Slide 1

Strategic management
Lesson 1
Strategy and strategic perspectives

Welcome to lesson 1 of your Strategic management module.

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Welcome

In this module, we consider what strategy is, why it is important to

organisations and how it can be undertaken.

By the end of the module you will be able to:

• apply a number of theoretical models and their potential for developing
strategy and supporting strategic decisions
• analyse theoretical developments in strategy
• evaluate the process of strategy making in multinational organisations
• assess the impact of strategy-making in an increasingly volatile and
turbulent environment
• appreciate the significance of and the difficulties in formulating and
implementing strategy.

In this module, we consider what strategy is, why it is important to organisations and how it
can be undertaken.
By the end of the module you will be able to:
apply a number of theoretical models and their potential for developing strategy and
supporting strategic decisions
analyse theoretical developments in strategy
evaluate the process of strategy making in multinational organisations
assess the impact of strategy-making in an increasingly volatile and turbulent environment
appreciate the significance of and the difficulties in formulating and implementing strategy.
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Lesson 1 Contents

SECTION 1 The Business Context

SECTION 2 Definitions of Strategy
SECTION 3 Tactics or Strategy?
SECTION 4 Characteristics of Strategy
SECTION 5 Strategic Management
SECTION 6 Corporate Vision
SECTION 7 Strategic Thinking
SECTION 8 Levels of Strategy
SECTION 9 Managerial Issues

This is what we shall be looking at in this lesson:

SECTION 1 The Business Context
SECTION 2 Definitions of Strategy
SECTION 3 Tactics or Strategy?
SECTION 4 Characteristics of Strategy
SECTION 5 Strategic Management
SECTION 6 Corporate Vision
SECTION 7 Strategic Thinking
SECTION 8 Levels of Strategy
SECTION 9 Managerial Issues
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The Business Context

Organisations operate within an environment. They don’t exist within a vacuum as they have
customers to whom they are a supplier, may have partners, they are required to abide by
legislation and they are impacted by how much money people have to spend and other such
factors. Many also have competitors. Organisations need to consider what competitors are
offering and what they are doing businesswise.
We will analyse the environment in terms of the macro environment and the micro
environment. The macro environment is the external environment which the organisation
has little influence over and which impacts greatly on an organisation, and many of you will
already be familiar with PESTLE which we will look at later in the module. A business’s micro
environment looks at the industry context and the factors which are closer to the
organisation, and not forgetting it will have internal and external stakeholders who will
impact on the organisation and the decisions it makes. So organisations cannot exist without
taking into consideration what’s happening within and around them.
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Strategy and definitions of strategy

Strategy can be thought of as a long-term plan of action or execution

designed to achieve particular objectives, such as achieving competitive
advantage for an organisation. It reflects the values, expectations and goals
of those who are in power within the organisation.

Strategy is about what we want to do, what we want our organisation to be

and where we want it to go.’ (Norton and Irving, 1999)

In a business perspective, strategy is about the long-term direction of the

organisation and how is going to achieve its goals. It involves:
• making choices: about how to structure the company, design jobs,
allocate roles and responsibilities - improving organisational capabilities
• making plans: rational decision-making, delivering short-term
commitments as well as long-term goals
• enhancing: trust, pride and teamwork amongst employees
• being professional: demonstrating honesty and integrity (acting as a role
model for a company’s core values)

What is strategy? Strategy can be thought of as being a long-term plan of action or execution
designed to achieve particular objectives such as achieving competitive advantage for the
organisation. Strategy should reflect the values, expectations and goals of those who are in
power within the organisation. This suggests that strategies are about what we want to do,
what we want our organisation to be and where we wanted to get to in a business
perspective. It’s about the long-term direction of the organisation and it involves making
choices about how to structure the company, design jobs, allocate roles and responsibilities,
providing organisational capabilities, making plans, decision-making and then considering
what short-term commitments the organisation has. It involves determining long-term goals,
enhancing trust, pride and teamwork amongst employees to encourage them to work
towards achieving organisational strategy. It is about being professional and demonstrating
honesty and integrity in an organisation’s choice of strategy and the methods it uses to
implement that strategy.
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Tactics or strategy?

