoo.co.uk
WHAT IS STRATEGY?
Origins of Strategy

• Strategy originates from Greek (stratēgos),

roughly meaning ”leading an army”
• Even today, militaries recognize strategic and
tactical levels of planning
– ”Tactics win battles, strategy wins the war”

Military metaphors remain common in

business environment, but are actually
valuable?
Strategy vs. Tactics

• Tactics are the immediate means

(actions) used to attain a goal
• Strategy incorporates a selection of
tactics
The most commong definition

”A comprehensive long-term plan to

attain chosen goals.”

Often, management scholars and gurus define the

goal of strategy as ”beating the competition” or
”maximizing shareholder value”
Goals in Business Strategy

• In for-profit firms, strategic goals ultimately

facilitate some or all of the following:
– Growth
– Profitability
– Survival of the firm
– Shareholder value

• Goals depend on the type of the firm

– Technology startups vs. family businesses
Other approaches to strategy

• ”Strategy means that the top management

creates a future for the firm and takes
control of that future”
• ”Competitive strategy is about being
different. It means deliberately choosing a
different set of activities to deliver a unique
mix of value”
• Strategy is about archieving more optimal
fit with the firm’s environment
Johnson, Scholes & Whittington book

Strategy is the direction and scope of an

organization over the long term, which
achieves advantage in a changing
environment though its configuration of
resources and competences with the aim of
fulfilling stakeholder expectation.
(Page 9, emphasis in the original)
My preferred approach to strategy

Strategic
Analysis

Firms’ Actions &

Strategy
Objectives Structures

Strategy is an articulated and actionable

understanding of what the firm does and
should do to attain its objectives.
Example:
Strategic Intent of Comsats University

• To remain or be amongst the top tier of scientific, engineering and

management research and teaching institutions in the world.
• To develop our range of academic activities to meet the changing
needs of society industry and research.
• To continue to attract and develop the most able students and staff
worldwide.
• To establish our Comsats Business School as one of the leading
institutions in the world.
• To communicate widely the significance of science in general, and
the purpose and ultimate benefits of our activities in particular.

• At Comsats University, strategy is implemented on

departmental level following 16 more specific key objectives
Implicit assumptions?

• A comprehensive long-term plan

• A future created by managers

• A distinctive set of activities

Explicit assumptions

• A comprehensive long-term plan

– Future is predictable, optimal plan can be deduced
by collecting enough information
• A future created by managers
– Future can be ’enacted’ by taking the initiative,
persistent managers can realize their visions
• A distinctive set of activities
– The optimal set of activities remains relatively
constant in the near future
Strategy as boundary-setting

Strategy is an articulated and actionable

understanding of what the firm does and
should do to attain its objectives.

• Specific attention on the course is devoted

on things a firm does not do

• How does not doing things create value?

• How can a firm avoid doing things?
Today

1. Practicalities
2. What is strategy?
– Pattern vs. Plan
3. Strategic vision
– The surface level
4. Strategic analysis
– Introduction & readings for the next
session
The surface of business strategy

STRATEGIC VISION
Why a strategic vision?

• Top management would like all parts of the

firm to act towards strategic goals
• Decision making tends to be distributed
– Why is this increasingly so?
• Vision directs decisions & actions on lower
levels of hierarchy
• Other benefits
– Leadership: motivation, identification with the firm
– External communication: shareholders, etc.
Example:
Vision/Mission Statements

Sony (based on shareholder meeting slides):

“Developing champion products with innovative

technologies to deliver a compelling
entertainment experience.“

“Key priority to revitalize electronics by changing the

organizational structure, reducing overheads,
refocusing product lines, reducing model count,
optimizing manufacturing, divesting non-strategic
assets”
Case Netflix (cf. Lovefilms.co.uk)
Netflix Vision
(From investor material)

• Attention
directed to:
– Improving
web site and
service
– Increasing
subscriptions
– Online video
technology
Articulating a Strategic Vision

• Key goals of the organization

• Chosen means for attaining the goals

• Underlining activities or goals that are

unique to the specific company
To direct and unify activities in a firm,
strategic vision should be...?

• Widely known and understood within the

organization
• Relatively simple and stable
• Actionable (influence real decisions)
• Acceptable to firm’s stakeholders
– I.e. owners, employees, customers, government
Vision-- Potter's Value Chain

• Strategy must incorporate more detailed understanding

of different functional areas (tactics, if you will)

”Value chain” graph originally by Porter, 1977

Consider the higher education industry

• What are the implicit assumptions regarding

the activities of Comsats University?

• How does our strategy differentiate us from

the other universities?
• How do some other universities differentiate
themselves?
 Strategic intent of Comsats College

• To remain amongst the top tier of scientific, engineering and

medical research and teaching institutions in the world.
• To develop our range of academic activities to meet the
changing needs of society, industry and healthcare.
• To continue to attract and develop the most able students
and staff worldwide.
• To establish our Business School as one of the leading such
institutions in the world.
• To communicate widely the significance of science in
general, and the purpose and ultimate benefits of our
activities in particular.
Today

1. Practicalities
2. What is strategy?
– Pattern vs. Plan
3. Strategic vision
– The surface level of strategy
4. Strategic analysis
– Introduction & readings for the next
session
STRATEGIC ANALYSIS
Industry/market analysis

