Strategic Management

Week 1
Introduction

FT MSc
Semester 2 09/10

Phil Johnson 1
Objectives
 To provide an overview of the process and
procedures of strategy management.
 To provide an understanding of the main
approaches to strategy in business, their
practical and theoretical underpinnings, their
limitations and weaknesses.
 To provide practice in applying these models
to differing, complex and volatile situations.

Phil Johnson 2
Timetable (flexible!)
 Week 1
 Overview
 Objectives
 Timetable
 Assessment
 History
 Elements of strategic management
 Case study: EMB inc

Phil Johnson 3
Timetable
 Week 2

Stakeholders

 Mission, Vision, Values

 External analysis
 Macro

Phil Johnson 4
Timetable
 Week 3
 External analysis
 Industry/sector
 Internal analysis
 Case Study: EMB inc (re-visited)
 Corporate structures and strategic
management

Phil Johnson 5
Timetable
 Week 4
 Corporate level strategy
 Growth, portfolios, Ansoff
 Business level strategy
 Porter, Bowman’s clock

Phil Johnson 6
Timetable
 Week 5
 Intended & emergent strategies
 Assignment prep
 Case study: to be confirmed
 Wrap up

Phil Johnson 7
Assessment
 Case study
 circa 2,500 words (+/- 10%)
 Emphasis on analysis, not description
 Demonstrate that you understand the
appropriate use of the tools we have
discussed

Phil Johnson 8
Sources
 Set books
 WebCT
 …or Virtual Learning Environment (VLE)
 …or Keele Learning Environment (KLE)
 Flash movie at:-
 http://www.keele.ac.uk/depts/aa/landt/KLE%20D
EMO%20LDU%20version.swf

Phil Johnson 9
What is strategy?

‘Would you tell me please, which

way I ought to go from here?’

‘That depends a good deal on

where you want to get to’ said the
Cat

Alice’s Adventures in Wonderland

Lewis Carroll

Phil Johnson 10
Strategy
 ‘In…circumstances of competition or conflict, as in the theory of
games, decision theory, business administration, etc., a plan for
successful action based on the rationality and interdependence
of the moves of the opposing participants.’
OED Online 2005
 ‘Strategy is the direction and scope of an organisation over the
long term, which achieves advantage in a changing environment
through its configuration of resources and competencies with
the aim of fulfilling stakeholder expectations.’
Johnson, Scholes & Whittington, 2005 p9

Phil Johnson 11
Some history
孙子
 Sun Tzu (circa 400BC)
 Strategic objectives
 External analysis
 Internal analysis
 Resulting action
 Fayol (1841-1925)
 Plan
 Organise
 Coordinate
 Command
 Control

Phil Johnson 12
Some history
 1960s - Harvard business policy courses
 emphasis on practicality, not theory or
research
 1960s & 70s - Development of corporate
planning
 finance-driven
 corporate planning departments

Phil Johnson 13
Some history
 1980s & 90s -
 Quinn, Mintzberg, Pettigrew
 ‘people [are] too imperfect and the world too complex for
heavy reliance on analysis and planning’ (Johnson, Scholes &
Whittington, 2008, p17)
 ‘It is better to work with, rather than against, the messiness of
organisations.’ (ibid.)
 Porter
 ‘Competitive advantage’ (1980) & ‘Competitive Strategy (1985)
 Hamel & Prahalad
 resource-based theories (1990)

Phil Johnson 14
Elements of strategic management

Missions &
Stakeholders

Johnson, Scholes & Whittington

‘Exploring Corporate Strategy’ 2005

Phil Johnson 15
Vision
 A vision, or strategic intent, is a view of
a future reality that the organisation
seeks.
Mellahi Frynas & Finlay
‘Global Strategic Management’ 2005
p363

Phil Johnson 16
Mission
 “The mission of an organisation outlines
the broad directions that it should and
will follow and briefly summarises the
reasoning and values that lie behind it.
 The role of the mission statement is to
communicate to all the stakeholders
inside and outside the organisation
what the company stands for and
where it is headed”. Lynch
‘Corporate Strategy’ 2006, p246

Phil Johnson 17
Mission
 Mission statements should:
 be specific enough to have an impact upon the behaviour of
individuals throughout the business;
 reflect the distinctive advantages of the organisation and be
based upon an objective recognition of its strengths and
weaknesses;
 be realistic and attainable;
 be flexible enough to take account of shifts in the
environment;
 emphasise the common ground amongst stakeholders, not
the differences.

