BPS-Session required for information ........
- 1. Strategic Management #1 Mr Mansoor Ahmed Lecturer, Comsats Business School e.mail: mansoorlse@yahoo.co.uk
- 2. Today 1. Practicalities 2. What is strategy? – Pattern vs. Plan 3. Strategic vision – The surface level 4. Strategic analysis – Introduction & readings for the next session
- 3. The basic information • 16 sessions, 1.5 +1.5 hours each week • Grading
- 4. Assessment • 2 sessionals-(6 week, 12th week) • 16th Week Revision Week • Quizzes Based on – Topics covered during the sessions • Group Project Format – It will test your Analytical , Problem Solving skills within the real life organization context. • Assignment-PLAGIRASM? Literature Review {Academic Articles} • Final Exam
- 5. Preparation for sessions • Prepare by going through the pre-readings • Articles (roughly one per session) – Available online – You need to browse the correct volume & issue for a pdf copy of the articles–Google Scholar is a good start – Academic Journals and Newspapers. AVOID PLAGERISAM!!!
- 6. Group Work/Project Agree on a publicly listed US, UK ,Asian firms or Case Study! • Conduct strategic analyses • Identify strategic problem(s) • Recommend strategic actions
- 7. Group Project Format • Condensed report (1200-1500 words) – Try to analyze the firm from multiple angles and include the most relevant findings • A powerpoint presentation (~5 slides) – Each group has max. 10 minutes to present
- 8. Group presentations Your group must inform me as soon as possible • Four {?} groups will present in each slot – 10 minutes presentation, up to 5 minutes questions – We will discuss it further!!! – I will keep you updated throughout the Semester.
- 9. Scheduling the group work • You should begin early on, but allocate enough time for the last week (between sessions 14 and # 15) • Sessions #1-6 focus on strategic analysis • Sessions #7-10 focus on strategic decisions • Sessions #10-12 focus on implementation issues • Session #13-15 integrates and revisits key issues During Last Session, You will Present your Group work!
- 10. Text book • Articles online–Google Scholar-Literature Review • If you are interested in obtaining a book, I recommend the following:. Johnson, Scholes, Whittington (2005). Exploring Corporate Strategy, Text and cases, 7th ed. Prentice Hall.
- 11. A rough course structure Part 1: Internal and external strategic analysis () Part 2: Organizational boundary decisions and strategy process () Part 3: Summary and student presentations
- 12. Today 1. Practicalities 2. What is strategy? – Pattern vs. Plan 3. Strategic vision – The surface level 4. Strategic analysis – Introduction & readings for the next session
- 14. Origins of Strategy • Strategy originates from Greek (stratēgos), roughly meaning ”leading an army” • Even today, militaries recognize strategic and tactical levels of planning – ”Tactics win battles, strategy wins the war” Military metaphors remain common in business environment, but are actually valuable?
- 15. Strategy vs. Tactics • Tactics are the immediate means (actions) used to attain a goal • Strategy incorporates a selection of tactics
- 16. The most commong definition ”A comprehensive long-term plan to attain chosen goals.” Often, management scholars and gurus define the goal of strategy as ”beating the competition” or ”maximizing shareholder value”
- 17. Goals in Business Strategy • In for-profit firms, strategic goals ultimately facilitate some or all of the following: – Growth – Profitability – Survival of the firm – Shareholder value • Goals depend on the type of the firm – Technology startups vs. family businesses
- 18. Other approaches to strategy • ”Strategy means that the top management creates a future for the firm and takes control of that future” • ”Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value” • Strategy is about archieving more optimal fit with the firm’s environment
- 19. Strategy as a pattern • A description of a firm’s key activities – ”Apple’s strategy is to leverage its brand by creating and marketing electronic appliances with great usability and design” – When a pattern creates profits in the current environment it has ’environmental fit’ • Important: A firm’s present ’strategy’ not always the result of a deliberate plan – Result of accumulated choices over time
- 20. Pattern vs. Plan: Compatible? • Think of the current strategy (as a pattern) in the following firms? – IKEA, Amazon.com, Apple, Vodaphone • To what extent do you think these patterns were planned? • Do you think these patterns are reflected in current ”strategic plans”?
- 21. Johnson, Scholes & Whittington book Strategy is the direction and scope of an organization over the long term, which achieves advantage in a changing environment though its configuration of resources and competences with the aim of fulfilling stakeholder expectation. (Page 9, emphasis in the original)
- 22. My preferred approach to strategy Firms’ Objectives Strategy Strategic Analysis Actions & Structures Strategy is an articulated and actionable understanding of what the firm does and should do to attain its objectives.
- 23. Example: Strategic Intent of Comsats University • To remain or be amongst the top tier of scientific, engineering and management research and teaching institutions in the world. • To develop our range of academic activities to meet the changing needs of society industry and research. • To continue to attract and develop the most able students and staff worldwide. • To establish our Comsats Business School as one of the leading institutions in the world. • To communicate widely the significance of science in general, and the purpose and ultimate benefits of our activities in particular. • At Comsats University, strategy is implemented on departmental level following 16 more specific key objectives
- 24. Example: Tesco!!!!. • What are the strategic initiatives of Tesco • What do you think are it's objectives? • Are the company in an equal position to implement their strategy in the U.S/Globally?
