Chapter 1 – Introducing Strategy
Chapter summary
• Strategy is the long-term direction of an organisation
• The work of strategy is to define and express the purpose of an organisation through its
mission, vision, values and objectives.
• The Exploring Strategy Model has three major elements: understanding the strategic
position, making strategic choices for the future and managing strategy in action
• Many corporations comprise several, sometimes many, strategic business units. Business
strategy needs to be considered and defined in terms of strategic business units (SBUs).
o Corporate strategy involves the decisions and activities above the level of business
units. It is concerned with the scope of the organisation.
o Business strategy is concerned with seeking competitive advantage in markets at the
business rather than corporate level.
• Although the fundamentals of strategy may be similar, strategy varies by organisational
context, for example small business, multinational or public sector
• Management paradigms are changing from the 20th to the 21st Century
What is strategy
Strategy is the long-term direction of an organization
3 horizon framework looking at abilities to grow as company always focus on al 3
Horizon 1 extend and defend core business (ex. uber: bring you from place A to B)
70% of your business
Horizon 2 build emerging business (ex uber: UberEATS) 20% of your business
Horizon 3 create viable options (ex. uber: flying cars in the future) 10% of your
business
- Strategy is to define and express the purpose of an organization to stakeholders
4 ways to define an organization’s purpose
- mission statement = why do we exist
- vision statement = future image
- statement of corporate values = guidance
- statement of objectives = SMART
, Evi Bekooij – 2IBM
The exploring strategy model
Strategic business units & product-market matrix
Strategic Business Units & product-market matrix part of strategic choices
Corporate level at overall business level
Business-level strategy at business unit level
Functional strategies
SBU = strategic business unit = a part of a corporation grouper around a particular activity,
product group or technology
A small company = 1 SBU
Big company = more SBU’s Mars = mars pet care (Whiskas, Pedigree, Sheba, etc.), mars
chocolate (mars, snickers, m&m’s, Twix, etc.), and mars food (Uncle Ben’s, Ebly, Suzi Wan,
etc.)
- each SBU has responsibility for its own business strategy and profit performance
goal of SBUs:
- To decentralize imitative to smaller units within so SBUs can pursue their own distinct
strategy
- to allow large corporations to vary their busines strategies according to the different
needs of external markets
- to encourage accountability – each SBU can be held responsible for the success or failure
of its own strategy
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