Business strategy

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business strategy: The journey travelledbusiness strategy: The journey travelled

business strategy thought: A historybusiness strategy thought: A history

Introduction and backgroundIntroduction and background

business strategy thought: A historybusiness strategy thought: A history

Outline

• Terminology and first courses

• Practice of business strategy

• Development of business strategy thought

• business strategy thought: A summary.

Outline

• Terminology and first courses

• Practice of business strategy

• Development of business strategy thought

• business strategy thought: A summary.

Nature and scope of business strategy

Nature and scope of business strategy

Introduction business strategy

equals

Introduction business strategy

equals

• Strategic planning

+• Implementation = Strategic

+ Management

• Evaluation

• Strategic planning

+• Implementation = Strategic

+ Management

• Evaluation

Definition of business strategyDefinition of business strategy

“The process of identifying, choosing and implementing activities that will enhance the long-term performance of an organisation by setting direction, and by creating ongoing compatibility between the internal skills and resources of the organisation, and the changing external environment within which it operates”.

(Viljoen and Dann,2003:15)

“The process of identifying, choosing and implementing activities that will enhance the long-term performance of an organisation by setting direction, and by creating ongoing compatibility between the internal skills and resources of the organisation, and the changing external environment within which it operates”.

(Viljoen and Dann,2003:15)

Dimensions of business strategyDimensions of business strategy

business strategy comprises three dimensions:

• Strategic PROCESS• Strategic CONTENT• Strategic CONTEXT

(de Wit and Meyer, 2010: 5-7)

business strategy comprises three dimensions:

• Strategic PROCESS• Strategic CONTENT• Strategic CONTEXT

(de Wit and Meyer, 2010: 5-7)

Dimensions of business strategyDimensions of business strategy

business strategy comprises three dimensions (de Wit and Meyer, 1998 edition: 6)

business strategy comprises three dimensions (de Wit and Meyer, 1998 edition: 6)

What is business strategy? business strategy by time horizon

What is business strategy? business strategy by time horizon

Existing operation efficiency (ROI)

New projectsProject payback

Future optionsPotential cost/benefit (NPV)

0 1 2 3 4 5 Years

Pearson Education Australia 2000

Levels of strategyStrategy may be practised at different organisational levels

(Based on deWit and Meyer, 2010: 9)



NETWORK/ JOINT VENTURE LEVEL STRATEGIESMultiple corporations working collaboratively


CORPORATE LEVEL STRATEGIESStrategies for a corporation with multiple businesses


BUSINESS LEVEL STRATEGIESStrategies for a business in a single industry or market

Your case study organisation sits here.


Your case study organisation sits here.

FUNCTIONAL LEVEL STRATEGIESStrategies for each functional or discipline area in a business that combine to implement

business level strategies.Your case study organisation’s functional area strategies sit here.


business level strategies.Your case study organisation’s functional area strategies sit here.

Process of business strategyProcess of business strategy

Analyse the environment

Identify opportunities and threats

Identify the organisation’s current vision,

mission and strategic

objectives/

Reassess the organisation’s vision, mission and strategic

objectives

Formulate business

and functional

level strategies

Implement strategies

Evaluate results

Analyse the organisation’s

resources

Identify strengths and weaknesses

A business strategy process: Rational or formal model

Strategic direction-setting

Strategic choiceStrategic analysis Strategic implementation

Strategic evaluation2.

9.8.7.6.

3.

1.

4. 5.

Source: Based on Hanson et al., 2014: 4; Viljoen and Dann, 2003: 42 and 59; Robbins et al., 1997: 248

business strategy in practicebusiness strategy in practice

In this age of rapid, volatile, discontinuous change, business strategy is a constant, dynamic interplay of planning,

implementation and evaluation.

The process is undertaken 24/7/365!

In this age of rapid, volatile, discontinuous change, business strategy is a constant, dynamic interplay of planning,

implementation and evaluation.

