BUS516 Integrative Business Strategies What is Strategy? Dr. Ellen A. Drost

1. BUS516 Integrative Business Strategies What is Strategy? Dr. Ellen A. Drost

2. The Concept of Strategy OVERVIEW • Ten schools of thought. • Ten different strategy definitions • The evolution of strategic management. • The Basis Framework • Levels of strategy • Strategy making: Design or process?

3. Ten Schools One Word Definitions A DESIGN A PLAN A POSITION A VISION A PATTERN A PERCEPTION AN AGENDA A BELIEF AN EVOLUTION A TRANSFORMATION

4. Ten Schools Word Association 1. DESIGN: plan, long term, fit, SWOT, competitive advantage, deliberate 2. PLANNING: facts, scenarios, analysis, budgeting, scheduling, reason 3. POSITIONING: markets, industry, generic, analytical, experience curve, portfolio, 4. ENTREPRENEURIAL:vision, insight, leadership, simple, gut feel 5. LEARNING: emergent, pattern, serendipitous, venturing, champion intrapreneurship, sense-making, incrementalism, decentralized 6. COGNITIVE: perception, cognition, frame, concept, interpretation, map, frame, brain 7. POWER: resistance, coalitions, stakeholders, conflict, game, bargaining, network, alliance 8. CULTURAL: values, beliefs, commitment, ideology, people, training 9. ENVIRONMENTAL: reaction, passive, evolutionary, contingency, selection, complexity, adaptation 10. CONFIGURATIONAL SCHOOL: any of the above, at the proper time

5. The Ten Strategy Schools 1. DESIGN: a process of conception 2. PLANNING: a formal process 3. POSITIONING: an analytical process 4. ENTREPRENEURIAL: a visionary process 5. COGNITIVE: a mental process 6. LEARNING: an emergent process 7. POLITICAL: a process of negotiation 8. CULTURAL: a collective process 9. ENVIRONMENTAL: a reactive process 10. CONFIGURATIONAL: a process of transformation

6. Ten Different Strategy Definitions 1. DESIGN SCHOOL: a carefully tailored, explicit (unique) plan 2. PLANNING SCHOOL: a systematic, formal plan for five to ten years 3. POSITIONING SCHOOL: a tangible position fitted to context 4. ENTREPRENEURIAL SCHOOL: a leader’s perspective or intuition on a vague vision 5. LEARNING SCHOOL: a pattern that emerges from behavior 6. COGNITIVE SCHOOL: a (creative) interpretive or constructivist view of what is happening or must happen (strategy) 7. POWER SCHOOL: an agenda, a compromised position, often a ploy resulting from bargaining among competing actors 8. CULTURAL SCHOOL: strategy as a social process or set of key values and beliefs on common interest and integration 9. ENVIRONMENTAL SCHOOL: a position as a necessary response to external factors 10. CONFIGURATIONAL SCHOOL: any of the above, at the proper time

7. What are the leading perspectives on what determines how firms compete? Prescriptive SchoolDescriptive Schools a design a vision a plan a perception a position a pattern an agenda a belief a response a stage

8. What are the leading perspectives on what determines how firms compete? Industrial Organization external focus analytical approach Focus on: firm’s position, competitiveness in an industry/market Creation of a unique position, valuable position in industry/market Resource-Based View internal focus learning approach core competence How valuable are the firm’s resources Depends on unique resources and capabilities of the firm Look inside the firm valuable rare costly to imitate

9. The Evolution of Strategic Management 1950s 1960s 1970s Late1980s 1990s Late 90s Budgetary Corporate Corporate Industry analysis Resource Innovation Planning&control planning strategy & competition based view of the firm Financial Control Growth Diversification Positioning, market Core Strategic Portfolio Planning segmentation competency capabilities Budget&planning forecasting Strategic fit Industry Structure Resources Knowledge modeling competitor Capabilities creation analysis Learning Financial mgt key Corporate planning Multidivisional/ Industry Outsourcing Alliances/ matrix structures consolidation redefining Networks globalization Downsizing strategy Virtual org. TQM Reengineering for growth operational asset mgt improvement Themes & Issues Concepts Techniques Organization implication

10. The Basic Framework:Strategy is the Link between the Firm And its Environment GENERAL ENVIRONEMNT Political Economy Technology Socio-cultural THE INDUSTRY ENVIRONMENT Competitors Customers Suppliers THE FIRM Goals and Values Resources And Capabilities Structure and Systems STRATEGY

11. Sources of Superior Profitability INDUSTRY ATTRACTIVENESS Which industries/businesses should we be in? CORPORATE STRATEGY How do we obtain superior profitability? How do we make money? COMPETITIVE ADVANTAGE How should we compete? BUSINESS STRATEGY

12. Levels of Strategy and Organization Structure Corporate Head Office Corporate Strategy Business Strategy Division B Division A R & D R & D Functional Strategies H R HR Finance Finance Production Production Marketing/Sales Mkt/sales

13. The Multiple Roles of Strategy Strategy as Decision Support Improves the quality of decision making Strategy as Coordination and Communication Creates consistency and unity Improves performance by setting high aspirations Strategy as Target

14. The Role of Analysis • Strategy analysis improves decision processes, but doesn’t give answers. • Strategy analysis assists us to identify and understand the main issues. • Strategy analysis helps us to manage complexity. • Strategy analysis can enhance flexibility and innovation by supporting learning.

15. Strategy: Design or Process? You Decide………… Strategy as design Strategy as process Planning and rational choice Many decision makers responding to multitude of external and internal forces INTENDED STRATEGY EMERGENT STRATEGY REALIZED STRATEGY