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Summary ICB Corporate Strategy
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- ICB Corporate Strategy Summary
Full summary of ICB Corporate Strategy Chapter 1 to 9
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Corporate StrategyChapter 1
Introduction to strategic management
1.1. Introduction
8 Challenges that SA businesses face as identified by Manning:
• Rapidly increasing competition from new and unexpected sources
• Changing demographics and psychographics
• New technology
• The new global economy
• The shift from manufacturing to services
• The proliferation (explosion) or corporate stakeholders
• Managing the new workforce
• The rapid rise of the green movement
The former CEO of General Electric Company (GEC) described strategic management as follows:
• Understanding where the business is now
• Having a clear view about where the business wants to be in future
• Conducting a wide-scale debate about how it will reach its future destination
Major perspectives on management as per Mintzberg: Strategy Formation is
• A formal process – it follows a structured plan
• A process of conception – it’s about designing a future
• A visionary process – it clarifies what the ideal future should be
• An analytical process – considers current realities and makes projections about the future
• A collective endeavour – it involves various stakeholders
• A reactive process – it responds to internal and external environments
• A process of transformation – it requires change
1.2. Definition of strategy
Strategy originates from the Greek word strategia which translates to ‘generalship’
‘A way a business gets from where it is to where it wants to be’ (Marcouse)
A specific set of actions used by a business against one or more rivals, to attain specific goals
‘A plan of action designed to achieve a long-term or overall gain’ (Soanes and Stevenson)
Stratagem – a plan or scheme, especially one used to outwit an opponent or achieve an end
Strategic – relates to the identification of long-term or overall aims and interests and the means of achieving them
- relating to the gaining of overall, long-term military advantage
Strategise – an action or actions to devise a strategy or strategies
Strategist – a person skilled in planning action or policy, especially in war and politics
Strategy refers to warfare.
As per Thompson a company’s strategy is made up of a series of competitive actions which are designed to:
• Attract and satisfy customers
• Compete to succeed
• Grow the business
• Conduct long-term and sustainable business operations
• Achieve targets and goals
Rossouw say the following about strategy:
• Strategy as generalship refers to ‘the art of generals’ which means that strategy is used to overpower rivals
• Strategy is about a plan of action to achieve goals, despite constant changes in the competitive environment
, Liddell Hart:
• Strategy as a plan that maps out a proposed course of battle
Writers in management science builds on the same idea by showing that strategy is about formulating a set of
specific, long-term objectives for an organisation
1.3. Definition of management
Management can be described as:
• Leading, overseeing and mentoring
• Assuming responsibility for and the control of an organisation
• Ensuring that resources are allocated correctly to create products or deliver services
• Ensuring that the business runs profitably and sustainably
• Devise actions that will achieve the maximum results, with the least possible waste
1.4. Definition of strategic management
Synonymous with ‘Strategic Planning’
Lynch (2009):
• Strategic management can be described as the identification of the purpose of the organisation and the plans and
actions to achieve that purpose.
o Why do we exist?
o What do we want to contribute to society?
Takes a broad view and approaches strategy from the point of determining the overall purpose of the organisation.
Strategic management is also about the plans and actions that are taken and that will enable an organisation to
realise their purpose.
Thompson (2005):
• Strategy is the game plan indicating the choices a manager needs to make.
o How to attract and meet customer needs
o How to compete successfully
o How to grow the organisation
o How to manage the organisational architecture and develop dynamic capabilities
o How to achieve performance targets by implementing strategies successfully
Highlights various aspects of the strategic management process.
It also takes into account that organisations have to make choices and prioritise activities
At the core of strategic management lie the following key questions:
• How will we be able to grow turnover?
• How will we outperform our competition?
• How will we continually adapt to an ever-changing environment?
The language of strategy
• Strategic management – the art and science of formulating, implementing and evaluating cross-functional actions
that will enable an organisation to achieve its objectives
• Vision or strategic intent – desired future state; the aspirations of the organisation
• Mission – overriding purpose of the organisation
• Goal – a specific aim that the organisation wants to achieve
• Objective – a measurable long-term goal which is to be achieved by a certain time
• Unique resources or core competencies – unique resources, processes or skills that provide competitive advantage
• Competitive advantage – the edge that an organisation has over others
• Strategies – planned actions an organisation implements to outperform its rivals and achieve long-term objectives
• Strategic control – the monitoring of strategies to ensure that they are effective and achieve the objectives; it also
involves the process of modifying and reviewing strategies if they are not achieving the intended results
, Mintzberg summarises the key aspects of strategic planning by identifying the 5 Ps of strategy:
• Plan – management plans how to attain outcomes
• Pattern – strategy develops a consistent pattern of behaviour over time
• Position – seeks to position the business within the market place
• Perspective – the company’s unique way of doing things in order to remain competitive
• Ploy – an action to manoeuvre which is intended to outwit the competition
1.5. Understanding competitive advantage
Porter identified eight factors that a company must attend to in order to establish and maintain differentiation
in the market place:
• Time:
Need for organisations to balance swift action with cautious action. When confronted with opportunity,
companies should take time to evaluate opportunity and consider all angles. Costs and benefits of an opportunity
should be swiftly and efficiently evaluated, in order to present an offering timeously to the market. Evaluating is a
fine balancing act, cutting corners and overhasty decisions can have dramatic consequences, avoid ‘analysis
paralysis’. Pros and cons must be considered, weighed-up and exhausted. Decide to ‘seize the opportunity’ or
‘move on’. Pursuing an opportunity, ‘way of the tortoise’ – move rapidly and cautiously. Time frame minimised to
reduce time customers need to wait.
