CIPS Professional Diploma Commercial Global Strategy notes

1. Leading global excellence in procurement and supply
The concept of commercial global strategy in
organisations
This podcast gives an overview of the concept of commercial global strategy in organisations.
This section looks at the characteristics of global strategic decisions in organisations.
In 2005, Pearce and Robinson defined strategic management as the set of decisions and actions
that result from the formulation and implementation of plans designed to achieve
organisations’ objectives.
Strategic decisions are the actions or paths chosen as part of the strategic management
process.
Dimensions of strategic decisions include:
• Strategic issues that require top management input
• Issues that require large amounts of the organisation’s resources
• Issues that affect the organisation’s long-term prosperity
• Future-oriented issues often connected with the direction of the business
• Issues with multi-functional consequences, and
• Issues that require consideration of the organisation’s external environment.
Strategic decisions relate to:
• The long-term future of an organisation
• The scope of an organisation’s activities, for example the markets it chooses to operate in
• The source of an organisation’s competitive advantage, and how it can be improved
• The organisation’s strategic fit in the business environment
• The analysis of an organisation’s resources and competencies
• The values and expectations of powerful internal and external stakeholders
• Complexity
• Uncertainty
• Operational decisions
• The integration of functional and operational activities

2. Leading global excellence in procurement and supply
• The creation of relationships and networks outside of the organisation, and
• Organisational change.
There are many terms used in relation to strategy.
Strategy is an organisation’s view of how to achieve sustainable competitive advantage.
According to Coulter, it is a series of goal-directed plans and actions that align an organisation’s
skills and resources with the opportunities and threats in its environment.
Competitive advantage is the ability of an organisation to gain a greater market share over its
competitors.
A mission statement defines what the organisation does and what it hopes to accomplish, and
provides a focus for employees to make and implement strategic decisions.
The vision is the ultimate future goal of the organisation. Coulter defines it as a broad,
comprehensive picture of what the organisation wants to become.
An objective is an aim used in strategic management to breakdown strategy into measurable
parts. Objectives can be short or long term, but they all collectively make up the organisation’s
overall strategy.
A goal is the overall desired outcome of the activities of the organisation that goes along with its
mission. The common goals used to guide strategic directions usually relate to finance,
customers, CSR, regulations and development.
A business model is the way the organisation is structured to deliver its products and services
and how it turns these products and services into revenue.
In organisations, decision-making generally arises at three levels.
Strategic-level decisions are normally long-term and are usually made by senior managers. They
are complex and affect the whole organisation.
Tactical-level decisions are concerned with meeting the corporate objectives that follow on from
strategic decisions and provide the detail for how strategies are to be implemented.
Operational-level decisions are concerned with short-term objectives and the day-to-day
running of the business. They are simple and routine, and are focused on the business function
level, such as reordering supplies, and performing health and safety checks.
Strategic management and operational management are mostly differentiated by the following
factors:
• The focus of the decision
• The level in the organisation at which a decision is made
• The scope of the decision
• The time horizon

3. Leading global excellence in procurement and supply
• The degree of certainty or uncertainty, and
• The complexity.
Coulter stated that strategic management involves situation analysis and formulating,
implementing and evaluating strategies. It encompasses decisions that affect the whole
organisation, including forming the company’s mission, vision, objectives, goals and strategies,
which give the organisation direction.
Operational management is the management of activities within the operating environment, or
at the functional level, with regard to implementing the organisational strategy. Operational
management deals with competitors, creditors, customers, employees and suppliers.
Operational management involves managing the business processes of the organisation in such
a way as to create the greatest possible efficiency in the organisation’s processes and
procedures, reducing the organisation’s costs and increasing its potential profits.
The strategic position of an organisation is affected by the external environment, and the impact
this has on the organisation’s strategy.
Mintzberg defined 5Ps of strategy, which are the components that enable an organisation to
implement a more effective strategy. They are: plan, plot, pattern, ploy and position. A position
strategy is appropriate when an organisation’s position with respect to its competitors or
markets is deemed crucial.
There are four factors that are crucial to an organisation’s positioning.
By understanding the environment in which the business is operating, the organisation can
position its activities to take advantage of opportunities and shield from threats.
Understanding the organisation’s capabilities helps when designing strategies to place the
organisation in a situation where its capabilities are used to its best advantage. For example, an
organisation with well-trained staff could position itself to make customer satisfaction a source
of competitive advantage.
Stakeholder expectations influence positioning in that whatever strategy the organisation
pursues, it must satisfy stakeholders’ needs. For example, if stakeholders expect financial gains
from the firm, the organisation’s strategy must revolve around increasing revenue to make
more profit.
Finally, cultural and historical influences also play a part. A firm is likely to pursue strategies that
have been successful in the past. And the organisation’s past reputation influences its current
position. Publicly stating how long an organisation has been in business demonstrates reliability
over the years.
Organisations have to make choices regarding their future. Strategic choice is about the
formulation of, and selection between, alternative courses of action.
Strategic choices relate to business strategy that involve choices about business positioning
relative to its competitors; strategic decisions, that is a choice of which products, industries and

4. Leading global excellence in procurement and supply
markets to pursue; and strategy methods, that is whether to use organic, acquisition or alliance
strategies.
Various courses of action exist for an organisation. There are generic strategies, such as cost
leadership, differentiation, and focus and hybrid strategies. Other strategies include whether to
consolidate, grow or withdraw from markets. The strategic choices open to an organisation will
all be evaluated before any single course of action is pursued.
A number of different tools can be used to undertake analysis to support the evaluation of
different options when making strategic choices. For example, STEEPLED, SWOT and Porter’s
Five Forces can be used to analyse organisations’ environments. The competitive position can be
understood by using a strategic group analysis. Value chain analysis and resource audits can be
used to analyse resources, competencies and strategic capabilities. Comparative analysis can
use tools such as benchmarking or historical and financial analysis. SWOT, BCG or critical
success factors can help with organisational analysis, and stakeholder mapping and mission
statements can help to understand stakeholder perceptions.
Strategy in action is the process of ensuring that the chosen strategies are implemented. It
involves mobilising organisational resources and capabilities in order to execute the chosen
strategy. This involves allocating, planning, controlling, leading and organising resources and
managing human resource issues, as well as managing change in the organisation.
Strategic implementation is intended to answer questions such as:
• Are strategies suitable, acceptable or feasible?
• What kind of strategy-making process is needed?
• What are the required organisational structures and systems?
• How should the organisation manage necessary changes?
• Who should do what in the strategy process?
Strategies can develop in two ways. Intended strategies develop as a result of formal planning
and decision-making processes. Whereas emergent strategies develop as a result of decisions
made within the organisation over a period of time.
A strategic organisational structure is a framework used to identify and define work roles,
relationships, tasks and responsibilities, and thereby shows information flow within the
organisation, to ensure that it flows efficiently.
Implementation of strategies sometimes involves changing the organisational structures,
processes and relationships within an organisation in order for the strategy to be effective. This
requires effective leadership and strategic change management processes.
This brings us to the end of the section on the characteristics of global strategic decisions in
organisations.
Now answer these questions to check your understanding. Pause the podcast to write down
your answers.

5. Leading global excellence in procurement and supply
1. Give three examples of issues that strategic decisions can relate to.
2. What is the difference between strategic and operational management?
3. State three tools that can be used to evaluate strategies, and what they are used for.
This is the end of this podcast. You should now be able to evaluate the characteristics of global
strategic decisions in organisations.