Management Strategy

S1 2016
MKT3002 Business Strategy

in a Global Environment
Course overview & Lecture 1
(Grant, Butler, Orr & Murray 2014 Chapters 1 & 3)
Dr Peng Zhou (Joe)

School of Management & Enterprise
Contact details
Course Examiner:
Dr Peng Zhou (Joe)

Room: T244 (Toowoomba)
Phone: (07) 4631 1535
Email: zhoupeng@usq.edu.au
All queries relating to assessments, extensions,
marking and course management should be
referred to the Course Examiner directly by
email.
2016 by Dr Peng Zhou
Teaching session
Toowoomba Campus:
Tuesday 9:00 am-12:00 pm
Presenter: Joe Zhou Peng
Lecture room: T121
Consultation Time
Toowoomba
Monday: 12:00 pm 2:00 pm
Wednesday: 12:00 pm 2:00 pm
Friday: 12:00 pm 2:00 pm
Other times by prior arrangement
May sometimes be unavailable because of other USQ
commitments & unscheduled meetings etc.
Assessment Details
1.
Assessment 1 (10%): A 20 questions

Online Test to assess your understanding
of Chapter 3, due 4 April 2016
2.
Assessment 2 (45%): A 1,800 to 2,300

words case study report prepared using
the provided Case Study 1 Template, due
2 May 2016
3.
Assessment 3 (55%): A 1,800 to 2,300

words case study report prepared using
the provided Case Study 2 Template, due
6 June 2016
Submission requirements
All assessments must be submitted by

23:59 pm USQ time on the due date
The two case studies should be submitted

electronically in Word .doc or .docx together
with the Turnitin Originality Report in PDF
through online assignment dropboxes
The file size of each of your submitted

assessments must not exceed 5 MB
Please name your file in the format below:

SURNAME_First Name_Assignment number
Late policy
As a general rule no extension will be granted

Late submission will be penalised 10% per
working day late
Any submission more than 5 working days
late will not be accepted
Request for extension under extreme hardship
or illness must reach the course examiner by
email before the due date with supporting
documentary
Work load reasons do not qualify for extension
Etiquette for lectures
Attendance is
expected
Please arrive on time
Mobile phones must be

turned off
Come prepared and be

willing to contribute
MKT3002 StudyDesk
ALL students are encouraged to

regularly visit course website and
participate in the online discussion
forums.
Most of the students enrolled in this course

are external students. The discussion
forums provide a very practical way for all
students to discuss and share information
and help each other out
Structure of the course

Introductiontostrategy
Corporategovernance
Strategicanalysis
Externalindustryanalysis
Internalcapabilityanalysis
Strategyformulation
Businesslevelstrategy
Corporatelevelstrategy
Globalstrategy
Strategyimplementation
Organisationalstructure
Network&partnership
Strategyevaluation
10
Lecture 1a: Strategy concepts

Strategy: Concepts and perspectives
(Chapters 1 in Grant, Butler, Orr & Murray)
Lecture 1a learning objectives
Explain key concepts of

strategy & strategic
management
Articulate perspectives on
strategy
Identify & define elements

of strategic management
Discuss issues relating to

nature of strategic
management
11
What is strategy?
A classic definition: ..the determination of the longrun goals and objectives of an enterprise and the
adoption of courses of action and the allocation of
resource necessary for carrying out these goals
(Chandler 1963)
A more recent definition: the plans and actions a

company selects to achieve its strategic goals
(Grant et al. 1996, p. 7)
12
Tian Jis horse racing:

A classic example of strategy
Tian Ji
vs. The King
Tian Ji
First round
vs The King
Second round
Super
Super
Plus
Plus
Regular
Regular
The King wins

Regular
Super
The strategist: Sun Bin

An alleged descendant
of Sun Tzu, author of
The Art of War
Super
Plus
Winning strategy:
Weakest vs. strongest
Strongest vs. second best
Second best vs. weakest
Plus
Regular
Tian Ji wins
13
Mintzbergs five Ps
Source:Grantetal.2014,p.8
14
Nature of strategy
Two different views on nature of
strategy:
Planned strategy: strategy is the end

product of a careful and rational
planning process
Emergent strategy: strategy is often

the result of a series of
experimentation and political
bargaining
15
Why strategy is needed?

There are many reasons why a strategy is
needed:
A strategy acts as the key driver of how and

where resources should be invested.
The strategy of an organisation also

influences its pattern of investments.
The strategy ensures that the organisation

has sufficient flexibility to respond to
environmental changes.
16
What is strategic management?

