Understanding

Strategy

Prof. JB Bernat, PhDc

Strategy
• Strategic management helps answer the key question: “why do some
firms outperform other firms?”
• Examines how actions and events involving top executives, firms, and
industries influence a firm’s success or failure
• Various tools exist to analyze and understand these relationships
• But, creativity is central to strategic management; mastering strategy is
therefore part art and part science.

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Strategy Definitions

Together, strategy and tactics bridge the

gap between ends and means.
Strategy Definitions
• Strategy is a term that comes from the Greek
strategia, meaning "generalship.”

• Concluding his review of wars, policy, strategy and

tactics, Liddell Hart arrives at this short definition of
military strategy: "the art of distributing and applying
military means to fulfil the ends of policy (p.335)."

Joseph Folkman (2021) - Strategic Thinking: The Pathway to the Top

Strategy Definitions
• Strategy is that which top management does that is of
great importance to the organization.
• Strategy refers to basic directional decisions, that is, to
purposes and missions.
• Strategy consists of the important actions necessary to
realize these directions.
• Strategy answers the question: What should the
organization be doing?
• Strategy answers the question: What are the ends we
seek and how should we achieve them?
Strategy According to Kenneth Andrews
In the 1980 edition of his book, The Concept of Corporate Strategy, Andrews presents
this lengthy definition of strategy:

"Corporate strategy is the pattern of decisions in a company that determines and reveals
its objectives, purposes, or goals, produces the principal policies and plans for achieving
those goals, and defines the range of business the company is to pursue, the kind of
economic and human organization it is or intends to be, and the nature of the economic
and non-economic contribution it intends to make to its shareholders, employees,\
customers, and communities (p.18)."
Strategy According to Kepner-Tregoe
In Top Management Strategy, Benjamin Tregoe and John Zimmerman, of Kepner-Tregoe,
Inc., define strategy as "the framework which guides those choices that determine the
nature and direction of an organization (p.17)."

• Products Offered • Market Needs • Technology

• Production Capability • Method of Sale • Method of Distribution
• Natural Resources • Size/Growth • Return/Profit
Strategy According to Treacy and Wiersema

Operational Excellence Customer Intimacy Product Leadership

• Strategy is predicated on • Strategy is predicated • Strategy is predicated
the production and on tailoring and shaping on producing a
delivery of products and products and services to continuous stream of
services. The objective is fit an increasingly fine state-of-the-art products
to lead the industry in definition of the and services. The
terms of price and customer. The objective objective is the quick
convenience. is long-term customer commercialization of
loyalty and long-term new ideas.
customer profitability.
Strategy as Plan
• A strategic plan is a carefully crafted set of steps that a firm intends to
follow to be successful.
• Virtually every organization creates a strategic plan to guide its future
• So should you….

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Strategy as Ploy
• A strategic ploy is a specific move designed to outwit or trick competitors.
• Ploys often involve using creativity to enhance success
• Ploys can be especially beneficial in the face of much stronger opponents.
• Military history offers quite a few illustrative examples

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Strategy as Pattern
• Consistency of strategy over time
• Kmart began straying from its established strategic pattern, from discount
retailing and toward diversification including sporting goods (Sports
Authority), building supplies (Builders Square), office supplies (OfficeMax),
and books (Borders)
• In the 1990s, Kmart’s strategy was again adjusted to emphasize
information technology and supply chain management
• Then Kmart’s strategy was to compete directly with its much-larger rival,
Walmart. The resulting price war left Kmart crippled and eventually
bankrupt

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Strategy as Position
• Strategy as position—considers a firm and its competitors
• Refers to a firm’s place in the industry relative to its competitors, leader,
brand levels
• Very hard to change position….

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Strategy as Perspective
• Strategy as perspective refers to how executives interpret the competitive
landscape around them
• Because each person is unique, 2 different executives could look at the
same event—such as a new competitor emerging—and attach different
meanings to it
• One might just see a new threat to his or her firm’s sales; the other sees
newcomer as potential ally
• An old cliché “make lemons into lemonade”

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Intended, Emergent & Realized Strategies
• Intended strategies: Strategy that an organization hopes to execute
• Emergent strategies: Unplanned strategy that arises in response to unexpected
opportunities and challenges
• Realized strategies: The strategy that an organization actually follows. They are a
product of both intended and realized strategies
• Deliberate strategy: The parts of the intended strategy that an organization continues to
pursue over time
• Non-realized strategy: The parts of the intended strategy that are abandoned

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Strategies - Examples

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Creative Commons Attribution 3.0 Unported License (CC-BY). Chapter 1: Mastering Strategy: Art and Science
Strategies - Examples

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Creative Commons Attribution 3.0 Unported License (CC-BY). Chapter 1: Mastering Strategy: Art and Science
A Model of Intended, Deliberate, and
Realized Strategy

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Strategy Definition
• Strategy is the long-term direction of an organization.