The process is undertaken 24/7/365!

business strategy in practice business strategy in practice

Intended strategy: that which was deliberately formulated Realised strategy: that which is being executed Unrealised strategy: that which is not happening Imposed strategy: that which is imposed by government, corp.

headquarters of a business unit, or by environmental circumstances

Emergent strategy: strategy which emerges from a complexmix of:

• individual experiences• company experiences• organisational culture• negotiation• corporate politics• learning processes (the learning organisation)

Intended strategy: that which was deliberately formulated Realised strategy: that which is being executed Unrealised strategy: that which is not happening Imposed strategy: that which is imposed by government, corp.

headquarters of a business unit, or by environmental circumstances

Emergent strategy: strategy which emerges from a complexmix of:

• individual experiences• company experiences• organisational culture• negotiation• corporate politics• learning processes (the learning organisation)


The notion of punctuated equilibrium ( Johnson and Scholes, 2002: 78)

The notion of punctuated equilibrium ( Johnson and Scholes, 2002: 78)


The notion of strategic drift (Johnson et al., 2008: 180)The notion of strategic drift (Johnson et al., 2008: 180)

Concept of the Sigmoid Curve(Handy, 1994)

Concept of the Sigmoid Curve(Handy, 1994)

A strategic philosophy to promote corporate longevity(Fortune diagram: Handy, C. 1994. The empty raincoat. pp. 50-51).

A strategic philosophy to promote corporate longevity(Fortune diagram: Handy, C. 1994. The empty raincoat. pp. 50-51).

Strategic analysis: The external environment





mission, strategic

objectives

Assess the organisation’s vision, mission and strategic

objectives

Formulate business

and functional strategies


Evaluate results


resources



Strategic choice Strategic analysis Strategic implementation


9.8.7.6.

3.

1.

4. 5.



Analysing external environmentsAnalysing external environmentsThe general and specific external environments illustratedThe general and specific external environments illustrated

Economic

Environmental

Legal

Technological

Social

Political

General Environment

Government

Specific Environment

Customers

Suppliers

Substitutes

New Entrants

Competitors

Organisation

(From Hubbard, G., Pocknee, G. and Taylor, G. 1996. Practical Australian Strategy. Prentice Hall, Australia, p.30)

Diagram created by Melanie Law, RDACC

Analysing external environmentsAnalysing external environments

Opportunity

• A condition in the general or specific environment that, if exploited, helps a firm achieve strategic competitiveness and above average returns.

Threat

• A condition in the general or specific environment that may hinder a firm’s efforts to achieve strategic competitiveness and above average returns.

Opportunity


Threat


Copyright © 2014 Cengage Learning Pty Limited


Economic

Environmental

Legal

Technological

Social

Political

General Environment

Government


Customers

Suppliers

Substitutes

New Entrants

Competitors

Organisation



What’s going on in external environments?What’s going on in external environments?

We live in an age of age of unprecedented rapid, volatile, discontinuous change!

The nature of competition in many of the world’s industries is changing:

Rapid technological change is the norm The size of investments required for global business can be enormous The post global financial crisis business environment is dangerous Hypercompetition is escalating! The global economy is a reality Globalisation is driven primarily by technology Success depend upon strategic flexibility.

We live in an age of age of unprecedented rapid, volatile, discontinuous change!

The nature of competition in many of the world’s industries is changing:

Rapid technological change is the norm The size of investments required for global business can be enormous The post global financial crisis business environment is dangerous Hypercompetition is escalating! The global economy is a reality Globalisation is driven primarily by technology Success depend upon strategic flexibility.


Analysing external environments Analysing external environments

The general external environment: PESTEL

• Political• Economic• Social• Technological• Environmental• Legal

(Note: The Hanson et al., version of this model includes a Global issues segment but not an Environmental issues segment).

(Hanson et al., 2014:35-50; Viljoen and Dann, 2003:121-130)

The general external environment: PESTEL

• Political• Economic• Social• Technological• Environmental• Legal

(Note: The Hanson et al., version of this model includes a Global issues segment but not an Environmental issues segment).

(Hanson et al., 2014:35-50; Viljoen and Dann, 2003:121-130)

Analysing external environmentsThe general external environment

Analysing external environmentsThe general external environment

PESTEL analysis of the general environment aims to identify:

The key MEGATRENDS/ DISCONTINUITIES faced by a firm in its general external environment

The opportunities offered to a firm by those

megatrends; or the threats posed to a firm by those megatrends.