Strategic management is the process of directing
and strengthening an organisation in its competition
with other organisations (Grant et al. 2014, p. 6).
Strategic management plays an essential role in:

1) Setting the direction for organisational
development and,
2) Securing its future survival and growth.
) Strategic management theories help

understand why organisations succeed or fail
17
A framework for
strategic management
A planned approach to strategic management is illustrated below
External
environment
analysis
SWOT
Internalcapabilities
analysis
Strategyformulation
Strategyimplementation
feedback
Strategyevaluation
feedback
Source:developedforthiscourse
18
Key concepts of
strategic management?
Strategic intent: sets the aspirations that can
motivate and inspire the organisation.
Strategic thinking: extends the idea of strategic

intent to cover the whole strategy formulation
process and not just the broad thrust and
objectives.
Sustainable competitive advantage: refers to

organisational capacity to continuously
outperform its rivals in attracting customers.
19
Other strategy-related concepts

Organisational purpose: addressing who the
organisation exist to serve and how they should

be served.
Organisational vision: refers to the desired (long

term) future state of the organisation.
Organisational mission: refers to a short term
version of the vision, incorporating the values

and expectations of the major stakeholders and
contemporary environmental factors.
20
Outside-in or inside-out?
Two approaches to strategy development:
Outside-in approach: highlight the

importance of adapting to changes in
external environment
Inside-out approach: believe in that

capitalising on internal strength is more
important than adapting to external
changes
21
Two distinctive views of strategy

Two different views for analysing internal
resources/capabilities of an organisation:
Resource-based view (RBV): postulates that

an organisations success is strongly influenced
by the resources it has at its disposal.
Knowledge-based view (KBV): suggests

that a competitive advantage should be
achievable from the management of
knowledge within the organisation.
22
Levels of strategy
Corporatelevel
strategy
Businesslevel
strategy
Operationlevel
strategy
News Corporation
diversifying from print
journalism into social
networking.
Website and
marketing
improvements at
MySpace to attract
more users.
MySpace engineers
increasing processing
Capacity.
23
Generic perspectives on strategy
24
Offensive vs. defensive strategies

The two most general modes of competition
refer to offensive and defensive strategies.
An offensive strategy is intended to
increase the market share or leadership

position of an organisation at the expense
of competitors.
A defensive strategy is intended to protect
the market share position of an
organisation against the offensive strategy
activities of competitors.
25
Lecture 1b: Strategy concepts

Goals, Values and performance
(Chapters 3 in Grant, Butler, Orr & Murray)
Lecture 1b learning objectives
Explain why modern organisations

frequently possess multiple strategic goals
Explain the differences in the roles of goals,

values and ethical positions in setting
strategies
Describe relationship between goals, values,

ethical standpoint and performance
Discuss business performance and its

various measures
26
Goals, objectives & vision
Goals provide a reference point for all strategic

decisions
An organisation will have a set of goals and
objectives that reflect the vision of the organisation
and resources available.
A triple bottom line goal (TBL) combining social
contribution, financial performance and
environmental sustainability measures has proven
to be a sound basis for business sustainability and
success.
27
Goals, values & ethical position

Underlying goals and vision are values and ethical
position.
Goals represent the targets that the organisational

strategy intends to achieve
Values represent the characteristics of the actions
that the organisation takes to achieve the goals
Ethical position assists organisations in deciding
which methods will be acceptable for achieving the
goals.
28
Strategic goals & value creation
Strategic goals should be developed to create

value for stakeholders
There is some debate whether value should be
only for stakeholders or simply shareholders
Value creation: a way of defining the outputs of the
organisation which is broader than profitability and
considers all forms of contribution to the
environment in which it operates
Economic value added (EVA): total profit after tax
and the cost of capital (e.g. dividend & interest)
29
Organisational values &

organisational culture
Organisational values: characterise the actions the

organisation takes to achieve its goals.
Organisational culture: a set of behaviours
displayed by members of the organisation during
decision making and when dealing with
stakeholders and the external environment.
Formal statement of organisational value is
considered as an effective way of communicating
its image to the wider community.
30
Real example: Seeks values

As a major employment agency with operations in
many countries, Seeks value statement include the
following:
Honesty . Mean It
Ownership . Show it
Teamwork . Share it
Passion . Bring it
Action . Drive it
31
Corporate social responsibility

& strategic philanthropy
Corporate social responsibility (CSR): the continuing

commitment by business to behave ethically and
contribute to economic development while
improving the quality of life of the workforce and
their families as well as of the local community and
society at large
Strategic philanthropy: a significant social

contribution, usually to the communities in which
the organisation operates, that will have some longterm benefit to the organisation as well
32
Relationship between goals, values,

ethical position & performance
33
Business performance
& measurement
Business performance: the achievements an

organisation has made in relation to its strategic
goals and other implicit goals that could be
reasonably expected of it
Performance measurement: measuring

performance against setting goals to determine
how the organisation has progressed in its pursuit
of achieving goals and delivering value
34
Financial performance measures

