L13 - Intro to strategy Flashcards
What is a strategy?
Long-term direction of an organisation, an integrated plan of how to achieve competitive objectives
Evolves over time as the external environment and internal resources and capabilities change
Involves commitment of significant resources
The effectiveness of either player’s strategy depends critically on the strategy employed by the other – mutual interdependence of actions
What is the three-horizons framework?
Long term – three-horizons framework suggest organisations should think of themselves as comprising 3 types of business or activity, defined by their horizons in terms of years
Horizon 1 – extend and defend core business
Horizon 2 – build emerging business
Horizon 3 – create viable options
While timescales might differ, the basic point about the ‘three-horizons’ framework is that managers need to avoid focusing on the short-term issues of their existing activities. Strategy involves pushing out Horizon 1 as far as possible, at the same time as looking to Horizons 2 and 3.
What are the 3 main levels of strategy?
Corporate-level – overall scope of an organisation and how value is added to the constituent businesses of the organisational whole. Geographical scope, diversity of products
Business-level – how the individual businesses should compete in their particular markets (often called competitive strategy). Can be standalone businesses or business units. Innovation, appropriate scale, response to competitors. In public sector – how to provide best-value service
Operational – how the components of an organisation deliver effectively the corporate- and business-level strategies in terms of resources, processes and people
Important all levels are integrated
What is a strategy statement?
Should have 3 main themes: the fundamental goals (mission, vision or objectives), the scope of the organisation’s activities and the advantages or capabilities it has to deliver all of these
Explain vision, mission, and objectives
Mission – overriding purpose of the organisation - “what business are we in”
Vision – desired future state of the organisation, an aspiration – “what do we want to achieve”
Objectives – more precise and quantifiable statements of goals over some period – “what do we have to achieve in the coming period”
In summary – motivation, direction, purpose to people as supposed to strategy which is guidance to competitive actions
Explain scope and advantage
Scope – refers to 3 dimensions: (1) customers or clients; (2) geography, and (3) external of internal activities (vertical integration)
Advantage – how the organisation will achieve the objectives it has set for itself – competitive advantage
What is the exploring strategy model?
Includes understanding the strategic position of an organisation, assessing strategic choices for the future, and managing strategy in action
What is strategic position in the exploring strategy model?
The impact on strategy of the external environment, the organisation’s strategic capability, the purpose of the organisation and the culture of the organisation
Environment – opportunities and threats
Strategic capability – resources and competences – strengths and weaknesses
Strategic purpose – what does the organisation seek to achieve? Here the issue of corporate governance is important: how to ensure that managers stick to the agreed purpose. Questions of purpose and accountability raise issues of corporate social responsibility and ethics - Purpose and ethics will in turn be closely associated with organisational culture , implying the importance of cultural fit with the desired strategy.
What are strategic choices in the exploring strategy model?
Both the directions in which strategy might move and the methods by which strategy might be pursued
Business strategy – how the organisation seeks to compete at the individual business level
Corporate strategy and diversification – corporate scope, which businesses to include in the portfolio. Corporate degree of diversification – markets and products. Internal relationships
International strategy – internationalisation is a form of diversification
Innovation strategy
Acquisitions and alliances
What are 3 key issues for strategy in action?
Structuring an organisation to support successful performance – how centralised or structured the organisational structure should be
Systems are required to control the way strategy is implemented – planning and performance systems, how to ensure that strategies are implement according to plan
Leading strategic change - include the speed and comprehensiveness of change
What is the rational-analytical view of strategy development?
Conventional. Strategies developed through rational and analytical processes, led typically by top managers. Result – strategical plan.
Linear sequence
Typical plan begins with statement of overall strategy, mission, vision, and objectives
Then environmental and capability analyses
A range of strategic options evaluated
The final elements of a strategic plan are putting
the resources in place and addressing the key change processes.
The basic assumption in this rational-analytic view is that strategies are typically intended , in other words the product of deliberate choices.
What is the emergent strategy view of strategic development?
Strategies often do not simply develop as intended or planned, tend to emerge in organisations over time as result of ad hoc, incremental or accidental actions
Good ideas and opportunities often come from practical experience at the bottom of the organisation, not just from management at the top. Even the best laid plans may need to be abandoned as new opportunities arise or the organisation learns from the marketplace. Learning from experience can be as valuable as planning in advance
Rational-analytical and emergent views are not mutually exclusive
