Strategic Advantage 1 - Strategy Concept

Strategic Advantage Book analyses strategy by looking at its external logic – the organaizational positions itself relative to its external context

• Internal logic – the levels of the org at which strategy has different meanings and what distinctive resources and competences it must acquire; its performance over time
• Managerial requirements – the role of general mgrs and how strategy is planned managed monitored and maintained

Key Definitions of Strategy

• Mintzberg – Strategy as a planned action but fails to recognize intended strategy as emergent process which is best seem as a stream of ideas
• Prahalad and Hamel – conceptualize as strategic intent – winning a competitive game. Also strategy as stretch and leverage – breaking the strategy frame and leveraging the critical key competences in an innovative and distinctive manner - This is dominant in current thinking
• Chandler – the determination of the basic l-t goals and objectives of the org and adoption of courses of action and allocation of resources necessary for carrying out these goals:

This is classical view and follows rational analysis including Sun Tzu – The Art of War.

Porter – Strategy is about being different – positioning – About combining activities that are complementary and re-inforcing (strategic coherence)

The common elements and view points are

• • Establishing org purpose
• • Definition of competitive domains
• • Response to threats and opportunities
• • A way of defining managerial tasks
• • Involves a system of coherent unifying forces
• • To enable developing competences
• • A vehicle to determine investments in tangible and intangible resources
• • An expression of strategic intent

The basics of strategy

• Plans decisions and actions
• Plans are hierarchical and the process, iterative. See diagrams

• But Mintzberg say although it may be planned many emerge which are responses to unexpected opportunities and are business units and not HQ
• Quinn believes that logical incrementalism – long-term plans with emergent strategy properly managed is conscious, purposeful, pro-active, executive practice.

Realized strategy is a blend of intentions and emergent strategy – a kind of environmental determinism

The external environment

The regions below show zones of influence for firms. Most influence at Mkt structure. One way for firms to access exposure is PEST – But analysis needs to identify probabilities and outcomes – Managers are likely to only have partial information

Goals

Goals represent what not how. Can be a mission statement – a philosophy or something more specific like a strategy

Resources

Resource Based View (RBV) – Penrose Strategists can mobilize and build resources that can bring huge rewards to the co E.g. Post-it note was not something customers wanted until they were told of its uses – Allows strategies to be planned inside out Prahalad and Hamel

Competences should

• • Provide access to a wide variety of markets
• • Give perceived customer benefits
• • Difficult to imitate

Prahalad says only 5 or 6 have more than 5 competences. Core competences allow orgs to have strategy intent – cam be oriented to the ext environment and can be goals that can be communicated to stakeholders

Conceptualizing strategy

Strategy is determined and constrained by econ / political environment. Strategist needs an intuitive feel for the boundaries of the problem. He must recognize interrelationships, org functions, must be willing to act, accept consequences

Strategy processual or org process is a more agnostic view about a market’s ability to produce satisfactory outcomes – orgs and mkts are sticky and messy and strategies emerge through small steps and much confusion. Strategy behavior is embedded in culture, routines; sop’s – Strategy-as-systems perspective – orgs can make effective plans in contrast to the evolutionary or strategy process views. This rests on Social Embeddedness - Social relationships that involve family, state profession, edu backgrounds.

These views can be seen as mutually exclusive Competition is a contest for the acquisition for of skills and competences and provides linkages between classical processual and systematic views.

• Egs – Honda’s entry into US Motorcycle market – deliberate planned strategy – economic calculation

Pascale says the success was processual – a quick incremental adjustment to marketplace realities.

The systematic view was that the management knew how the game should be played.

The strategy systems framework

The strategy map leads to a discussion in a broad systematic fashion

The map animates and orientates the problem of strategy Overarching direction

• What does the org want to be?
• The vision is the core ideology and provides the glue
• Walt Disney – Make people happy
• HP- Technological contribution

The vision can be broken down into a flexible set of aspirations that can be defined quantitatively or qualitatively Strategic thinking Requires a whole range of techniques and tools Strategists need to understand the sources of value creation through revenue cost drivers and risk drivers. It begins with a good business model perhaps using Porters 5 forces – Supplier/Customers/New entrants/ Substitutes / Intensity of Rivalry There is a need to drill deeper into analysis and look at their impact.

Strategies; the strategic framework and product goals Link the strategy framework to the broad goals

Strategic programming – who when and how much (day-to-day priorities, org roles, responsibilities, resource allocation)

Tactics and execution – develop metrics

Performance and measurement – Feedback to reframe the strategy

Information and analysis – the internal and ext environment. Identify its key resources and evaluate their impact on competitive adv

Feedback of results and incentives Balanced scorecard, financial results, continuous improvement