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Samenvatting (hoorcolleges en literatuur) Strategy And Organisation (ECB1SO)
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This document contains a summary of the lectures and literature of the Strategy and Organisation course.
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Strategy and Organisation - week 1Topic 1: Introducing strategy
Levels of analysis
a. Individuals within firms
o Managerial decision making; Motivation; Social relationships
b. Organizations
o Sources of (financial) success; Strategies; Internal structures
c. Industries
o Relationships and competition between similar firms; External developments
Part 1: Introduction to strategic management
Exogenous developments
Technological developments that are external to the firm.
These external developments can be an opportunity as well as an threat
Internal decision making and competences
Managerial decision making processes
Internal strengths and weaknesses that empower or prevent firms to exploit certain
opportunities
The SWOT model
Internal versus external models
Examples of external analysis
o PESTEL, Five-Forces, Competition, Growth, Cycles, Strategic Groups, Strategic
Positioning, Strategic Purpose
Examples of internal analysis
o Organizational Cultures, Organizational Structures, Reward and Motivation,
Governance
Examples of hybrid approaches (external as well as internal elements)
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, o Corporate Strategy, Diversification, Resources Based Analysis, Mergers and
Acquisitions, Transaction Costs
Part 2: Different stream within strategic management
What is strategy?
The long-term direction of the organisation
Originates from Greek word meaning art of troop leader
Strategy is studied from different perspectives
1) A long term plan
2) Being different
3) Obtaining distinct resources
4) A consistent pattern of decisions
5) A process or practice
1) Strategy as a plan
“… the determination of the long-run goals and objectives of an enterprise and the
adoption of courses of action and the allocation of resources necessary for carrying
out these goals” – Alfred D. Chandler
Mainly relates to the strategic planning function of firms
He emphasises a logical flow from the determination of goals and objectives to the
allocation of resources
Strategic plans should include different time horizons:
o Short term (Horizon 1): How do we defend and build our core business?
Businesses are basically the current core activities
o Medium term (Horizon 2): How do we build emerging businesses?
Businesses are emerging activities that should provide new sources of profit
o Long term (Horizon 3): How do we create new viable opportunities?
possibilities, for which nothing is sure; these are typically risky research and
development projects, start-up ventures, test-market pilots or similar.
The three-horizons framework suggests organisations should think of themselves as
comprising three types of business or activity, defined by their horizons in terms of
years. Managers need to avoid focusing on the short-term issues of their existing
activities.
At different levels (corporate, business, operational)
The idea of strategy as a plan has received a lot of criticism, because:
o Little information on whether the plan will succeed
o Can we even make a long-term plan? Is it still relevant within 5-10 years?
2) Being different
Strategy is about different. It means deliberately choosing a different set of activities
to deliver a unique mix of value – Michael Porter
Copying industry leaders cannot lead to sustainable competitive advantages
Porter’s approach is rooted in industry analysis and requires that firms make trade-
offs
He focuses on deliberate choices, difference and competititon
A trade-off is a choice that simultaneously provides a benefit and a downside.
Opportunities are exogenous to the organization conduct external analysis to spot the
right opportunities.
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,Trade-offs and sustained competitive advantage
Trade-offs affect:
o Marketing
o Where firms invest in
o Research and development
o Mergers and acquisitions
o Human resource management (especially hiring staff)
Trade-offs have to:
o Create value for firms by addressing the needs of specific target groups or
customers
o Target and customer groups should be large enough to ensure market share
or growth opportunities
3) Building distinct resources
Firms can make similar trade-offs but fail to achieve the same level of sustainable
competitive advantage – Jay Barney
This is because some resources are perfectly immobile, they cannot be obtained by
multiple firms simultaneously.
Firms, thus need to build distinct resources and competences that allow them to
differentiate them from other firms.
4) Strategy as a pattern
Realized strategy is a combination of intended (deliberate) strategy and unintended
(emergent) strategy – Henry Mintzberg
He 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
Puts emphasis on…
o Dynamic capabilities (David Teece)
o Entrepreneurial orientation of a firm (Jeffrey Covin)
5) Strategy as process or practice
Strategy process and practice scholars focus on how strategic decisions are being
made – Robert Burgelman
What is the influence of…
o Time
o Practitioners (e.g. the personality and experiences of top managers)
o Practice (e.g. the tools and materials that practitioners use to craft a strategy)
o Praxis: the flow of activity in which strategy is accomplished (e.g. the
interactions within a top management team)
Strategy is the long-term direction of an organisation
Can include both deliberate, logical strategy and more incremental, emergent patters
of strategy
Long-term direction can include both strategies that emphasize difference and
competition, and strategies that recognise the roles of cooperation and even
imitation
The long term, direction and organisation
1) The long term: Strategies are typically measured over years, for some
organisations a decade or more. The importance of a long-term perspective
on strategy is emphasized by the three-horizons framework.
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, 2) Strategic direction: Over the years, strategies follow some kind of long-term
direction or trajectory. Sometimes a strategic direction only emerges as a
coherent pattern over time. Typically, however, managers and entrepreneurs
try to set the direction of their strategy according to their long-term
objectives.
3) Organisation: Organisations involve complex relationships, both internally
and externally. This is because organisations typically have many internal and
external stakeholders.
Because strategy typically involves managing people, relationships and resources, the
subject is sometimes called ‘ strategic management’.
Levels of strategy
Corporate-level strategy is concerned with the overall scope of an organisation and
how value is added to the constituent businesses of the organisational whole.
Corporate-level strategy issues include geographical scope, diversity of products or
services, acquisitions of new businesses, and how resources are allocated between
the different elements of the organisation.
how to add value to the organisation as a whole (geographical scope,
diversification, M&As, allocation of resources, etc.)
Business-level strategy is about how the individual businesses should compete in
their particular markets (for this reason business-level strategy is often called
‘competitive strategy’). Business-level strategy typically concerns issues as
innovation, appropriate scale and response to competitors’ moves. Where the
businesses are units within a larger organisation, business-level strategy should
clearly fit with corporate-level strategy.
how to compete (innovations, response to competitors’ moves)
Operational strategies are concerned with how the components of an organisation
deliver effectively the corporate- and business-level strategies in terms of resources,
processes and people. In most businesses, successful businesses strategies depend to
a large extent on decisions that are taken, or activities that occur, at the operational
level. Operational decisions need therefore to be closely linked to business-level
strategy. They are vital to successful strategy implementation.
how to deliver the aforementioned strategies (managing resources, processes and
people)
Strategy statements summarize an organisation’s strategy. Strategy statements should have
three main themes: the fundamental goals (mission, vision or objectives) that the
organisation seeks; the scope or domain of the organisation’s activities; and the particular
advantages or capabilities it has to deliver all of these.
Mission: This relates to goals, and refers to the overriding purpose of the
organisation. ‘What business are we in?’
Vision: This relates to goals, and refers to the desired future state of the organisation.
‘What do we want to achieve?’
Objectives: These are more precise and ideally quantifiable statements of the
organisation’s goals over some period of time. ‘What do we have to achieve in the
coming period?’
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