EXAMPLES?

PESTEL analysis of the general environment aims to identify:

The key MEGATRENDS/ DISCONTINUITIES faced by a firm in its general external environment

The opportunities offered to a firm by those

megatrends; or the threats posed to a firm by those megatrends.

EXAMPLES?


Economic

Environmental

Legal

Technological

Social

Political

General Environment

Government


Customers

Suppliers

Substitutes

New Entrants

Competitors

Organisation



Analysing external environmentsThe specific/industry environment

Analysing external environmentsThe specific/industry environment

There are two models typically used to analyse the specific/industry environment:

The turbulence model

Porter’s Five Forces plus Government model.

Both models tell us something about the opportunities and threats faced by a firm in its

specific environment or industry.

There are two models typically used to analyse the specific/industry environment:


Porter’s Five Forces plus Government model.

Both models tell us something about the opportunities and threats faced by a firm in its

specific environment or industry.

Analysing external environmentsThe specific/ industry environment

Analysing external environmentsThe specific/ industry environment

A reminder Opportunity


Threat


A reminder Opportunity


Threat



Analysing external environments Concept of environmental turbulence in an industry

Analysing external environments Concept of environmental turbulence in an industry


Indicates the degree of change taking place within a specific environment or

industry. Often but not always, this change may be due to discontinuities from the general external environment impacting the industry. The more change, the greater the turbulence in a specific environment or industry

(Viljoen and Dann, 2003:149-153)

The greater the turbulence in a firm’s environment, the greater the likely number of opportunities and threats a firm typically faces.

How to analyse the source of these opportunities or threats?


Indicates the degree of change taking place within a specific environment or

industry. Often but not always, this change may be due to discontinuities from the general external environment impacting the industry. The more change, the greater the turbulence in a specific environment or industry

(Viljoen and Dann, 2003:149-153)

The greater the turbulence in a firm’s environment, the greater the likely number of opportunities and threats a firm typically faces.

How to analyse the source of these opportunities or threats?

Analysing external environments Concept of environmental turbulence in an industry: The

turbulence model

Analysing external environments Concept of environmental turbulence in an industry: The

turbulence model

Three criteria to identify degree of turbulence:

• Complexity• Dynamism• Unpredictability.

Three criteria to identify degree of turbulence:

• Complexity• Dynamism• Unpredictability.

Analysing external environmentsConcept of environmental turbulence in an industry: The

turbulence model

Environmental turbulence and managerial focus

Analysing external environmentsConcept of environmental turbulence in an industry: The

turbulence model

Environmental turbulence and managerial focus Types of

turbulenceInactive Gentle Moderate Discontinuous Unpredictable/

Appropriatemanagement

focus

Preservation Inwardlooking

Customer andcompetitor

based

Formalstrategicplanning

Creative andflexiblestrategic

management

Dynamic business strategy

disruptive


Analysing external environments The specific/ industry environment


Porter’s Five Forces plus Government model

Provides a useful way to systematically pinpoint where changes are being triggered within a specific environment or industry. The most important

changes are called MEGAFORCES, which may provide major opportunities to improve a firm’s returns or threats that could severely

reduce a firm’s returns (Hanson, Hitt, Ireland and Hoskisson, 2014: 51-63)

Porter’s Five Forces plus Government model

Provides a useful way to systematically pinpoint where changes are being triggered within a specific environment or industry. The most important

changes are called MEGAFORCES, which may provide major opportunities to improve a firm’s returns or threats that could severely

reduce a firm’s returns (Hanson, Hitt, Ireland and Hoskisson, 2014: 51-63)

Analysing external environments The specific/ industry environmentAnalysing external environments

The specific/ industry environment

Porter’s Five Forces Model

The five forces model is a strategy tool of analysis to identify sources of

specific industry opportunities and threats.

Copyright © 2014 Cengage Learning Pty LimitedHanson et al., 2014: 51





A sixth force?

Government!



