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Chapter 1 The Concept of Strategy

© 2013 Robert M. Grant 1

com 2 .The Concept of Strategy OUTLINE • • • • • • The role of strategy in success A framework for strategy analysis The evolution of strategic management What is strategy? Who do we describe it? How is strategy made? Strategy and not-for-profit organizations © 2013 Robert M.contemporarystrategyanalysis. Grant www. 3 .What Makes a Successful Strategy? Successful Strategy EFFECTIVE IMPLEMENTATION Long term. Grant www. simple and agreed objectives Profound understanding of the competitive environment Objective appraisal of resources © 2013 Robert M.

wiliness to create new images on almost a daily basis Understanding the Environment Resource Appraisal Implementation © 2013 Robert M. eccentricity. Grant www. design capability and musical skills Devotion to living the Lady Gaga character.contemporarystrategyanalysis. emphasis on building an effective family team supported by loyal professionals Lady Gaga and the Haus of Gaga Single-minded quest for stardom through her Lady Gaga persona Awareness of the new economics of the music 4 . the marketing potential of social networking and needs of Generation Y Exploited her innate theatricality.Ingredients of Success Queen Elizabeth & The House of Windsor Goals Life-long dedication to role as head of state and reigning monarch Alertness to the changing political environment Sensitive to the mood and needs of the British people Recognized lack of formal authority and need to exploit traditional loyalties and informal influence Resolute commitment. strong self discipline.

The Basic Strategy Framework Strategy as a Link Between the Firm and its Environment THE FIRM • Goals & Values • Resources & Capabilities • Structure & Systems THE INDUSTRY ENVIRONMENT • Competitors • Customers • Suppliers STRATEGY © 2013 Robert 5 . Grant www.

What is Strategy? • Distinguishing strategy from tactics o Strategy is the overall plan for deploying resources to establish a favorable position o Tactic is a scheme for a specific maneuver • Characteristics of strategic decisions o Important o Involve a significant commitment of resources o Not easily reversible © 2013 Robert 6 . Grant www.contemporarystrategyanalysis.

Alfred Chandler .The Concept of Strategy ( 7 . Kenneth Andrews .Definitions of Strategy Strategy: a plan.wordsmyth.Strategy and Structure (MIT Press. Grant www.contemporarystrategyanalysis. 1962) © 2013 Robert M. 1971) The determination of the long-run goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals. purposes or goals and the major policies and plans for achieving these goals. stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to Strategy is the pattern of objectives. method or series of actions designed to achieve a specific goal or effect Wordsmythe Dictionary (http://www.

Grant www.Sources of Superior Profitability INDUSTRY ATTRACTIVENESS Which businesses should we be in? RATE OF PROFIT ABOVE THE COST OF CAPITAL How do we make money? COMPETITIVE ADVANTAGE How should we compete? CORPORATE STRATEGY BUSINESS STRATEGY © 2013 Robert 8 .

com 9 . Grant www.Sources of Superior Profitability Strategy as Decision Support Strategy as Coordination & Communication Strategy as Target Improves the quality of decision making Creates consistency and unity Improves performance by setting high aspirations © 2013 Robert M.contemporarystrategyanalysis.

alliances COMPETING FOR THE FUTURE 10 How are we competing? What is the basis of our competitive advantage? COMPETING FOR THE PRESENT © 2013 Robert M. R&D Growth modes: organic growth.contemporarystrategyanalysis. M&A. Grant www.Describing Strategy Current Positioning. Future Direction STRATEGY AS POSITIONING Where are we competing? Product market scope Geographical scope Vertical scope STRATEGY AS DIRECTION What do we want to become? Vision statement What do we want to achieve? Mission statement Performance goals How will we get there? Guidelines for development Priorities for capital .

Grant www.contemporarystrategyanalysis.The Role of Analysis in Strategy Making • Strategy analysis improves decision processes. but doesn’t give answers • Strategy analysis assists us to identify and understand the main issues • Strategy analysis helps us to manage complexity • Strategy analysis can enhance flexibility and innovation by supporting learning © 2013 Robert 11 .

performance management and Strategy implementation leadership are common to all organizational types © 2013 Robert M. World Health Organization Examples Royal Opera House Guggenheim Museum Stanford University Analysis of goals and performance Analysis of the competitive environment Analysis of resources and capabilities Identifying 12 . Grant www.Applying Strategy Analysis to Not-For-Profits Organizations in competitive environments that charge users Organizations in competitive environments that provide free services Salvation Army Habitat for Humanity Greenpeace Linux Organizations sheltered from competition UK Ministry of Defence European Central Bank New York Police Dept.contemporarystrategyanalysis. goals and performance indicators and establishing consistency between them is a key area of strategy analysis for all non-profits Main tools of competitive analysis are the same as for for-profit firms Main area for competition competitive strategy is the market for funding Not important. However. agencies compete for public funding Analysis of resources and capabilities essential in determining priorities and designing strategies Identifying and exploiting distinctive resources and capabilities critical to design strategies that create competitive advantages The basic principles of organizational design.