Business Strategy Lecture 8 Making Strategy Work
People and Relationships
John Birchall
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Linking Purpose to Action
Strategy Context
Broad and Operating Environments
Organisational
Purpose
Vision, Mission,
Ethics
Strategy Process
Involves Stakeholders
Strategy Content
Business Definition,
Competitive
Strategies
Adapted from Harrison (2003: 37) and De Wit & Meyer (2005: 5)
2
Organisational Architecture
 Concept developed by John Kay (1993) Foundations of
Corporate Success: How Business Strategies Add Value.
Oxford: University Press.
 Architecture: a distinctive capability founded on
relationships
 Remember Porter’s Value Chain?
 Capabilities strengthen the chain:
 Co-ordinating the efforts of different functional
departments
 Improving communications to improve new
product design, generating extra customer
value
Link to : Porter’s Value Chain (Harrison
2003: 83)
Administration (Firm Infrastructure)
Support
activities
Human resource management
Technology development
Resource procurement
Inbound
logistics
Outbound
Operations logistics
Marketing
and sales
Service
Primary activities
4
Linking Marketing and Operations
 Long-Range Market Forecasts:

guide decisions about facility size and process
 Marketing Data on Customer Needs:


can help location decisions
Which is most important? - cost, customer
convenience or access to scarce resources?
 Promotions and Ordering Cycles:


should be built into production schedules
seasonal peaks matter too
People and Relationships
 Kay (1993: 66) says:



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“Architecture…is a network of relational
contracts within, or around, the firm”
Internal architecture: relationships of
management with employees, and employees
with each other
External architecture: relationships with
suppliers and customers
Networks: relationships “among a group of
firms engaged in related activities
Link to :
Stakeholder Analysis
LEVEL OF INTEREST
LOW
Minimal
effort
Keep
informed
HIGH
Keep
satisfied
Key
players
POWER
LOW
HIGH
The Mendelow Grid, as shown in
Johnson, Scholes and Whittington (2005: 182)
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External Stakeholders:
A Positive View (Harrison 2003: 268)
Formal Power
Economic
Power
Political Power
Influence on
Environmental
Uncertainty
Facing the
Firm
Possession of
Knowledge or
Resources not
Found in Firm
High
Importance
Partnering and
Inclusion in the
Firm’s Activities
Strategic
Importance
of External
Stakeholder
Low
Importance
Monitoring and
Traditional
Management
Techniques
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Link to : Stakeholders and Environmental
Change
(Harrison, 2003: 37)
The Broad Environment
Technological Influences
Socio-cultural Influences
The Operating Environment
Activist
Groups
Suppliers
Unions
Competitors
The Organization
Owners/Board of Directors
Managers
Employees
Financial
Intermediaries
Economic Influences
Local
Communities
Customers
The Media
Government Agencies
and Administrators
Political/Legal Influences
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Internal Stakeholders
 The world is complex and changing (Stacey 2003)
 Businesses need to avoid complacency, slow




reactions or resistance to change: strategic drift
Junior managers with fresh ideas can stop chief
executives getting set in their ways
Learning is key to success, and often comes from
staff directly involved in operations and sales
Frontline staff can help the organisation develop
proactive strategies to anticipate and shape the
process of change within its industry
Emergent strategy, well directed, can turn the
leader’s vision into reality (Mintzberg et al 1998: 175231)
A good architecture…
 Information flows freely upwards, downwards,
and across functional divisions
 People are willing to play with new ideas and
help each other develop them further
 Strategy can emerge in flexible response to
issues and challenges
 The organisation can learn: from its own
experiences and from its stakeholders
May be now is the time to collaborate?
 Strategic Alliances





Joint ventures
Research partnerships
Franchising
Outsourcing
Start-up assistance, training
Supplier
value
chains
Channel
value
chains
Customer
value
chains
Organisation’s
value chain
From Porter’s Value System …
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