Porter’s Five Forces plus Government model analysis of a firm’s specific/ industry environment aims to identify:

The MEGAFORCES faced by a firm in its specific/ industry environment

The opportunities offered by those megaforces; or the threats posed by those megaforces

The overall capacity of the industry to offer a firm the potential for above average returns.

Porter’s Five Forces plus Government model analysis of a firm’s specific/ industry environment aims to identify:

The MEGAFORCES faced by a firm in its specific/ industry environment

The opportunities offered by those megaforces; or the threats posed by those megaforces

The overall capacity of the industry to offer a firm the potential for above average returns.

37

Strategic analysis: Internal environmentStrategic analysis: Internal environment




mission, strategic

objectives


objectives

Formulate business



Evaluate results


resources





9.8.7.6.

3.

1.

4. 5.


Strategic analysis: The internal environment

Analysing the organisationComponents of internal analysisAnalysing the organisationComponents of internal analysis


Analysing the organisation What are skills and resources?

Analysing the organisation What are skills and resources?

Skills and resources may be classified in many ways eg:

• Physical, human, financial, intellectual, organisational

• Threshold – minimum needed to operate

• Tangible and intangible.

Skills and resources may be classified in many ways eg:

• Physical, human, financial, intellectual, organisational

• Threshold – minimum needed to operate

• Tangible and intangible.

Analysing the organisation What are strategic capabilities?Analysing the organisation What are strategic capabilities?

Hanson et al., 2014: 83

Analysing the internal environment What are strategic capabilities?

Analysing the internal environment What are strategic capabilities?

HOWEVER

The presence of strategic capabilities alone usually does not produce sustained superior performance against

competitors in a market.

Why?

Because most (if not all) competitors are likely to have similar strategic capabilities to enable them to operate

and compete in the market.

HOWEVER

The presence of strategic capabilities alone usually does not produce sustained superior performance against

competitors in a market.

Why?

Because most (if not all) competitors are likely to have similar strategic capabilities to enable them to operate

and compete in the market.

Sustained superior performance requires combining strategic capabilities in ways unique to each firm:

that is combining strategic capabilities into:

core competencies.

Sustained superior performance requires combining strategic capabilities in ways unique to each firm:

that is combining strategic capabilities into:

core competencies.

Analysing the internal environment What are core competencies?


Analysing the organisation Concept of core competence


A core competence

‘… (an activity) a company does especially well in comparison to its competitors’ (Hamel and Pralahad,1990 cited in Viljoen and Dann, 2003:197, bracket

added).

A core competence

‘… (an activity) a company does especially well in comparison to its competitors’ (Hamel and Pralahad,1990 cited in Viljoen and Dann, 2003:197, bracket

added).



Characteristics of core competencies:

• Systems of integrated strategic capabilities• Based on strategic capabilities (skills and knowledge) rather

than products or services• Built up through experience and commitment over time• Are in a constant state of adaptation and evolution• Limited in number (maximum 5?)• Difficult to replicate; they are areas where a firm dominates it’s

competitors• Areas of activity that provide major value to customers• Unique to each organisation – can’t be acquired in the market• Are deeply embedded in the firm’s organisation and systems• Difficult to readily observe.

(Hanson et al., 2014: 79-93; Viljoen and Dann, 2003:197-198; Hubbard et al, 1996: 127-129)

Characteristics of core competencies:

• Systems of integrated strategic capabilities• Based on strategic capabilities (skills and knowledge) rather

than products or services• Built up through experience and commitment over time• Are in a constant state of adaptation and evolution• Limited in number (maximum 5?)• Difficult to replicate; they are areas where a firm dominates it’s

competitors• Areas of activity that provide major value to customers• Unique to each organisation – can’t be acquired in the market• Are deeply embedded in the firm’s organisation and systems• Difficult to readily observe.

(Hanson et al., 2014: 79-93; Viljoen and Dann, 2003:197-198; Hubbard et al, 1996: 127-129)




The four criteria to test for a core competence: Valuable; rare; costly to imitate; non-substitutable.

Analysing the internal environment Concept of strategic competitive advantageAnalysing the internal environment

Concept of strategic competitive advantage




The combination of a firm’s core competencies emerges

IN THE MARKETPLACE

in the form of the firm’s strategic competitive advantage (SCA) or uniquely competitive position in its market.

