Strategy & Controls #1

Mr Mansoor Ahmed
Comsats Business School
e.mail: mansoorlse@yahoo.co.uk
WHAT IS STRATEGY?
Origins of Strategy

• Strategy originates from Greek (stratēgos),

roughly meaning ”leading an army”
• Even today, militaries recognize strategic and
tactical levels of planning
– ”Tactics win battles, strategy wins the war”

Military metaphors remain common in

business environment, but are actually
valuable?
Strategy vs. Tactics

• Tactics are the immediate means

(actions) used to attain a goal
• Strategy incorporates a selection of
tactics
The most commong definition

”A comprehensive long-term plan to

attain chosen goals.”

Often, management scholars and gurus define the

goal of strategy as ”beating the competition” or
”maximizing shareholder value”
Goals in Business Strategy

• In for-profit firms, strategic goals ultimately

facilitate some or all of the following:
– Growth
– Profitability
– Survival of the firm
– Shareholder value

• Goals depend on the type of the firm

– Technology startups vs. family businesses
Other approaches to strategy

• ”Strategy means that the top management

creates a future for the firm and takes
control of that future”
• ”Competitive strategy is about being
different. It means deliberately choosing a
different set of activities to deliver a unique
mix of value”
• Strategy is about archieving more optimal
fit with the firm’s environment
Johnson, Scholes & Whittington book

Strategy is the direction and scope of an

organization over the long term, which
achieves advantage in a changing
environment though its configuration of
resources and competences with the aim of
fulfilling stakeholder expectation.
(Page 9, emphasis in the original)
My preferred approach to strategy

Strategic
Analysis

Firms’ Actions &

Strategy
Objectives Structures

Strategy is an articulated and actionable

understanding of what the firm does and
should do to attain its objectives.
Example:
Strategic Intent of Comsats University

• To remain or be amongst the top tier of scientific, engineering and

management research and teaching institutions in the world.
• To develop our range of academic activities to meet the changing
needs of society industry and research.
• To continue to attract and develop the most able students and staff
worldwide.
• To establish our Comsats Business School as one of the leading
institutions in the world.
• To communicate widely the significance of science in general, and
the purpose and ultimate benefits of our activities in particular.

• At Comsats University, strategy is implemented on

departmental level following 16 more specific key objectives
Implicit assumptions?

• A comprehensive long-term plan

• A future created by managers

• A distinctive set of activities

Explicit assumptions

• A comprehensive long-term plan

– Future is predictable, optimal plan can be deduced
by collecting enough information
• A future created by managers
– Future can be ’enacted’ by taking the initiative,
persistent managers can realize their visions
• A distinctive set of activities
– The optimal set of activities remains relatively
constant in the near future
Strategy as boundary-setting

Strategy is an articulated and actionable

understanding of what the firm does and
should do to attain its objectives.

• Specific attention on the course is devoted

on things a firm does not do

• How does not doing things create value?

• How can a firm avoid doing things?
Today

1. Practicalities
2. What is strategy?
– Pattern vs. Plan

3. Strategic vision
– The surface level

4. Strategic analysis
– Introduction & readings for the next
session
The surface of business strategy

STRATEGIC VISION
Why a strategic vision?

• Top management would like all parts of the

firm to act towards strategic goals
• Decision making tends to be distributed
– Why is this increasingly so?
• Vision directs decisions & actions on lower
levels of hierarchy
• Other benefits
– Leadership: motivation, identification with the firm
– External communication: shareholders, etc.
Example:
Vision/Mission Statements

Sony (based on shareholder meeting slides):

“Developing champion products with innovative

technologies to deliver a compelling
entertainment experience.“

“Key priority to revitalize electronics by changing the

organizational structure, reducing overheads,
refocusing product lines, reducing model count,
optimizing manufacturing, divesting non-strategic
assets”
Case Netflix (cf. Lovefilms.co.uk)
Netflix Vision
(From investor material)

• Attention
directed to:
– Improving
web site and
service
– Increasing
subscriptions
– Online video
technology
Articulating a Strategic Vision

• Key goals of the organization

• Chosen means for attaining the goals

• Underlining activities or goals that are

unique to the specific company
To direct and unify activities in a firm,
strategic vision should be...?

• Widely known and understood within the

organization
• Relatively simple and stable
• Actionable (influence real decisions)
• Acceptable to firm’s stakeholders
– I.e. owners, employees, customers, government
Vision-- Potter's Value Chain

• Strategy must incorporate more detailed understanding

of different functional areas (tactics, if you will)

”Value chain” graph originally by Porter, 1977

Consider the higher education industry

• What are the implicit assumptions regarding

the activities of Comsats University?

• How does our strategy differentiate us from

the other universities?
• How do some other universities differentiate
themselves?
 Strategic intent of Comsats College

• To remain amongst the top tier of scientific, engineering and

medical research and teaching institutions in the world.
• To develop our range of academic activities to meet the
changing needs of society, industry and healthcare.
• To continue to attract and develop the most able students
and staff worldwide.
• To establish our Business School as one of the leading such
institutions in the world.
• To communicate widely the significance of science in
general, and the purpose and ultimate benefits of our
activities in particular.
Today

1. Practicalities
2. What is strategy?
– Pattern vs. Plan

3. Strategic vision
– The surface level of strategy

4. Strategic analysis
– Introduction & readings for the next
session
STRATEGIC ANALYSIS
Industry/market analysis

• Some goals:
– Determine the attractiveness of an industry/market
– Understand key drivers of competitiveness
– Understand current and likely competitors
– Understand customer behavior
Strategic analysis:
Five Forces Framework

Threat of
New
Entrants Captures key threats for
the profitability of a
strategic positions

Supplier Buyer
Bargaining Competitors Bargaining Most lucrative
Power Power businesses have many
weak suppliers, price-
insensitive buyers, low
competition, and low
Threat of
Substitutes
threat of substitutes and
new entrants.
Environmental analysis

• Some goals:
– Understand how the environment hinders or helps
the firm reach its goals
– Underline potentially important changes in the
environment
– Enable firm to proactively fit its strategy to a
changing external context
PEST(EL) Framework

Political Economic
Changes in regulations, Consumer purchasing
taxation, government power, material costs,
subsidies, anti-trust law interest rates

Technological The Firm

Sociocultural
New innovations that Consumer preferences
enable new products or and behavior, social
help reduce costs norms and expectations
(Environmental) (Legal)
All issues related to environmental Outcomes of political environment: new
sustainability (partly political, etc.) laws or court decisions influencing
demand/cost of products/services
M. Sc. International Healthcare Management

Political Economic
Write here
Write here

M.Sc.
Technological program Sociocultural
Write here
Write here

Work out the potential relevant

changes in the external environment
SUMMARY
Strategy in Context

Five forces
Strategic PEST(EL)
Analysis And many others...

Actions &
Objectives Strategy
Structures

What our organization An understanding of New processes,

should be? current activities + policies, rewards, etc.
further plans to
achieve objectives
Summary of Key Points

• ’Strategy’ means two things:

– A plan of the actions to attain goals
– A pattern of activities the firm is currently undertaking
• Strategic vision
– A simplified statement of a firm’s strategy that helps
align decisions and activities across the firm
• Frameworks help analyze profit potential and
environmental changes
– Five forces & PEST covered so far – more to follow in
the next sessions