• strategy must be holistic – it must involve the whole organisation, and

its objective is to achieve the goal (or win the ‘war’) defined by the
company
• tactical measures are actions or manoeuvres carried out to win
individual battles, which may eventually, after a number of battles, win the
‘war’.

In the context of business, a tactical measure may, for example, involve

ruthless, but short-term, price-cutting, in order to grab market-share and
remove a competitor. A strategic move, on the other hand, may be an
acquisition in order to move into a new market area. Tactical measures are
usually short term, whereas strategy is long term. A series of tactical
measures can help achieve the long-term strategy.

Strategy is holistic. It involves the whole organisation and its objective is to achieve an
ultimate goal, or you can consider this as winning the war, and that goal is defined by the
company. Tactical measures, on the other hand, are actions or manoeuvres which the
organisation might take to achieve that goa. The reason I use the analogy of ‘winning the
war’ is because if you consider that wars are made up of many individual battles, those
individual battles can be considered tactical measures and, ultimately, winning those little
battles will help win the war.So the context of business using a tactical measure could be to
undertake some short-term price-cutting to grab market share or remove a competitor. It
could also be an acquisition to move into a new market area, but because that is long term it
is considered to be a strategic move. Tactical measures are usually short term. Strategy is
considered to be long term and a series of tactical measures can help your organisation
achieve its long-term strategy.
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Characteristics of business strategy

• Sets direction and scope over the long term to achieve goals.
• Designed to achieve competitive advantage.
• Directs business in a changing and evolving environment.
• Holistic and pervasive of the whole organisation; covering all business
activities.
• Fulfils stakeholder expectations.

So strategy sets direction and scope over the long term to achieve goals. It should be
designed to achieve competitive advantage, it should direct the organisation in a changing
and involving environment and should be holistic and include all of the organisation and its
business activities. It also needs to fulfil stakeholder expectations.
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Strategic management

Strategic management concerns three questions, relating to the

organisation:
1. Where are we now?
2. Where do we want to be?
3. How do we get there?

This then begs three questions:

Where are we now?
Where do we want to be?
How do we get there?
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Corporate vision
A vision is to establish a dream to which all employees and other
stakeholders will subscribe.

Vision should consider:

• What would we like our organisation be like in five years’ time?
• What will our market offerings be?
• What skills, knowledge and experience would we require from our
workforce?
• What will be our distinguishing organisational capabilities?
• What will be the shared values of the organisation?
• What will be the culture of the organisation?
• How will we present ourselves to outsiders?
• What key messages will we convey to describe our mission?
• How will we be perceived by our workforce, customers, or community?

This generally starts with a vision and a vision is a dream to which all employees and other
stakeholders can subscribe. The vision should consider things like:
What would we like the whole organisation to be like in five years’ time?
What will our market offerings be?
What skills knowledge and experience would we require from our workforce?
What will our distinguishing organisational capabilities be?
What will the shared values of the organisation be?
What will the culture of the organisation be?
How will we present ourselves to outsiders?
What key messages will be conveyed to describe our mission?
How do we want to be perceived by our workforce customers and community?
Some organisational visions are short whilst other organisational visions are longer. Some
organisations have a vision but this isn’t written down and people may not be fully aware of
it. Take some time to research the vision of organisations which you are familiar with. Try to
choose different organisations and consider how their ambitions vary.
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Strategic thinking

Central to strategy is the concept of strategic thinking. It includes:

• taking into account the lessons of the past
• changes in the environment
• consideration of new opportunities
to define future strategic aims.

Mintzberg suggests that strategy should include the resulting behaviour to

how we are going to get to where we are going.

Strategic thinking centres around three questions:

• Where are we now?
• Where do we want to be?
• How do we get there?

In successful, high-performance organisations, strategic thinking is not

confined to management; it dominates the entire corporate culture.