There are two types of financial measures:
Historical measures: represent the accrued cash

value of aspects of operations such as revenue,
profits and inventory, levels usually over the
previous financial year
Predictive measures: represent the future potential

value of aspects of the operations based on
assumptions such as the cost of capital
35
Measuring growth & profit

Performance measures differ between commercial
organisations and not-for-profit organisations:
Most organisations (including charitable) include

measurements of sales, profit and growth in their
evaluations of performance
Commercial organisations generally need to deliver

profit from the owners and shareholders equity
In the case of not-for-profit organisations, surplus is

calculated instead of profit as there are usually no
shareholders or owners to collect profits
36
Non-financial performance
measures
Organisational performance can also be measured
through other measures of value creation
Some of the commonly used measure include:

Customer satisfaction levels
Independent quality assessment
Rate of innovation
It is advisable to compare non-financial measures

against an industry benchmark of best practice
Best practice: performance in a particular activity or
feature of the organisations performance which is
considered to be the best available
37
The balanced scorecard
A methodology developed by Kaplan & Norton, which

provides an extended framework of assessing
organisational performance
It helps organisations to seek answer to four

questions:
How do we look to shareholders?
How do customers see us?
What must we excel at?
Can we continue to improve and create value?
38
Historical financial performance

measures
Historical financial performance measures are

also known as Accounting Ratios
They are determined only after a predefined

period of operation
Despite the limitations to assist in changing

strategic direction, these measures continue to be
used by many organisations.
39
Profitability ratios
40
Predictive financial performance

measures
Predictive financial performance measures that can be
used to identify the increase in business value include:
economic value added (EVA)

market value added (MVA)
shareholder value added (SVA)
market to book ratio (MBR)
cash value added (CVA)
cash flow return on investment (CFROI).
41
Shareholder value analysis
Shareholder value analysis (SVA) measures

business performance from the perspective
of the shareholders.
SVA can be calculated for various periods

into the future as shown in the next slide.
42
Shareholder value analysis
43
Performance analysis
in practice
It is important to recognise that all performance

measures share many common features.
In order to decide which ones to use and how to
use them for a particular organisation, it is
important to have a clear understanding of the
relative strengths and weakness of each
performance measure.
The selected measures must reflect the strategic
objectives of the organisation and the macro
environment in which the organisation exists.
44
Classroom exercises
Think of the strategy development in your own
organisation. Which approach (outside-in or
inside-out) do you think is more likely to be used
within your organisation? Why?
Tell us an story from your personal experience to

demonstrate how a planned or emergent strategy
has changed the business circumstance of an
organisation.
45
Summary of key points
Strategy is about long term thinking and

planning for an organisation
Strategy management is concerned about
developing strategies to ensure sustainable
development of an organisation
Development of goals, values and
performance measurement is an integral
part of the strategic management process
Organisations should consider using both
forward and backward looking measures of
performance
46

Management Strategy

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S1 2016

MKT3002 Business Strategy

Dr Peng Zhou (Joe)

Dr Peng Zhou (Joe)

2016 by Dr Peng Zhou

2016 by Dr Peng Zhou

2016 by Dr Peng Zhou

Assessment 1 (10%): A 20 questions

Assessment 2 (45%): A 1,800 to 2,300

Assessment 3 (55%): A 1,800 to 2,300

2016 by Dr Peng Zhou

All assessments must be submitted by

The two case studies should be submitted

The file size of each of your submitted

Please name your file in the format below:

2016 by Dr Peng Zhou

As a general rule no extension will be granted

2016 by Dr Peng Zhou

Etiquette for lectures

Please arrive on time

Mobile phones must be

Come prepared and be

2016 by Dr Peng Zhou

ALL students are encouraged to

Most of the students enrolled in this course

2016 by Dr Peng Zhou

Structure of the course

2016 by Dr Peng Zhou

Lecture 1a: Strategy concepts

(Chapters 1 in Grant, Butler, Orr & Murray)

Lecture 1a learning objectives

2016 by Dr Peng Zhou

Explain key concepts of

Identify & define elements

Discuss issues relating to

A more recent definition: the plans and actions a

2016 by Dr Peng Zhou

Tian Jis horse racing:

vs. The King

The King wins

The strategist: Sun Bin

Planned strategy: strategy is the end

Emergent strategy: strategy is often

2016 by Dr Peng Zhou

Why strategy is needed?

A strategy acts as the key driver of how and

The strategy of an organisation also

The strategy ensures that the organisation

2016 by Dr Peng Zhou

What is strategic management?

Strategic management plays an essential role in:

) Strategic management theories help

Strategic thinking: extends the idea of strategic

Sustainable competitive advantage: refers to

2016 by Dr Peng Zhou

Other strategy-related concepts

organisation exist to serve and how they should

Organisational vision: refers to the desired (long

Organisational mission: refers to a short term

version of the vision, incorporating the values

2016 by Dr Peng Zhou

Outside-in approach: highlight the

Inside-out approach: believe in that