The combination of a firm’s core competencies emerges

IN THE MARKETPLACE

in the form of the firm’s strategic competitive advantage (SCA) or uniquely competitive position in its market.



The firm’s strategic competitive advantage (SCA) and hence the core competencies that make up the SCA,

must satisfy the four core competencies criteria:

• Valuable to the customers in the markets targeted by the firm

• Rare. That is, much better than competitors’ offerings in the eyes of those customers;

• Costly or difficult for competitors to imitate, exceed, or substitute with something else.

• The offering has no competitive substitute (ie. few competitors, if any, can offer anything like it).

The firm’s strategic competitive advantage (SCA) and hence the core competencies that make up the SCA,

must satisfy the four core competencies criteria:

• Valuable to the customers in the markets targeted by the firm

• Rare. That is, much better than competitors’ offerings in the eyes of those customers;

• Costly or difficult for competitors to imitate, exceed, or substitute with something else.

• The offering has no competitive substitute (ie. few competitors, if any, can offer anything like it).

51

Strategic direction-settingStrategic direction-setting




mission, strategic

objectives


objectives

Formulate business



Evaluate results


resources





9.8.7.6.

3.

1.

4. 5.


Strategic direction and strategic objectives

Organisational vision and missionOrganisational vision and mission

Vision statement

“…specifies what an organisation could achieve if it performed perfectly..”(Viljoen and Dann,2003:97)

Vision statement

“…specifies what an organisation could achieve if it performed perfectly..”(Viljoen and Dann,2003:97)

Strategic distinctivenessHow the organisation

differentiates itselffrom others of its type

Stakeholder promisesthe commitment of the

organisation to allinterested parties

Values and beliefsGuidelines on how

things are to be donein the organisation

Public imageHow the organisationwishes to be seen by external constituents

THE MISSIONSTATEMENT

Fundamental purposethe business of the

organisation -its reason forexistence

Standards and behavioursthe major policies an proceduresused to implement the strategy

and reinforce the values and beliefs

Organisational vision and mission Elements of a mission statement

Organisational vision and mission Elements of a mission statement


Strategic objectivesWhat are strategic objectives?

Strategic objectivesWhat are strategic objectives?

‘… specify exactly what it (a firm ) hopes to achieve in the future…’

(Viljoen and Dann, 2003:201)

Strategic objectives involve the whole organisation

Strategic objectives link an organisation to its environment

Strategic objectives are the focus of top management.

‘… specify exactly what it (a firm ) hopes to achieve in the future…’

(Viljoen and Dann, 2003:201)

Strategic objectives involve the whole organisation

Strategic objectives link an organisation to its environment

Strategic objectives are the focus of top management.

Strategic objectives Scope of strategic objectives

Strategic objectives Scope of strategic objectives

Strategic objectives may be:

• Financial• Non-financial

Examples of financial strategic objectives:

• Growth in dividends• Eps• Profits• Sales

Strategic objectives may be:

• Financial• Non-financial

Examples of financial strategic objectives:

• Growth in dividends• Eps• Profits• Sales

Strategic objectivesScope of strategic objectives

Strategic objectivesScope of strategic objectives

Examples of areas for non-financial strategic objectives:

• Employee relations, development and safety• Customer service and satisfaction levels• Fair treatment and payment of suppliers• Ethical standards of behaviour in communities• Environmental responsibility.

Examples of areas for non-financial strategic objectives:

• Employee relations, development and safety• Customer service and satisfaction levels• Fair treatment and payment of suppliers• Ethical standards of behaviour in communities• Environmental responsibility.

Major influences on strategic objectives formation(Viljoen and Dann, 2003:47-53 & 205-208)

Major influences on strategic objectives formation(Viljoen and Dann, 2003:47-53 & 205-208)

Business ethics

Stakeholder expectations

They are closely related. Why? Because ethics typically focuses upon responsibilities to stakeholders.

Business ethics

Stakeholder expectations

They are closely related. Why? Because ethics typically focuses upon responsibilities to stakeholders.

