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Complete Summary for open-book exam week 1-5-book & lectures & tutorials - summarised and explained
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Final Exam Strategy & Organization NotesWeek 1
Topic 1
1.1 INTRODUCTION
▪ Strategy is about key issues for the future of organizations
▪ Strategy questions matter more widely than only to entrepreneurs or senior mangers-middle
managers also have to understand the strategic direction of their organizations, to get top
management support and to explain their organization's strategy to the people they are
responsible for
▪ Book looks at both the economics of strategy and the people side of managing strategy in
practice
▪ Important is strategy to explore several options, probing each one before making choices
1.2 What is strategy?
▪ Strategy is the long-term direction of an organization ex. Disney: from cartoon to diversified
entertainment
1.2.1 Defining Strategy
▪ Chandler: logical flow from the determination of goals and objectives to the allocation of
resources
▪ Porter: deliberate choices, difference and competition
▪ Mintzberg: uses the word pattern to allow for the fact that strategies do not always follow a
deliberately chosen and logical plan, but can emerge in more ad hoc ways
Book’s definition
▪ Exploring strategy: the long-term direction of an organization
1. Long-term direction of an organization can include both deliberate, logical strategy and more
incremental emergent patterns of strategy
2. Long-term direction can include both strategies that emphasis difference and competition
▪ Long-term: the three horizontal framework: suggest organization shield think of themselves as
comprising three types of business or activity, defined by the horizons in terms of years
Horizon 1: businesses are basically the current core activities
Horizon 2: businesses are emerging activities that should provide new sources of profit
Horizon 3: for which nothing is sure, risky research and development projects, start-up ventures
▪ Strategic direction: typically set strategy according to long-term objectives- in private sector:
objective usually maximizing profits for shareholders, but profits do not always set strategic
, direction, family businesses may sometimes sacrifice the maximization of profits for family
objectives
▪ Organization: involve complex relationships, both internally and externally-organizations typically
have many internal and external stakeholders, externally organizations are surrounded by
important relationship, e.g. with suppliers, customers, regulators and investors
Book takes the view that managing is always important in strategy- good strategy is about the
practicalities of managing as well as the analysis of strategizing
1.2.2 LEVELS OF STRATEGY
▪ Corporate-level strategy: is concerned with the overall scope of an organization anyhow value is
added to the constituent businesses of the organizational whole (being clear about corporate-
level strategy important: determining the range of businesses to include is the basis of other
strategic decision, such as acquisitions and alliances
▪ Business-level strategy: about how the individual businesses should compete in their particular
markets - concerns with issues such as innovation, appropriate scale and response to
competitors’ moves- should clearly fit with corporate-level strategy
▪ Operational Strategies: concerned with how the components of an organization deliver effectively
the corporate-and business-level in terms of resources, processes and people
1.2.3 STRATEGY STATEMENTS
David Collins and Rukstad argue that all entrepreneurs and managers should be able to summaries their
organization's strategy with a strategy statement - should not be more than 35 words long (easy to
remember)
▪ Strategy stem tents: should have three main themes: the fundamental goals (mission, vision or
objectives) that the organization seeks, the scope or domain of the organization's activities; and
the particular advantages or capabilities it has to deliver all of these
▪ Mission: refers to the overriding purpose of the organization - what business are we in?
▪ Vision: the desired future state of the organization, it is an aspiration which can help mobilize the
energy and passion of organizational members - what do we want to achieve?
▪ Objectives: quantifiable stamens of the organization's goals over some period of time - what do
we have to achieve in the coming period?
▪ Scope? Customer, geographical location, extent of internal activities (vertical integration)
▪ Advantage: how the organization will achieve the objectives it has set for itself in its chosen
domain, competitive advantage: how a particular company or sports club will achieve goals in the
face of competition form other companies or clubs
1.3 THE EXPLORING STRATEGY MODEL
▪ Understanding the strategic position of an organization: assessing strategic choices for the future,
and managing strategy in action
, ▪ Interconnected circles are designed to emphasize this potentially non-linear nature of strategy
▪ Position, choices and action shield be seen as closely related, and non has priority over another
in practice
1.1. Strategic Position
▪ The impact on strategy of the external environment, Theo organization's strategic capability, the
organization's goals and the organization's culture
▪ Environment: opportunities and threats available to the organization in this complex and changing
environment
▪ Strategic capability: made up of: resources (machines and buildings) and competences (technical and
managerial skills) - where is it at a completive advantage or disadvantage?
▪ Strategic purpose: what is the organization's strategic purpose; what does it seek to achieve?
Corporate governance: how to ensure that managers stick to the agreed purpose? Is the purpose an
appropriate one and are managers sticking to it?
▪ Culture: are typically a product of an organization's history- this can be a drift, a failure to create
necessary change - how does culture fit with the required strategy?
1.3.2 Strategic choices
▪ The options for strategy in terms of bout the directions in which strategy might move and the methods
by which strategy might be pursued
, ▪ Business Strategy: there are strategic choices interns of how the organization seeks to. Compete at
the individual business level
▪ Corporate strategy and diversification: the appropriate degree of diversification, with regard to products
offered and markets served
▪ International strategy: internationalization is a form of diversification into new geographical markets -
where internationally should the organization compete?
▪ Innovation and entrepreneurship: entrepreneurship: is an act of innovation too- whether the
organization is innovating appropriately
▪ Acquisitions and alliances“ organization have to make choices about methods for pursuing their
strategies, many organizations prefer to build new businesses with their own resources
1.3.3. STRATEGY IN ACTION
▪ Managing strategy in action is about how strategies are formed and how they are implemented,
emphasis on practicalities of managing
▪ Strategy performance and evaluation: are the options suitable in terms of matching opportunities and
threats, are they acceptable in the eyes of significant stakeholders, and are they feasible give the
capabilities available?
▪ Strategy development process:
The Glastonbury Festival’s mission statement
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