STRATEGIC MANAGEMENT AND
INNOVATIONS (6 cr)
Post-doctoral Researcher
Mika Vanhala
(mika.vanhala@lut.fi)
Lappeenranta University of Technology
LUT School of Business
Practicalities
Modes of study
− In-class hours:
− Introductory lecture 2h
− Instructions for the essay
− Other practicalities
− Essay seminar 4h
− Out-class hours
− Preparation of essays 100h
− Written evaluation on others’ essays 50h
− Preparation for the essay seminar 4h
− Total workload 160h
− The course is all about independent work
− Essay
− Reading, studying, thinking and writing
− Evaluating one essay
− Presentation
Evaluation
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Grade 0-5, 0-100 points
50 points to pass the course
Individual essay
Essay presentation
Written and oral evaluation on others’ essays
70 points
10 points
20 points
Essay
− 15-20 pages (excluding cover, table of contents, references)
− According to LUT School of Business Report Guideline (available in Noppa)
− The minimum number of written references to be included in the essay
is 10 (journals, books)
− Internet references are not counted as written references (their usage is
OK if the source is reliable)
− Course books are not counted (their usage is however recommended)
− Good resources (journals):
− Strategic Management Journal
− Academy of Management Journal
− Academy of Management Review
− Journal of Management
− Organizational Science
− Harvard Business Review (practitioners forum)
Essay
− Introduction
− Literature review
− Analysis (use at least two, short presentation in the slide set, see Noppa)
− SWOT
− Porter’s five forces framework
− Competitor analysis
− Resources and capabilities analysis
− Competitive advantage
− Framework for global strategy
− Empirical data (use at least one)
− Public sources (web sites, annual reports, magazines, newspapers etc.)
− Databases
− Cases
− Interviews (e.g. company representatives)
− Survey (maybe too time consuming to conduct)
− Discussion and conclusions
− Remember research questions
Topics for the essays, e.g.
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Globalizaton strategy of the company X
Strategic change of the company Y
Comparison of the company Z’s strategy in 1990’s and now
Company Q’s succes in terms of strategy
Company W – Strategic analysis
Comparison between e.g. Nokia and Apple
Strategic management choices in improving innovations in company X
How strategic management of the company Z has affected its
innovativeness?
− Comparison of the strategic management between e.g. Nokia and Apple
and its effect on innovativeness (e.g. innovative products, innovations in
production, innovations in designing products)
Evaluation on others’ essays
− Each evaluates one essay, focus on
− Literature review
− Analysis
− Discussion and conclusions
− Not what was done but:
− How to improve?
− Suggestions
− Do you agree with the findings? Your thoughts
− Argue your criticism
− Report (approx. 5 pages, without cover etc.)
Evaluation of the essay
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Following of the instructions
Structure and layout
Literature review
Empirical study and analysis
Discussion and conclusions
In total
5 points
5 points
15 points
20 points
25 points
70 points
Timetable
− Please, let me know if you are not going to complete the course
− E-mail your (preliminary) topic to Mika by Monday, February 18th
− Tutoring (if needed, not mandatory), room 7580.2
− Monday, March 11th and Tuesday, March 12th
− 15 minutes/student
− Book in advance, by Wednesday, March 6th via Doodle
− You’ll get link by e-mail (only those who have sent topic)
− Essay seminar
− Monday, April 8th, 9-13, room 7332
− Deadlines
− Essay to Mika and your opponent*, Monday, March 25th
− *See Noppa
− Written evaluation to Mika, Friday, April 5th
− Presentations to Mika, Friday, April 5th or save to room 7332’s
computer before Monday 8th, 9 o’clock
− Respect the deadlines
− Essays and written evaluations returned after deadlines won’t be
evaluated!
Presentations
− Short presentations
− 5 minutes, four slides
− Research questions
− Empirical study and analysis
− Findings
− Conclusions
− Opponent’s feedback and discussion
− 5 minutes
That’s all Folks!
Thank you.
Questions?
Concept of strategy
Concept of strategy
"People should not be unfamiliar with strategy,
Those who understand it will survive,
Those who do not understand it will perish"
Sun Tzu's the Art of War
Some definitions
− ”Strategy: a plan, method, or series of actions designed to achieve a
specific goal of effect.” (Wordsmyth Dictionary)
− ”The determination of the long-run goals and objectives of an enterprise,
and the adoption of courses of action and the allocation of resources
necessary for carrying out these goals.” (Alfred Chandler, Strategy and
Structure, 1962)
− ”Strategy is the direction and scope of an organisation over the long term,
which achieves advantage for the organisation through its configuration of
resources within a changing environment and to fulfil stakeholder
expectations.” (Johnson & Scholes, 2002)
− “..strategy is concerned with planning how an organization or an individual
will achieve its goals.” (Grant, 2006)
What is strategy?
− How individuals or organizations achieve their objectives
− Common to definitions:
− Achieving certain goals
− Allocation of resources
− Implying consistency, integration or cohesiveness of decisions and
actions
Concept of strategy
− Strategy forms link between the firm and the industry environment
− The firm
− Goals and values (simple, consistent, long-term goals)
− Resources and capabilities (objective appraisal of resources)
− Structure and systems (effective implementation)
− The industry environment
− Profound understanding of the competitive environment i.e.
