MST-21306
SUMMARY ADVANCED
Summary: Advanced Management and Marketing (Management)
MANAGEMENT
,AMM Management Chapter 1
Problems of top-managers: decision-making in a complex setting, appointed to solve open-ended, multi-
faceted problems!
What is strategy?
• Strategy
o Is the long-term direction of an organisation
• Defining strategy multiple ways:
o 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. Chandles)
o Competitive strategy is about being different. It means deliberately choosing a different
set of activities to deliver a unique mix of value (Michael Porter)
o A firm’s theory about how to gain competitive advantages (Peter Drucker)
o A pattern in a stream of decisions (Henry Mintzberg)
o The long-term direction of an organisation (Exploring strategy)
• Strategic decisions are:
o Complex in nature
o Made in situations of uncertainty
o Affect daily decisions
o Requires integrated approach (internal and external activities)
o Strategy results in significant change (mostly)
• 2 advantages of defining strategy as; the long-term direction of an organisation:
o Direction: follow the set objectives OR emerging pattern (vice) formed out of decisions!
(where company is targeting for)
I. Can include both deliberate, logical strategy, and more incremental, emergent patterns
of strategy
II. Can include both strategies that emphasise on differentiation and competition, and
strategies that recognise the roles of cooperation and even intimidation (copying)
▪ Three elements of the definition.
I. Long-term:
Strategies are measured over years
Emphasis on the three horizons framework:
o Suggests organisation should think of themselves as comprising
three types of business or activity, defined by their ‘horizons’ in
term of years.
o Horizon 1: Core business (tesla roadster)
o Horizon 2: Additional sources of income for company (mega
battery)
o Horizon 3: project R&D based which yet to be seem to be
profitable. (space)
o This is done to continuously develop new generating income
capacity for the business! (ASK)
o This is only done when looking at long-term vision!
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, II. Strategic direction:
Strategy follows some sort of ‘direction’ during the years.
Direction is based on the long-term objectives! (logical)
Objectives may differ per sector and type of company! (e.g. family
company: Hand company over to next gen. Unilever: generating profit)
III. Organisation:
External relationships: people, groups that depend on the organisation.
And likewise.
Internal relationships: people with different views and opinions within
the company. Have to be in coordinance with each other to set a clear
strategy!
External boundaries: what is included within the organisation and how
to manage important relationships with external stakeholders (e.g.
transactional/strategic alliance)
• The purpose of strategy: mission, vision, values and objectives
o Defining and expressing a clear and motivating purpose for the organisation. (often
more difficult than thought)
o 2 essential questions to be answered:
▪ How does the organisation differentiate?
▪ For whom does the organisation make the difference (target group probably,
depends on type of company!!)
▪ 4 Manners in which organisation define their purpose (logical!)
1. Mission:
Aims to provide employees and stakeholders with clarity about
what the organisation purpose is of existing (asking what
business is doing after which why does the business does this?)
2. Vision:
Concerned with the future the organisation seeks to create
(what do we want to achieve) → the goals!
3. Values:
Communicate the underlying and enduring core principles that
guide organisations strategy and define the way that the
organisation should operate (the core values that do no change
over time!!) values that change with circumstances is not core
value!
E.g. Bible belt back on Sunday → no business on Sunday!
4. Objectives:
Statements of specific outcomes to be achieved (logical)
Measurable (quantifiable)
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, Expressed in financial terms – can also be in relation with
competitor (logical)
Triple bottom-line: not only financial objectives but also
environmental and social objectives included (CSR)
• Strategy statements:
o 3 main themes included:
▪ Fundamental goals (mission, vision, objectives)
▪ Scope of organisation’s activities
Customers (client groups)
Geographical location
Vertical integration (internal)
o Core competencies and what capabilities to outsource!
▪ Advantages (capabilities) it has to deliver.
How will the company achieve the objectives set → via its core
competencies! (competitive advantage)
• Levels of strategy: 3 levels of strategy within business
o Corporate-level strategy:
▪ Concerned with overall scope of an organisation and how value is added to the
constituent businesses of the organisation
▪ E.g. geographical scope, diversity of products, services, acquisitions, resource
allocation.
▪ Long-term
o Business-level strategy:
▪ Is about how the business competes with its competitors in their market
(competitive strategy)
▪ E.g. innovation level, scale of operations, response to competitors’ move.
▪ Short-term
o Functional strategy:
▪ Concerns with how the components of an organisation deliver effectively the
corporate- and business-level strategies in terms of resources, processes and
people.
▪ What is needed on functional level (lower levels) to fulfil both business and
corporate strategies! (KEY)
▪ Vital for successful strategy implementation!
▪ How are the resources utilized on lower levels eventually determines the
capability of the firm to fulfil their business-level strategy!
▪ Overall all levels should be aligned to be all successfully integrated!
The exploring strategy framework
• Exploring strategy framework:
o Includes understanding of the 1.strategic position of an organisation; assessing
2.strategic choices for future; and managing 3.strategy in action.
▪ These are all closely related to each other with regards to decision making and
are not necessarily linear.
