North South University

School of Business & Economics (SBE)

EMB 690 Strategic Management

Spring Semester, 2021
Week 2
 Today’s Learning objectives
Define & discuss
Strategy
Strategic management
Strategy is partly proactive & partly reactive
Strategic vision & strategic mission
Strategic management process
Importance of SM
Challenges of SM
IO model & Resource based model
Business model
The Development of Strategic
Thinking in Management
The Development of Strategic Thinking in Management
Early contributors (Academia, researchers):
 Alfred Chandler
 Kenneth Andrews
 Igor Ansoff
Early contributors (Consulting companies):
 McKinsey & Co:
– Peters & Waterman (In Search of Excellence)
– Kenichi Ohmae (Global Strategy)
 Boston Consulting Group (BCG)
– Bruce Henderson (BCG Matrix)
Early contributors (Business leaders):
 Jack Welch
 Bill Gates
 Warren Buffett
Alfred Chandler (Harvard) 1918-2007

Pulitzer Prize winning business

historian
From studies of GM, DuPont, Exxon,
& Sears from 1900s to 1940s
explained the structure of the
multidivisional firm and argued that
structure follows strategy.
“Strategy can be defined as the
determination of the basic long-term
goals and objectives of an enterprise,
and the adoption of courses of action
and the allocation of resources
necessary for carrying out these
goals”. (Strategy & Structure, 1962, p 13)
Kenneth Andrews, Harvard (1916-2005)

 Led the articulation of courses

in corporate strategy at
Harvard, from courses in
“Business Policy”
 Father of SWOT analysis & the
use of Case Studies

Organisation
Environment
Igor Ansoff (Carnegie Institute of Technology)

 Father of Corporate Strategy (1965)

 “Strategic management is a
systematic approach to a major
and increasingly important
responsibility of general
management: to position and
relate the firm to its
environment in a way which will
assume its continued success and
make it secure from surprises”
(Igor Ansoff & Edward McDonnell, 1990)
 Need to adapt management
approaches to rates of
environmental change
Tom Peters
 Co-creator of the McKinsey 7-S framework
 Co-author of ‘In Search of Excellence’ (1982)
 “What is a good strategic plan”? There is none.
But there is a good strategic planning process.
 A good strategic planning process:
 gets everyone involved
 is not constrained by overall corporate “assumptions”
(e.g., about the general economic picture)
 is perpetually fresh, forcing the asking of new questions
 is not left to the planners, and
 requires lots of noddling time and vigorous debate.
 As far as the document per se, it is:
 is succinct
 emphasises the development of strategic skills, and
 is burned the day before it is to go to the printer- that is,
it is a living document, not an icon”. Tom Peters, 1987
Kenichi Ohmae
 Co-founder of McKinsey’s strategy practice;
extensive contributions to global strategies
 In making strategy, first comes painstaking
attention to the needs of customers.
 Then comes close analysis of a company’s real
degrees of freedom in responding to those needs.
 Then comes the willingness to re-think,
fundamentally, what products are and what they
do, as well as how best to organize the business
system that designs, builds, and markets them.
 Competitive realities are what you test possible
strategies against; you may define them in terms
of customers.
Before you test yourself against
competition, strategy takes shape
in the determination to create
value for customers.
Henry Mintzberg (McGill University)

Strategy is “A pattern in a
stream of decisions”.
Plan
Ploy
Pattern
Position
Perspective
Co-authored “Strategy Safari” which identified
ten different strategy schools/ approaches
 Mintzberg’s ‘Five Ps for Strategy’

Strategy as plan Consciously intended course of action

Strategy as ploy Specific manoeuvre to outfit
opponents
Strategy as pattern Pattern in a stream of actions
Strategy as position Position in relation to the
organisation’s environment
Strategy as perspective The organisation’s shared mindset
Bruce Henderson (1915-1992)
 Founder of the Boston
Consulting Group &
creator of the BCG matrix
& the Experience Curve
Michael Porter (Harvard)
Argued that the structure of
the market determined the
competitive landscape and
hence the shape of a firm’s
strategy
Dominated strategic thinking
during the 1980s and 90s.
“The essence of strategy
formulation is coping
with competition”.(1979)
Gary Hamel (Michigan; LBS)

Strategy in a business
comprises four components
(Hamel, Leading the Revolution, p70):

Core strategy
Strategic resources
Customer Interface
Value network
C.K. Prahalad (Univ of Michigan)
 Early work related to resource-based
theory (e.g. with Hamel)
 Demonstrates the way in which strategic
thinking is about conceptualisation of
situations, e.g. The Fortune at the
Bottom of the Pyramid, 2008
 Recent work on new business models
integrating IT and strategy and the
relationship between strategy, business
models and business processes; the N=1
and R=G principles for innovation model
(N= No. of customers; R= source of
Resources; G=Global)
The New age of Innovation
(Co-Creation of Value)
Richard Normann (1943-2003) (Lund University)

Strategy is the art of creating value

Richard Normann & Rafael Ramirez, 1993
Kim Warren (London Business School)
 “Strategic management is
about building and sustaining
performance into the future”
(Strategic Management Dynamics, 2008, p 4)
Evolutionary Theorist: Robert Burgelman (Stanford)

