North South University

School of Business & Economics (SBE)

EMB 690 Strategic Management

Intersession Semester, 2023
Lecture two
 Today’s Learning objectives
Define and discuss:
Strategy.
Strategic management.
Strategy is partly proactive and partly reactive.
Strategic vision and strategic mission.
Strategic management process.
Importance of SM.
Challenges of SM.
Business model.
The Development of Strategic Thinking in
Management
The Development of Strategic Thinking in Management
Early contributors (Academia, researchers):
❑Alfred Chandler.
❑Kenneth Andrews.
❑Igor Ansoff.
Early contributors (Consulting companies):
❑McKinsey & Co:
– Peters and Waterman (In Search of Excellence).
– Kenichi Ohmae (Global Strategy).
❑Boston Consulting Group (BCG).
– Bruce Henderson (BCG Matrix).
Early contributors (Business leaders):
❑ Jack Welch.
❑ Bill Gates.
❑ Warren Buffett.
Alfred Chandler (Harvard) 1918-2007

❑Pulitzer Prize-winning business

historian.
❑Studies of GM, DuPont, Exxon, and
Sears from the 1900s to 1940s
explained the structure of the
multidivisional firm and argued that
structure follows strategy.
❑“Strategy can be defined as the
determination of the basic long-term
goals and objectives of an enterprise,
and the adoption of courses of action
and the allocation of resources
necessary for carrying out these
goals”. (Strategy & Structure, 1962, p 13)
Kenneth Andrews, Harvard (1916-2005)

❑Led the articulation of courses

in corporate strategy at
Harvard, from courses in
“Business Policy”.
❑Father of SWOT analysis & the
use of Case Studies.

Organisation
Environment
Igor Ansoff (Carnegie Institute of Technology)

❑ Father of Corporate Strategy (1965).

❑ “Strategic management is a
systematic approach to a major
and increasingly important
responsibility of general
management: to position and
relate the firm to its
environment in a way which will
assume its continued success and
make it secure from surprises”.
(Igor Ansoff & Edward McDonnell, 1990)
❑ Need to adapt management
approaches to rates of
environmental change.
Tom Peters
❑ Co-creator of the McKinsey 7-S framework.
❑ Co-author of ‘In Search of Excellence’ (1982).
❑ “What is a good strategic plan”? There is none.
But there is a good strategic planning process.
❑ A good strategic planning process:
❑ gets everyone involved.
❑ is not constrained by overall corporate “assumptions”
(e.g., about the general economic picture).
❑ is perpetually fresh, forcing the asking of new questions
❑ is not left to the planners, and
❑ requires lots of noddling time and vigorous debate.
❑ As far as the document per se, it is succinct
❑ emphasises the development of strategic skills, and
❑ is burned the day before it is to go to the printer- that is,
it is a living document, not an icon”. Tom Peters, 1987
Kenichi Ohmae
❑ Co-founder of McKinsey’s strategy practice; extensive
contributions to global strategies.
❑ In making a strategy, first comes painstaking
attention to the needs of customers.
❑ Then comes a close analysis of a company’s real
degrees of freedom in responding to those needs.
❑ Then comes the willingness to re-think,
fundamentally, what products are and what they do,
as well as how best to organize the business system
that designs, builds, and markets them.
❑ Competitive realities are what you test possible
strategies against; you may define them in terms of
customers.
❑Before you test yourself against the
competition, strategy takes shape in
the determination to create value for
customers.
Bruce Henderson (1915-1992)
❑Founder of the Boston
Consulting Group &
creator of the BCG matrix
& the Experience Curve.
Michael Porter (Harvard)
❑Argued that the structure of
the market-determined the
competitive landscape and
hence the shape of a firm’s
strategy.
❑Dominated strategic thinking
during the 1980s and 90s.
❑“The essence of strategy
formulation is coping
with competition”.(1979)
C.K. Prahalad (Univ of Michigan)
❑ Early work related to resource-based
theory (e.g. with Hamel).
❑ Demonstrates how strategic thinking is
about conceptualisation of situations,
e.g. The Fortune at the Bottom of the
Pyramid, 2008.
❑ Recent work on new business models
integrating IT and strategy and the
relationship between strategy, business
models, and business processes; the N=1
and R=G principles for innovation model
(N= No. of customers; R= source of
Resources; G=Global).
The New Age of Innovation.
(Co-Creation of Value)
Richard Normann (1943-2003) (Lund University)

Strategy is the art of creating value.

Richard Normann & Rafael Ramirez, 1993
Kim Warren (London Business School)
❑“Strategic management is
about building and sustaining
performance into the future”.
(Strategic Management Dynamics, 2008, p 4)
Evolutionary Theorist: Robert Burgelman (Stanford)

❑Has pioneered the study of

firms’ co-evolving with their
environments.
❑Mentor to Andy Groves and
studied Intel’s approach to
strategy over 12 years.
(Strategy is Destiny)
Arie P.De Geus (Shell)
❑ In the 1980s, the planning group at Shell
surveyed 30 companies that had been in
business for more than 75 years. What
impressed us most was their ability to
live in harmony with the business
environment, to switch from survival
mode when times were turbulent to a
self-development mode when times were
slow. This pattern rang a familiar bell
because Shell’s history is similarly replete
with switches from expansion to self-
preservation and back to growth.
❑ …For this reason, we think of planning
as learning and of corporate planning as
institutional learning. (The Learning Company, 1988)
 Finally, approaches to strategy are
influenced by business leaders….
Strategy: Proactive and Reactive
❑Strategies are a blend of proactive initiatives
and reactive adjustments.
Abandoned strategy
elements