Strategic thinking is central to strategy and includes taking into account the lessons of the
past, changes in the environment and consideration of new opportunities to define strategic
aims Mintzberg suggests that strategy should include the resulting behaviour to how we are
going to get to where we are going.
Strategic thinking still centres around the three questions which we highlighted earlier:
Where are we now?, Where do we want to be? and How do we get there? In successful
high-performance organisations, strategic strategic thinking is not confined to management,
it dominates the entire corporate culture.
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Levels of strategy

Corporate
• Defines the strategy for the enterprise as a whole, and is cascaded to
business units below.
• Must be holistic and define the overall purpose and scope of the organisation.
• Must be visionary.
• Must ensure that the different parts of the organisation add value to the overall
strategy.
• Must meet the expectations of stakeholders.
Business unit
• Must be derived and be aligned with the corporate strategy.
• Must be focused on how to compete in the particular markets or business
areas for which the business unit has responsibility.
• Can be visionary and creative within the context of its business remit.
Operational
• Must define and deliver the operational processes required to achieve the
corporate and business unit strategy.
• Must address the resource and resource development plans to support the
corporate and business unit strategy.

So, there are three levels of strategy:

• Corporate strategy, which we have been talking about, where we devise a strategy for
enterprises as a whole that is cascaded to business units below. It is holistic and defines
the overall purpose and scope of the organisation and needs to be visionary. It must
ensure that the different parts of the organisation all add value to the overall strategy
and ensures that it meets the expectations of stakeholders.
• Individual business units must ensure that their strategy is aligned with corporate
strategy. They will focus on how to compete in particular markets or business areas for
which the business unit has responsibility. The strategy can still be visionary and creative
but it’s within the context of the business remit and must connect with the
organisational strategy.
• We also have operational strategy and operational level managers must define and
deliver the operational processes required to achieve corporate and business unit
strategies. They have to address the resource and resource development plans to
support the corporate and business unit strategy.
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Managerial issues of strategy

Strategic manager considerations:

• Strategic collaboration – the option of working with strategic
partners as supply chains become increasingly complicated through
globalisation, technological development becomes increasingly more
expensive and the options to expand into new markets arise
• Core competencies and organisational capability – to be able to
meet the challenges and opportunities of the future
• Customer-centricity – the increasingly more important requirement
of meeting and exceeding customer needs as organisations seek to
differentiate themselves further from the competition
• Effective stakeholder management – recognition of the importance
of internal stakeholders as roles within organisations require greater
skills to enable differentiation, explore new markets and take
advantage of technology within product and service provision
• Opportunities in the global marketplace – especially through
increasing wealth in the developing world
• E-business strategies – taking advantage of the opportunities
enabled through the Internet and improved communications

So, clearly this can lead to issues with regards to determining and implementing strategy for
the strategic manager.
• They need to consider resources and young expanding markets and whether strategic
collaboration and the option of working with strategic partners as supply chains will
become increasingly complicated through globalisation and as technological
developments become more expensive.
• They need to consider the core competencies and organisational capability of the
organisation to be able to meet the challenges and opportunities of the future,
• The increasing importance of customer centricity needs to be borne in mind as meeting
and exceeding customer needs is frequently the way organisations differentiate
themselves from the competition.
• Effective stakeholder management specialist strategy is considered to be a little bit riskier
or a little more long-term than normal.
• There are opportunities within the global marketplace, as we are experiencing increasing
wealth in the developed world and obviously the emergence of the BRICS countries.
• E-business strategies enable organisations to take advantage of the Internet and
improvements in communications.
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Managerial issues of strategy

Business unit managers should:

• ensure that strategies are part of the overall corporate strategy
• ensure that strategies are consistent, coherent, effective and
appropriate
• ensure that strategies are sustainable and supported by
operational processes (link between business strategy and
operational strategy)
• understand an organisation’s business environment
• understand the attributes of the organisation and what makes it
unique/distinctive
• be aware of the organisation’s resources, capabilities,
competencies and customers
• understand how the organisation’s advantages can be exploited
• understand and exploit the existence of any strategic
networks/alliances.

Business unit managers who are looking at implementing strategies at a more local level
should:
• ensure that strategies are part of the overall corporate strategy
• ensure that they are consistent, coherent, effective and appropriate
• ensure that they are sustainable and supported by operational processes - this is the link
between business strategy and operational strategy
• ensure they understand the organisation’s business environment and the attributes of the
organisation and what makes it distinctive, i.e. overall strategy
• ensure they are aware of resources, capabilities, competencies and customers, and fill
any potential gaps
• ensure they understand the environment within the context of the industry within which
they operate and therefore the organisation’s advantages and how they can be exploited
and equally
• understand and exploit the existence of any strategic networks and alliances which are
also in place.
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THANK YOU

Thank you for listening. We will see you again in lesson 2.