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Learning Objectives• Define what is meant by strategy and strategic management • Explain the difference between emergent and intended strategy • Define the four main types of strategy fo

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Strategic management

Lecture One:

• Introduction to the Unit

• Strategic Management & Competitive Advantage

Part A:

Unit Overview

Who Am I?

• Dr Stuart Crispin (Unit Coordinator)

• Room – A240 (L), Com308 (H)

• Phone – 62267476

• Email – Stuart.Crispin@utas.edu.au

• Skype – scrispin

Unit Overview

• Capstone unit – focus on strategic management of ‘organisation’ (for-profit and not-for-profit).

• Internal and external analysis, business-level and corporate-level strategy, corporate governance.

• Markets are more dynamic, global, and competitive.

Unit Overview

• MyLO:

• Begin Here– unit outline & study guide.

• Learning Hub – lecture slides and additional content.

• Assessment – information about assessment items and submission.

• News.

• Q&A Forum.

• Communication.

• Our expectations.

Part B:

Strategic Management & Competitive Advantage

Learning Objectives

• Define what is meant by strategy and strategic management

• Explain the difference between emergent and intended strategy

• Define the four main types of strategy formulation process

• Explain how strategic thinking is used to achieve differentiation leading to sustainable competitive advantage

Learning Objectives

• Assess the role of internal and external environment analysis in strategic management

• Incorporate the vision, values, ethics and stakeholder needs into organisation purpose

• Define the role of strategic objectives and performance measures

• Explain the two mechanisms by which sustainability is incorporated into strategic objectives

• Distinguish between corporate-, business- and functional-level strategies

• Strategic management plays in essential role in:

• (1) setting the direction for organisational development and,

• (2) securing its future survival and growth

• Strategic management is critical in both difficult and prosperous business environments(always change) – albeit for different reasons

• Despite the advantages of strategic management, it is not used consistently by organisations

What is Strategy?

• A strategy is a plan or guide to future action.

• It is designed to ensure fit between the entity (person, group, society, organisation) and the

environment.

• Based on assumptions about the future.

• Represents decisions about the best (most effective) use of our limited resources – it is the end

point of a series of decisions/choices Best decision to use resources

• Strategy can create path dependence and lock-in.

What is Strategic Management?

• Strategic management is the process of directing and strengthening an organisation in its

competition with other organisations.

• Strategic management should be a central consideration for all organisations

• It is not a simple process and contains multiple dimensions

• Strategic management theories help understand why organisations succeed or fail

• Strategic management is a process – formulation, implementation, evaluation and control

What is Strategic Management?

• Strategic management argues that organisational performance is affected by the:

• (1) characteristics of the organisation and, resources

• (2) environment in which an organisation exists

• Extensive research confirms that effective strategy leads to organisational success

• Effective decision making is a fundamental component of strategic management

Why Does An Organisation Need A

Strategy?

There are many reasons why a strategy is needed:

• (1) A strategy acts as the key driver of how and where the organisational resources are invested

• (2) The strategy of an organisation also influences its pattern of investments

• (3) Ensure continued fit between the organisation and the environment.

• The strategy ensures that the organisation has sufficient flexibility to respond to environmental

changes.

Strategic Management Approaches

• The practice of strategic management incorporates distinct perspectives

• A key issue is the degree to which strategy can actually be planned and how much emerges from the organisation’s actions plan&emerges

• The debate between these two positions of 1980s, laid the foundation of modern concept of strategic management

Mintzberg’s Five Psfor Strategy

Table 1.1

Part C:

Strategy Formulation Process

The Strategy Formulation Process

• Strategic management is influenced by multiple, sometime conflicting theoretical approaches.

• Whittington has synthesised these perspectives into four distinct based on two key dimensions:

1 The extent to which the perspective assumes a single profit-maximisation motive versus a broader (pluralist)

one.

2 The extent to which the theories assume that strategic management is a deliberative, rational planning process

verses an emergent process.

