Chapter 1 - The nature of strategy and planning Flashcards
How do strategy and planning differ?
Planning is the process of deciding the steps needed to achieve a goal (answers questions like how, when, where, and who).
Strategy is a broader concept that addresses the why—why a company chooses certain actions, often considering long-term goals and multiple plans (e.g., financial plans, contingency plans).
According to Pettigrew and Whipp (1991), what are the three key elements of strategic decisions?
Context: The environment in which the strategy is developed.
Content: The main actions of the strategy.
Process: How the actions are linked and interact with each other over time.
What are the key characteristics of strategy?
Long-term direction (usually several years or more).
Scope (deciding what the organization does).
Achieving competitive advantage.
Adapting to external changes.
Exploiting internal resources and competencies.
Understanding stakeholder needs.
What are the three types of strategic decisions?
Irreversible decisions: Decisions from which there is no going back (e.g., selling off part of the business).
Reversible decisions: Decisions that can be changed or reconsidered (e.g., signing a lease with a break clause).
Experimental decisions: Small-scale tests before committing fully (e.g., testing a new product).
What factors should be considered regarding the timeframe of strategic decisions?
The consequences of some strategic decisions may take years to materialize, while others may have immediate effects.
For example, a decision to explore new oil deposits may take years but require immediate investments.
What is meant by the “scope” of a strategic decision?
The scope refers to considering both the external environment and the internal resources when making strategic decisions, ensuring a strategic fit.
What are Mintzberg’s five perspectives (P’s) on strategy?
Strategy as Plan: A consciously intended course of action.
Strategy as Ploy: Tactics to outsmart competitors.
Strategy as Pattern: Emergent strategies from spontaneous decisions.
Strategy as Position: Choosing a niche or place in the market (e.g., Ryanair’s low-cost model).
Strategy as Perspective: Shaped by an organization’s culture (e.g., The Body Shop’s ethical values).
What are Spender’s four paradigms of strategy?
Goals: Recognizing the changing environment and adjusting goals accordingly.
Judgement: Acknowledging that decisions may be based on biases or irrational assumptions.
People: Adapting the organization to strategic changes by engaging and persuading individuals.
Flexibility: Developing adaptable strategies in response to environmental changes
What are Maccoby’s four dimensions of strategic intelligence?
Foresight: Understanding trends and anticipating threats or opportunities.
Visioning: Creating a compelling vision of the future based on foresight.
Partnering: Developing strategic alliances with others.
Motivating: Inspiring people to work together to implement the strategy.
What does Argyris’s “Ladder of Inference” describe?
It explains how managers make decisions based on filtered information. The process starts with facts but, due to biases, can lead to jumping to conclusions without fully considering the evidence.
What are the different levels of planning in an organization?
Operational Plans: Short-term plans (up to 1 year) for daily tasks and resource use.
Intermediate Plans: Medium-term plans (6 months to 2 years) to integrate organizational parts.
Strategic Plans: Long-term plans (1 to 10 years) focused on achieving business objectives.
What are the four levels of strategy in an organization?
Corporate Strategy: Overall direction and scope of the organization (e.g., entering new markets).
Business Unit Strategy: Focused on how to compete successfully within specific markets (e.g., pricing strategies, market positioning).
Functional Strategy: Supports business and corporate strategies (e.g., marketing, HR, IT).
Individual/Team Strategy: Day-to-day decisions and actions to implement strategies (e.g., implementing a marketing plan).
How does the Virgin Group exemplify the different levels of strategy?
Corporate Strategy: Richard Branson focuses on the overall Virgin brand and corporate purpose (e.g., investment in travel, telecoms, and media sectors).
Business Unit Strategy: Virgin’s various units (e.g., Virgin Atlantic, Virgin Media) compete in specific markets.
Functional Strategy: Each department (e.g., marketing, HR) supports the business unit’s goals.
Individual/Team Strategy: Daily actions by employees and teams to execute functional strategies.
Why is communication important across different levels of strategy?
Clear communication ensures alignment between strategic goals at the corporate level and day-to-day operations at the individual/team level. It helps managers understand customer needs and challenges from the ground level, which is crucial for informed strategic decision-making.