▪ Working systematically through questions is key for strategy recommendations!
1) Strategic position of organisation (understanding):
▪ Concerned with the impact on strategy of the macro environment CHY 2 and
industry environment CH 3, the organisation’s strategic capability (resources &
competences) CH 4 and the organisation’s stakeholders and culture CH 5.
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, Macro-environment CH 2
• Much effect from external factors: political, economic, social,
technological, ecological, legal forces. (Opportunities and
Threats!)
Industry environment CH 3
• Challenges faced by competitors, suppliers, customers.
(Opportunities and Threats)
Strategic capability CH 4
• Consist of resources (e.g. machine & buildings) and
competences (e.g. technical & managerial skills)
Are the capabilities of the firm adequity for the challenges
opposed by its environment?
(Strengths and Weaknesses
Stakeholders CH 5
• How can a company be aligned around a common purpose?
• Key stakeholder should set the purpose and corporate
governance should develop strategy based on that!
• Issues with CSR and ethics
2) Strategic choices of organisation (assessing) CH 6-7
▪ Involve options for strategy in terms of both the direction in which strategy
might move and the methods by which strategy might be implemented!
▪ How is the decision-making process formed?
▪ Different directions should follow different methods of implementation
(logical!!)
Business strategy and models CH 6
• What business model and strategy to compete with?
• More on optimisation, where to put efforts (short-term)
Corporate strategy and diversification CH 7
• What businesses to include in portfolio? → diversification of
provided products and services (logical!)
• How to assess and determine the diversification process!
• Long-term!
3) Strategy in action in organisation (managing) CH 8
▪ Managing strategy: how implemented and formed?
▪ 3 issues in managing strategy;
I. Structuring: used to support successful performance (e.g. centralised)
II. Systems: used to control the way in which strategy is implemented. (planning &
performance systems → feedback mechanisms)
III. Strategic change: what should be the rate and magnitude of the change?
Strategy development processes.
• The Rational-analytical view:
o Strategy is developed through rational and analytical processes, led typically by top
managers.
o There is a linear sequence
o The strategy is deliberately chosen!!
o Reliable and is backed by data (preferred by stakeholders)
• The emergent strategy view:
o Strategies often do not simply develop as intended or planned, but tend to emerge in
organisations over time as a result of ad hoc, incremental or even accidental actions.
(Grodan)
o Non-linear nature
o Strategy derived from experience and at functional units (bottom of organisation)
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,Obstacles to good strategy:
- Strategy does not directly impact current results, it may happen that loyalty and the brand in
general (other variables) are performing well but cannot be allocated to the implementation of a
new strategy! → difficult to measure effectiveness!
- Compromise: lack of focus (e.g. via consolidation of car brands → improve economies of scale
but the reputation could be harmed!)
- The choice set is not known? No conclusion possible from the choice made! → induction
problems: do not know what to expect!
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,AMM Management Chapter 2: Macro-environment analysis
• Macro-environment: consists of broad environmental factors that impact to a greater or lesser
extent many organisations, industries and sectors. (logical!)
• Industry (sector): consist of organisations producing the same sort of products or services. (e.g.
car industry, health-care industry)
• Competitors and markets: immediately surrounding organisations. (e.g. Ford, Nissan)
• The point is to minimize threats and to seize opportunities (make use of them IN TIME).
Layers of macro-environmental analysis. (no organisation = internal)
Macro-environment analysis:
• PESTEL analysis:
o Highlights six environmental factors in particular: political, economic, social,
technological, ecological, legal.
o Market and non-market factors should be considered.
o Market environment: suppliers, customers, competitors.
▪ Mostly economic → pricing and innovation
o Non-market environment: social, political, legal, ecological
▪ NGO’s, politicians, government, regulators, activists, media, etc. involved.
, ▪ Lobbying, trust, networking, legitimacy is key!
▪ Especially important where government and regulators are powerful, customer
sensitiveness is high (food). (Where external factors potentially have a high
impact on company!)
o Politics:
▪ Highlights the role of political factors.
▪ Important to identify:
The role of the state: government is often important customer,
economic actor.
Exposure to civil society organisations: depending on company, society
may comprise a whole range of liable political issues
Types of industry and the exposure/involvement with the state! (logical!)
Needed to identify how important the political environment is likely to be for any
organisation and consequently act on that (where does opportunities and pressure
comes from ? state or civil society?)
Political risk analysis:
- Macro-Micro dimension:
▪ Macro: risk concerning whole countries
▪ Micro: risk concerning specific organisation
- Internal-external dimension:
▪ Internal: issues within country (e.g. government change)
▪ External issues: arise outside the country but have an impact within
(e.g. OPEC oil prices)
o Economics:
▪ Currency exchange rates, interest rates, fluctuating economic growth rates may
affect companies.
▪ Managers must understand how the above may influence their capabilities
▪ Economic cycle: economic growth rates have an underlying tendency to rise and
fall in regular cycles. (logical!) → this has affect on e.g. interest rates, etc.) so
indirect cause causes a direct problem))
▪ KEY: be alert when turning point of economic cycle occurs!
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