 Has pioneered the study of

firm’s co-evolving with their
environments
 Mentor to Andy Groves and
studied Intel’s approach to
strategy over 12 years
(Strategy is Destiny)
Arie P.De Geus (Shell)
In 1980s, the planning group at shell
surveyed 30 companies that had been in
business for more than 75 years. What
impressed us most was their ability to
live in harmony with the business
environment, to switch from survival
mode when times were turbulent to a
self-development mode when times were
slow. And this pattern rang a familiar bell
because shell’s history is similarly replete
with switches from expansion to self-
preservation and back to growth……
…For this reason, we think of planning as
learning and of corporate planning as
institutional learning. (The Learning Company, 1988)
 Finally, approaches to strategy are
influenced by business leaders….
Do the work. Out-work. Out-think.
Out-sell your expectations. There
are no shortcuts.
 'Our role is to
imagine products
that don't exist and
guide them to life.
Christopher Stringer
Lead Industrial designer
Apple
Strategy: Proactive and Reactive
Strategies are a blend of proactive initiatives
and reactive adjustments
Abandoned strategy
elements

Proactive strategy elements

New indicatives plus ongoing Latest
Vision & strategy elements version
strategy Strategy in
action
Adaptive reactions to changing
circumstance

Reactive strategy elements

 Strategic Vision vs. Mission

A strategic vision portrays a company’s future

business scope (“where are we going?”), whereas a
company’s mission typically describes its present
business and purpose (“who we are, what we do,
and why we are here?”) (Thompson et al., page 20)
 Characteristics of an Effectively Worded Strategic Vision
(Kotler, 1996)

Graphic Paints a picture of the kind of company that management is trying

to create and the market position(s) the company is striving to
stake out.
Directional Is forward-looking; describes the strategic course that management
has charted and kinds of product/market/customer/technology
circumstances change.
focused Is specific enough to provide managers with guidance in making
decisions and allocating resources.
Flexible Is not a once-and-for-all-time statement-the directional course that
management has charted may have to be adjusted as
product/market/customer/technology circumstances change.
Feasible Is within the realm of what the company can reasonably expect to
achieve in due time.
Desirable Indicates why the chosen path makes good business sense and is in
the long-term interests of stakeholders.
Easy to Is explainable in 5-10 minutes and, ideally, can be reduced to a
communicate simple, memorable slogan (Ford’s famous vision of ‘A Car in Every Garage’)
Common Short Comings in Company Vision Statements
(Davidson, 2002; Robert, 1992)

Vague or Is short on specifies about where the company is headed or what the
incomplete company is doing to prepare for the future
Not forward Does not indicate whether or how management intends to alter the
looking company’s current product/market/customer/technology focus.

Too broad Is so umbrella-like and all-inclusive that the company could head in
most any direction, pursue most any opportunity, or enter most any
business.
Bland or Lacks the power to motivate company personnel or inspire
uninspiring shareholder confidence about the company’s direction or future
prospects.
Not Provides no unique company identity; could apply to companies in
distinctive any of several industries (or at least several rivals operating in the
same industry or market arena).
Too reliant Does not say anything specific about the company’s strategic course
on beyond the pursuit of such lofty accolades as best, most successful,
superlatives recognized leader, global or worldwide leader, or first choice of
customers.
 Goals
A goal is a precise & measurable
desired future state that a company
attempts to realize.
 The purpose of goals is to specify with
precision what must be done if the
company is to attain its mission or
vision.
Well-constructed goals have five main characteristics

1. They are precise and measurable

2. They address critical issues
3. They are challenging but realistic
4. They specify a time period in which
the goals should be achieved
5. Well-constructed goals also provide a
means by which the performance of
managers can be evaluated
Who participates in
crafting strategy?

CEO (Chief Executive Officer)

Senior executives
Managers of subsidiaries,
divisions, plants, other
important operating units
(and, often, key employees)
Defining Strategic Management
 Strategic Management (SM)
 No set of rules
 Strategic management is the study of why some firms
outperform others…
How to compete in order to create competitive advantages in the
marketplace
How to create competitive advantages in the market place
SM is a ‘Capstone’ subject
It covers aspects of:
Management
Economics
Marketing
Accounting & finance
International business
Many more………..
 Importance & Challenges of SM
Importance
Allows (identification, prioritisation and exploration of opportunities)
Minimises (effects of adverse conditions and changes)
Helps (develop a framework for improved coordination & control
activities)
Guides (entire organisation regarding ‘what it is we are trying to do &
achieve)

Challenges
Change & competition
Current success (guarantee of future???)
Right strategy & effective implementation
Expect unexpected (any time)
No boarders/boundaries
 Strategic Management Process

 The set of processes used to determine the strategies

for the organisation
 Identifying an organization’s existing vision, mission and
setting objectives followed by strategy formulation,
implementation & evaluation
 Strategic Management Process
The External
Environment
Strategic inputs

Strategic Intent
Strategic Mission
The Internal
Environment

Strategy Formulation Strategy Implementation

Strategic actions

Organizational
Business-level Competitive Corporate- Corporate
Structure &
Strategy Dynamics level Strategy Governance
Controls
Acquisition &
International Cooperative Strategic Strategic
Restructuring
Strategies Strategies Leadership Entrepreneurship
Strategies
outcomes
Strategic

Strategic Competitiveness
Feed back Above Average Returns
 Business Model
A company’s Business Model is the ‘Plan of doing business
related to its cost and revenue’ or ‘How to make money in this
business’?
Both start-up ventures and established companies need a well
defined business model to take new products and services.
Process of business model design is part of business strategy.
Company’s strategy is complementary to its business model.
Implementation of company’s business model is a part of
Business Operations (organization structure, human resources,
sequence of operations and systems e.g. information
technology architecture, production lines)