Introduction To Strategy

1. Strategic Planning
Roger Bradburn

2. Learning Objectives
By the end of this session students should be able to:
 Evaluate current corporate business strategies and
formulate new ones;
 Include external industry environments in formulating
those policies;
 Understand internal resources and capabilities
available to implement strategy;
 Be able to shape the organization to reflect changes in
business policy and better compete.

3. Required Reading
Carpenter and Sanders, (2009) Strategic
Management (2nd Edition) Person
International (Part one - chapter one)

4. Strategic Planning – Week One
An Introduction to Strategy.

5. Strategic Planning
 Strategic Planning is a critical skill.
 It aims to give a “big picture” view of
business rather than a detailed one.
 SP is practiced by all managers, but in
particular the CEO and directors.
 It draws together the other classes of the
MBA.

6. Strategic Planning
 What is strategy? Strategy is:
Pattern in decisions in a company that
determines and reveals its objectives,
purposes and goals.
Produces the principal policies and plans for
achieving those goals.
Defines the range of business the company is
to pursue.

7. Strategic Planning
 Strategy:
Defines the kind of economic and human
organisation it is or intends to be.
Defines the nature of the economic and non-
economic contribution it intends to make to its
shareholders, employees, customers and
other stakeholders.
 Johnson et al.

8. Strategic Planning
 What is strategy? – K Andrews.
 Deals with the scope of an organisation's activities
 Is about matching the activities of the organisation
with its environment
 Is about matching its activities to resources
 Will be influenced by the power and values of its
stakeholders
 Effects the long term direction of the organisation.

9. Strategic Planning
 What is strategy – IBM’s View.
The formulation and execution of an integrated
set of choices based on customer needs which
identify the essential positioning, competitive
advantages, and configuration of activities
necessary to create and sustain value superior
to the competition, and to generate superior
financial returns in dynamic environments
Source IBM

10. Characteristics of
Strategic Decisions(Johnson et al)
 Long-term direction
 Scope of an organisation’s activities
 Competitive advantage
 Strategic fit with business environment
 Organisation resources and competences
 Values and expectations of power players

11. Implications of Strategic Decisions
(Johnson et al)
 Complexity
 Uncertainty
 Operational
decisions
 Integration
 Relationships and
networks
 Change

12. Levels of Strategy
Operational strategy
Business-level
strategy
Corporate-
level
strategy

13. Strategic Planning
Corporate Level – this relates to:
 The overall scope and mission of an
organisation
 How it is run in general terms and how
resources are generated.

14. Strategic Planning
Competitive or Business Level – relates to:
 How to compete in the market.
 What products and services should be
developed.
 What are our objectives in terms of profits,
market share, market growth or efficiency.
 Competitive/Business strategy is usually set at
the SBU level.

15. Strategic Planning
Operations Level – relates to:
 The day to day decisions taken to run the
business within the various departments.

16. Strategic Planning
 How is strategy formulated? Over the
years, a number of “views” been put
forward by key writers in the field. We will
consider these now.

17. Strategic Planning
 The Planning View of Strategy
The Planning View of Strategy was developed
in the 1960s and 1970s by Ansoff, Chandler
and others.

18. Strategic Planning
 The Basic Assumptions of the Planning
View are:
The future can be predicted accurately
enough to make rational discussion and
choice realistic.

19. Strategic Planning
 The Basic Assumptions of the Planning
View are:
It is assumed that you can detach strategy
formulation from everyday management. This
suggests that there is a “planning period”
within the company. You write your plan and
then do it.

20. Strategic Planning
 The Basic Assumptions of the Planning
View are:
It is possible and better to forego short term
benefit in order to obtain long term good.

21. Strategic Planning
 The Basic Assumptions of the Planning
View are:
The strategies proposed are logical and
capable of being managed in the way
proposed.

22. Strategic Planning
 The Basic Assumptions of the Planning
View are:
The Chief Executive and senior management
has the knowledge and power to choose
amongst the options presented.
Typically you plan first and then implement.
Planning and implementing are two separate
stages.

23. Strategic Planning
 Typically, the planned view assumes:
Formal planning departments.
Systemised forms of planning.
Clear objectives.
Placid environment.
Rational decision making.

24. Strategic Planning
 Business planning is clearly critical but are
all strategies developed through rational,
formal planning?
 Other writers have put forward a number
of alternate views that we might consider.