Adapted from Lynch

‘Corporate Strategy’ 2006
Phil Johnson 18
Values
 “Core values are the principles that guide an
organisation’s actions.”
Johnson, Scholes & Whittington, 2005, p207

 “Core values are the underlying principles

that guide an organisation’s strategy
Johnson, Scholes & Whittington, 2008, p163

Phil Johnson 19
Values
 Values should:
 Place constraints on the means by which
the organisation will seek to maximise
shareholder value
 Increase the effectiveness with which the
organisation builds competitive advantage
through reinforcing strategic intent and
building internal consensus and
commitment.

Phil Johnson 20
Stakeholders
 “Stakeholders are those individuals or groups who
depend on an organisation to fulfil their own goals
and on whom, in turn, the organisation depends.”
Johnson, Scholes & Whittington
‘Exploring Corporate Strategy’ 2008, p132

 “…the individuals and groups who have an interest in

the organisation and, therefore, may wish to
influence aspects of its mission, objectives and
strategies.” Lynch
‘Corporate Strategy’ 2006, p172

Phil Johnson 21
 Stakeholder examples

Source: From R.E. Freeman, Strategic Management: A Stakeholder Approach, pub. Pitman 1984 Copyright 1984 by R.
Edward Freeman

Phil Johnson 22
 Stakeholder analysis

Source: Adapted from A. Mendelow, Proceedings of the Second International Conference on Information Systems,
Cambridge, MA, 1991. In Johnson Scholes and Whittington 2008, p156

Phil Johnson 23
Conflict of expectations

Johnson, Scholes & Whittington, ‘Exploring Corporate Strategy’ 2008, p155

Phil Johnson 24
Mission/Vision/Values
 Marks & Spencer plc
 “Our Vision: To be the standard against
which all others are measured.
 Our Mission: To make aspirational quality
accessible to all.
 Our Values: Quality, value, service,
innovation and trust.”

Phil Johnson 25
Mission/Vision/Values
 The purpose of the firm is to contribute to society by
supplying goods of high quality at low prices in
ample quantity. The happiness of man is built on
mental stability and material affluence. To serve the
foundation of happiness, through making man’s life
affluent with an inexpensive and inexhaustible supply
of life’s necessities like water, is the duty of a
manufacturer. The purpose of the enterprise is to
materialise the duty and consequently contribute to
society.

Phil Johnson 26
Mission/Vision/Values
 The purpose of the firm is to contribute to society by
supplying goods of high quality at low prices in
ample quantity. The happiness of man is built on
mental stability and material affluence. To serve the
foundation of happiness, through making man’s life
affluent with an inexpensive and inexhaustible supply
of life’s necessities like water, is the duty of a
manufacturer. The purpose of the enterprise is to
materialise the duty and consequently contribute to
society. Matsushita, in Mellahi Frynas & Finlay
‘Global Strategic Management’ 2005
p364

Phil Johnson 27
Mission/Vision/Values
 Our Mission is to own and develop
financially disciplined businesses that are
leaders in responsibly providing adult
tobacco consumers with superior branded
products.

Altria Group Mission Statement www.philipmorrisusa.com May ‘08

Phil Johnson 28
Mission/Vision/Values
 As an operating company of Altria Group, PM USA is guided by Altria Group's
Mission  to own and develop financially disciplined businesses that are leaders in
responsibly providing adult tobacco consumers with superior branded products.

Guided by Altria Group’s Mission and Values, PM USA’s role is to responsibly and
effectively develop, manufacture and market superior branded cigarettes and
smokeless products for adult tobacco consumers.

The Mission guides and informs the business decisions at Altria Group and its
operating companies, which pursue the Mission by focusing on four strategies:

 Invest in Leadership: We will invest in excellent people, leading brands and external stakeholders
important to our business success.
 Align with Society:  We will actively participate in resolving societal concerns that are relevant to
our business.
 Satisfy Adult Consumers: We will convert our deep understanding of adult tobacco consumer
needs into better, more creative and more satisfying products.
 Create Substantial Value for Shareholders: We will execute our business plans to create
sustainable growth and generate substantial return for shareholders
www.philipmorrisusa.com May ‘08

Phil Johnson 29