Strategic management (core) Flashcards
INTRODUCTION
What is rational strategy?
What will a rational strategy contain?
Name an example.
What is emergent strategy?
When will an emergent strategy occur?
Name an example.
Rational strategy = change that evolves as a result of the working through of a strategic plan
contain conscious choices that have been made concerning the length of the strategic plan, the levels of risk, and the perceived opportunities and threats
Nintendo strategy = to build upon its earlier game consoles = launched GameCube
Emergent strategy = change that evolves without a rational plan, or as a result of the changes in the parameters of a rational plan
occurs when an intended rational strategy comes under the influence of unexpected forces, and the strategic plan requires change to enable the achievement of the strategic objectives
Within a few weeks of Nintendo launching GameCube, Sony released its new PlayStation which was cheaper = Nintendo’s original strategy had to change to remain competitive so reduced their price below the PlayStation
RATIONAL STRATEGY - PRINCIPLES OF THE RATIONAL VIEW
What is the rational view of strategic management based on?
Why is this an important base point?
Many strategists and writers on strategy have used the concept of ‘rational strategy’ as what?
Based upon the presumption that the people undertaking the strategic management will always act in a logical, structured and proactive manner
to understand both the nature of strategic management and how other views of strategy and strategic management have developed
Used as their starting point and then added their own particular nuance to explain why humans do not behave in a rational or logical manner
RATIONAL STRATEGY - PRINCIPLES OF THE RATIONAL VIEW - ANSOFF (1990)
What does Ansoff (1990) suggest around the presumption of setting out to achieve one or more objectives? (2)
What are the 4 categories Ansoff (1990) splits objectives into? / What are the 4 methods suggested by Ansoff that can be used to identify the success or failure of a strategy?
For each, provide an example of a question that helps determine success or failure of a strategy.
suggests that: (A) organisations are ‘purposive’, that they have an intent to achieve something, and (B) success or failure could be measured against 4 key objectives:
- Economic = quantitative figures that measure the efficient use of available resources to convert inputs into outputs
Q = have resources been used effectively to create the planned outputs? - Non-economic = quantitative and qualitative information measured against stakeholder expectations
Q = have the expectations of the differing stakeholders been satisfied? - Self-renewal = the building of an organisation through reinvestment
Q = has the strategy contributed to the ongoing life and sustainability of the organisation? - Flexibility = sufficient latitude in the prescribed plan to enable an organisation to survive and manage different forces
Q = has the strategy allowed sufficient latitude to enable real-world change?
RATIONAL STRATEGY - PRINCIPLES OF THE RATIONAL VIEW - JOHNSON ET AL. (2017)
What are 3 core attributes that are normally attached to the thinking behind rational strategy?
What does Johnson et al. (2017) suggest are the 4 core aspects of strategic management?
In reality the 4 elements are what?
A rational strategy:
1. will be created at the top of an organisation = by the leaders and/or those who have accountability for an organisation
2. starts with the entirety of an organisation, before it can be broken down into smaller constituent parts; and
3. will contain conscious choices that have been made concerning the length of the plan, the levels of risk, opportunities and threats offered by the environment, and the realistic availability of resources
(1) Analysis = the collection and interpretation of appropriate data to enable the understanding of reality, resource and expectation
(2) Choice = the evaluation of the strengths and weaknesses of different potential options to choose a preferred option
(3) Implementation = the ability to put the chosen option into action
(4) Control = the establishment of a method of monitoring outcomes of each stage of the strategic development process
interrelated and will constantly inform each other BUT control is seen as a constant influence and requirement throughout the process
RATIONAL STRATEGY - EVOLUTION OF THE RATIONAL VIEW
Each person, and each organisation, needs to be prepared to consider, challenge and place their own strategic development within a range of different contexts.
Several theorists have developed the rational model further, to consider strategy development in a range of different contexts. What are the 5 different contexts?
What are the 4 limitations laid down by Mintzberg (1994)?