Proactive strategy elements

New indicatives plus ongoing Latest
Vision & strategy elements version
strategy Strategy in
action
Adaptive reactions to changing
circumstance

Reactive strategy elements

 Strategic Vision vs. Mission

A strategic vision portrays a company’s future

business scope (“Where are we going?”), whereas a
company’s mission typically describes its present
business and purpose (“who we are, what we do,
and why we are here?”).
Characteristics of an Effectively Worded Strategic Vision
(Kotler, 1996)

Graphic Paints a picture of the kind of company that management is trying

to create and the market position(s) the company is striving to
stake out.
Directional Is forward-looking; and describes the strategic course that
management has charted and the kinds of
product/market/customer/technology circumstances change.
focused Is specific enough to provide managers with guidance in making
decisions and allocating resources.
Flexible Is not a once-and-for-all-time statement directional course that
management has charted that may have to be adjusted as
product/market/customer/technology circumstances change.
Feasible Is within the realm of what the company can reasonably expect to
achieve in due time.
Desirable Indicates why the chosen path makes good business sense and is in
the long-term interests of stakeholders.
Easy to Is explainable in 5-10 minutes and, ideally, can be reduced to a
communicate simple, memorable slogan (Ford’s famous vision of ‘A Car in Every Garage’).
Common Short Comings in Company Vision Statements
(Davidson, 2002; Robert, 1992)

Vague or Is short on specifies about where the company is headed or what the
incomplete company is doing to prepare for the future.
Not forward Does not indicate whether or how management intends to alter the
looking company’s current product/market/customer/technology focus.

Too broad Is so umbrella-like and all-inclusive that the company could head in
almost any direction, pursue most any opportunity, or enter most any
business.
Bland or Lacks the power to motivate company personnel or inspire
uninspiring shareholder confidence about the company’s direction or prospects.

Not Provides no unique company identity; could apply to companies in

distinctive any of several industries (or at least several rivals operating in the
same industry or market arena).
Too reliant Does not say anything specific about the company’s strategic course
on beyond the pursuit of such lofty accolades as best, most successful,
superlatives recognized leader, global or worldwide leader, or first choice of
customers.
❑A goal is a precise and measurable desired
future state that a company attempts to
realize.
❑ The purpose of goals is to specify with
precision what must be done if the company
is to attain its mission or vision.
Well-constructed goals have five main characteristics

1. They are precise and measurable.

2. They address critical issues.
3. They are challenging but realistic.
4. They specify a time in which the goals should be
achieved.
5. Well-constructed goals also provide a means by
which the performance of managers can be
evaluated.
Who participates in crafting strategy?

❑CEO (Chief Executive Officer).

❑Senior executives.
❑Managers of subsidiaries, divisions, plants,
and other important operating units. (and,
often, key employees)
Defining Strategic Management
 Strategic Management (SM)
❑No set of rules.
❑Strategic management is the study of why some firms
outperform others.
How to compete to create competitive advantages in the
marketplace.
How to create competitive advantages in the marketplace.
SM is a ‘Capstone’ subject.
It covers aspects of:
❑Management.
❑Economics.
❑Marketing.
❑Accounting and Finance
❑International Business
❑Many more…
 Importance & Challenges of SM
Importance
❑ Allows (identification, prioritization, and exploration of
opportunities).
❑ Minimises (effects of adverse conditions and changes).
❑ Helps (develop a framework for improved coordination and
control activities).
❑ Guides (entire organization regarding ‘what it is we are trying
to do and achieve).

Challenges
❑ Change & competition.
❑ Current success (guarantee of future???).
❑ The right strategy and effective implementation.
❑ Expect unexpected (any time).
❑ No borders/boundaries.
 Strategic Management Process

❑The set of processes used to determine the strategies for

the organization.
❑Identifying an organization’s existing vision, and mission
and setting objectives followed by strategy formulation,
implementation, and evaluation.
 Strategic Management Process
The External
Environment
Strategic inputs

Strategic Intent
Strategic Mission
The Internal
Environment

Strategy Formulation Strategy Implementation

Strategic actions

Organizational
Business-level Competitive Corporate- Corporate
Structure &
Strategy Dynamics level Strategy Governance
Controls
Acquisition &
International Cooperative Strategic Strategic
Restructuring
Strategies Strategies Leadership Entrepreneurship
Strategies
outcomes
Strategic

Strategic Competitiveness
Feed back Above Average Returns
 Business Model
❑ A company’s Business Model is the ‘Plan of doing business
related to its cost and revenue’ or ‘How to make money in
this business’?
❑ Both start-up ventures and established companies need a
well-defined business model to take on new products and
services.
❑ The process of business model design is part of business
strategy. The company’s strategy is complementary to its
business model.
❑ Implementation of the company’s business model is part of
Business Operations (organization structure, human
resources, sequence of operations, and systems e.g.
information technology architecture, production lines).