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2. Introducing Strategy (II)

Corporate Strategy Master Degree The Faculty of International Business and Economics, ASE Bucharest

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AGENDA for Today

2. Introducing Strategy (II)

1. 2. 3. 4.

The General Strategy Process Strategic Management Evolution of Strategic Approach 2 Main Types of Strategic Approach

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What is the Strategy Process?

The Five Phases of Strategy

Phase One Strategic Intelligence Gathering and Analysis
Phase Two Phase Three Strategy Implementa tion Planning

Strategy
Formulation

Phase Four Strategy Implementa tion

Phase Five Strategy Monitoring and Updating

(source: Kepner-Tregoe, Inc)

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The Outputs of Phase 1: Strategic Intelligence Gathering and Analysis

The Five Phases of Strategy

Phase One Strategic Intelligence Gathering and Analysis Phase Two Strategy
Formulation

Phase Three Strategy Implementa tion Planning

Phase Four Strategy Implementa tion

Phase Five Strategy Monitoring and Updating

Your assumptions about the external business environment

An assessment of your strategic situation, externally and internally

A set of Basic Beliefs that guide your strategic and operational decisionmaking

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The Outputs of Phase 2: Strategy Formulation

The Five Phases of Strategy

Phase One Strategic Intelligence Gathering and Analysis Phase Two Strategy
Formulation

Phase Three Strategy Implementa tion Planning

Phase Four Strategy Implementa tion

Phase Five Strategy Monitoring and Updating

Your specific decisions regarding:

Product/service definition and emphasis Market definition and emphasis Sources of growth

Competitive advantages

Supporting infrastructure
Metrics Critical issues

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The Outputs of Phase 3: Strategy Implementation Planning

The Five Phases of Strategy

Phase One Strategic Intelligence Gathering and Analysis Phase Two Strategy
Formulation

Phase Three Strategy Implementa tion Planning

Phase Four Strategy Implementa tion

Phase Five Strategy Monitoring and Updating

A Strategic Master Project Plan that contains all of the initiatives that
need to be launched or continued to implement the strategy:
> > > > Initiative Executive Sponsor Start date Completion date

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The Outputs of Phase 4: Strategy Implementation

The Five Phases of Strategy

Phase One Strategic Intelligence Gathering and Analysis Phase Two Strategy
Formulation

Phase Three Strategy Implementa tion Planning

Phase Four Strategy Implementa tion

Phase Five Strategy Monitoring and Updating

A strategy that has taken root > Guiding decisions > Motivating to all stakeholders > Winning in the marketplace

Execution > On time > On budget

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The Outputs of Phase 5: Strategy Monitoring and Updating

The Five Phases of Strategy

Phase One Strategic Intelligence Gathering and Analysis Phase Two Strategy
Formulation

Phase Three Strategy Implementa tion Planning

Phase Four Strategy Implementa tion

Phase Five Strategy Monitoring and Updating

A strategy that reflects the current reality of:

> > > > The marketplace The competitive landscape The economic and regulatory environment Technology

A strategy that continues to be a winner Two triggers for a strategy update:

1) Passage of time 2) A significant change in the internal or external environment

A set of assumptions that reflects your best current thinking

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Assessment The Five Phases of Strategy

Phase One Strategic Intelligence Gathering and Analysis Phase Two Strategy
Formulation

Phase Three Strategy Implementa tion Planning

Phase Four Strategy Implementa tion

Phase Five Strategy Monitoring and Updating

On a scale from 1 to 10, how would you rate your organizations strategy and its implementation?
10: We are world-class 9: This is a formidable competitive advantage for us 8: This is one of our strengths, but we have room for improvement 5: We are average in our industry 2: This is one of our significant weaknesses 1: This is a crippling competitive disadvantage for us 0: We dont have a strategy as it has been defined today

What questions do you have?

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AGENDA for Today

2. Introducing Strategy (II)

1. 2. 3. 4.

The General Strategy Process Strategic Management Evolution of Strategic Approach 2 Main Types of Strategic Approach

LEARN. PERFORM. GROW.

Strategic Management

Includes understanding the strategic position of an organization, strategic choices for the future and turning strategy into action

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AGENDA for Today

Course 2: Introducing Strategy (II)

1. 2. 3. 4.

The General Strategy Process Strategic Management Evolution of Strategic Approach 2 Main Types of Strategic Approach

LEARN. PERFORM. GROW.

Perspectives on Corporate Strategy (I)

Perspective
Representative author(s)

1. Concept of Corporate Strategy

Ansoff 1965

2. Organization Structure
Chandler 1962

Andrews 1971 General management role

Early statement of corporate and competitive strategy Corporate vision Distinctive competence SWOT Analysis

Bower 1970
Vancil 1978

CONCERN
CONTRIBUTION

Organization structure
Structure follows strategy, fit, decentralization Multidivisional structure

OUTPUT

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Perspectives on Corporate Strategy (II)

Perspective
Representative author(s)

3. Diversification
Wrigley 1970 Rumelt 1974

4. Portfolio Planning
BCG 1968 Haspeshaslagh 1982

Montgomerz 1985
Hill 1988 CONCERN CONTRIBUTION Extent and mode of diversification Set of business as strategic variable, sinergy Measure of relatedness, analysis of performance Resource allocation Portfolio management

OUTPUT

Grow/share matrix

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Perspectives on Corporate Strategy (III)

Perspective 5. Value-Based Strategy 6. Generic Corporate Strategies
Porter 1987 Goold & Campbell 1987 McKinsey 1989 Source of corporate advantage

Representative author(s)

Jensen 1985 Schmalensee 1985

Copeland 1990
Rumelt 1991 CONCERN Corporate contribution to SBU performance

CONTRIBUTION
OUTPUT

Limited evidence of corporate value;

Market for corporate control Free cash flow Value-based strategy

Typology of corporate advantage

Corporate role

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Perspectives on Corporate Strategy (IV)

Perspective
Representative author(s)

7. Resource-Based View
Wernerfelt 1984 Dierickx and Cool 1989 Barney 1991

CONCERN CONTRIBUTION

Firm idiosyncracy and growth Tangible and intangible assets and capabilities

OUTPUT

Characteristics of valuable resources

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AGENDA for Today

2. Introducing Strategy (II)

1. 2. 3. 4.

The General Strategy Process Strategic Management Evolution of Strategic Approach 2 Main Types of Strategic Approach

LEARN. PERFORM. GROW.

2 Main Types of Strategic Approach

PRESCRIPTIVE (DESIGN) vs. EMERGENT Strategic approach -> refers to the 3 main areas of strategic management
Strategic position Strategic choices (strategy selection) Strategy into action

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PRESCRIPTIVE strategy
Authors Jauch, Glueck, Argenti the 3 main areas of strategic management -> CORRELATED
CONSEQUENTLY

Corporate strategy = directed & rational planned process Where we are? -> Where we want to be? -> new strategies Final goals defined from the beginning Key strategic elements defined before the strategy implementation

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EMERGENT strategy
Authors Mintsberg, Cyert, March the 3 main areas of strategic management -> INDEPENDENT & MIXED Corporate strategy = clarified step by step, adapted to the people needs,
developed in time

Final goals not clear

Key strategic elements elaborated during implementation

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PRESCRIPTIVE vs. EMERGENT

PRESCRIPTIVE vs. EMERGENT
Common way? Different way?

Advantages & challenges

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Thank you!

For more information: Cosmin Jolde cosmin.joldes@achieveglobal.ro