− The firm’s relationships with customers, competitors and suppliers
Concept of strategy
The
The firm
•Goals and values
•Resources and capabilities
•Structure and systems
STRATEGY
industry
environment
•Competitors
•Customers
•Suppliers
The task of strategy
− Determine how the firm will
− Deploy its resources
− Within its environment
− In order to
− Satisfy its long-term goals
− And how to organize itself to
− Implement that strategy
Strategic fit
− For a strategy to be succesfull, it must be consistent with
− External environment
− Internal environment
Basic strategic choices
− Where to compete?
− How to compete?
Corporate and business strategy
− Corporate strategy
− Defines industries and markets in which the firm competes i.e. where a
firm competes
− Decisions over the scope of the firm’s activities:
− Product scope i.e. how specialized should the firm be (the range of
products it supplies)?
− Geographical scope i.e. what is the optimal geographical spread of
acivities for the firm?
− Vertical scope i.e. what range of vertically linked activities should
the firm encompass?
− Business strategy
− How the firm competes within a particular industry or market?
Tools for strategy analysis
SWOT analysis
− A tool to evaluate:
− Strenghts
− Company resources and capabilities that can lead to a competitive
advantage
− Weaknesses
− Resources and capabilities that company does not possess
− Their absence places the firm at a competitive disadvantage
− Opportunities
− Conditions in the broad and operating environments
− Allow a firm to take advantage of organizational strenghts,
overcome organizational weaknesses, and/or neutralize
environmental threats
− Threats
− Conditions in the broad and operating environments
− May impede organizational competitiveness or the achievement of
stakeholder satisfaction
Porter’s five forces of
competition framework
− A tool for industry analysis
− Views the profitability of the industry as determined by:
− Horizontal competition
− Substitutes
− Entrants
− Established rivals
− Vertical competition
− Power of suppliers
− Power of buyers
Porter’s five forces of
competition framework
Competitor analysis
− To forecast future strategies and decisions
− To predict likely reactions to a firm’s strategic initiatives
− To determine how competitors’ behavior can be influenced to make it more
favorable
− Not just collecting information  to understand one’s rival
Competitor analysis
Strategy
Current goals?
Are these met?
Are these likely to change?
Objectives
How is firm competing?
Predictions
Assumptions
About industry and itself
Strategy changes?
Response to others’ strategic initiatives?
Resources
and
capabilities
Key strenghts and weaknesses?
Analyzing resources and capabilities
− Resources
− Tangible
− Financial (cash, securities, borrowing capacity)
− Physical (plant, equipment, land etc.)
− Intangible
− Technology (patents, copyrights, trade secrets)
− Reputation (brands, relationships)
− Culture
− Human
− Skills/know-how
− Capacity for communication and collaboration
− Motivation
− Capability
− Capacity to deploy resources for a desired end result
− E.g. corporate functions, R&D, operations, marketing, sales
Analyzing resources and capabilities
− Identify key resources and capabilities
− Appraise resources and capabilities
− Importance
− Strenghts and weaknesses as compared with competitors
− Strategy implications
− Exploiting key strenghts
− Managing key weaknesses
Competitive advantage
How does competitive
advantage emerge?
External sources of change e.g.,
- Change in customer demand
- Changing prices
Internal sources of change
Technological change
Resource heterogenity among
firms means different impact
Some firms are faster and more
effective in exploiting change
Some firms have greater
creative and innovative
capability
Sources of competitive advantage
− Cost advantage
− Similar product at lower cost
− The goal is to become the cost leader in its industry or industry segment
− The firm must
− Find and exploit all sources of cost advantage
− Sell a standard, no-frills products
− Differentiation advantage
− Price premium from unique product
− The goal is to provide something unique that is valuable to buyers
beyond simply offering a low price
Globalization and
strategic management
Globalization
− Globalization:
− Transition of industries whose competitive structure changes
progressively from multinational to global e.g. telecommunications or
processed food
− Factors that push for globalization:
− Political (liberalisation of trade and investment)
− Technological (transport, communication and economies of scale)
− Social (convergence of consumer needs)
− Competitive (global brands, globalization of customers)
Global strategy
− Global strategy is the way a company:
− Defines its long-term objectives for the world market
− Selects its value proposition for the world market
− Builds, integrates and co-ordintes its business system
− To gain and sustain global competitive advantage and puts in place an
organization to manage its operations worlwide
Framework for global strategy
− Ambition
− Express the role a company wants to play globally
− How it views the future distribution of its sales and assets
− Positioning
− The choice of countries
− The role of those countries in the company’s country portfolio
− The various value propositions for the products and services
− Business system
− How value chain is spread and intergrated across the world
− Set of activities (innovative, productive, customer relationship) that a
company employes in order to design, produce and deliver the value
proposed to the customer
− Organization
− Design of an organizational architecture in order to support and
implement other elements