General and Strategic Management (GSM1):

1. General and Strategic Management (GSM1): Dr Kevan Williams 6 December 2005

2. What happened this week?

3. What happened this week? “ITV may be forced to scrap news channel” “…have lost about £30m since it was launched in August 2000.” “In October its share of the total television audience was just 0.1% compared with 0.5% each for the other two broadcasters.” “The channel has been a serious drain on the main ITV network.”

4. Today • Recent developments in strategy • …towards the end of the course • Beginning of the course review • Thoughts on the exam

5. Recent Developments • Leadership • Governance • Managing change • Technology • International

6. Leadership

7. Leadership • The growing emphasis on leadership including the cult of ‘celebrity’ in leadership? • “Management is doing things right; leadership is doing the right things.” Peter Drucker • “Leadership is practiced not so much in words as in attitude and in actions.” Harold Geneen, Chairman, ITT Corp • See leadership in earlier lectures (and in GSM2)

8. Leadership Marks & Spencer in 2004 Good example of different leadership styles - See previous articles / studies "It's not going bust and it doesn't have outrageous debts but it's in a cycle of decline and it's hard to see where that's going to stop,"

9. Leadership Mistakes The chief executive of Barclays Bank has done a Gerald Ratner. He went before a select committee of MPs and - in front of a battery of TV cameras and newspaper reporters - admitted that he doesn't own a credit card because it's too expensive.

10. Governance “The chairman will get his way BSkyB shareholders are unlikely to prevent James Murdoch's appointment” “NYSE plans independent board GRASSO RESIGNATION” “Slow progress expected to end white, male dominance”

11. Managing Change “BMW’s Coup: It Outsourced a Whole New Car”

12. Technology “Research offers cancer drug hope” “US scientists plan to create new life form”

13. International – a multidimensional issue • A global shift in power • Easier to trade globally – technology driven • Threat and opportunity • “Italian lingerie maker [SG3]dodges China threat” http://news.bbc.co.uk/1/hi/business/4469724.stm • Journal of International Business Studies – going since 1970! – some people now waking up! • The Great Reverse – Part IIIBurgeoning Sino-Indian trade ties may significantly alter the world economic balance Anna Greenspan YaleGlobal, 8 September 2004 • Other issues…?

14. International - Tesco “Sales across the group jumped 13.9% during the 14 weeks to 19 November, led by a 23.3% surge in international sales. UK sales grew by 11.6%.” “Analysts say it plans to increase its global presence to offset a lack of growth opportunities in the UK.” “In the past four weeks, the firm has opened 25 stores in eight countries, including its first store in Guangzhou, southern China.” “Tesco said it was on track to open 150 stores abroad in the second half of the year.”

15. Review: What is Strategy About? • Different schools and expert opinions (Porter, Hamel, Mintzberg etc) • Different ways in which strategy gets created and implemented (Design, experience, ideas)

16. Strategy Development - Strategy as Design - Strategy as Experience - Strategy as Ideas Three Viewpoints or ‘Lenses’ - Strategic Planning - Strategic Leadership - Organisational Politics - Logical Incrementalism - The Learning Organisation - Imposed Strategy Six ways in which strategy can be developed in practice

17. I. Strategy Development Current Mission, Vision, Strategy, Objectives Organisational Competencies, Strengths and Weaknesses External, Economic Industry and Market Environments Desired Future Mission, Vision, Strategy, Objectives II. Strategy Implementation Strategic Plans Action Programmes Organization & Systems People Resources Strategic Management:the Design Viewpoint Stakeholder Needs

18. Some Tools and Techniques of the Design Viewpoint • MOST: Analysis • Mission • - Objectives • - Strategies • - Tactics Organisational purpose • SWOT: Analysis • Strengths • Weaknesses • Opportunities • Threats Situation Analysis PEST: Analysis - Political - Economic - Social - Technological • Industry Analysis: • 5 Forces • - Strategic groups

19. What are the Most Common Causes of Strategic Failure? • Bad luck • Inward perspective • Failure to generate a coherent strategy • Poor top management • Poor corporate governance • Complacency • Short term focus • Poor timing • Examples?

20. Most Widely Used Management Tools • What are they? • When should they be used? • When should they not be used? • How should they be used properly?

