PRESENTATION SLIDES To accompany: Contemporary Strategy Analysis: Concepts, Techniques, Applications (4th edition, Blackwell, 2002) Robert M. Grant Assisted by Kate Grant The Concept of Strategy OUTLINE • The role of strategy in success • A framework for strategy analysis • The evolution of strategic management • Corporate strategy and business strategy • Strategy making: Design or process? • The role of strategy Elements of Success GOALS MADONNA GIAP & NORTH VIETNAMESE MILITARY Single-minded quest for stardom. Reunification of Vietnam under Communist rule. ALEX FERGUSON & MAN UNITED Success in soccer—an escape route from poverty in Glasgow UNDERSTANDING Identified emerging trends THE in popular culture. ENVIRONMENT Recognized power of sex. Understood showbiz distribution channels. Intimate knowledge of terrain. Clear recognition of Understanding U.S. political importance of discipline, system. training, motivation, & competitive intelligence RESOURSE APPRAISAL Recognized limited raw talent. Relied on strengths in self-promotion, imagecreation, relationship management Recognized economic and military weaknesses and political strengths. Combined internal development of skills with acquisition of key players. Nurturing of team capabilities IMPLEMENTATION Commitment to hard work. Disciplined, inspirational Leadership. Attention to detail. Tight control. Long-term commitment. Effective propaganda. Inspirational leadership. Effectiveness in motivating players, demonstrating commitment. Common Elements in Successful Strategy Successful Strategy EFFECTIVE IMPLEMENTATION Long-term, simple and agreed objectives Profound understanding of the competitive environment Objective appraisal of resources What is Strategy? • Distinguishing strategy from tactics: – Strategy is the overall plan for deploying resources to establish a favorable position. – Tactic is a scheme for a specific maneuver. • Characteristics of strategic decisions: – Important. – Involve a significant commitment of resources. – Not easily reversible. The Evolution of Strategic Management DOMINANT THEME MAIN ISSUES CONCEPTS & TECHNIQUES IMPLEMENTATION 1950s 1960s Early-mid Late1970s 1970s early 1980s Late 1980s Late 1990s early 1990s early 2000s Budgetary planning & control Corporate planning Corporate strategy Quest for competitive advantage Financial control Planning growth Diversifica- Positioning ion Competitive advantage Budgeting project appraisal Forecasting & investment planning Portfolio planning. Synergy market share Resource analysis. Case competences Emphasis on financial management Rise of corporate planning departments & formal planning DiversifiIndustry/market cation. selectivity. Quest for Active asset global management market share Analysis of industry & competition Analysis of industry & competition Strategic innovation The “New Economy” Innovation & knowledge Dynamic sources of advantage Knowledge management cooperation Restructuring Virtual orgaBPR. nization. Refocusing Alliances Outsourcing Quest for critical mass The Turbulent 90s The Death of Communism Sclerosis in Japan International competition intensifies Stock Market Goes Bananas DJIA 1/1/90: 2,765 31/12/99: 11,425 The Turmoil in Russia The End of Apartheid Financial Crisis in Asia Bloodbath in Rwanda Advent of the Internet Unstable Currencies Yen/$ from 87 to 148 (1997-98) The Horror of Yugoslavia Volatile Oil 9/1990: $34 12/1998: $10 12/1999: $30 The Basic Framework Strategy: the Link between the Firm and its Environment THE FIRM Goals & Values Resources & Capabilities Structure & Systems STRATEGY STRATEGY THE INDUSTRY ENVIRONMENT Competitors Customers Suppliers Sources of Superior Profitability INDUSTRY ATTRACTIVENESS RATE OF PROFIT ABOVE THE COMPETITIVE LEVEL How do we make money? Which businesses should we be in? CORPORATE STRATEGY COMPETITIVE ADVANTAGE How should we compete? BUSINESS STRATEGY Strategy Making : Design or Process? Strategy as Design Strategy as Process Planning and rational choice Many decision makers responding to multitude of external and internal forces INTENDED STRATEGY EMERGENT STRATEGY REALIZED STRATEGY Mintzberg’s Critique of Formal Strategic Planning: •The fallacy of prediction – the future is unknown •The fallacy of detachment -- impossible to divorce formulation from implementation •The fallacy of formalization --inhibits flexibility, spontaneity, intuition and learning. Strategy Making Processes within the Company: Multiple Roles of Strategy Strategy as Decision Support Improves the quality of decision making Strategy as Coordination and Communication Creates consistency and unity Strategy as Target Improves performance by setting high aspirations The Role of Analysis • Strategy analysis improves decision processes, but doesn’t give answers. • Strategy analysis assists us to identify and understand the main issues. • Strategy analysis helps us to manage complexity. • Strategy analysis can enhance flexibility and innovation by supporting learning.