Stakeholder expectationsStakeholder expectations

Defining stakeholders

Freeman’s (1984) classic definition of stakeholders as “any group or individual who can affect or is affected by the

achievement of the firm’s objectives”

(Freeman, R.E. 1984. Strategic management: A stakeholder approach. Pitman, Marshfield, USA, p. 25).

Defining stakeholders

Freeman’s (1984) classic definition of stakeholders as “any group or individual who can affect or is affected by the

achievement of the firm’s objectives”

(Freeman, R.E. 1984. Strategic management: A stakeholder approach. Pitman, Marshfield, USA, p. 25).

Stakeholder expectationsFour stakeholder groups


Major determinants of strategic objectives Another view of stakeholder groups

( Johnson, G., Scholes, K. and Whittington, R. (2008). Exploring Corporate

Strategy: Text and Cases, 8th edition, Prentice-Hall, Pearson Education, UK: 154).

Business ethics(Hanson et al., 2014: 312)

Business ethics(Hanson et al., 2014: 312)

Strategic objective-setting is heavily influenced by a firm’s ethical stance towards its stakeholders.

Ethical stance: standards of behaviour and moral judgement practised by a firm

Ethical stance shaped by:

• Society’s expectations (legal, social, moral) about business behaviour

• Individuals’ ethical views/practices within a firm, ESPECIALLY those of top management and CEO.

Strategic objective-setting is heavily influenced by a firm’s ethical stance towards its stakeholders.

Ethical stance: standards of behaviour and moral judgement practised by a firm

Ethical stance shaped by:

• Society’s expectations (legal, social, moral) about business behaviour

• Individuals’ ethical views/practices within a firm, ESPECIALLY those of top management and CEO.

Business ethics Four broad levels of ethical stance

Business ethics Four broad levels of ethical stance

Ethical responsibility to

Other commitments Comment

Short-term shareholder interests

Legal minimum to all other stakeholders

Many new economy firms appear to be of this type

Longer-term shareholder interests

May need to heed certain stakeholder interests; all others, legal minimum

Many firms in this category

Multiple stakeholders Recognise stakeholder interests beyond legal minimum

Many charitable and church based organisations

Society Commitments to main groups

Some family firms,charitable trusts etc.

(Please note this diagram is from the earlier edition of Johnson, G., Scholes, K. and Whittington, R. 2005. Exploring Corporate Strategy, 7 th edition: 189-191)

Business ethics Business ethics

Example of a corporate code of ethics or conduct statementEndeavour Energy

Example of a corporate code of ethics or conduct statementEndeavour Energy

Business ethics Business ethics

In sum

A firm’s mission statement and corporate code of ethics or conduct statement should answer the questions:

Who are the firm’s stakeholders (including whether there is only one or are multiple stakeholders)

The firm’s view about the ethical stance and responsibilities it has towards these stakeholders.

In sum

A firm’s mission statement and corporate code of ethics or conduct statement should answer the questions:

Who are the firm’s stakeholders (including whether there is only one or are multiple stakeholders)

The firm’s view about the ethical stance and responsibilities it has towards these stakeholders.


Problem

• Stakeholders are not passive • They have demands on the firm and expectations that the firm will satisfy those demands• Those expectations or demands are often in conflict!

How does a CEO:

• Determine these expectations or demands of stakeholders?• Prioritise those often conflicting expectations or demands?• Determine how those expectations or demands should be met?

The Mitchell, Agle and Wood (1997) stakeholder theory model provides a way to address these vital questions.

Problem

• Stakeholders are not passive • They have demands on the firm and expectations that the firm will satisfy those demands• Those expectations or demands are often in conflict!

How does a CEO:

• Determine these expectations or demands of stakeholders?• Prioritise those often conflicting expectations or demands?• Determine how those expectations or demands should be met?

The Mitchell, Agle and Wood (1997) stakeholder theory model provides a way to address these vital questions.


The Mitchell, Agle and Wood model (1997: 874)The Mitchell, Agle and Wood model (1997: 874)



THE NEXT STEP: CEOs must then develop the firm’s STRATEGIC OBJECTIVES to address

those prioritised stakeholder demands.