21. Usage of Management Tools http://www.bain.com/management_tools/

22. Most Popular Management Tools http://www.bain.com/management_tools/

23. When to Use the Tools? • Corporate Strategy - Developing Strategy for the Whole Organisation • Value chain integration • Portfolio analysis (BCG, Directional Policy Matrix) • Directional policy matrix • Mergers and acquisitions • Corporate parenting styles • Core competencies (corporate) • Business Strategy – Developing Strategy for a Strategic Business Unit • Single value chain analysis • Resource analysis • Porter 5 forces • PEST analysis • SWOT analysis • Generic business strategy analysis (strategy clock) • Core competencies (business) • Functional/Operations Strategy – Developing Strategy for a Function • e.g. Supply chain strategy

24. Questions to ask When Using Strategy Tools? • Is the tool intended to be used at the level of strategy at which I am operating? • Some tools can be used at different levels, in different ways. Am I using such a tool in the right way? • If multiple tools are available for the same situation, which one is the right one for the job?

25. What Does it Take to be aGood Strategist? • Mindset • Competencies • Training • Experience • Knowledge

26. GSM1...the early days • What is strategy? “The direction and scope of an organisation over the long term, which achieves advantage for the organisation through its configuration of resources within a changing environment and to fulfil stakeholder expectations” • Fit or Stretch (leverage)? • Language of strategy • Levels of strategy • Environmental uncertainty (forecasting / scenarios • Elements of Strategic Management

27. GSM1...understanding strategy development • Strategy development – seen, understood, implications • Three strategy lenses – design, experience, ideas • Strategy development process in organisations • Implications for Strategy Development • Some types of strategy

28. GSM1...The Environment • PESTEL • SWOT • Forecasting and Scenarios • Industry Analysis • Porters 5-forces • Life cycle • Competitive Advantage • Strategic Groups

29. GSM1...Strategic Capability • Roots of strategic capability • Types of resources • Nature of competencies, core competencies, distinctive capabilities [Kay], dynamic capabilities [Teece et al, Eisenhardt & Martin] and critical success factors (CSF’s) • Competitive advantage and capabilities • Framework for analysis: VRIO [Barney 1997]- resources and capabilities should be o Valuable o Rareo Inimitableo Organization can effectively exploit them [www.ecofine.com/strategy/RBV%20of%20the%20firm.htm]

30. GSM1...Strategic Capability…continued • … • Experience curve effects • Value chain analysis • Benchmarking and Knowledge management • Resource-based approach to strategy-development

31. GSM1...Expectations and Purposes • Organisational expectations and purpose • Importance of corporate governance • Stakeholders and stakeholder mapping • Ethical issues and their impact on strategy • Meaning and importance of legitimacy • Culture and its impact on strategy • Communicating organisational purpose

32. GSM1...at the Corporate Level • Nature of strategic choices – Corporate, Business or Competitive, Directions and Methods of Development • Corporate level strategy and multi-business organisations • Creating value through corporate strategy • Different styles of corporate ‘parenting’ – portfolio, restructurer, synergy manager, parental developer • Frameworks for portfolio analysis of corporate strategy – balance, attractive, fit • Diversification strategies • The corporate portfolio and the nature of corporate control

33. GSM1...and at the Business Level • Strategic Business Units (SBUs) and business unit strategy • Competitive advantage • Different ways of achieving competitive advantage – the strategy clock • The meaning and importance of differentiation strategies – cost leadership, differentiation, focus • Relation of differentiation strategies to core competencies • Sustainability of competitive advantage • Cooperation versus competition • Principles of game theory • Fast-paced environments: hypercompetition

34. GSM1...finally Directions and Methods of Development • Identify development directions (new / existing, markets, products) open to an organisation – available, preferred, succeed better • Compare three methods of development (internal, acquisitions, alliances) • Understand the different forms of strategic alliance and the conditions for successful alliances • Strategic evaluation: what makes a good strategy? • Understand suitability, acceptability and feasibility • Selecting strategies for implementation

35. Readings for Exam Preparation • Read…review…and read again chapters 1 – 8 of Johnson and Scholes textbook • Work through case studies in Johnson & Scholes • Review of slides and lecture notes • Read in Management journals – follow-on from the Authors given in the lecture notes • Consider other people’s points of view • Newspapers/Journals – e.g. Financial Times, Economist, Business Week • Visit the Website of Bain and Co to review the management tools (http://www.bain.com/management_tools/) • Visit the Website that goes with the textbook by Johnson and Scholes • Look for real world examples – you must have a few in mind

36. …final thoughts • “Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things.” Miyamoto Musashi • I don't want any yes-men around me. I want everybody to tell me the truth even if it costs them their jobs. Samuel GoldwynUS (Polish-born) movie producer (1882 - 1974)