Summary
Summary summaries and class notes
- Course
- Strategic Management 344
- Institution
- Stellenbosch University (SUN)
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Strategic Management 344Summaries and Class Notes
Chapter 1: The Nature of Strategic Management
Learning Objectives:
• Explain the essence of strategy
• Demonstrate an understanding of strategy development and perspectives of strategy
• Discuss the nature and role of strategy
• Explain the concept of strategic management
• Formulate an argument on the different perspectives of managing strategically
• Identify and explain the elements of the strategic management process
• Identify and explain the tests for a winning strategy
• Demonstrate an understanding of strategic paradoxes
Key Terms:
• Business model
• Competitive advantage
• Complexity theory
• Dynamic capabilities
• Multiple connections
• Strategic flexibility
• Strategic frames
• Sustainability
• Values
1.1 Introduction
• Managing an organisation:
- Complex task in the 21st century
- Impacts organisational leadership, strategies, and organisational architecture
• Meaning of sustainable global organization and its contribution towards strategic development, change, and
transformation
• Thinking strategically about an organisation:
- Where are we now?
- Where do we want to go?
- How will we get there?
- How are we doing?
• Organisation’s approach to sustainability determines successful implementation of strategy
• All organisations require strategy to achieve their purpose
• Business models are important to ensure sustainability of an organisation
• Better understanding of markets leads to continuous rethinking of every element of business models
1.2 The Essence of Strategy (Learning Objective 1)
1.2.1 Strategy conceptualised
§ Strategy is considered a key element of managerial activity
§ Strategy is important for competitive advantage
§ Strategy is a very complex concept
§ There are numerous attempts to define strategy
,Authors Contributions in defining management tasks
F.W. Taylor Identify the best way for employees to perform a task
Henri Fayol Emphasised formal structures and processes for the adequate performance of all
important tasks
Henry Ford (1908–1915) innovative technology, mechanisation, quality standards, redesign, and cost cutting
Alfred Sloan Emphasised rapid model changes, niche marketing
The Harvard Business School Introduced a capstone course in business policy
1.2.2 The historical origins of the concept of strategy (Learning Objective 2)
[Read through thoroughly]
• Derived from the Greek word strategos, meaning ‘a general’
• Strategos is derived from stratos (the army) and agein (to lead)
• First formal article on strategy: Sun Tzu’s seminal work, The art of war
• Only became popular in the business world in the 20th century
• Military and business operations share some common concepts and principles, for example, strategy and tactics
1.2.3. Strategy development in the 20th and 21st centuries
• Defining management tasks in the 20th century.
1.2.3.1 Strategy in the 20th century
, • Accelerated by: rate of change & greater spread of wealth, pressure to analyse external environment and focus on
internal organizational environment, etc.
• Strategy defined
- essentially defined as a process compromising of the following sub-processes
Identify and analyse
threats and
Implement strategic
plans
opportunities
Strategy
Design control
systems for
implementation Respond to threats and
process opportunities
1.2.3.2 Strategy into the 21st century
• Application of game
and complexity
theories
Scenario
• Analysis of disruptive
planning? effects of technology
Incorporate • 2008-2009 recession
unpredictable • Renewed interest in
conditions into an Rethinking incorporating
organisation’s business corporate social
strategy models
responsibility, business
ethics, and
sustainability
• Competitive advantage
using blue ocean
1.3 The nature and role of strategy (Learning objective 3) strategies
1.3.1 The five Ps of strategy (Mitzberg’s 5Ps of strategy)
- each “P” is important
• The 5Ps:
• Each defines strategy
• Are complementary and interrelated
• Strategy as a plan: Overall direction and a course of action
• Strategy as a position: Determination of particular products in particular markets
• Strategy as a perspective: Organisation’s way of doing things
• Strategy as a ploy: Specific manoeuvre to outwit a competitor
• Strategy as a pattern: Consistent behaviour over time
, 80%
1.3.2 Levels of Strategy
- Should be cohesive strategy-making between the 3
• Corporate level strategy:
o Sets the direction of the organisation. Determines how value can be added at all business levels and
lines.
• Business level strategy:
o How to compete to strengthen market position and attain a competitive advantage in each area of its
business units.
• Functional level strategy:
o Underpins business-level strategy by implementing business strategies through the functional areas
o E.g. marketing, HR, production and finance
o Decision-making lies with heads of respective areas and with the general managers
o Must be synergy and cooperation between functional level strategy and business level
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