Strategic Management 344 summaries of the textbook Strategic Management (third edition): Developing Sustainability in Southern Africa by Lynette Louw & Peet Venter
Extremely thorough & clear summaries of the chapters needed for the upcoming test:
chapter 1, 3, 4, 5, 6
,PART 1: STRATEGY. STAKEHOLDERS & STRATEGIC DIRECTION
CHAPTER 1: INTRODUCTION – THE NATURE OF STRATEGIC
MANAGEMENT
1.1 INTRODUCTION
Managing an organisation in the competitive landscape of the 21st century is a highly
complex task & has an impact on organisational leadership, strategies & organisational
architecture
Reasons for heightened complexity: increasingly competitive business practices, the
inclination towards strategic flexibility to accommodate change, the emergence of
networked organisations and the concern for sustainability & business ethics in the
global arena
It is vital that leaders think strategically about how they achieve a competitive
advantage for the organisation
- Leaders need to understand where they fit into the global competitive landscape,
what it means to be a sustainable global organisation & how they can contribute
towards strategic development, change & transformation
When thinking strategically about their organisation’s current situation & future
prospects in a competitive landscape, management is faced with 4 critical questions:
1. Where are we now?
- To answer this question, management should consider an organisation’s:
o Competitive positioning
o Resources & dynamic capabilities
o Appeal & innovative value added to its products & services
o Extent to which it meets the needs & expectations of its customers &
stakeholders
o Environmental integrity
o Current performance
2. Where do we want to go?
- Refers to the strategic direction that management believes the organisation should
adopt
- E.g.: vision: “To be the world’s best platinum-producing company, delivering
superior returns to stakeholders relative to their peers” to achieve the vision of
being the most efficient & low-cost primary producers, the company is a good
corporate citizen, acting with integrity & openness, has human resources that are
highly skilled & technologically proficient
3. How will we get there?
- Depends on:
o How strategy is formulated at the different organisational levels based on
customer needs, stakeholder expectations, integration with the environment &
ethical perspectives
, o The influence of leadership, values, organisational culture & organisational
architecture on strategy implementation
4. How are we doing?
- Requires that strategic leaders manage the performance of the organisation by
means of strategic control measures & appropriate feedback
In the future, the extent to which an organisation successfully implements its strategies
will be determined by the approach towards sustainability that it adopts
- There is a growing need for organisations to manage their own resources while at
the same time being responsible, sustainable, global corporate citizens
- There is a positive association between economic & environmental performance,
while corporate social responsibility is closely linked to economic performance
It is NB to note that:
- all organisations require strategies to achieve their purpose, whether they are in
developed or developing countries, large or small, profit-seeking or not-for-profit,
private or from the public sector
- sustaining a competitive advantage is influenced by the organisation’s engagement
with government, environmental focus (process improvement &products/services)
& socio-economic development
- sustainable development is a challenge & the business community, ranging from
small organisations to multinational corporations has an important role to play
1.2 THE ESSENCE OF STRATEGY
Overview of the conceptualisation of strategy & the historical perspectives of strategic
development
1.2.1 Strategy conceptualised
The concept of strategy dates back to ancient Athens of 500 BC, and the documentation
of Sun Tzu’s ‘The art of war’, written about 500 BC.
Strategy has always been considered to be a key element of managerial activity
Selected definitions of strategy:
Table 1.1: Selected definitions of strategy
Strategy: a plan, method or series of actions designed to achieve a specific goal or effort
The determination of the LR goals & objectives of an enterprise, & the adoption of
courses of action & the allocation of resources necessary for carrying out these goals.
A strategy is the pattern or plan that integrates an organisation’s major goals, policies &
action sequences into a cohesive whole. A well-formulated strategy helps marshal &
allocates an organisation’s resources into a unique & viable posture based upon its
relative internal competencies & shortcomings, anticipated changes in the environment,
& contingent moves by intelligent opponents.
What business strategy is all about is, in a word, competitive advantage… The sole
purpose of strategic planning is to enable a company to gain, as efficiently as possible, a
sustainable edge over its competitors. Corporate strategy thus implies an attempt to alter
a company’s strength relative to that of its competitors in the most efficient way.
Without strategy, the organisation is like a ship without a rudder, going around in circles.
, Strategy is the direction & scope of an organisation over the LT which achieves advantage
in a changing environment through its configuration of resources & competencies with
the aim of fulfilling stakeholder expectations.
Strategy can be regarded as a game plan indicating the choices a manager needs to
make for example about how to:
- Attract & meet customer needs
- Compete successfully
- Develop the necessary dynamic capabilities
- Grow the organisation
- Manage the organisational architecture
- Achieve performance targets by implementing strategy successfully
1.2.2 The historical origins of the concept of strategy
The concept of strategy derives from the Greek word strategos, meaning ‘a general’.
- Strategos, in turn, derives from stratos (the army) and agein (to lead).
So, originally, strategy was associated with the military – the ‘art of leading the army’.
Sun Tzu’s primal work, ‘The art of war’, written about 500 BC, is regarded as the first
formal article on strategy
However, it was only in the 20th century that the concept of strategy gained importance
in the business world
Military & business operations share some common concepts & principles, particularly
strategy & tactics.
- A tactic: a plan for a specific action
- Strategy: the overall scheme for leveraging resources to obtain a competitive
advantage
Strategic decisions, whether in the military or business sphere, share common
characteristics:
- Strategy is concerned with LT direction & sustainable success
- Strategy exploits the links between the internal & external environments – the so-
called strategic link
- Strategies require major resources
- Strategies are likely to affect the whole organisation
- Strategies are shaped by the values & expectations of stakeholders
- Strategies are directed by visions – the ability to move forward
1.2.3 Strategy development in the 20th & 21st centuries
During the early 20th century managers began to explore & define the management task,
e.g.:
- FW Taylor in the USA: identified best way for employees to perform a task
- Henri Fayol in France: emphasised formal structures & processes for the adequate
performance of all NB tasks
- Henry Ford (1908–1915): focused on innovative technology, mechanisms, quality
standards, redesign & cost cutting
- 1912 Harvard Business School: introduced business policy capstone courses
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