MMM365 Strategic Management Exam Notes
Topic 1: Introducing Strategy – exploring strategy model
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Chapter 1: Introducing strategy
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Robin Hood Case Study
1.1 WHAT IS STRATEGY
Strategy is the long-term direction of an organisation.
‘Long Term’ – strategies measured over years (can be decade +)
The Three-Horizons Framework suggests organisations should think of themselves as comprising three
types of business or activity, defined by their ‘horizons’ in terms of years.
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Horizon 1: businesses are the current core activities (extend and defend core business)
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Horizon 2: businesses are emerging activities that should provide new sources of profit (build
emerging businesses)
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Horizon 3: possibilities, for which nothing is sure (create viable options)
1.2 LEVELS OF STRATEGY
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Corporate-level strategy: is concerned with the overall scope of an organisation and how value is
added to the constituent businesses of the organisational whole.
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Business-level strategy: is about how the individual businesses should compete in their particular
markets (for this reason, business-level strategy is often called ‘competitive-strategy’)
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Operational strategies: are concerned with how the components of an organisation deliver
effectively the corporate and business-level strategies in terms of resources, processes and people
Need to link corp, bus and organisational levels underlines importance of integration in strategy. Each
level needs to be aligned with the other. Demands of integrating levels define an important characteristic
of strategy: strategy is typically complex, requiring careful and sensitive management. Strategy is rarely
simple.
1.2.3 STRATEGY STATEMENTS
Strategy statement should have three main themes: 1) fundamental goals (mission, vision or objectives)
that the org seeks; 2) scope or domain of the org’s activities and 3) advantages or capabilities it has to
deliver all of these.
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Mission – relates to goals, refers to the overriding purpose of the org
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Vision – relates to goals and refers to desired future state of the org
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Objectives – more precise and ideally quantifiable statements of the org’s goals over some
period of time
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Scope – org’s scope or domain refers to three dimensions: customers or clients; geographical
location; extent of internal activities
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Advantage – this part of a strategy statement describes how the organisation will achieve the
objectives it has set for itself in its chosen domain
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1.4 WORKING WITH STRATEGY
Strategy itself is a kind of work and something that all levels of management have to engage in, not just
top decision makers. Middle and lower level managers have to understand their orgs strategic objectives
and contribute to them as best they can.
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Managers must communicate strategy to team
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Middle and lower managers important because closer to daily realities of business
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Strategy part of job of being manager
1.5 STUDYING STRATEGY
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This book is comprehensive and serious about strategy
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To understand full range of issues important to be open to perspectives and insights of key
disciplines such as eco, sociology and psychology
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To be serious about strategy means to draw as far as possible on rigorous research about these
issues
Book overs equally three main branches of strategy research: conventionally; context, content and
process
Context – internal and external: research: industry analysis, cultural analysis, resource based view
Content – strategic options: research: strategy and performance
Process – formation and implementation. Research: strategic planning, choice and change, strategy-aspractice
1.6 DOING STRATEGY DIFFERENTLY
Strategic issues are typically complex and are best explored from a number of points of views. No simple,
universal rule for good strategy. This section introduces two ways of exploring strategy differently; one
depending on context one of perspective
1.6.1 Exploring strategy in different contexts
Small businesses – with regard to positioning, small businesses will certainly need to attend closely to the
enviro, because they are vulnerable to change.
Multinational corporations – positioning in a complex global marketplace will be very important. Each
significant geographical market may call for a separate analysis for the business environment
Public sector and not-for-profits – positioning issues of competitive advantage will be important even in
these contexts, but have a different flavor. Charitable not-for-profits typically compete for funds from
donors: public sector orgs, such as schools and hospitals often compete on measures such as quality or
service
1.6.2 Exploring strategy through different ‘strategy lenses’
The strategy lenses are ways of looking at strategy issues differently in order to generate additional
insights
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Topic 2: Strategic Position
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2.2 THE MACRO-ENVIRONMENT
This section introduces two tools – PESTEL and scenarios – for analyzing the broad macro-enviro of an org.
PESTAL provides a wide overview and scenarios build on this in order to consider how the macro-enviro
might change. Both PESTAL and scenarios, however can be overwhelming in the amount of issues and
possibilities they uncover.
2.2.1 PESTEL framework
(Similar to PEST) framework which categorizes environmental factors into key types.
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Politics: highlights role of state and other political forces. State is often important as a direct eco
actor, for instance as potential customer, supplier or owner of bus. Also political movement
influences, campaign groups of concerned media.
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Economics: refers to macro-eco factors such as exchange rates, business cycles and differential
eco growth rates around the world. It is important for a bus to understand how its markets are
affected by the prosperity of the eco as a whole. Managers should avoid over-confidence at the
top of the bus cycle and excessive caution at the bottom.
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Social: influences include changing cultures and demographics. Eg aging populations in many
Western societies create opp and threats for both private and pub sectors. Changing cultural
attitudes also raise strategic challenges.
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Technological: influences refer to influences such as the Internet, nano tech or the rise of new
composite materials. As in the case of the internet in retailing, new technologies open up
opportunities for some (Amazon) while challenging others (traditional stores)
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Ecological: stands specifically for ‘green’ environmental issues, such as pollution, waste and
climate change. Enviro regulations can impose additional costs eg with pollution controls but they
can also be a source of op peg new businesses
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Legal: embraces legislative and regulatory constraints or changes. Eg legal changes might include
restrictions on co mergers and acquisitions or new tax treatments of profits earned overseas
Key drivers of change: environmental factors likely to have a high impact on future success or failure of
strategy. Typical key drivers will vary by industry or sector. Thus retailer may be primarily concerned with
social changes driving customers tastes and behav eg forces encouraging out-of-town shopping and eco
changes eg rates of eco growth and employment
Three concepts are useful for focusing on change while at the same time avoiding too much detail
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Megatrends: large-scale social, eco, political, eco or technological changes that are typically slow
to form, but which influence many other activities and views, possibly over decades. A megatrend
typically shapes other trends. Thus, megatrend towards ageing populations in west influences
other trends in social care, retail spending and housing.
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Inflexion points: are moments when trends shift in direction, for instance turning sharply upwards
or downwards. Eg after decades of stagnation and worse, in the early twenty-first centry subsaharan Africa may have reached an inflexion point in its eco growth, with the promise of
substantial gains in the coming decade or so.
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Weak signals: are advances signs of future trends and are particularly helpful in identifying
inflexion points. Typically these weak signals are unstructured and fragmented bits of info, often
perceived by observers as ‘weird’. A weak signal for the worldwide financial crisis was the rise in
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