D39BU – Strategic Management in the Built Environment

1. D39BU – Strategic Management in the Built Environment sl/BMBE/2017 Lesson Three : The Strategic Management Process

2. What is strategy?What is strategic management? D39BU – Strategic Management in the Built Environment sl/BMBE/2017

3. According to Whittington (2001)… D39BU – Strategic Management in the Built Environment … strategy should be treated as the contested and imperfect practice it really is ….which means that strategy is elusive and abstract as it is a very long term development. sl/BMBE/2017

4. What is strategy? D39BU – Strategic Management in the Built Environment According to Chandler (1962) Strategy is 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 to achieve those goals …. sl/BMBE/2017

5. D39BU – Strategic Management in the Built Environment Other definitions of strategy … Strategy is the skill in managing or planning… or “Strategy is the primary means of reaching the focal objective. sl/BMBE/2017

6. Other definitions of strategy D39BU – Strategic Management in the Built Environment • The art or science of the planning and conduct of war – Collins (1995) • Strategy is supposed to lead an organisation through changes and shifts to secure its future growth and sustainable success- Cleggs(2005) • The process of formulating, implementing of actions derived from a competitive position which is based on distinctive capabilities to have relationship with customers, suppliers, employees etc. -- Kay 1993 sl/BMBE/2017

7. STRATEGIC MANAGEMENT D39BU – Strategic Management in the Built Environment BUSINESS POLICY Providing the road map and the destination /goals TOP Mgt/CEO DIVISIONAL MANAGERS THE ROLE OF EACH Strategic Business Unit POLICY sl/BMBE/2017 TACTICAL OR OPERATIONAL PLANS Rest of organisation

8. Some of the common strategic issues D39BU – Strategic Management in the Built Environment 1. Growth concerns - 2. Diversification issues and problems sl/BMBE/2017 3. Issues of competitive advantage

9. MEANING OF strategic planning D39BU – Strategic Management in the Built Environment Knowing where your organisation Is heading and how to get there? Setting clear objectives and mobilising resources to achieve the objectives Thinking in long term Taking into account the macro - environment in which the organisation operates – looking at what you can do better than competitors 70 50 30 sl/BMBE/2017 10 Yr 4 Yr 1 Yr 2 Yr 3 For example: Growth of Business

10. Strategic Issues & concerns D39BU – Strategic Management in the Built Environment • Addressing and developing organisation aims & goals • Examining values and cultures underpinning the organisation • Assessing the appropriateness of structure for future directions • Exploring marketplace relationships and stakeholders’ concerns • Exploring current and future expectations on ROI etc sl/BMBE/2017

11. D39BU – Strategic Management in the Built Environment Strategic planning is aimed with the following objectives • To maximise shareholders’ values • To achieve competitive positioning and power • To help grow profits and expand the organisation • To satisfy customers • To provide employment for the community (Refer to Pg 4 Unit 4 ) sl/BMBE/2017

12. D39BU – Strategic Management in the Built Environment Overview of development of strategic management … DYNAMIC FORMULATION AND IMPLEMENTATION COMPLEXITY STRATEGIC PROCESSES COMPETITIVE ADVANTAGE sl/BMBE/2017 PHASE OF GENERALISATION STRATEGIC PLANNING FORMULATION IMPLEMENTATION Competitiveness Value chain Generic strategies Strategic plans/SWOT Life cycle / portfolio/ PIMS Strategy processes Orgn learning BPR Merger and acquisition TIME

13. D39BU – Strategic Management in the Built Environment Overall view of Strategic Management Step 1 Step 3 Step 4 Step 2 sl/BMBE/2017 Opportunities & Risks –assessments By considering Resources and capability Implementing strategies and action plans Evaluation of Best match between Opportunities and resources Environmental scanning

14. Dimensions of strategy D39BU – Strategic Management in the Built Environment implementation Scope Acquisition and internal dev Content Activities/resources/technology process Diversification/growth STRATEGY sl/BMBE/2017 Central or decentral orgn/structure philosophy Method Report/plan /what model? Time framed Ownership Analytic/deductive/ enterpreneurial/system How many year frames? Specialists/top mgt /employees

15. Hierarchy of Strategy D39BU – Strategic Management in the Built Environment Corporate Strategy Corporate HQ Business Strategy Business Unit Business Unit Business Unit sl/BMBE/2017 Functional/ operational Strategy Operations Finance Marketing Research & development Human resources

16. Difference between Strategic & operational Management D39BU – Strategic Management in the Built Environment sl/BMBE/2017 Refer to Pg 5 Unit 4

17. According to Whittington … D39BU – Strategic Management in the Built Environment … strategy should be treated as the contested and imperfect practice it really is ….which means that strategy is elusive and abstract as it is a very long term development. He develops what we know as the 2 x 2 framework or the 4 perspectives of management approach sl/BMBE/2017

