PS4 L1 Role of Strategy

8/8/2019 PS4 L1 Role of Strategy

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COMPETING INTODAYS ECOMONY

The Role Of Strategy

Hilary Lewis. BSc, MAHilary Lewis. BSc, MA

The Role of StrategyProfessional Studies 4 -Lecture 1 Hilary Lewis October 2003

The Role of Strategy

What is strategy?

Why is it important?

What influences strategy?

The Role of StrategyProfessional Studies 4 -Lecture 1

3Hilary Lewis October 2003

Strategy is..

. derived from the word Stratagem whichmeans:


Strategy is..

. derived from the word Stratagem whichmeans:1. a cunning plan or scheme, esp. for deceiving anenemy.


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Strategy is..

. derived from the word Stratagem whichmeans:1. a cunning plan or scheme, esp. for deceiving anenemy.

2 . trickery


Strategy is..

quoted in the Concise Oxford Dictionaryas meaning;



Strategy is..

quoted in the Concise Oxford Dictionary

as meaning;1. the art of war.


Strategy is..


1. the art of war. 2a the management of an army or armies in a campaign. b the art of moving troops,ships, aircraft, etc. into favourable positions (cf.TACTICS). c an instance of this or a plan formedaccording to it.


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Strategy is..


1. the art of war. 2a the management of an army or armies in a campaign. b the art of moving troops,ships, aircraft, etc. into favourable positions (cf.TACTICS). c an instance of this or a plan formedaccording to it. 3 a plan of action or policy inbusiness or politics etc.


Organizational Strategy is..

the way in which an organizationuses its knowledge and other resourcesto achieve its economic purpose.

Haberberg and Rieple.The Strategic Management of Organisations. 2001



The Nature Of Strategy

Range Of Strategic FormatRange Of Strategic Format

Defined Planned Proactive With detail

Vague Loose Reactive No detail


Levels of Organizational Strategy

CorporateStrategy

BusinessStrategy

FunctionalStrategy

Corporate Head Office

Division A Division B

R & D

Human Resources

Finance

Production

Marketing/Sales

R & D

Human Resourc

Finance

Production

Marketing/Sales


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The Purpose of Strategy

Provides directionProvides coherence

Allows day-to-day processes to bedesigned

Should give direction for one offprocedures


The Purpose of Strategy

The essence of strategy is coping with competition.The corporate strategists goal is to find a positionin the market where his or her company can bestdefend itself against the collective industry forcesor can influence them in its favour.

Michael E. Porter. How competitive forces shape strategy Harvard Business Review, 1979



The Nature of Strategic Decisions

Magnitude

BIG DECISIONSTime-scale

Medium to long term

Commitment

Locks in resources, locks out alternatives


Influences on strategic choices

Organizational Purpose


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Vision / Mission

Objectives



Organizational Purposes

Vision / Mission

Objectives

Corporate Governance

Whom should the

organization serve? How should purposes be

determined?

Business Ethics

Which purposesshould be prioritised?

Why?

Stakeholders

Whom does theorganization serve?

Cultural Context

Which purposes areprioritised?

Why?





The Macro-Environment


The PESTEL Framework

Political

Example of Political influences;

Taxation Policy

Foreign Trade Regulations


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Political

Economic

Example of Economic influences;

Interest Rates

Inflation

Unemployment



Political

Economic

Sociocultural

Example of Sociocultural influences;

Attitudes to work and leisure

Income distribution

Levels of education




Political

Economic

Sociocultural

Technological

Example of Technological influences;

New discoveries, developments

Spending on research



Political

Economic

Sociocultural

Technological

Environmental

Example of an Environmental influences;

Emission levels

Planning regulations


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Political

Economic

Sociocultural

Technological

Environmental

Legal

Example of Legal influences;

Monopolies Commission

Employment Law


The Impact Of The New Economy

The New Economy is shorthand for nothing

less than a revolution in the way businessworks, economic wealth is generated, societiesare organized, and individuals exist within them.Todays realities are telephone-based servicecentres in India serving US consumers, andnew technologies underpinning extraordinaryshifts in everything from food production to thehealth products addressing long standingtropical diseases.



The Impact Of The New Economy

The knowledge and information revolutionprovides a historic opportunity, a new age withenormous potential in promotingcompetitiveness, new economic growth and

jobs, better access to basic services bigger impacts from education and health interventionsand most importantly, enhanced empowermentof local communities and stronger voices for poor people.

James D Wolfensohn, President of the World Bank. 2001


New Vs Old Economy

No gender bias; highproportion of graduates

Male dominated, semi skilledor unskilled

WorkforceCharacteristics

Devolved, flat, flexibleCentralised, hierarchical,functionalOrganizationalStructures

Email, mobile phone, WWWLetter, fax, telephone, telexCommunication Media

24 hours8 hoursWorking Day

GlobalInternationalTrade Pattern

Measured in years or monthsMeasured in decadesProduct Life cycles

Information technologyPower trains, machine toolsTechnology

Information, knowledge, talentEnergy, labour Key Resources

Computers / software,biotechnology, entertainment,financial services

Oil, mining, steel, vehicles,railways, shippingKey Industries

New EconomyOld Economy


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The Industry Environment


BUYERSBUYERS

The Industry Lifecycle

0

20

40

60

80

100

Development Growth Shakeout Maturity Decline

Innovators Early adopters Early Majority Late majority Laggards

Fewcompetitors

High costs;low profits

Growing number of competitors

Me too products

Start to competefor market share

Many competitorsto shakeout of weakest

Productdifferentiation

Price wars tomaintain share

Lower margins

Divesting by somecompetitors

Little productdifferentiation

CompetitiveCompetitiveconditionsconditions



Porters Five Forces Model

The Industry

Jockeying for position amongstcurrentcompetitors

Bargainingpower of suppliers

Bargainingpower of customer

Threat of substitute

products or services

Threat of new

entrants





The Industry Environment

Competitive Positioning


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Market segmentation

..dividing a market into distinct groups of buyers with different needs,

characteristics or behaviour, who mightrequire separate products or marketing

mixes



Developing the Proposition

Choose a broad positioning

Choose a specific positioning

Choose a value positioning



Broad Positioning Alternatives

Product differentiator The low cost leader

Nicher


Positioning Strategy

1. Become the best at one of the three disciplines.

2. Achieve an adequate performance level in the other

two disciplines.3. Keep improving ones superior position in the

chosen discipline so as not to lose out to acompetitor.

4. Keep becoming more adequate in the other twodisciplines, since competitors keep raisingcustomers expectations about what is adequate.


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Influences on strategic choices (cont)

OrganizationalPurpose


The IndustryEnvironment

CompetitivePositioning

Resources


Resources

Capabilities and competencies

Learning and knowledge

Analysing competitive advantage








Resources

The Value Chain


The Value Chain

MarketingandSales

OutboundLogistics

perationsInboundLogistics

Firm Infrastructure

Human resource management

Technology DevelopmentProcurement

Service

M a r g

i n

M a r g i n

Primary Activities

SupportActivities


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Resources

The Value Chain

OrganizationalStructure


Organizational Structure

Structure types

Organizational design

Communication








Resources

The Value ChainOrganizationalStructure

OrganizationalCulture


Organizational Culture

Leadership behaviour

Reward systems

Language

Documents

PS4 L1 Role of Strategy