Welcome to

BSP028 Strategic Management

Dr Angelika Zimmermann

Evacuation in case of fire

Evacuation procedure Location of the fire assembly point

The Module: Aims

To develop a critical understanding of the concepts involved in strategic management and their application in the private and public sectors To develop skills in the area of strategic analysis, the development of strategic options and the implementation of strategy To encourage a positive attitude to change, with a desire for excellence and a visionary and positive approach to future developments To encourage an openness to new ideas and an awareness of alternatives To develop skills in obtaining, analysing and applying information from a variety of sources

Lecture Topics
Introduction to Strategic Management 1. Analysing the Environment 2. Strategic Capability 3. Corporate Governance 4. Business Level Strategy 5. Corporate level strategy 6. Evaluating Strategies 7. Strategy implementation 8. Strategic Leadership 9. Organisation Structure and Design 10. The Cultural Context 11. Business Ethics and Corporate Responsibility 12. Managing Strategic Change

Main Textbooks

Johnson, G., Whittington, R. and Scholes, K., (2011) Exploring Corporate Strategy. Enhanced Media Edition (with student access kit) (9th ed.) Prentice Hall: London

Website address: www.pearsoned.co.uk/ecs7

Lynch, R. (2006) Corporate Strategy (4th ed.). Prentice Hall: London Finlay, P. (2000) Strategic Management. Prentice Hall: London Grant, R.M. and Jordan, J. (2012) Foundations of Strategy. Wiley: Chichester

Methods

Teaching approach Assessment see Reading list on learn

Introduction to Strategic Management Intended learning outcomes

To develop an understanding of the definitions and functions of strategic management To distinguish between prescriptive and emergent approaches to Strategy To be aware of factors affectig the strategies of different types of organisations To take into account prominent contemporary issues when analysing strategy

What is a Strategy?

Greek Strategia = The art of leading an army (stratos=army; agein=to lead) But: Strategy is nowadays not in the hands of top leaders alone No single agreed definition General def.: The means to achieve the organisations purpose and objectives

Quotes
The flame of competition has changed from smokey yellow to intense white heat. For companies to survive and prosper they will have to have a vision, a mission and strategy. Peter Ellwood, CEO Lloyds TSB Group Far too many companies either have no goals at all, other than cost reduction, or their boss hides them in his head. Theres no hope for companies in Britain unless more top management accepts the need for a widely communicated set of clear objectives. Peter Beck, ex-Chairman, The Strategic Planning Society
(adapted from Thompson & Martin, p.7)

Strategic terms

Mission

Overriding purpose (e.g., What business are we in?) Desired future state General statement of purpose or aim More precise statement of the goal Resources, activities and processes Means to achieve purpose and objectives (paths, decisions) Long-term direction of the organisation

Vision

Goals

Objective

Strategic capability

Strategies

Definitions (1)
Corporate strategy is the pattern of major objectives, purposes or goals and essential policies or plans for achieving goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be. (Andrews,
1971; Lynch, 2003)

Definitions (2)
Strategy is the direction and scope of an organisation over the long term, which achieves advantages in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations. (Johnson et
al., 2005)

Illustration: British Airways (1)

How do mission, goals, and strategies of BA differ from those of other airlines you know?

Johnson et al., p. 14

Illustration: British Airways (2)

Chairmans report 2010:

,We are in the grip of a devastating global economic downturn and the next year will be extremely difficult for us. In times of crisis, it is essential that we keep our sights fixed on the future. That is why we are continuing with our plans to firmly establish British Airways as a high performing, market-focused, global premium airline.

Levels of strategy

Corporate strategy

What business the company should be in How value will be added to the different parts How to compete successfully in particular markets How the component parts of the organisation can effectively deliver the corporate- and business level strategies (resources, processes, people)

Business-level strategy (Strategic business unit)

Operational strategies

Exhibit 1.3

The Exploring Corporate Strategy model

What is Strategic Management?

The process by which organisations determine their purpose, objectives and desired levels of attainment, decide on actions for achieving these objectives in an appropriate timescale and frequently in a changing environment; implement the actions; and assess progress and results.(Thomson & Martin, 2005) Elements: Understanding the strategic position of an organisation; Making strategic choices for the future; Turning strategy into action

- Both art and science (business judgement, values, speculation) -

Prescriptive vs. Emergent Approach

(Mintzberg, 1987; Quinn, 1980)

The future can be estimated Long-term strategic plan > Develop strategy first, then implement it

The future is uncertain Complete strategic plan not useful > Experiment: develop and implement strategy iteratively

Strategic Management in different contexts

Small businesses International corporations Manufacturing and service organisations Public sector Not-for-profit organisations

Small businesses

Single or limited amount of markets, products/services Strategy made by less people (no dept. for strategic analysis) Competitive strategy and capability especially important Legacy of founders expectation may persist Private ownership, limited finances > limited choice of strategies

Multinational corporations

Diverse products and markets Stronger market position Issues:

Structure and control Relationships between businesses and corporate parent Competition between business units for resources Logistics of distributed operations Global scale economies vs. local market identity

Manufacturing and service organisations

Competitive advantage through quality of product versus service But: good service is competitive advantage for selling products

Public sector

Ideology more important More outside control (e.g., government, political agenda rather than market) Strategy dictated by provider of funds rather than user of service Competition for funds rather than customers

Not-for profit sector

Ideology of central strategic importance Competition for funds Different expectations of funding bodies

Contemporary issues (1)

Internationalisation

Increases size of markets and range of competitors Have to organise activities across borders Changes customer expectations Easier access to competitors

E-commerce: effect on strategic position

Contemporary issues (2)

Knowledge and learning

Fast-moving world > continuous learning is necessary Need to create knowledge from inside and outside (R&D) Have to challenge the status quo, be innovative

Assignment: IKEA case

5000 words

including supporting, charts, diagrams and tables, but without references.

Read assignment guidelines! Hand in date 17th August 2012, 2pm Submit a printed copy to MSc office, plus an electronic version on Learn system

Assignment: IKEA case

Complete the following tasks:

Describe IKEAs main strategies and evaluate them with regard to their suitability. Use your evaluation to explain IKEAs successes and difficulties in the past and present, and to contemplate its potential successes and difficulties in the future.