For example, the long-term direction of

Amazon is from book retailing to internet services in
general.

For Disney, it is from cartoons to

diversified entertainment.
Strategy Definition
Strategy Definition
Strategy is the long-term direction of an organization.

• The long term. Strategies are typically measured

over years, for some organizations a decade or
more.
• The importance of a long-term perspective on
strategy is emphasized by the ‘three horizons’
framework.
• Horizon 1 businesses are
basically the current core
activities.
• Horizon 2 businesses are
emerging activities that should
provide new future sources of
profit.
• Horizon 3 possibilities, which
are more open and for which
outcomes are even more
uncertain.
Strategy Definition
Strategy is the long-term direction of an organization.

• Strategic direction. Over the years, strategies follow some

kind of long-term direction or trajectory.
• Typically, however, managers and entrepreneurs try to set
the direction of their strategy according to long-term
objectives.
• In private-sector businesses, the objective guiding strategic
direction is usually maximizing profits for shareholders.
Strategy Definition
Strategy is the long-term direction of an organization.

• Organization. Organizations are not treated as discrete, unified

entities.
• Organizations involve many relationships, both internally and
externally.
• This is because organizations typically have many internal and
external stakeholders, in other words people and groups that
depend on the organization and upon which the organization
itself depends.
Purpose of Strategy
Harvard University’s Cynthia Montgomery argues that the core of a strategist’s
job is defining and expressing a clear and motivating purpose for the
organization.

According to Montgomery, the stated purpose of the organization

should address two related questions:

ü How does the organization make a difference;

ü and for whom does the organization make that difference?
Purpose of Strategy
There are four ways in which organizations typically define their purpose:

• A mission statement aims to provide employees and

stakeholders with clarity about what the organization is
fundamentally there to do.
• A vision statement is concerned with the future the
organization seeks to create. The vision typically expresses an
aspiration that will enthuse, gain commitment and stretch
performance.
Purpose of Strategy
There are four ways in which organizations typically define their purpose:

• Statements of corporate values communicate the underlying

and enduring core ‘principles’ that guide an organization’s
strategy and define the way that the organization should
operate.
• Objectives are statements of specific outcomes that are to be
achieved.
Levels of Strategy
There are four ways in which organizations typically define their purpose:

• Corporate-level strategy is concerned with the overall scope of

an organization and how value is added to the constituent
businesses of the organizational whole.
• Corporate-level strategy issues include geographical scope,
diversity of products or services, acquisitions of new
businesses, and how resources are allocated between the
different elements of the organization.
Levels of Strategy
There are four ways in which organizations typically define their purpose:

• Business-level strategy is about how the individual

businesses should compete in their particular markets (this is
often called ‘competitive strategy’).
• Business-level strategy typically concerns issues such as
innovation, appropriate scale and response to competitors’
moves.
Levels of Strategy
There are four ways in which organizations typically define their purpose:

• Functional strategies are concerned with how the

components of an organization deliver effectively the
corporate- and business-level strategies in terms of resources,
processes and people.
Levels of Strategy

“This need to link the corporate, business and functional levels

underlines the importance of integration in strategy. Each level
needs to be aligned with the others. The demands of integrating
levels define an important characteristic of strategy: strategy is
typically complex, requiring careful and sensitive management.”
Strategic Position

The strategic position is concerned with the impact on strategy

of the external environment, the organization’s strategic
resources and capabilities, the organization’s goals and the
organization’s culture.
Strategic Position

• Strategic purpose. Most organizations claim for themselves a

particular purpose, as encapsulated in their vision, mission,
values and objectives.
• These may be captured in a key strategy tool, the Strategy
Statement.
Strategic Position

• Macro-environment. Organizations operate in complex multi-

level environments.
• At the macro level organizations are influenced by political,
economic, social, technological, ecological and legal forces.
• These may present both opportunities and threats for
organizations.
Strategic Position