25. Strategic Planning
The Command View of Strategy:
 Assumes that strategy is developed by a
strong leader and that the strategy reflects
their personality.
 It is clearly related to culture and previous
decisions.

26. Strategic Planning
 The Logical Incremental View – as put
forward by Quinn and others suggests:
Managers have a general view of where they
are going but try out side bet ventures.
Strategies are tested and feedback assessed.
Such strategies may not deal with major
change.

27. Strategic Planning
 Leads us to the concept of Emergent Strategy
 The planning view assumes that strategy has is made
through formal systems.
 However not all strategies are realised.
Circumstances change.
 Strategy can be imposed on an organisation through
environmental pressures.
 This leads to the idea of emergent strategy – strategy
developed as time progresses.

28. Strategic Planning
 Emergent Strategy.
This view assumes that people are not totally
rational and logical in their approach.
Suggests that strategies “emerge” over time
rather being developed in formal plans.

29. Strategic Planning
 Emergent Strategy also assumes:
Managers can only handle a relatively small
number of options.
Managers can be biased in their interpretation
of data.
Managers are likely to seek a satisfactory
solution rather than a maximised one.

30. Strategic Planning
 Emergent Strategy.
Organisations consist of coalitions of interest
groups:
 Dominant Coalition – people with critical
information/power.
 Network Centrality – the power of departments and
individuals will vary according to strategy. In some
companies marketing dominates and decisions
tend to be marketing related.

31. Strategic Planning
 Emergent Strategy.
In this view we can also assume that when
making decisions, managers pay as much
attention to a company’s culture and politics
as to factors such as resource availability and
external factors.

32. Strategic Planning
 We can suggest that managers do not
have all the information to make a totally
rational decision:
There are just too many factors to take into
account for the average manager.
Economics teaches us to maximise profits,
but in reality this does not happen.
Concept of “satisficing”.

33. Strategic Planning
 Some questions are hard to answer!
 How will customers perceive our products?
 How far will it be possible to meet cost targets?
 How will competitors react to what we do?
 When will a substitute appear on the market?
 What will be the impact of sales of a one year
launch delay?

34. Strategic Planning
However, we can’t just have no plans!
 The company can still have a broad mission. We
can do more than just react.
 We need planning to ensure we allocate
resources correctly.
 People in the organisation may be tough to deal
with a culture can be a barrier – but a good CEO
can deal with this.

35. Strategic Planning
 Many strategic decisions are long term.
We have to plan ahead.
 A compromise decision may make sense if
it is based on the only information we
have.
 Adopting a plan makes the basis for
management action clear.

36. Strategic Planning
Strategy can be .
 Strategy is a complex problem with a very
wide range of variables.
 Different functional members will have
different views of strategy. For example:

37. Strategic Planning
 Marketing people will emphasise the
customer and a wide range of
products/variants.
 Operations people will emphasise ease of
production/service delivery and uniform
products and services.
 Finance people will be concerned with
asset utilisation, cost control and stock.

38. Strategic Planning
I think we can conclude that strategy tends
to require two main skills:
 Synthesis – being able to relate the
various functions (marketing, finance etc.)
together and
 Evaluation – being able to see which
course of action makes most sense.

39. Strategic Planning
Strategy and Crises!
 Strategy is rarely routine and predictable.
Key problems might include:
 Changing environment – credit crunch!
 Changing consumer tastes.
 Key staff leaving.

40. Strategic Planning
Some very key questions!
 Do the strategists have the appropriate
characteristics for the type of company?
 Have they formulated clear objectives?
 Has adequate analysis of the environment
and the company been carried out?

41. Strategic Planning
Some very key questions!
 Was an appropriate choice of strategy
made in the light of possible alternatives?
 Were company resources used effectively
to achieve the strategic objectives?

42. Strategic Planning
Some very key questions!
 Was the company able to learn from
subsequent feedback and adapt
accordingly?

43. Strategic Planning
What is clear is that:
 Strategic Planning is all about making decisions.
 Individuals make decisions, but the decisions
taken are constrained by the organisation and its
traditions.
 Also, different individuals given the same
information may view the information differently.

44. Strategic Planning
Conclusions:
In this class we have discussed the importance of
strategy. We have noted that whilst plans are
clearly important, strategy decisions will reflect a
wide range of influences, personalities and
influences. In the next class we will consider the
importance of Mission, Vision and Objectives in
forming strategy.