BUS516

Integrative Business Strategies

What is Strategy?

Dr. Ellen A. Drost

The Concept of The Concept of StrategyStrategyThe Concept of The Concept of StrategyStrategy

• Ten schools of thought.Ten schools of thought.• Ten different strategy definitionsTen different strategy definitions• The evolution of strategic management.The evolution of strategic management.• The Basis FrameworkThe Basis Framework• Levels of strategyLevels of strategy• Strategy making: Design or process?Strategy making: Design or process?

OVERVIEW

Ten Schools One Word Definitions Ten Schools One Word Definitions

A DESIGN A DESIGN A PLANA PLANA POSITIONA POSITIONA VISIONA VISIONA PATTERNA PATTERN

A PERCEPTIONA PERCEPTION AN AGENDAAN AGENDA

A BELIEFA BELIEFAN EVOLUTIONAN EVOLUTIONA TRANSFORMATIONA TRANSFORMATION

Ten Schools Word Association Ten Schools Word Association

1.1. DESIGN: plan, long term, fit, SWOT, competitive advantage, DESIGN: plan, long term, fit, SWOT, competitive advantage, deliberatedeliberate

2.2. PLANNING: facts, scenarios, analysis, budgeting, scheduling, PLANNING: facts, scenarios, analysis, budgeting, scheduling, reasonreason

3.3. POSITIONING: markets, industry, generic, analytical, experience POSITIONING: markets, industry, generic, analytical, experience curve, portfolio, curve, portfolio,

4.4. ENTREPRENEURIAL:vision, insight, leadership, simple, gut feel ENTREPRENEURIAL:vision, insight, leadership, simple, gut feel

5.5. LEARNING: emergent, pattern, serendipitous, venturing, champion LEARNING: emergent, pattern, serendipitous, venturing, champion intrapreneurship, sense-making, incrementalism, decentralizedintrapreneurship, sense-making, incrementalism, decentralized

6.6. COGNITIVE: perception, cognition, frame, concept, interpretation, COGNITIVE: perception, cognition, frame, concept, interpretation, map, frame, brainmap, frame, brain

7.7. POWER: resistance, coalitions, stakeholders, conflict, game, POWER: resistance, coalitions, stakeholders, conflict, game, bargaining, network, alliancebargaining, network, alliance

8.8. CULTURAL: values, beliefs, commitment, ideology, people, trainingCULTURAL: values, beliefs, commitment, ideology, people, training

9.9. ENVIRONMENTAL: reaction, passive, evolutionary, contingency, ENVIRONMENTAL: reaction, passive, evolutionary, contingency, selection, complexity, adaptationselection, complexity, adaptation

10.10. CONFIGURATIONAL SCHOOL: any of the above, at the CONFIGURATIONAL SCHOOL: any of the above, at the proper timeproper time

The Ten Strategy SchoolsThe Ten Strategy Schools

1.1. DESIGN: a process of conceptionDESIGN: a process of conception

2.2. PLANNING: a formal processPLANNING: a formal process

3.3. POSITIONING: an analytical processPOSITIONING: an analytical process

4.4. ENTREPRENEURIAL: a visionary processENTREPRENEURIAL: a visionary process

5.5. COGNITIVE: a mental processCOGNITIVE: a mental process

6.6. LEARNING: an emergent processLEARNING: an emergent process

7.7. POLITICAL: a process of negotiationPOLITICAL: a process of negotiation

8.8. CULTURAL: a collective processCULTURAL: a collective process

9.9. ENVIRONMENTAL: a reactive processENVIRONMENTAL: a reactive process

10.10. CONFIGURATIONAL: a process of transformationCONFIGURATIONAL: a process of transformation

Ten Different Strategy DefinitionsTen Different Strategy Definitions

1.1. DESIGN SCHOOL: a carefully tailored, explicit (unique) planDESIGN SCHOOL: a carefully tailored, explicit (unique) plan

2.2. PLANNING SCHOOL: a systematic, formal plan for five to ten PLANNING SCHOOL: a systematic, formal plan for five to ten yearsyears

3.3. POSITIONING SCHOOL: a tangible position fitted to contextPOSITIONING SCHOOL: a tangible position fitted to context

4.4. ENTREPRENEURIAL SCHOOL: a leader’s perspective or intuition ENTREPRENEURIAL SCHOOL: a leader’s perspective or intuition on a vague visionon a vague vision

5.5. LEARNING SCHOOL: a pattern that emerges from behaviorLEARNING SCHOOL: a pattern that emerges from behavior

6.6. COGNITIVE SCHOOL: a (creative) interpretive or constructivist COGNITIVE SCHOOL: a (creative) interpretive or constructivist view of what is happening or must happen (strategy)view of what is happening or must happen (strategy)

7.7. POWER SCHOOL: an agenda, a compromised position, often a POWER SCHOOL: an agenda, a compromised position, often a ploy resulting from bargaining among competing actorsploy resulting from bargaining among competing actors

8.8. CULTURAL SCHOOL: strategy as a social process or set of key CULTURAL SCHOOL: strategy as a social process or set of key values and beliefs on common interest and integration values and beliefs on common interest and integration

9.9. ENVIRONMENTAL SCHOOL: a position as a necessary response ENVIRONMENTAL SCHOOL: a position as a necessary response to external factorsto external factors

10.10. CONFIGURATIONAL SCHOOL: any of the above, at the proper CONFIGURATIONAL SCHOOL: any of the above, at the proper timetime

What are the leading perspectives on What are the leading perspectives on what determines how firms compete?what determines how firms compete?

