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Strategy. The word strategy has its roots in the greek word strategos . The word means ”the one who leads ” an army, (what we today would call a general). The task of an leader of an army is to lead it to victory. How does he do that? What does he do?. Not by all means.
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Strategy • The word strategy has its roots in the greek word strategos. The word means ”the one who leads” an army, (what we today would call a general). • The task of an leader of an army is to lead it to victory. • How does he do that? What does he do?
Not by all means... • He starts by setting objectives for the army. Victory is achieved if those objectives are reached. • He then outlines by which means (how) those objectives will be achieved. • Which means he chooses depends on the resources he has at his disposal (manpower, weapons, intelligence, and terrain, as well as the enemy and its manpower, weapons and their strategy in past conflicts).
Show tact... • He will not outline in detail how the army will fight, that is a task for commanders who will be doing the actual fighting. • Their decisions will have to be in accordance with the strategy that was outlined by the leader of the army, be an implimentation of that strategy. The actions they decide are usually called ’tactics’.
In the long run you can change everything.. • People often (quite understandably) confuse ’strategy’ and ’tactics’. • The difference betwen the two is not only that strategic decisions and tactical decisions are made by army ’officers’ of different rank, but that strategic decisions are nearly always decisions that are big and once decided on difficult and time consuming to change.
In the short run you can only change your tie... • Tactical decisions, however, are usually decisions which can rather easily be changed in a short span of time. An example: To blow or not to blow up a particular bridge is a tactical decision which may or may not support the strategy of starving the enemy to surrender by blocking their supply lines. Tactical decisions are made to implement the chosen strategy.
A sound business decision... • An example of this difference from business would be: • A shoping mall opens a petrol station on its parking lot. (Is this a strategic or a tactical decision?) • The same mall decides to stop charging for parking. (Is this a strategic or a tactical decision?)
”Hail to the chief...” • Of course modern company executives are not generals. Business studies, however, developed out of engineering which was first academically taught in military academies. The model of the company ceo as an all powerful army leader has been slow in dying. Maybe the reason is how strategy is taught.
Before or after..? • No ceo in a modern company decides the strategy alone. Strategy is usually the outcome of input from all levels of managment. Top managment only finalises and shapes the input into a strategy. • There are professors who maintain that managers are deluding themselves when they think they set strategy. Strategy rather than being set before hand ’emerges’ from the actions of the comany.
Life is but a game... • Let us now consider briefly how strategy is used by companies in a modern market economy (in an economy characterised by monopolistic competition). Let us look at game theory. The simplest example of game theory is the so-called ’prisoners dillemma’ game. (The ’cold war’ was also an example of this game.)
The Prisoners’ Dilemma Game Consider two firms in a duopoly each with a choice of producing “high” or “low” output:
A rope trick... • Strategy as an academic subject is a blend of various subjects. • Many things will be familiar for your from previous courses. • Like a godd chef the strategos blends together various ingredients and the outcome is the firms ’strategy’. • In this course we will take many of your previous subject and twist out of them a ’rope’. The rope becomes stronger the stronger you are in those subjects.
I/O Model of Above-Average Returns • The industry in which a firm competes has a stronger influence on the firm’s performance than do the choices managers make inside their organizations • Industry properties include • economies of scale • barriers to market entry • diversification • product differentiation • degree of concentration of firms in the industry
Resource-Based Model of Above-Average Returns • Each organization is a collection of unique resources and capabilities that provides the basis for its strategy and that is the primary source of its returns • Capabilities evolve and must be managed dynamically
Impact of prescriptive and emergent approaches on three core areas
Impact of prescriptive and emergent approaches on three core areas (continued