18. 4perspectives on strategy – each will have different impact on management style of organisation leadership D39BU – Strategic Management in the Built Environment • Classical • Evolutionary • Processual • Systematic sl/BMBE/2017

19. Diagram on the 4 perspectives on strategy D39BU – Strategic Management in the Built Environment Outcomes profit maximisation CLASSICAL EVOLUTIONARY Processes Deliberate emergent SYSTEMATIC PROCESSUAL plural /mixed sl/BMBE/2017

20. Diagram on the classical approach on strategy D39BU – Strategic Management in the Built Environment Outcomes profit maximisation CLASSICAL X Processes Deliberate emergent plural /mixed sl/BMBE/2017

21. D39BU – Strategic Management in the Built Environment Classical Perspective • Rational planning because profitability is the supreme goal of business ; • Strategic position of the firm is vital to achieve profit maximisation as it is the aim of business to earn a return on capital • Top down , rational management approach to decision making and focus on long term goals through logical cascading of actions and resource Refer to the supplementary notes “ British Library :the world’s knowledge” sl/BMBE/2017

22. Advantages of Classical Approach D39BU – Strategic Management in the Built Environment • Accountability and control by top management so that middle management can concentrate on operational matters; • Military tradition of strategy means that decision making is centred on the leader who has the foresight and the experience to plan and execute proper command • Rational and well thought long term planning focussed on fulfilling objectives set sl/BMBE/2017

23. Disadvantage of classical planning D39BU – Strategic Management in the Built Environment • Top management may not be able to know all the issues at hand and act rationally • Bureaucratic and slow process thus causing time wastage • Decision making may not be for the benefit of all stakeholders as it is too rigid sl/BMBE/2017

24. Diagram on the evolutionary approach on strategy D39BU – Strategic Management in the Built Environment Outcomes profit maximisation EVOLUTIONARY X Processes Deliberate emergent plural /mixed sl/BMBE/2017

25. Evolutionary Approach to Strategy D39BU – Strategic Management in the Built Environment • Based on groups of managers to plan and strategize using the best possible methods such as cost-benefit analysis and other ways to map out resources and strategies for business development and growth • Decision making is based on various options and consensus by managers and experts in the field , taking into account competition in the market place sl/BMBE/2017

26. Advantages of evolutionary perspective D39BU – Strategic Management in the Built Environment • Take into consideration competitive environment in which business operates; • Let nature takes its course so the decision makers consider many factors in the ecology of business and select the best alternative for survival and growth sl/BMBE/2017

27. Problems encountered using evolutionary perspective D39BU – Strategic Management in the Built Environment • Organisations may lack capacity to achieve differentiation and adaptation to sustain competition; • Markets are unpredictable and the environment can be dynamic and turbulent which results in changes which may be too rapid for the organisations to slowly evolve.. sl/BMBE/2017

28. Diagram on the PROCESSUAL APPROACH on strategy D39BU – Strategic Management in the Built Environment Outcomes profit maximisation Processes Deliberate emergent x PROCESSUAL plural /mixed sl/BMBE/2017

29. Processual approach to strategy D39BU – Strategic Management in the Built Environment • Similar to evolutionary approach but more cautious by taking small steps procedurally and carefully to achieve objectives ; • Internal procedures and external complexities are weighed by managers in decision making • Taking feedback from the ground and enabling people’s opinion so that a satisfactory option is presented for implementation sl/BMBE/2017

30. Advantages of processual approach D39BU – Strategic Management in the Built Environment • This kind of management takes into consideration individual interest via the bounded rationality to derive at a decision • Strategies are chosen not programmed – depending on the emergent issues that arise • Decisions are made after considering human factors and behaviours to integrate best decisions sl/BMBE/2017

31. The challenges of processual approach D39BU – Strategic Management in the Built Environment • Time consuming due to the need to consider many variables and could endanger the organisation’s long term survival; • Does not take rational thinking seriously • Lack of sufficient managers with the right skills and knowledge to ensure success of this kind of strategy so decisions may not be the optimal solutions – may just be satisfying ones only sl/BMBE/2017

32. Diagram on the SYSTEMIC APPROACH on strategy D39BU – Strategic Management in the Built Environment Outcomes profit maximisation Processes Deliberate emergent X SYSTEMATIC plural /mixed sl/BMBE/2017

33. Systemic perspective on strategy D39BU – Strategic Management in the Built Environment • Examines the various social systems within the organisation and evolve decisions that consider both economic and social implications • Depending on the internal corporate culture, the decision makers go by the rules of the majority so as to get viable goals achieved which may not be the profit maxmisation objective but achieve overall stakeholders’ satisfaction sl/BMBE/2017

34. Advantages of Systems View D39BU – Strategic Management in the Built Environment • All stakeholders are involved in the social systems of the organisation ; • Take into embedded systems within the organisation and consider all social groups’ inputs such as culture and values sl/BMBE/2017

