Strategy and strategic

management
Chapter 1

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Learning Objectives
• define what is meant by the word ‘strategy’
• explain Mintzberg’s five Ps framework
• distinguish between deliberate (prescriptive) and
emergent strategy
• describe the different elements associated with
business strategy
• explain the different schools of strategy and their
implications
• profile a framework that allows strategy to be
analysed and better understood

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

What is strategy and who
cares?
Mintzberg’s 5 Ps

A strategy can be:

a plan
a ploy
a pattern of behaviour
a position in respect to others
a perspective.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Deliberate Strategy

Deliberate strategy, sometimes called

planned or prescriptive strategy, is meant to
happen. It is preconceived, premeditated and
usually monitored and controlled from start to
finish. It has a specific objective.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Emergent Strategy

Emergent strategy has no specific objective.

It does not have a preconceived route to
success but it may be just as effective as a
deliberate strategy. By following a consistent
pattern of behaviour, an organization may
arrive at the same position as if it had planned
everything in detail.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Terms used in Strategy
Values are the underlying principles,
perspectives and beliefs that guide action
and behaviour in the organization.

The strategic aim is a statement of

organizational intent specified in terms
of where the organization wishes to ‘go’
and when it wishes to get there.

Strategic objectives often form the strategy road

map for an organization. They are ‘stepping stones’
to achieving the strategic aim and should be
SMART in nature, that is, specific, measurable,
achievable, relevant and time bound.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Chandler: 3 Components
of Good Strategy
•The determination of the basic long-term goals concerns the
conceptualization of coherent and attainable strategic objectives.

•The adoption of courses of action refers to the actions taken to

arrive at the objectives that have been previously set.

•The allocation of resources refers to the fact that there is likely to

be a cost associated with the actions required to achieve the
objectives.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Schools of Strategy
The positioning school is founded on ‘positioning’ the organization in
the ‘best’ place in the market or industry ‘space’ based on the
structure-conduct-performance paradigm (Scherer, 1980).

Performance is dependent on the conduct (activity, tactics or strategy)

displayed by buyers and sellers in any given market, based on a range
of criteria such as prices, investment, advertising, technological
development, firm collaboration and so on.

In turn, such conduct is dependent on the structure of each given

market, defined by the number, size and distribution of sellers and
buyers, the degree of product differentiation, entry barriers, cost
structures, integration and diversification, and the resulting
attractiveness of the industry/market.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Schools of Strategy cont.
The resource-based view (RBV) views superior performance
as resulting from the better use of underlying assets deployed
by a firm, with an emphasis on innovation, creativity, value
chains, knowledge and talent and, more recently, dynamic
capabilities.

Therefore, these ‘assets’ are deemed to provide not only the

industry threshold competences but core competences,
making competitive advantage more difficult to copy and
potentially more sustainable, especially if the advantage is
embedded in the skills, knowledge, networks and processes of
the organization.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Schools of Strategy cont.
So, in effect,

... the positioning school has an ‘outside-in’ perspective

(outside – external environment, in – influences
organization strategy).

... the resource-based view has an ‘inside-out’ perspective

(inside – use of resources and competences, out –
influences environment and performance).

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Evolution of
Business Strategy
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5
(1950s) (present)
Strategy Business Control and Positioning Resource- Dynamic
approach contexts planning based view capabilities
Themes Budgetary Economies of Economies of Economies of Innovation and
control scale scope expertise creativity
Emphasis Budgets and Mergers Industry Value creation Agility and
control diversification leadership and capability speed
and
building
acquisition
Frameworks Financial Forecasting, Environmental Competences, Innovative
/ techniques control, synergy, and analysis, core capabilities,
forecasting, BCG industry competence, adaptive
budgeting structure knowledge capabilities,
analysis, management, adoptive
SWOT, value chain, capabilities,
globalization learning collaboration,
organization knowledge
management

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Business Strategy
Framework

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Reading
Argyris, C. (1977) ‘Double loop learning in organisations’, Harvard Business Review, 55: 115–25.
Grant, R.M. (1996) ‘Prospering in dynamically-competitive environments: organizational capability as
knowledge integration’, Organization Science, 7(4): 375–87.
Jacobson, R. (1992) ‘The “Austrian” School of Strategy’, Academy of Management Review, 17(4):
782–807.
Kay, J. (1995) ‘Learning to define the core business’, Financial Times, 1 December.
McKiernan, P. (1997) ‘Strategy past; strategy futures’, Long Range Planning, 30(5): 790–8.
Mintzberg, H. (1990) ‘The design school: reconsidering the basic premises of strategic management’,
Strategic Management Journal, 11: 171–95.
Newbert, S. (2005) ‘New firm formation: a dynamic capability perspective’, Journal of Small Business
Management, 43(1): 55–77.
Nonaka, I., Toyama, R. and Konno, N. (2000) ‘SECI, Ba and leadership: a unified model of dynamic
knowledge creation’, Long Range Planning, 33(1): 5–34.
Prieto, I.M. and Easterby-Smith, M. (2006) ‘Dynamic capabilities and the role of organizational
knowledge: an exploration’, European Journal of Information Systems, 15(5): 500–10.
Teece, D.J., Pisano, G. and Shuen, A. (1998) ‘Dynamic capabilities and strategic management’,
Strategic Management Journal, 18(7): 509–33.
Wenger, E. and Snyder, W. (2000) ‘Communities of practice: the organizational frontier’, Harvard
Business Review, 78(1): 139–45.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Review Questions
1. Explain the difference between each of the
Ps in Mintzberg’s view of strategy.

2. Comment on the appropriateness of

Chandler’s definition of strategy.

3. Evaluate the differences in perspective

between the positioning view of strategy and
the resource-based view.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction