Principles of Business Implementing Strategy

Lecture 1 – designing strategy

To get you thinking …

Objectives of today

To understand what strategy is and be able to explain it in simple terms

To understand some of the terminology regularly used in a strategiccontext

To look at some tools of strategic analysis

Strategy – the origins

στραταγός = the General

The one who stands back from the frontline and takes an overview

Strategy is ‘the art of the general’

Studying strategy can be helpful both now and in the future:

- To help you understand the environment you operate in- To improve your ability to implement- To improve your own ‘generalship’

What is strategy?

"Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resourceswithin a challenging environment, to meet the needs of markets and tofulfil stakeholder expectations".Johnson and Scholes 1998

Strategy is a combination of the ends (goals) for which the(firm) is striving and the means (policies) by which it is seeking to get there

Michael Porter 1986

Strategy is a plan, a means of getting from here to there. It is a pattern in actions over time; It is a position; for example regarding particular products or services in particular markets. It is perspective, vision and direction.

Henry Mintzberg 1994

In more detail …

"Strategy is the direction and scope of an (organisation) over the long-term: which achieves advantage for the (organisation) through its configuration of resourceswithin a challenging environment, to meet the needs of markets and to fulfil stakeholderexpectations".

Where are you trying to get to?

What markets, services, partners, means?

What benefits?

Finances, customer Relationships, processes,People/skills?

What external factors need toBe considered? What/whose needs/expectations are

you trying to meet?

Simply put …

"Strategy is the general plan of actions for achieving one’s goals or objectives". Nikols 2008

When it all comes down to it …

Source: professor Marcus Alexander – London Business School

Marcus Alexander’s Lizard sums it all up

Where are We now?

Analysis

Where could we go?

Optiongeneration

Where do wewant to go?

Optionselection

What will help get us there?

EngineeringCoherent support

What shouldwe dotoday?

Implement

Some strategic analysis tools

STEP/PEST/PESTLE (Political, Economic, Sociological, Technological, Legal, Environmental)

SWOT (Strengths, Weaknesses, Opportunities, Threats)

Scenario Planning

Market Segmentation

Competitor Analysis

Horizon Scanning

McKinsey’s 7S model

Ansoff Matrix (Markets and Products)

BGC Matrix (Market Share and Market Growth)

GE Matrix (Industry Attractiveness and Business Strength)

Porter’s 5 Forces

Stakeholder Analysis

Look up the ones you aren’t familiar with

outside the session

Strategy must:

ALIGN With other strategies, initiatives, upwards and downwards

INTEGRATE Across the whole business, and within individual businesses

Be GOVERNED Someone must have responsibility for driving the strategy through

Be EFFICIENT Strategy must make best use of all available resources

Be EFFECTIVE Strategy must DO what it says it will DO. It must be measurable

Be SUSTAINABLE Strategy is not just a quick fix, it must last, it must be prepared to evolve where market influences change

Source: Neville Pritchard (2006)

Alignment and Integration

Enterprise Level Strategy

Business Unit Plans

Head of FunctionObjectives

Horizontal integration

Individual objectives

In summary

Strategy is about standing back from the frontline

It is about making choices

It is about moving from where you are now to where you want to be

It is about having a clear destination in mind

It is about doing the right level of initial analysis to see where you are

It is about generating options

It is about being aligned, integrated etc

In the seminar we will look at ways in which we can use this knowledge better