35. Demerits of the systemic perspective D39BU – Strategic Management in the Built Environment • Various social and cultural systems may have conflicts with each other causing dissent and unhappiness within the organisation; • May result in some dominant decision makers who may push through their ideas and decisions sl/BMBE/2017

36. D39BU – Strategic Management in the Built Environment Table showing the various elements associated with the 4 perspectives on strategy sl/BMBE/2017

37. D39BU – Strategic Management in the Built Environment In essence … • The 4 approaches/theories or perspectives show different ways in which management look at strategic decisions. • The classical school confidently prescribes a rational detached and sequential approach to long term strategic management; • The evolutionary and processual perspectives are more cautious and plan according to hierarchy which work well in stable environments while • the systems approach is more relativistic taking into account the social systems and the environment interaction sl/BMBE/2017

38. Exam questions on whittington Explain what do you understand by Richard Whittington’ 2x2 framework of generic perspective on strategy. Draw the diagrams depicting the 4 perspectives relating to his theory sl/BMBE/2017

39. As organisations are operating in a competitive world, strategies are developed to cope with the need to survive in the marketplace. Strategic management is supposed to help organisations steer through changes and shifts in the environment to secure future growth and sustainable success . D39BU – Business Management in the Built Environment Another look at strategic positioning in reality … sl/BMBE/2017

40. D39BU – Business Management in the Built Environment Strategic positioning in reality … • Just like you and I, without a long term goal, we will be aimless, so organisations need goals, vision, mission to enable them to sail through the storms of competition, changes in the market etc.. In fact, strategic planning is similar to the art of war (Sun Tze) – you need to understand strategic positioning and also the process of analysis, formulation and then implementation of your tactics and operations in order to succeed in business sl/BMBE/2017

41. D39BU – Business Management in the Built Environment Strategies are based on certain schools of thoughts on which differs in the way strategic planning is done 3 basic thoughts via … • Classical or rational planning school • The design school • The positioning school sl/BMBE/2017

42. D39BU – Business Management in the Built Environment 1. Classical or rational planning school • is fashioned after Alfred Chandler’s model, where planning is top down, bureaucratic approach of central decision which is cascaded down to the bottom of the hierarchy in the organisation • Igor Ansoff’s model of 3 levels of decisions: Strategic --- then Operational --- Administrative in a pyramidal format like this below: sl/BMBE/2017 Strategic level Operational level Administrative level

43. D39BU – Business Management in the Built Environment 2. The Design school of thought • Fashioned like the planning school except that there is internal focus on SWOT and external analysis of the environment • This process is adopted by most organisations today - • 7 steps to strategic planning will be discussed ………next slide sl/BMBE/2017

44. D39BU – Business Management in the Built Environment Diagram showing the process of strategic planning – a 7-step model Vision & mission Swot analyss STEEP & Scenarios Planning Strategic analysis & options decision making sl/BMBE/2017 implementation Evaluation & monitoring

45. Vision and Mission D39BU – Business Management in the Built Environment • Discuss in pairs the various vision and mission of these organisations given in the exercise (we did it in the last lesson) • Write your own vision and mission for 2015 & beyond sl/BMBE/2017

46. 3. The positioning school : michael porter’s model – also part of the evolutionary/competitive perspective D39BU – Business Management in the Built Environment This is the strategic approach based on competition –survival of the fittest. Porter argues that profitability of an organisation lies in the power of the organisation to position itself against the others in the industry and how it uses its capabilities to handle its bargaining position to sustain growth and success. sl/BMBE/2017

47. D39BU – Business Management in the Built Environment MICHAEL PORTER: Guru of Strategic Management His theories include: • Diamond Model • Generic Business strategies • 5 Forces Model • Value Chain Analysis etc.. sl/BMBE/2017

48. Michael Porter’s strategies Will be discussed in detail in Lesson 4 sl/BMBE/2017

49. Discuss the following question : Which strategic approach do you think is adopted by your senior management? sl/BMBE/2017

50. Core reading for module D39BU – Strategic Management in the Built Environment Useful reading material • Carter, C., Clegg, S., Kornberger, M (2008) A very short, fairly interesting and reasonably cheap book about studying organisations, Sage, London • Clegg, S., Kornberger, M., Pitsis, T. (2005) Managing and Organisations: An introduction to theory and practice, Sage, London • Whittington, R. (2001) (2nd Ed.) What is Strategy – and does it matter?, Thomson, London • Mintzberg, H., Ahlstrand, B., Lampel, J. (1998) Strategy Safari: the complete guide through the wilds of strategic management, Prentice Hall, London • Langford, S., Male, S. (2001) Strategic Management in Construction, Blackwell, Oxford • Journal papers..................... sl/BMBE/2017