• Execution:
How and how well a company does things. Four options:
o Do the wrong things wrong
o Do the wrong things right
o Do the right things wrong
o Do the right things right (challenging but need to develop practices that ensure they are better in what
they do and how they do it).
‘How things are done’ will improve ‘what things are done’.
• Manoeuvrability:
Company’s reaction to changing circumstances (internal or external), when realising strategy not producing
results. Market’s preference changes. Reject ‘old and trusted’ in favour of ‘new and exciting’. Reshaping offerings
in changing market should be timeous to ensure company outperforms competitor. Producing new alternatives
when existing product in decline can provide advantage over competitors.
• Knowledge:
Does not refer to how many degrees the CEO or employees have, but refers to:
o Knowledge that everyone in the company has regarding the products and services
o Ability to find the right answers at the right time
o Knowing where to find the best possible solution or resources at any given time
o Knowing how to handle situations
o Understanding the implications of changes in the competitive environment
o Identifying strengths and weaknesses
o Understanding and exploiting a competitor’s weaknesses
o Responding to a competitor’s strengths
• Value:
Customer’s perception of a company’s goods and services.
High value perception = loyal customers
Consider the following while building a competitive advantage base:
o Easier and convenient access to products and services
o Offering different product mixes
o Adding additional services and products to provide clients with more options and flexibility
o Adding additional services and products without creating a feeling of ‘junk selling’.
o Service or product justifies the price
o ‘Little things’ and finer details more valued than showy ‘big things’
, • Process:
Many companies struggle due to them not willing or able to seriously reconsider their processes or the way in
which they do business. Humphrey introduced the capability maturity model which is a tool to improve software
projects. Regular review and redesign of processes is important, BUT if it’s not broken, don’t fix it
Strategic managers should consider the following processes:
o Processes are not monolithic – must adapt to new situations
o Processes needs to be usable in a crisis
o Processes must be consistent, repeatable and reliable
• Cost:
A focus on cost needs to be consistent in the mind of the strategic manager
2 major dimensions:
o Internally – ensure return on investment on what is spent internally
o Externally – product price, perceptions of price
A competitive advantage should ensure:
o Profit margins must not be put under pressure
o Cost price must not exceed selling price
o Pricing and costing model must be sustainable over long period of time
• Differentiation:
Refers to more than simply the difference in products, it also entails the following:
o Making it hard or expensive for competitors to copy a product or service
o Improving the quality of products and services without increasing cost
o Adding functions or features without increasing cost
o Combining products and services so that they are useful to the market without increasing cost
o Making sure that delivery of products or services is superior to that of competitors
1.6. The importance of strategy
Strategy is a particular form of long-term planning that considers internal and external factors and then chooses a
direction based on the information gained from analysing the environments.
As an essential action plan, strategy forces an organisation to ask the following questions, referred to as the
‘strategy diamond':
o Where did we come from? – Understanding the past
What has changed between then and now?
What were the factors that caused us to take specific direction?
Why did we take that direction?
Would we have done the same had we known then what we know now?
What worked and did not work in the past?
Are the actions that we took then still relevant today?
o Where are we now? – Understanding the present
Where are we today?
Recognise why they do things certain way?
Recognise factors brought specific results?
Consider which actions should be avoided?
Consider which actions should be repeated?
Consider plans that have not been implemented and why?
o Where do we want to go to? – Understanding the future
Why pursue particular direction?
What resources do we need?
What skills or abilities needed to exploit opportunities
By when do we want to achieve our goals?
What are we willing to sacrifice or invest?
o How do we get to our desired future? – Understanding the journey
What actions needed to pursue opportunity?
What constraints could prevent pursuing opportunity?
What risks and rewards?
What phases need to be considered?
What is the timeline?
What indicators will signal deviation?
What corrective actions should be implemented?
Sometimes refer to the above questions as the ‘strategy diamond’.
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