Approaches to Strategy & Planning

Enterprise Strategy/AW/01a

Arj Wignaraja

From someone familiar with the topic…

What Is Strategy?

We Follow the Rational Strategy Process Model through the Course

Corporate Appraisal

Position Audit

Mission & Objectives

Environmental Analysis

Strategic Option Generation

Strategy Evaluation &

Choice

Strategy Implementation

Review & Control

StrategicImplementation

StrategicChoice

StrategicAnalysis

The Johnson and Scholes model of strategic management

Appreciating theorganisation’s strategic position.

Putting the decision into action.

Deciding whichstrategic options to implement.

Criticism of the Rational Approach

Challenges in Implementation

Difficulties of Forecasting

Emergent

Incrementalism

Freewheeling Opportunism

Alternative Approaches to Strategy Formulation

The Puzzle

Persistent Performance Differences in Seemingly Similar Enterprises…

Leading Airline Companies

Leading Automobile Companies

Resource-Based versus Position-Based Strategies

Position View

• High market share relative to rivals.

• Differentiated products.

• Lower costs.

Source of Competitive Advantage

“Outside-in”

Resource-based View

• Assets

• Capabilities

• Competencies

“Inside-out”

Four Criteria for a “Strategic Resource” – Barney 1991

1. Valuable

2. Rare

3. Difficult to Imitate

4. Substitutability Resources need to be combined in a strategic manner.

A Resource-Based View of Competitive Advantage (Grant, 1991)

Strategy

Competitive Advantage

Capabilities

Resources

4

3

2

1

5

Limitations of the Resource-Based View of Strategy

1. Conflicts with conventional product/market based views of strategy

2. Finds it difficult to cope with a dynamic environment

3. Challenges the rational model of strategy

4. Leads to different conclusions

5. Has limited empirical evidence supporting it

Theory in Practice (TIP): Citibank in the 1990s