• Industry and sector. At the industry level competitors,

customers and suppliers also present challenges.
• These environments vary widely in terms of their competitive
pressures and overall attractiveness and may present further
opportunities and threats to the organization.
Strategic Position

• Resources and capabilities. Each organization has its own

strategic resources (e.g. machines and buildings) and
capabilities (e.g. technical and managerial skills) that support
its position in a market.
• The fundamental question on capability regards the
organization’s strengths and weaknesses (for example, where is
it at a competitive advantage or disadvantage?).
Strategic Position

• Stakeholders and governance. The wishes of key

stakeholders should define the purpose of an organization.
• Here the issue of corporate governance is important: how
to ensure that managers stick to the agreed purpose.
• Questions of purpose and accountability raise issues of
corporate social responsibility and ethics: is the purpose of
an organization an appropriate one and are managers
sticking to it?
Strategic Position

• History and culture. Organizational cultures can also

influence strategy. So can the cultures of a particular industry
or particular country.
• These cultures are typically a product of an organization’s
history.
• The consequence of history and culture can be strategic
drift, a failure to create necessary change.
• A fundamental question here, therefore, is: how does
culture fit with the required strategy?
Strategic Choices

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

• Business strategy and models. There are strategic choices in

terms of how the organization seeks to compete at the
individual business level.
Strategic Choices

• Corporate strategy and diversification. The highest level of

an organization is typically concerned with issues of corporate
scope; in other words, which businesses to include in the
portfolio.
• This relates to the appropriate degree of diversification, with
regard to products offered and markets served.
Strategic Choices

• International strategy. Internationalization is a form of

diversification, but into new geographical markets.
• Here the fundamental question is: where internationally
should the organization compete?
Strategic Choices

• Entrepreneurship and innovation. Most existing

organizations have to innovate constantly simply to survive.
• Entrepreneurship, the creation of a new enterprise, is an act
of innovation too.
• A fundamental question, therefore, is whether the
organization is innovating appropriately.
Strategic Choices

• Mergers, acquisitions and alliances. Organizations have to

make choices about methods for pursuing their strategies.
• Many organizations prefer to build new businesses with
their own resources.
Strategy in Action

Managing 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

• Evaluating strategies. Managers have to decide whether

existing and forecast performance is satisfactory and then
choose between options that might improve it.
• The fundamental evaluation questions are as follows:
• are the options suitable in terms of matching opportunities
and threats;
• are they acceptable in the eyes of significant stakeholders;
• and are they feasible given the capabilities available?
Strategy in Action

• Strategy development processes. Strategies are often

developed through formal planning processes.
• But sometimes the strategies an organization actually pursues
are emergent – in other words, accumulated patterns of ad hoc
decisions, bottom-up initiatives and rapid responses to the
unanticipated.
• Given the scope for emergence, the fundamental question
is: what kind of strategy process should an organization
have?
Strategy in Action

• Organizing and strategy. Once a strategy is developed, the

organization needs to organize for successful implementation.
• Each strategy requires its own specific configuration of
structures and systems.
• The fundamental question, therefore, is: what kinds of
structures and systems are required for the chosen
strategy?
Strategy in Action

• Leadership and strategic change. In a dynamic world,

strategy inevitably involves change.
• Managing change involves leadership, both at the top of the
organization and lower down.
• There is not just one way of leading change, however: there are
different styles and different levers for change.
Strategy in Action

• The practice of strategy. Inside the broad processes of

strategy development and change is a lot of hard, detailed
work.
• The fundamental question in managing this work is: who
should do what in the strategy process?
Strategy Redefined

‘Strategy is the long-term direction of an organization, formed

by choices and actions about its resources and scope, in order
to create advantageous positions relative to competitors and
peers in changing environmental and stakeholder contexts’.
Exploring strategy through different ‘strategy lenses’
The four strategy lenses cover ways of looking at strategy issues differently in
order to generate additional insights.

• Strategy as design, which might be likened to an architect’s approach

that is systematic, analytical and logical.
• Strategy as experience, which recognizes that taken-for-granted
assumptions and ways of doing things, biases and routines, will
influence strategy.
Exploring strategy through different ‘strategy lenses’
The four strategy lenses cover ways of looking at strategy issues differently in
order to generate additional insights.

• Strategy as variety, which focuses on new ideas and innovation

bubbling up in unpredictable ways in an organization.
• Strategy as discourse, which focuses upon the ways that managers
use language to influence strategy making – that strategy talk matters.
Thank You