SESION 1 and 2: Analysis of the Macro-environment

I.

WHAT IS STRATEGY?
Strategy is about being UNIQUE
What unique position will we be able to achieve?
Strategy is about creating SUSTAINABLE ADVANTAGES
What is our advantage going to be?
How are we going to sustain that advantage over time?

MULTIPLE DEFINITIONS OF STRATEGY

Mintzberg explained that the most common ones are:
1. Plan, a "how," a means of getting from here to there.
2. Pattern in actions over time
for example, company that regularly markets very expensive products is using a
"high end" strategy.
3. Position: reflects decisions to offer particular products or services in particular
markets.
4. Perspective: vision and direction.
Porter, 1996
Strategy is the creation of a unique and valuable position, involving a different set of
activities.
Strategy requires trade-offs (what not to do)
Strategy involves creating fit among companys activities

 Planned vs Emergent Strategy

Planning: can be defined as the process whereby strategy is decided, by
analyzing both the inner workings and the outside environment of the company and
evaluating the alternatives that arise from that analysis.
This definition leads us to a way of thinking out and deciding on strategy: the
planned strategy pioneered by Igor Ansoff and other authors
Emergent strategy, a more incremental, cumulative and intuitive way of thinking out
and deciding on strategy: informal, unplanned processes in which the choices appear
in response to unforeseen changes in the environment.
We can sum up these two extremes in the words of Henry Mintzberg: one way leads
to strategy through planning, the other through learning.

II.

VALUES
Values define how the organization wants to act and behave, which roads it wants
to take and which it does not.
They specify the nature of the relationships between the individuals who
comprise the company and how the company relates to its customers, its suppliers,
the community in which it operates, and so on.
They are based on beliefs as to what is desirable, valuable, justifiable.
Values should mobilize and amplify the energies of an organization, and therefore
they should be understood and shared.
Values are the only concept that does not change after a process of strategic
thinking. Values do not change, unless the company changes owners.
When a firm is sold, taken over or merged, its shareholding structure
changes. In these cases the new owners do not usually have the same values
as the old ones, and so the values are transformed. Values can also change if
a succession occurs in a family firm: the new generation that takes over does
not necessarily have exactly the same values as the previous one.

We find that the companys values are at the base of the sculpture.

III.

MISSION
However, in most cases an appropriate business definition is merely a necessary
but insufficient condition.
Usually a company is forced to compete, within that definition, with others, all
struggling to attract the same customers by satisfying similar needs in a similar
way.
This is when it needs to find a competitive advantage through strategy: to be
better than the rest of the companies in the industry in some aspect that is
appreciated by its customers.
Typically, the mission describes the ring in which all the companies with the same
mission fight it out to have the best competitive advantage.
The company must seek a competitive advantage, fighting against other companies
with the same mission, in the same business.

 The vision enables us to think about what we want to be but are not (yet).
Crucial: because a company needs direction, it needs to know where it wants to
get.
What future do we expect?
Defined by upper mananagement
Comes from SEE.Long run: 10-15 years ahead
How do we want the future to look like
A good definition of VISION should motivate people and call them to action
immediately.

IV.

OBJECTIVES
specific goals, and they are measurable and controllable, which makes them easier
to carry out.
... increase the organizations commitment, both collectively and individually, as
they provide the people who comprise it with a sense of direction.
... a guide for action, they help to establish priorities, by focusing the energy of
management and indeed the whole company, thus legitimizing resource allocation.
Only a set of objectives that pose a challenge will motivate, will provide the
necessary component of ambition and eagerness to face the difficult moments
that the organization will go through before it achieves them.
Only this sort of objectives will guard against the enterprise losing vitality.
Vision allows to think about what it wants to be in the future. But all this could
also be said of a companys objectives.
Objectives also look to the future; they too enable us to think about what we want
to achieve.
Objectives can be regarded as the concrete form taken by the vision
Difference between vision and objectives?
Objectives are quantifiable: time and the goal pursued.
Objectives should be SMART

V.

Specific
Measurable
Achievable
Relevant
Time-Oriented

STRATEGY

is the way in which the company attains its competitive advantage; it is its way of
competing, of being better than its rivals at satisfying its customers key needs. Each
strategic perspective will provide a vision of strategy; each analysis will lead us to a type
of strategic decision, a way of competing...
VI.

POLICIES
Policies are guidelines for action, decision-making criteria to select the right
alternative.
For example, a company might have the policy of not distributing dividends,
or of not accumulating debt, or of giving priority to in-house promotion when
filling vacancies.
They are important because they can stretch or shrink the companys capacities,
and can therefore increase or decrease its strategic possibilities.
They either limit or extend the companys field of strategic action.
If a company has the policy of not giving dividends it is increasing its financial
capacity, its strategic possibilities.
Similarly if it has the policy of accumulating high levels of debt.
And the opposite will be the case if its policies are to distribute a high dividend and
incur very little debt, thus restricting its capacities.
MAIN CONCEPTS
Mission: overriding purpose (What/Who/How)
Vision: desired future state (dream)
Goal: general statement of aim or purpose
Objective: quantification or more precise statement of goal
Strategic capability: resources, activities and processes
Business model: how product, service and information flow