Strategic Management
© Robert Jones 2012
Based on Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Definition of Strategy
Strategy is the direction and scope of an
organisation over the long term, which
achieves advantage in a changing
environment through its configuration of
resources and competences with the aim
of fulfilling stakeholder expectations.
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Layers of the business environment
Exhibit 2.1
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
The vocabulary of strategy
Exhibit 1.2
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
A model of the elements of strategic management
Analysis – external, internal
and stakeholders
(fairly straightforward)
Options
and selection of
option
(not so difficult)
Exhibit 1.3
Implementation
(now it gets tricky ! )
Based on Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Strategy as a Subject of Study
1960s
Harvard case study
What would you do if you were CEO?
60/70s Corporate planning
Systematised and analytical approach
1980s
Adaptive processes
(Quinn)
Complexity and uncertainty. Influence of
experience, politics, culture, history
1980s
Market positioning
(Porter)
Assessing competitive forces (5 forces) and
positioning
1980s
Resource based
theory (Hamel,
Prahalad)
Unique resources, core competences
1990s
Firms as organisms
(Eisenhardt, Stacey)
Innovation to deal with change
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Mintzberg, H.
Ten Strategy Schools (The Strategy Safari)
Bowman, C.
Generic Strategies – a Substitute for Thinking
There are many ways of looking at strategy:
The risk of strategic drift
Exhibit 1.4
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Good strategy is in the overlap
Often, the environment E moves
and the organisation does not move
- this can be fatal (strategic drift)
Contemporary Strategy Themes (1)
• Internationalisation
– Size of market
– Range of competitors
– Relationships
overseas
– Institutional/cultural
orientation to
strategy and profit
orientation
• E-Commerce
– Speed and direction
of technology change
– Expectations about
how to do business
– E-commerce
capability
– Service small markets
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Contemporary Strategy Themes (2)
• Changing purposes
– Change from pure
profit driven
– Corporate scandals
– Corporate social
responsibility
– AND drive for
shareholder value
– Public sector more
“business-like” –
target setting and
service orientation
• Knowledge and
Learning
– Innovation
– Generate and
integrate
knowledge/promote
learning
– New ways of doing
business
– People interactions
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
The role of the paradigm in strategy
formulation
Exhibit I.i
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Three strategy lenses
Exhibit I.v
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Macroenvironment – PESTEL (1)
Exhibit 2.2
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Government policy
The 2012 Financial Statement
How will this influence business and strategy?
http://www.youtube.com/watch?v=d0-V_HrrzcU
Wille Walsh, IAG plc (British Airways) and Mike O’Leary, Ryanair
respond to recent changes in APD Air Passenger Duty
http://www.youtube.com/watch?v=RuQY_WKbHEM&feature=related
Drivers of Globalisation
This is an excellent framework –
we will build on this in later lectures
Source: Based on G. Yip, Total Global Strategy ll, FT/Prentice Hall, 2003, chapter 2.
Exhibit 2.3
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Porter’s Diamond
The Determinants of National Advantage
This is an excellent framework
when looking at
conditions for business
Source: M. Porter, Competitive Advantage of Nations, Macmillan, 1990.
Exhibit 2.4
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
First test yourself –
you have seen this before
fill in the blanks
The Five Forces Framework
Source: Adapted from M.E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors © 1980, Free Press, 1980, p. 4.
Copyright 1980,1988 by The Free Press, a division of Simon & Schuster Inc. Reproduced with permission.
Exhibit 2.5
The Life-Cycle Model
Exhibit 2.6
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Strategic Capability- the terminology
Exhibit 3.2
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
The Value Chain
Source: M.E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, 1985. Used with permission of
The Free Press, a division of Simon & Schuster, Inc. © 1985, 1988 by Michael E. Porter. All rights reserved.
Exhibit 3.6
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
The Value Network
Source: M.E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, 1985. Used with permission of
The Free Press, a division of Simon & Schuster Inc. © 1985, 1988 by Michael E. Porter. All rights reserved.
Exhibit 3.7
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
See my lecture on Competences
based on application of the Value Chain
With examples of
Zara
Ryanair
Apple
Honda
Toyota
http://cambridgemba.wordpress.com/strategy/
Knowledge Creation Processes
Source: I. Nonaka and H. Takeuchi, The Knowledge-Creating Company, Oxford University Press Inc., © 1995. Reprinted by
permission of Oxford University Press.
Exhibit 3.9
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Expectations and Purposes - Outline
•
•
•
•
•
•
•
Corporate governance
Organisational stakeholders
Stakeholder mapping
Ethical issues
Culture
Cultural web
Communication of organisational purposes
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Expectations and Purposes
Exhibit 4.1
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Stakeholder Mapping: the Power/Interest Matrix
Source: Adapted from A. Mendelow, Proceedings of the Second International Conference on Information Systems, Cambridge, MA,
1991.
Exhibit 4.5
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
The Cultural Web
Exhibit 4.11
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Strategic choices
Exhibit III.1
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
The Strategy Clock
Note: The strategy clock is adapted from the work of Cliff Bowman (see D. Faulkner and C. Bowman, The Essence of Competitive
Strategy, Prentice Hall, 1995.) However, Bowman uses the dimenstion ‘Perceived Use Value’.
Exhibit 5.2a
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
The Strategy Clock
Exhibit 5.2b
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Competitive Strategies in Hypercompetitive
Conditions
• Competitive advantage is temporary
– Rapid imitation
– Not sustainable
• Competitive advantage relates to
– Organisation’s ability to change
– Speed
– Flexibility
– Innovation
– Disruption of market
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Competition and Collaboration
Exhibit 5.5
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Game Theory - Prisoner’s Dilemma
Exhibit 5.6
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Corporate Level Issues
Exhibit 6.1
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Related Diversification
Exhibit 6.3
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Diversity and Performance
Exhibit 6.4
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Reasons for International Diversity
Market-based
Exploit cultural/
geographic differences
Globalisation of markets &
competition
Cash in on differences in culture
Following customers
Administrative differences
Bypass limitations in home market
Specific geographical/
economic differences
Utilise strategic capabilities
Economic benefits
Broaden market size
Economies of scale
Internationalise value-adding
activities
Stabilisation of earnings across
markets
Enhance knowledge
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
The Growth Share (or BCG) Matrix
Exhibit 6.8
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Public Sector Portfolio Matrix
Source: J.R. Montanari and J.S. Bracker, Strategic Management Journal, vol. 7, no. 3 (1986), reprinted by permission of
John Wiley & Sons Ltd.
Exhibit 6.9
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Indicators of SBU Strength and Market Attractiveness
Exhibit 6.10a
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Market Attractiveness/SBU Strength Matrix
Exhibit 6.10b
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education
Strategy Guidelines Based on Directional Policy
Matrix
Exhibit 6.10c
Johnson, Scholes & Whittington (2005)
Exploring Corporate Strategy, 7th Edition, Pearson Education