Unit 1 Lecture Formulating Strategy (A prescriptive Strategy is one whose…
Unit 1 Lecture
There is no universally agreed definition of Strategic Management. The concenpt however is around managing the firms internal capabilites and its external relationships.
Emergent Strategic Management
is a strategy whose objective is unclear and whose elements are developed through the course of its life as the strategy proceeds
Strategic Management entrepreneurial and dynamic
Finding market opportunities, experimenting and developing comp advantage over time
Stragey evolves as as events internally and externally develop over time
Strategic management takes into account intended and emergent initiatives involving the utilisation of resources to enhance the performance of firms in their external environments
Encompasses both intended and emergent views
Ownership is beyond shareholders and extends to all stakeholders in the organisation, employees etc
Organisations deliver strategies through using their resources - ie people, finances, brands, factories, premises, supply chain etc.
The End Product of strategic management must be to improve performance but orgs must understand that measurements should be about add value
Strat management and competitive advantage.
Comp advantage - Superior performance relative to competitors in same field
Sustaiable comp advantage - Outperforming over a sustained period of time
Comp disadvantage - self explanatory
Competitive parity - performance of two firms at the same level
Levels of strategy
Corporate Level Strategy - concerned with the overall scope of the org and how value is addded to the constituent parts. This looks at the org as a whole as well as the field
Business level strategy - How a business competes in it;s market
Functional Strategy - How components of an org deliver effectively to the corp and business level strats in terms of resources - how to implement
Why is Strategic Management important?
Why have some companies been so successful?
What social and environmental responsibilities to firms have when developing strategy?
What enables a firm to gain competitive advantage?
How can managers influence performance?
Where should a firm compete? Local or international etc?
Why do once great firms fail?
Survival of the firm is the minimum objective
Why is strategic Management important for me?
A sound understanding of concepts of theory and practice wil distinguish me from other candidates
Can be used to guide career decision making
Careers in strategy
What is my own competitive advantage? My strengths and weaknesses? What kind of org will allow me to leverage my strengths and keep me engaged?
Three core areas of Strategic Management
Strategic Analysis - Environment, resources, Mission objectives and stakeholders
Strategic Development - Options, Evaluations, Choice
Strategy Implementation - Resource Allocation, Strategic planning and control
The central debate - are strategies formulated through conscious, formulated planning or through through continuous and adaptive learning processes?
The Dominant Perspective - Strategic Planning
Underpinnings of theory:
Adam Smith and the Rational Economic Man
Taylors Scientific Management
Fayol Principles of Management
Strategy as a rational process of decision making
CEO as the strategy architect
Separation of formulation from implementation
Key foundations of Strategic Planning Approach
A belief in rational anakysis - this can be an issue as we dont always act rationally!
The separation of formulation from imlplementation
The goal of profit maximisation
Return on investment as a KPI
Decentralised Divisional Form
Separation of policy from tactics - there being no understanding of the operational sphere. ie it is just a plan
Underlying assumption that managers operate in rational ways
External environment is sufficiently knowable to be able to predict
Org decsision making takes place in a ordered, sequential logical way
A belief that if sufficient time is taken to analyse data, then a linear process of planning is possible
Mintzberg critique of Strategic Planning
The fallacy of pre-determination - Certain patterns can be anticipated and predicted, this is becoming more difficult in an increasingly globalised world
The fallacy of Detachment - No need to detach planning from implementation - in fact it is vital not to do so and that orgs need to be responsive between all levels of the org
The fallacy of formalisation - Need to move away from formal organisational charts. "None of these have ever explained how strategy is created"
A prescriptive Strategy is one whose objectives have been defined in advance and whose main elements have been developed before the strategy commences.
An Emergent strategy is one whose final objective is unclear and whose elements are developed during the course of its life as the strategy proceeds
Prescriptive strategy limitations
Struggles to cope with uncertainty
Assumes future is predictable for years
Assumes the ability to make fir plans
Assumes strategies are logical and implementable despite difficulties arising
Implementation phase is separate and comes after planning
Replicates existing rather than innovates new
Limits of Emergent strategy
Unrealistic to expect board of org to let operational areas do what they want.
Some strategic overview of allocations of resource is needed
Abdication of final decision that need taken
Some strategies need to be fixed and take years to implement
Rational decisions based on evidence have more chance of success rather than chance/whim
Chaotic if everything is uncertain
Many companies have tried to integrate prescriptive and emergent approaches - for example google, who gives 20% of its time to experiment
The Consensus View