• Some goals:
– Determine the attractiveness of an industry/market
– Understand key drivers of competitiveness
– Understand current and likely competitors
– Understand customer behavior
Strategic analysis:
Five Forces Framework

Threat of
New
Entrants
Captures key threats for
the profitability of a
strategic positions

Supplier Buyer
Bargaining Competitors Bargaining Most lucrative
Power Power businesses have many
weak suppliers, price-
insensitive buyers, low
competition, and low
Threat of
Substitutes
threat of substitutes and
new entrants.
Environmental analysis

• Some goals:
– Understand how the environment hinders or helps
the firm reach its goals
– Underline potentially important changes in the
environment
– Enable firm to proactively fit its strategy to a
changing external context
PEST(EL) Framework

Political Economic
Changes in regulations, Consumer purchasing
taxation, government power, material costs,
subsidies, anti-trust law interest rates

Technological The Firm

Sociocultural
New innovations that Consumer preferences
enable new products or and behavior, social
help reduce costs norms and expectations
(Environmental) (Legal)
All issues related to environmental Outcomes of political environment: new
sustainability (partly political, etc.) laws or court decisions influencing
demand/cost of products/services
M. Sc. International Healthcare Management

Political Economic
Write here
Write here

M.Sc.
Technological program Sociocultural
Write here
Write here

Work out the potential relevant

changes in the external environment
SUMMARY
Strategy in Context

Five forces
Strategic PEST(EL)
Analysis And many others...

Actions &
Objectives Strategy
Structures

What our organization An understanding of New processes,

should be? current activities + policies, rewards, etc.
further plans to
achieve objectives
Summary of Key Points

• ’Strategy’ means two things:

– A plan of the actions to attain goals
– A pattern of activities the firm is currently undertaking
• Strategic vision
– A simplified statement of a firm’s strategy that helps
align decisions and activities across the firm
• Frameworks help analyze profit potential and
environmental changes
– Five forces & PEST covered so far – more to follow in
the next sessions
How Smart, Connected
Products(IoT) Reshaping
Competition.
Michael E. PorterJames E. Heppelmann
iot
• Smart thermostats control a growing array of home devices,
transmitting data about their use back to manufacturers. Intelligent,
networked industrial machines autonomously coordinate and
optimize work.
IoT
• The evolution of products into intelligent, connected devices—which
are increasingly embedded in broader systems—is radically reshaping
companies and competition.
iot
• Cars stream data about their operation, location, and environment to
their makers and receive software upgrades that enhance their
performance or head off problems before they occur.
• Products continue to evolve long after entering service. The
relationship a firm has with its products—and with its customers—is
becoming continuous and open-ended.
iot
• In this article we’ll explore their internal implications: how the nature
of smart, connected products substantially changes the work of
virtually every function within the manufacturing firm.
• The core functions—product development,
To recap IT, manufacturing,
logistics, marketing, sales, and after-sale service—are being
redefined, and the intensity of coordination among them is increasing
IoT
• All smart, connected products, from home appliances to industrial
equipment, share three core elements:
Physical components (such as mechanical and electrical parts);
smart components (sensors, microprocessors, data storage, controls,
software, an embedded operating system, and a digital user interface);
connectivity components (ports, antennae, protocols, and networks
that enable communication between the product and the product
cloud, which runs on remote servers and contains the product’s
external operating system).
IoT
• Smart, connected products require a whole new supporting
technology infrastructure. This “technology stack” provides a
gateway for data exchange between the product and the user and
integrates data from business systems, external sources, and other
related products
3- Levels : of IoT :
• Smart, connected products require companies to build and support
an entirely new technology infrastructure.
• including Smart product (hardware + embedded software)
• Connectivity—via wifi , 3g,4g, 5g, broadband

• A product Cloud : consisting of software running on remote servers,

a suite of security tools, a gateway for external information sources,
and integration with enterprise business systems.
New Data Resource :
• Before products became smart and connected, data was generated
primarily by internal operations and through transactions across the
value chain—order processing, interactions with suppliers, sales
interactions, customer service visits, and so on.
• Firms supplemented that data with information gathered from
surveys, research, and other external sources. By combining the data,
companies knew something about customers, demand, and costs—
but much less about the functioning of products.
New Data Resource
• Now, for the first time, these traditional sources of data are being
supplemented by another source—the product itself. Smart,
connected products can generate real-time readings that are
unprecedented in their variety and volume.

• Smart, connected products require a rethinking of design.

DATA ANALYTICS
.
• As the ability to unlock the full value of data becomes a key source of
competitive advantage, the management, productivity,governance,
analysis, and security of that data is developing into a major new
business function.
Data Analytics
• Capturing such insights is the domain of big data analytics, which
blend mathematics, computer science, and Managerial business
analysis techniques.
• Big data analytics employ a family of new techniques to understand
those patterns. A challenge is that the data from smart, connected
products and related internal and external data are often
unstructured. They may be in an array of formats, such as sensor
readings, locations, temperatures, and sales and warranty history.
Data Analytics
• Conventional approaches to data aggregation and analysis, such as
spreadsheets and database tables, are ill-suited to managing a wide
variety of data formats. The emerging solution is a “data lake,” a
repository in which disparate data streams can be stored in their
native formats.
Data Analytics
• From there, the data can be studied with a set of new data analytics
tools. Those tools fall into four categories: descriptive, diagnostic,
predictive, and prescriptive.