Generic Perspectives On Strategy

Fig 1.1

Sequential approach

• Often considered as the ‘standard’ approach, it comprises:

• Gathering information about your situation and the environment

• Determining the directions to take, given the information available

• Selecting a specific direction

• Taking steps to implement your decision

• Managing, monitoring and controlling your actions to achieve the desired outcome

Incremental Approach

• An incremental approach to the process of formulating strategy leads to evolutionary and gradual development of strategy

• It can be an iterative process with some steps occurring simultaneously

• It is less appropriate in rapidly changing organisational environment

Revolutionary Approach

• Developed in the 1990s, it is described as part planning and part trial and error until a successful approach is identified

• Three important questions to consider are:

• Who are our customers?

• What do we offer our customers?

• How do we go about doing the above two?

Part D:

Modern Strategic Management

Modern Strategic Management

• Modern approach to strategic management is viewed differently from the previous four approaches

• It is considered as an outcome of both deliberate and emergent attempts

• The optimal balance between deliberate and emergent components to strategy

depends on the stability of the external environment

Strategic Intent

• Strategic intent sets the aspirations that can motivate and inspire the organisation

• Hamel and Prahalad argue that strategic intent creates an extreme misfit between

resources and ambitions Top management then challenges the organisation to close the gap by building new competitive advantages’

Strategic Thinking

• Strategic thinking is one of the most important dimensions of modern strategic

management

• It extends the idea of strategic intent to cover the whole strategy formulation

process and not just the broad thrust and objectives.

• It is one of the main contributions to modern strategic management that differentiates

it from its processor, strategic planning

Strategy and Differentiation

• An important objective of strategic management is to create differentiation between the organisation and its competitors or the other entities operating in its space

• Differentiation should lead to stakeholders, particularly customers or other primary users to prefer one organisation over another

• Sustainable competitive advantage refers to organisational capacity to continuously

outperform its rivals in attracting customers

• A competitive advantage is more likely to be sustainable if it is based on

organisational processes rather than products and sets of assets

Sustainable Competitive Advantage

Organisational Purpose

• Organisational purpose can help in addressing many questions including:

• who the organisation exists to serve and

• how they should be served?

• Understanding of organisational purpose is critical for decision making in complex and ill

defined environment

Organisational Vision and Mission

• Vision refers to the desired (long term) future state of the organisation

• Mission refer to a shorter term version of the vision, incorporating the values and expectations of the major stakeholders and contemporary environmental factors

Organisational Values and Ethical Position

• Value statement is a brief description of the stakeholders and behaviours the

organisation considers most important

• Ethical position refer to the standard of behaviour the organisation sets for itself and its staff members

Key Organisational Stakeholders

• It is important for every organisation to clearly identify its key stakeholders

• Some of the key stakeholders include:

Typical Expectations of Key Stakeholders

Table 1.2

Part E:

Strategic Management Framework

A Framework for Strategic Management

• The planned components of strategic management involve the following seven aspects:

• The external environment general environment

• The internal characteristics of the organisation

• The setting of objectives

• The crafting of strategies

• Implementation of change

• Performance measurement

• Plan adjustment

Types of Strategies

• Corporate-level strategy refers to the selection of businesses in which a company

should compete

• Business-level strategy the actions that a company implements to create a

competitive advantage over rivals เเเเ

• Functional-level strategy suggest how the organisation supports its business-level

strategies

Strategy in the Public Sector

• Although the basis for strategy is the same, there are some differences in the way in which strategic management is implemented in the public sector

• These are primarily due to external environment of the public sector industry.

• The performance measures are also different

Offensive and Defensive Strategies

• The two most general modes of competition refer to offensive and defensive

strategies

• An offensive strategy is intended to increase the market share or leadership position

of an organisation at the expense of competitors

• A defensive strategy is intended to protect the market share position of an

organisation against the offensive strategy activities of competitors

• The importance of organisational purpose and the role of vision and missions in

reflecting the needs of key organisational stakeholders is a very important component

of strategy formulation