This linkage between stakeholder salience and strategic objective-setting is vitally important to CEOs but often not properly

understood or well addressed in the literature.

THE NEXT STEP: CEOs must then develop the firm’s STRATEGIC OBJECTIVES to address

those prioritised stakeholder demands.

This linkage between stakeholder salience and strategic objective-setting is vitally important to CEOs but often not properly

understood or well addressed in the literature.


Example of strategic objectives identified using a stakeholder analysis table

Source: Woolworths strategic case study by Lynda O’Hanlon, Mitch Soree and Seyed Zoheir Mirkarimi, Newcastle Business School, MBA program, trimester 3, 2010.

Strategic choiceStrategic choice




mission, strategic

objectives


objectives

Formulate business



Evaluate results


resources


Strategic choice




9.8.7.6.

3.

1.

4. 5.












FUNCTIONAL LEVEL STRATEGIESStrategies for each functional or discipline area in a business

that combine to implement business level strategies

FUNCTIONAL LEVEL STRATEGIESStrategies for each functional or discipline area in a business

that combine to implement business level strategies

Business level strategiesAnsoff’s product/market strategies

Business level strategiesAnsoff’s product/market strategies

Same New

SameMarket

Penetration

ProductDevelopment

NewMarket

Development Diversification

Products/Services

Markets/Clients

Least risk More risk

More risk Most risk


Business level strategies Business level strategies Miles and Snow’s adaptive strategiesMiles and Snow’s adaptive strategies

(Source: Robbins, S. P., Bergman, R., and Stagg, I 1997. Management, Prentice Hall, Australia: 257-260; and Miles, R.E., Snow, C.C., Meyer, A.D and Coleman, H.J. 1978. Organizational Strategy, Structure and Process. The Academy of

Management Review, July: 546-562).

Business level strategiesPorter’s competitive strategies Business level strategies

Porter’s competitive strategies


Business level strategiesInternational strategies

(Hanson et al., 2014: 219 - 247)

Business level strategiesInternational strategies

(Hanson et al., 2014: 219 - 247)


How are business-level strategic plans enacted?(Diagram based on deWit and Meyer, 2010: 9)

How are business-level strategic plans enacted?(Diagram based on deWit and Meyer, 2010: 9)






Ansoff’s product/ market strategiesMiles and Snow’s adaptive strategiesPorter’s competitive strategiesInternational strategies


business level strategies

Sales Marketing Finance Systems IT HR Logistics

Product development Manufacturing Accounting Many other disciplines


business level strategies

Sales Marketing Finance Systems IT HR Logistics

Product development Manufacturing Accounting Many other disciplines

Strategic implementationStrategic implementation




mission, strategic

objectives


objectives

Formulate business



Evaluate results


resources


Strategic implementation




9.8.7.6.

3.

1.

4. 5.


Strategic implementation: What must the CEO focus upon?

McKinsey 7-S model

(Viljoen and Dann, 2003: 368-369)

Systems

Staff

StrategyStructure

Skills

StyleShared Values



McKinsey 7-S ‘Plus’ model


McKinsey 7-S ‘Plus’ model

McKinsey 7-S ‘Plus’ model• Resources (apart from staff)

• Innovation

• Information technology incl. the internet

• Knowledge management

• Finance

• Intellectual property

• Legal and e-legal issues

• Mergers and acquisitions

• Strategic alliances


The McKinsey 7-S ‘Plus’ model


The McKinsey 7-S ‘Plus’ model

The issue of internal consistency – change one element and others must also be changed.

The issue of internal consistency – change one element and others must also be changed.


The McKinsey 7-S ‘Plus’ model: need for consistency (Hubbard et

al., 1996: 243)


The McKinsey 7-S ‘Plus’ model: need for consistency (Hubbard et

al., 1996: 243)

The key resource

The way we do things around here.

The guiding force

Strategic DirectionVision

MissionStrategic Objectives

Current issues in business strategy:

Innovation as a core competence

Current issues in business strategy:

Innovation as a core competence

What is innovation?What is innovation?

A definition

…..the process of harnessing creativity to create new value in new ways through new products, new services, and new businesses.”

(Jonash and Sommerlatte, 1999:6).

