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Business Policy & Fundamentals of Strategy
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For Marketing students studying a module in ' Business Policy & Fundamentals of Strategy'. Detailed lecture notes.
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Business Policy & The Fundamentals ofStrategy
Lecture 1
Intro
Learning aims of the module
o To discuss and critically evaluate the key concepts in strategic management
o To use strategic analytical tools with respect to practical business problems
o To compare the different perspectives on strategy and their implications for
managers
o To explain strategic management as an organisational process which involves a
variety of tasks and roles
Readings-core text
o Gamble, Peteraf & Thompson (2019) Essentials of Strategic Management 6th
edition, McGraw Hill
o Questions for the exam are taken from this textbook and from the class slides
o Copies of this book are in the library
Assessment BM2288
o 15% online quiz in week 8
30 min quiz on Blackboard
Multiple choice questions
Randomly allocated questions
o 85% exam in January 2020
2 hour exam
Multiple choice questions
100 questions to answer
Start Lecture
Definitions of Strategy
o “A company’s strategy is the set of actions that its managers take to outperform the
company’s competitors and achieve superior profitability” Core text book for this
module
What does strategy entail?
o How to create products or services that attract and please customers
o How to position the company in its industry
o How to develop and deploy resources to build valuable competitive capabilities
o How each functional piece of the business (R&D, supply chain activities, production,
sales and marketing, distribution, finance, and human resources) will be operated
o How to achieve the firm’s performance targets
Strategic decisions
o Are about:
The long-term direction for an organisation
The scope of business activities
Gaining competitive advantage
Addressing external and internal environment
Understanding key stakeholders
, o Can be seen as:
Complex and uncertain
Entailing change
Affecting operations
Strategy and business model
o A company’s business model sets forth how its strategy and operating approaches
will create value for customers, while at the same time generate ample revenues to
cover costs and realize a profit.
o The two elements of a company’s business model are its (1) customer value
proposition and (2) its profit formula.
The Business Model Canvas
Achieving sustainable competitive advantage
o A low-cost provider strategy achieves a cost-based advantage over rivals
o A broad differentiation strategy differentiates its products or services from rivals’ in
ways that appeal to a broad spectrum of buyers
o A focused low-cost strategy outcompetes rivals in a narrow/niche market by
achieving lower costs and offering its products at lower prices
o A focused differentiation strategy outcompetes rivals in a narrow/niche market by
offering buyers customized and exclusive attributes
o A best-cost provider strategy gives customers more value by satisfying their
expectations on key attributes, while beating their price expectations
Competitively valuable capabilities
o Cannot be easily bested, matched, or imitated by rivals
o Represent superior know-how and specialized abilities that require time to fully
develop and perfect
o Result in a sustainable competitive advantage over rivals
Is strategy planned?
o Environments are complex and tend to change rapidly
o Strategic planning is challenging, but it gives a sense of control over strategy
o Emergent strategy is flexible, but it may seem like managers are out of control
o Is strategy planned? Or does it emerge?
Why strategy evolves over time?
o A strategy changes over time due to:
Unexpected moves of competitors
Shifting buyer needs and preferences
Emerging market opportunities
Managers’ new ideas for improving the strategy
Mounting evidence strategy is not working well
o A strategy evolves:
Incremental (minor) adjustments or dramatic (major) shifts
Proactively and adaptively
o Avoid strategic drift at all cost!
Deliberate and emergent strategizing
o Diagram on PowerPoint
Three tests for winning strategy
o Strategic Fit
How well does the strategy fit the company’s situation?
o Competitive Advantage
Is the strategy helping the company achieve a sustainable competitive
advantage?
, o Performance
Is the strategy producing good company performance?
Working with strategy
o All managers are concerned with strategy:
o Top managers frequently formulate and control strategy but may also involve others
in the process.
o Middle and lower level managers have to meet strategic objectives and deal with
constraints.
o All managers have to communicate strategy to their teams and can contribute to the
formation of strategy through ideas and feedback.
Strategy as profession
o Organisations may also use strategy specialists:
o Many large organisations have in-house strategic planning or analyst roles.
o Strategy consultants can be engaged from management consulting firms (e.g.
Accenture, IBM Consulting, PwC).
o There are a growing number of specialist strategy consulting firms (e.g. McKinsey &
Co., The Boston Consulting Group).
What is strategy for?
o To define and express the purpose of an organization to stakeholders.
o Stakeholders are those individuals or groups that depend on an organisation to fulfil
their own goals and on whom, in turn, the organisation depends
The road ahead
o Strategy is about asking and answering a most important question.
o What must managers do, and do well, to make
a company a winner in the marketplace?
o Doing a good job of managing inherently requires good strategic thinking and good
management of the strategy-making, strategy-executing process.
Reading for this week
o Core textbook
Chapter 1: “Strategy, business models, and competitive advantage”
o Additional reading
Teece, D. J. (2010). Business Models, Business Strategy and Innovation. Long
Range Planning, 43(2), 172-194
Mintzberg, H., & Waters, J. A. (1985). Of strategies, deliberate and
emergent. Strategic Management Journal, 6(3), 257-272
, Lecture 2
Strategy process
Learning Objectives
o Understand why it is critical for company managers to have a clear strategic vision of
where a company needs to head and why
o Explain the importance of setting both strategic and financial objectives
o Explain why the strategic initiatives taken at various organizational levels must be
tightly coordinated to achieve companywide performance targets
o Identify the role and responsibility of a company’s board of directors in overseeing
the strategic management process.
The strategy process-framework
o diagram
Stage 1:Developing a strategic vision, mission and values
o Ways in which organisations tend to define their purpose:
o Mission statement
o Vision statement
o Corporate values
Vision statement
o A vision statement is concerned with the future the organisation seeks to create. It is
a possible image of the future which outgrows a single individual. A vision enlists the
commitment of company personnel to engage in actions that move the company in
its intended direction. It asks the question: what do we want to achieve?
Mission Statement
o A mission statement aims to provide employees and stakeholders with clarity about
why the organisation exists. It Identifies the company’s products or services,
specifies the buyer needs it seeks to satisfy, and gives the company its own identity.
It asks the questions: in which business are we in? How do we make a difference?
Comparing vision and mission
o A strategic vision concerns a firm’s future strategic course—
“where we are headed and our future focus.”
Markets to be pursued
Future product, market, customer and technology focus
o A firm’s mission statement focuses on its present business scope and purpose—
“who we are, what we do, and why we are here.”
Current product and service offerings
Customer needs being served
Company identity
Values
o A statement of corporate values communicates the underlying and enduring ‘core
principles’ that guide an organisation’s strategy and define the way that the
organisation should operate. A question to ask is: would these values change with
circumstances?
Stage 2:Setting objectives
o Managerial purpose in setting objectives
To convert the strategic vision into specific performance targets
To create yardsticks to track progress and measure performance
o Managerially valuable objectives
Are well-stated (clearly worded)
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