- crafting and intuition = Ohmea (1982): creativity is as important as logic in forming a strategy, and planning is as much based on intuition as on analysis
- competition = Porter (1980): the underlaying rationality of strategic development is often to gain competitive advantage
- the learning organisation = Senge (1990): when individuals become aligned in their vision the organisation itself is learning
- chaos theory = the most logical and rational strategic plan will be subject to volatility, uncertainty, complexity, and ambiguity (VUCA) forces before the plan is concluded
- limitations of the rational model = Mintzberg (1994):
(a) Data: it is difficult to gather the required level of data to enable the formulation of a rational plan in the first place = makes the starting point impossible to contain
(b) Routine: rational plans often form a recurrent part of an annual planning process, but an organisation cannot allow itself to wait 12 months before addressing problems
(c) Inertia: once a rational plan is established people are unwilling to question it
(d) Politics: the rational plan ignores the political environment and power struggles that exist within most organisations
EMERGENT STRATEGY - PRINCIPLES OF THE EMERGENT VIEW
Strategy development is a continually moving and evolving process, rather than something that is static and takes place as a single process.
According to Mintzberg, what are the 2 different directions that intended strategy can progress in?
Name an example for each.
What happens during the route from intended strategy to realised strategy?
Name an example.
- Some of the intentions will not succeed = referred to as non-realised strategy
E.g., a company changes its strategy after market research shows there is no demand for their planned product or service - The rest follow the deliberate strategy route to eventually become realised strategy
E.g., a company has a strategy to introduce an additional service for its customers; this is well received by customers and rapidly becomes part of the core process
The deliberate strategy will often come under significant influence from emergent strategies
E.g., motor manufactures have moved towards hybrid and/or electric cars as the result of emergent pressure from consumers and governments
EMERGENT STRATEGY - EVOLUTION OF THE EMERGENT VIEW
What causes the emergence of different strategic ideas or the alteration of a strategic requirement? (3)
These and other emerging dynamics and forces will always influence what?
Who are the best people to comment upon, challenge and help to redesign required change?
- People = someone leaves or joins the organisation or the team; someone changes their mind or opinion about an existing process
- Direct organisational events = a customer fails to buy; a supplier fails to supply; a piece of significant machinery breaks down; people go on strike
(known as the micro environment) - Indirect wider economic and other external events = taxation or interest rates change; there is a change in government
(known as the macro environment)
Influence the eventual shape and realisation of strategy
Those who are dealing with the day-to-day operations
EMERGENT STRATEGY - EVOLUTION OF THE EMERGENT VIEW - MINTZBERG
Mintzberg produced a non-exhaustive list of the differing degrees of deliberation and emergence that can influence and be contained within a strategy.
Name 4 types of strategy as summarised by Mintzberg? (non-exhaustive)
Name a practical example for each.
- Planned = deliberate with tight control and little room for variation
- Entrepreneurial = commences with intention, but will be subject to the mind of the entrepreneur
- Ideological = driven by strong beliefs and/or culture and subject to the views of the leaders
- Umbrella = broad boundaries within which a range of different types of strategy may exist
EMERGENT STRATEGY - EVOLUTION OF THE EMERGENT VIEW - PETTIGREW & WHIPP
There are many different models and developments of the concept of emergent strategy. Which 2 does the textbook focus on in addition to Mintzberg?
What do Pettigrew and Whipp suggest?
Expand on these 3 aspects and relate to the work of Lynch (2015) (i.e., Honda example).
What do Pettigrew and Whipp recognise?
(1) content, context and process by Pettigrew and Whipp
(2) integrative thinking by Martin
Suggest that all strategic change takes place within a threefold context as a result of linkage between strategic change and competition
- the CONTENT of the planning process requires a strategic vision, a strategic plan and an implementation plan = underlying objectives/assumptions; a range of targets; and methods of evaluation success
Strategy content = Honda used small machines as an entry point, then later launched larger machines
- the CONTEXT will consider the people; organisational culture; resources available; and stakeholders
Strategy context = historical dominance of US manufactures led to the failure of Honda’s entry strategy, but weakness in the industry’s small market provided an opening for Honda
- the PROCESS will consider the available and required leadership; change impact analysis; and a projection of the perceived route to deliver the strategy
Strategy process = Honda strategy was developed though a combination of luck, product performance, and management persistence
3 aspects are joint, inseparable and continuous processes from start to completion
EMERGENT STRATEGY - EVOLUTION OF THE EMERGENT VIEW - MARTIN
What is Martin’s idea of integrative thinking?
What are the 6 characteristics of the integrative thinker that Martin identifies?
Integrative thinking = a methodology that is analogous to ‘systems thinking’ but allows us to focus on the way that the brain as a system deals with the other systems that surround us
- Models that exist in the brain are simply the best that we have at that moment in time.