- 25. Implicit assumptions? • A comprehensive long-term plan • A future created by managers • A distinctive set of activities
- 26. Explicit assumptions • A comprehensive long-term plan – Future is predictable, optimal plan can be deduced by collecting enough information • A future created by managers – Future can be ’enacted’ by taking the initiative, persistent managers can realize their visions • A distinctive set of activities – The optimal set of activities remains relatively constant in the near future
- 27. Competitive strategy • Should ”strategy” relate to competition? – Or rather: when should it and why? – What about Comsats University? • ”Blue sea strategy” – Focus on new markets with little or no competition • ”Red seas” – Markets with bloody ’hypercompetition’ Strategy is an articulated and actionable understanding of what the firm does and should do to attain its objectives. Source: Kim, W.C. Mauborgne, R. (2005) Blue Ocean Strategy: From Theory to Practice. California Management Review
- 28. Strategy as boundary-setting • Specific attention on the course is devoted on things a firm does not do • How does not doing things create value? • How can a firm avoid doing things? Strategy is an articulated and actionable understanding of what the firm does and should do to attain its objectives.
- 29. Today 1. Practicalities 2. What is strategy? – Pattern vs. Plan 3. Strategic vision – The surface level 4. Strategic analysis – Introduction & readings for the next session
- 30. STRATEGIC VISION The surface of business strategy
- 31. Why a strategic vision? • Top management would like all parts of the firm to act towards strategic goals • Decision making tends to be distributed – Why is this increasingly so? • Vision directs decisions & actions on lower levels of hierarchy • Other benefits – Leadership: motivation, identification with the firm – External communication: shareholders, etc.
- 32. Example: Vision/Mission Statements Sony (based on shareholder meeting slides): “Developing champion products with innovative technologies to deliver a compelling entertainment experience.“ “Key priority to revitalize electronics by changing the organizational structure, reducing overheads, refocusing product lines, reducing model count, optimizing manufacturing, divesting non-strategic assets”
- 33. Case Netflix (cf. Lovefilms.co.uk)
- 35. Netflix Vision (From investor material) • Attention directed to: – Improving web site and service – Increasing subscriptions – Online video technology
- 36. Articulating a Strategic Vision • Key goals of the organization • Chosen means for attaining the goals • Underlining activities or goals that are unique to the specific company
- 37. To direct and unify activities in a firm, strategic vision should be...? • Widely known and understood within the organization • Relatively simple and stable • Actionable (influence real decisions) • Acceptable to firm’s stakeholders – I.e. owners, employees, customers, government
- 38. Vision-- Potter's Value Chain • Strategy must incorporate more detailed understanding of different functional areas (tactics, if you will) ”Value chain” graph originally by Porter, 1977
- 39. Grand strategy: movie rental leadership
- 40. Consider the higher education industry • What are the implicit assumptions regarding the activities of Comsats College? • How does our strategy differentiate us from the other universities? • How do some other universities differentiate themselves?
- 41. Strategic intent of Comsats College • To remain amongst the top tier of scientific, engineering and medical research and teaching institutions in the world. • To develop our range of academic activities to meet the changing needs of society, industry and healthcare. • To continue to attract and develop the most able students and staff worldwide. • To establish our Business School as one of the leading such institutions in the world. • To communicate widely the significance of science in general, and the purpose and ultimate benefits of our activities in particular.
- 42. Today 1. Practicalities 2. What is strategy? – Pattern vs. Plan 3. Strategic vision – The surface level of strategy 4. Strategic analysis – Introduction & readings for the next session
- 44. Industry/market analysis • Some goals: – Determine the attractiveness of an industry/market – Understand key drivers of competitiveness – Understand current and likely competitors – Understand customer behavior
- 45. Strategic analysis: Five Forces Framework Captures key threats for the profitability of a strategic positions Most lucrative businesses have many weak suppliers, price- insensitive buyers, low competition, and low threat of substitutes and new entrants. Competitors Supplier Bargaining Power Buyer Bargaining Power Threat of Substitutes Threat of New Entrants
- 46. Tanaka launches M.Sc. in International Healthcare Mngmt: Five Forces Framework Use the Five Forces framework. Analyze attractiveness of the market for M.Sc. in international healthcare management? 1. Existing competitors? 2. Likely entrants? 3. Suppliers? 4. Buyers? 5. Potential substitutes? Competitors Supplier Bargaining Power Buyer Bargaining Power Threat of Substitutes Threat of New Entrants
- 47. Environmental analysis • Some goals: – Understand how the environment hinders or helps the firm reach its goals – Underline potentially important changes in the environment – Enable firm to proactively fit its strategy to a changing external context
- 48. PEST(EL) Framework The Firm Political Economic Sociocultural Technological (Environmental) (Legal) Changes in regulations, taxation, government subsidies, anti-thrust law Consumer purchasing power, material costs, interest rates Consumer preferences and behavior, social norms and expectations All issues related to environmental sustainability (partly political, etc.) Outcomes of political environment: new laws or court decisions influencing demand/cost of products/services New innovations that enable new products or help reduce costs
- 49. Airbus & PEST analysis Regulations (noise, safety, pollution, competition, etc.) Taxation on greenhouse gases Price of oil Economic growth (business and leisure travel) Interest rates Fuel consumption Entertainment systems Safety Demand for travel Environmental issues Growth of large cities AIRBUS P E S T
- 50. M. Sc. International Healthcare Management M.Sc. program Political Economic Sociocultural Technological Work out the potential relevant changes in the external environment Write here Write here Write here Write here
- 51. SUMMARY
- 52. Strategy in Context Objectives Strategy Strategic Analysis Actions & Structures Five forces PEST(EL) And many others... An understanding of current activities + further plans to achieve objectives What our organization should be? New processes, policies, rewards, etc.
- 53. Summary of Key Points • ’Strategy’ means two things: – A plan of the actions to attain goals – A pattern of activities the firm is currently undertaking • Strategic vision – A simplified statement of a firm’s strategy that helps align decisions and activities across the firm • Frameworks help analyze profit potential and environmental changes – Five forces & PEST covered so far – more to follow in the next sessions
- 54. Next session ! Pre-readings: 1. Netflix Case 2. Porter’s 1996 article