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Strategy
What is strategy ?
• Strategy can be defined as the determination
of:
• the basic long-term goals and objectives of
an enterprise
• the adoption of courses of action
• the allocation of resources necessary for
carrying out these goals.
• Strategy is a plan you develop to help you achieve
your vision.
Views of Strategy
• Planning Mode: A plan or explicit set of guidelines developed
in advance. Managers identify where they want to go; then
they develop a systematic & structured plan to get there.
Corporate level
Business Unit 1 Business Unit 2 Business Unit 3
Business Level
Product 1 Product 2 Product 3
Types of Strategies
Corporate Level Strategy
If an organization is in more than one line of business, it will
need a corporate level strategy. This strategy seeks to answer
the question: ‘In what set of businesses should we be?’
Corporate-level strategy determines the roles that each business
in the organization will play
Business level strategy
Business-level strategy seeks to answer the question: ‘How
should we compete in each of our businesses?’ For a small
organization in only one line of business or a large organization
that has avoided diversification, business-level strategy is
typically the same as corporate strategy
Classifying strategic dimensions
•Innovation strategy does not mean a strategy merely for simple or
cosmetic changes from previous offerings but rather one for
meaningful and unique innovations, major new products or services.
e.g. Apple.
•Market differentiation strategy strives to create customer loyalty by
uniquely meeting a particular need. e.g. Nike, Honda.
•Breadth strategy refers to the scope of the market to which the
business caters: the variety of customers, their geographic range,
and the number of products. e.g. Rolls Royce, Rolex watch.
•Cost Control strategy considers the extent to which the organization
tightly controls costs, refrains from incurring unnecessary innovation
or marketing expenses, and cuts prices in selling a basic product.
e.g. Wal-Mart, Imtiaz.
Alfred Chandler’s Work on the Relationship
between an Organization’s Strategy & its
Structure
• A new strategy required a new or at least
refashioned structure if the enlarged enterprise was
to be operated efficiently….. unless structure follows
strategy, inefficiency results.
• Chandler studied about 100 large firms like DuPont,
General Motors, Sears, etc., and concluded that
changes in corporate strategy led to changes in
organization structure.
Contemporary Strategic Theory
Structure
• Since Chandler’s work in the 1960’s, the most
important research on the strategy-structure
relationship has been undertaken by Miles &
Snow.
• This was later followed by landmark work of
Michael Porter on competitive strategies.
• Then Danny Miller developed an integrative
framework.
• We’ll review each of these three contributions.
Raymond Miles’ & Charles Snow’s
Environment strategy continuum
• Miles & snow classify organizations into four strategic types,
based on the rate at which they change their products &
markets.
1. Defenders
2. Prospectors
3. Analyzers
4. Reactors
Little change Rapid change and
and uncertainty high uncertainty