Prescriptive SchoolPrescriptive School Descriptive Descriptive SchoolsSchools

a designa design a visiona visiona plana plan a perceptiona perceptiona positiona position a patterna pattern

an agendaan agendaa beliefa beliefa response a response a stagea stage

What are the leading perspectives on what What are the leading perspectives on what determines how firms compete?determines how firms compete?

Industrial Industrial OrganizationOrganization

external focusexternal focusanalytical approachanalytical approach

Focus on:Focus on:firm’s position, firm’s position, competitiveness in an competitiveness in an industry/marketindustry/market

Creation of a unique Creation of a unique position,position,valuable position in valuable position in industry/marketindustry/market

Resource-Based ViewResource-Based View

internal focusinternal focuslearning approachlearning approachcore competencecore competence

How valuable are the firm’s How valuable are the firm’s resourcesresources

Depends on unique Depends on unique resources and capabilities resources and capabilities of the firmof the firm

Look inside the firmLook inside the firmvaluablevaluablerarerarecostly to imitatecostly to imitate

The Evolution of Strategic Management

Themes &Issues

ConceptsTechniques

Organizationimplication

1950s 1960s 1970s Late1980s 1990s Late 90s

Budgetary Corporate Corporate Industry analysis Resource InnovationPlanning&control planning strategy & competition based view

of the firm

Financial Control Growth Diversification Positioning, market Core StrategicPortfolio Planning segmentation competency capabilities

Budget&planning forecasting Strategic fit Industry Structure Resources Knowledgemodeling competitor Capabilities creation

analysis Learning

Financial mgt key Corporate planning Multidivisional/ Industry Outsourcing Alliances/ matrix structures consolidation redefining Networks

globalization Downsizing strategy Virtual org.TQM Reengineering for growthoperational asset mgtimprovement

The Basic Framework:The Basic Framework:Strategy is the Link Strategy is the Link between the Firm And its between the Firm And its EnvironmentEnvironment

The Basic Framework:The Basic Framework:Strategy is the Link Strategy is the Link between the Firm And its between the Firm And its EnvironmentEnvironment

THE FIRM

Goals and Values

ResourcesAnd Capabilities

Structure and Systems

GENERAL ENVIRONEMNTPolitical EconomyTechnologySocio-cultural

THE INDUSTRYENVIRONMENTCompetitorsCustomersSuppliers

STRATEGY

Sources of Superior Profitability

How do we obtain

superior profitability?

How do we make

money?

INDUSTRY

ATTRACTIVENESS

Which industries/businesses

should we be in?

COMPETITIVE

ADVANTAGE

How should we compete?

CORPORATE STRATEGY

BUSINESS STRATEGY

Levels of Strategy and Levels of Strategy and Organization StructureOrganization StructureLevels of Strategy and Levels of Strategy and Organization StructureOrganization Structure

CorporateStrategy

BusinessStrategy

Functional Strategies

CorporateHead Office

Division A Division B

R & D

H R

Finance

Production

Marketing/Sales

R & D

HR

Finance

Production

Mkt/salesMkt/sales

The Multiple Roles of StrategyThe Multiple Roles of StrategyThe Multiple Roles of StrategyThe Multiple Roles of Strategy

Strategy as DecisionSupport

Strategy as Coordinationand Communication

Strategy as Target

Improves the qualityof decision making

Creates consistencyand unity

Improves performance by setting high aspirations

The Role of AnalysisThe Role of AnalysisThe Role of AnalysisThe Role of Analysis

• Strategy analysis improves decision Strategy analysis improves decision processes, but doesn’t give answers.processes, but doesn’t give answers.

• Strategy analysis assists us to identify Strategy analysis assists us to identify and understand the main issues.and understand the main issues.

• Strategy analysis helps us to manage Strategy analysis helps us to manage complexity.complexity.

• Strategy analysis can enhance flexibility Strategy analysis can enhance flexibility and innovation by supporting learning.and innovation by supporting learning.

Strategy: Design or Process?Strategy: Design or Process? You Decide………… You Decide…………

Strategy: Design or Process?Strategy: Design or Process? You Decide………… You Decide…………

Strategy asdesign

Planning andrational choice

INTENDEDSTRATEGY

Many decision makersresponding to multitude ofexternal and internal forces

REALIZED STRATEGY

EMERGENT STRATEGY

Strategy asprocess