Innovation may therefore be viewed both as:

• A process• An outcome.

We view innovation as a process in this topic.

A definition

…..the process of harnessing creativity to create new value in new ways through new products, new services, and new businesses.”

(Jonash and Sommerlatte, 1999:6).

Innovation may therefore be viewed both as:

• A process• An outcome.

We view innovation as a process in this topic.

Innovation in the business strategy process

The CEO must be heavily focused upon supporting innovation as part of strategic implementation.



McKinsey’s 7-S model areas

• Strategy• Structure of organisation• Staff• Skills PLUS• Shared values – culture• Style of leadership• Systems





McKinsey 7-S ‘Plus’ model areas• Resources (apart from staff)

• Innovation

• Information technology incl. the internet

• Knowledge management

• Finance

• Intellectual property

• Legal and e-legal issues

• Mergers and acquisitions

• Strategic alliances

Strategic evaluationStrategic evaluation




mission, strategic

objectives


objectives

Formulate business



Evaluate results


resources


Strategic evaluation




9.8.7.6.

3.

1.

4. 5.


Some strategic performance reporting systemsSome strategic performance reporting systems

Two strategic performance reporting systems used in many firms:

• The balanced scorecard

• Triple bottom line reporting.

These strategic performance reporting systems are used to report firm performance against those strategic objectives developed to meet

prioritised stakeholder demands developed in the strategic objectives-setting stage of the business strategy process.

Two strategic performance reporting systems used in many firms:

• The balanced scorecard

• Triple bottom line reporting.

These strategic performance reporting systems are used to report firm performance against those strategic objectives developed to meet

prioritised stakeholder demands developed in the strategic objectives-setting stage of the business strategy process.

• Cash flow

Some strategic performance reporting systemsThe balanced scorecard

(Hanson et al., 2014: 377-378)

Some strategic performance reporting systemsThe balanced scorecard

(Hanson et al., 2014: 377-378)



Triple bottom line reporting(Viljoen and Dann, 2003: 208-211)

Focuses on reporting strategic performance in three areas:

The environmental bottom line The organisation’s achievement of environmental objectives developed

to meet the demands of environmental stakeholders.

The social justice bottom line The organisation’s achievement of community and relevant social

objectives developed to meet the demands of community and social stakeholders.

Financial or economic bottom line The organisation’s achievement of financial and related objectives

developed to meet the demands of financial stakeholders, including shareholders.

Triple bottom line reporting(Viljoen and Dann, 2003: 208-211)

Focuses on reporting strategic performance in three areas:

The environmental bottom line The organisation’s achievement of environmental objectives developed

to meet the demands of environmental stakeholders.

The social justice bottom line The organisation’s achievement of community and relevant social

objectives developed to meet the demands of community and social stakeholders.

Financial or economic bottom line The organisation’s achievement of financial and related objectives

developed to meet the demands of financial stakeholders, including shareholders.


Triple bottom line reporting: Rio TintoTriple bottom line reporting: Rio Tinto








mission, strategic

objectives


objectives

Formulate business



Evaluate results


resources


A business strategy process: Rational or formal model




9.8.7.6.

3.

1.

4. 5.


Paradoxes of strategy(with apologies to de Wit and Meyer)

Paradoxes of strategy(with apologies to de Wit and Meyer)

Strategy is about:

• The need to think creatively as well as logically• Reliable planning as well as letting strategy emerge over time• The need for revolutionary jumps and evolutionary paths• Focusing on strengths as well as on markets• Sticking to the knitting while responding to change• Competing hard as well as co-operating• Thriving on chaos while seeking control• Thinking globally but acting locally• Pursuing profits for shareholders while looking after others

Strategy: a study in contradictions

Strategy is about:

• The need to think creatively as well as logically• Reliable planning as well as letting strategy emerge over time• The need for revolutionary jumps and evolutionary paths• Focusing on strengths as well as on markets• Sticking to the knitting while responding to change• Competing hard as well as co-operating• Thriving on chaos while seeking control• Thinking globally but acting locally• Pursuing profits for shareholders while looking after others

Strategy: a study in contradictions

Documents

Business strategy