Henry: Understanding Strategic

Management

Chapter 1: What is Strategy?

 What is Strategy?
Strategy has a long antecedent Sun Tzu The Art of
War

Strategy is about achieving a competitive advantage

Meeting customer needs better than rivals

Porter (1996) competitive strategy is about being

different
 What is Strategy?
Markides (1999) selecting a strategic position an
organization can call its own based on:

Who should the organization target as customers?

What products or services should be offered?

How can the organization do this efficiently?

 What is Strategy?
Kay (1993) an organizations strategy is the
match between its internal capabilities and
external relationships
Internal: what the organization is capable of
doing
External: Its relationship with employees,
customers, shareholders, and suppliers.
The use of analytical techniques allows the firm
to influence its position in the market
 What is Strategy?
The process of creating a strategy is called strategic
management

Strategic management consists of: strategy analysis,

strategy formulation, and strategy implementation

In reality these elements are interdependent and should

not be considered in isolation

Strategy analysis, formulation, and implementation all

need to be considered if the organization is to meet the
needs of its environment
 What is Strategy?
Strategy analysis is a useful starting point for crafting
strategy

It includes the general and competitive environment

facing the organization

It also deals with the organizations internal environment

Strategic analysis helps the organization evaluate how

well it is positioned to exploit external opportunities
 What is Strategy?
Strategy formulation usually takes place at the business
and corporation level

Strategic analysis is important for strategy formulation

So too is creative insights which synthesize experiences

that exist within the organization to form a novel strategy

An organization is seldom faced with only one strategy

which means it is necessary to evaluate competing
strategies
 What is Strategy?
Strategy implementation requires the organization to be
sufficiently flexible

A given strategy must be effectively communicated with

stakeholders inside and outside the organization

The organizations values are crucial in sign-posting to

individuals what the organization considers important

An organizations culture will determine how it responds

to opportunities that exist
 What is Strategy?
A vision is often associated with the founder of an
organization

It represents a desired state the organization aspires to

achieve in the future

A mission seeks to answer the fundamental question of

why an organization exists

Campbell et al. (1990) make a distinction between

mission and sense of mission
 What is Strategy?
The assumptions on which an organization has been
built and the basis on which it is run are its theory of
business

It includes assumptions about markets, customers,

competitors, and its internal capabilities

Organization encounter difficulties when their theory of

business no longer fit with reality

A organizations theory of business becomes obsolete

when it has achieved its objectives
 What is Strategy?
Corporate strategy is concerned with which markets an
organization wants to compete in

Business strategy deals with how an organization will

compete in its chosen industry or market

Functional strategy occurs according to functional lines

such as R&D, marketing and finance
 What is Strategy?
The Design School seeks to match the capabilities of the
organization to the opportunities within its competitive
environment

This rationalist approach is exemplified by Michael Porters

generic strategies

The Learning School emphasizes deliberate and emergent

strategies

A deliberate strategy is one the organization intends to pursue

An emergent strategies involves managerial learning and

experience that coalesce into a realised strategy
 What is Strategy?
A strategic management framework
A strategy must
take account of
the organizations
stakeholders if it is
to succeed

Figure 1.3