- The brain has the ability to hold and reflect upon conflicting models/approaches to, a particular situation. These are to be leveraged rather than feared.
- Better models do and will exist that have not yet been discovered by us.
- The brain of the integrative thinker is able to overlay an existing model with a perceived better model and allow them to morph into a new ‘best that we have’ structure
- The brain will enjoy the complexity and confusion that exists while looking for an optimal understanding
- An integrative thinker will ensure that they dedicate sufficient time to enable the first 5 challenges, but also recognises that this inevitably becomes an iterative process
EMERGENT STRATEGY - EVOLUTION OF THE EMERGENT VIEW - MARTIN
How does Martin model integrative thinking? (4)
(1) Salience: what features are seen as important for achievement of the vision? –>
(2) Causality: how do people make sense of what they are seeing? –>
(3) Architecture: what order is required for the practical tasks involved? –>
(4) Resolution: how will I know when I achieve the vision?
(and then the arrows go back down 4321)
RATIONAL VS EMERGENT STRATEGY
It is clear there is no one method for the development of strategy. All strategies are likely to have a mixture of what?
What are the concerns Lynch (2015) expresses about the nature of the people and the organisation in the consideration of emergent strategy? (4)
A mixture of rational, emergent, and many other influences
- the people who are accountable and/or in charge of an organisation will have agreed their strategic plans (rational) and are unlikely to sit back and allow the operational managers to adapt and amend the strategy (emergent) BUT both perspectives need to be included
= the bigger stakeholder expectation picture tempered by the practical operational realities - organisations only have finite resources = must be utilised in a structured manner (rational) and cannot be allowed simply to be consumed as the need demands (emergent)
- the timeframe and length of a strategy will significantly impact the interaction of rational and emergent thinking
Short-term strategy = more chance of remaining within rational boundaries
Long-term strategy = more affected by emergent strategies - rational decision-making based upon evidence is more likely to be successful than hunches
ORGANISATIONAL CONTEXTS
What are the strategic influences that may affect the following organisations?:
- sole trader (strategic objectives and strategic planning)
- partnerships (strategic objectives and strategic planning)
- limited companies (strategic objectives and strategic planning)
- private companies (strategic objectives)
- public companies (strategic dynamics)
- multinational corporations (strategic planning)
- membership organisations (strategic direction)
- Sole trader = the strategic objectives and strategic planning will be based upon the expectations of the individual, set within the operating parameters of financial, legal and environmental constraints
- Partnerships = the strategic objectives and strategic planning will be based upon the expectations of the partners, set within the operating parameters of financial, legal and environmental constraints
- Limited companies = the strategic objectives and strategic planning will be based upon the expectations of the shareholders and stakeholders within s.172 CA2006, set within the operating parameters of financial, legal and environmental constraints
- Private companies = strategic objectives defined by limited pool of existing shareholders (not publicly traded)
- Public companies = strategic dynamics much more diverse due to much wider and diverse shareholders
- Multinational corporations = different geographical markets will have different legal, environmental, culture and operating expectations that must be considered when strategic planning
- Membership organisations = exist for the benefit of its members e.g., CGI and ICAEW = strategic direction will require an alignment between those who run the organisation and the members
ECONOMIC CONDITIONS - STABILITY AND GROWTH CONDITIONS
The economic conditions of the environment within which any type of organisation is operating will need to be taken into consideration in any strategic planning, particularly in longer-term plans.
What is the strategic impact of periods of stability and growth? (3)
Periods of stability and growth:
(1) Organisations will be able to take a longer-term and more developmental strategic perspective
(2) It will be possible to develop strategic plans that enable a far more incremental approach to longer-term success
(3) The operating environment will be more confident, supportive and willing to accept short-term failures for the betterment of sustainable long-term success if this is well communicated at all levels and throughout the process of change
ECONOMIC CONDITIONS - STABILITY AND GROWTH CONDITIONS
What is the strategic impact of periods of instability, recession and austerity? (2)
Periods of instability, recession and austerity:
(1) In the volatility, uncertainty, complexity, and ambiguity (VUCA) world it would be reasonable for strategic planners to build in an expectation of instability
(2) Since the financial crisis of 2008, strategic planners have been forced to consider a series of much shorter-term dynamics to enable longer-term viability
