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Henry: Understanding Strategic

Management
Chapter 1: What is Strategy?

What is Strategy?

Strategy has a long antecedent Sun Tzu The Art of


War

Strategy is about achieving a competitive advantage

Meeting customer needs better than rivals

Porter (1996) competitive strategy is about being


different

What is Strategy?
Markides (1999) selecting a strategic position an
organization can call its own based on:
Who should the organization target as customers?
What products or services should be offered?
How can the organization do this efficiently?

What is Strategy?
Kay (1993) an organizations strategy is the
match between its internal capabilities and
external relationships
Internal: what the organization is capable of
doing
External: Its relationship with employees,
customers, shareholders, and suppliers.
The use of analytical techniques allows the firm
to influence its position in the market

What is Strategy?
The process of creating a strategy is called strategic
management
Strategic management consists of: strategy analysis,
strategy formulation, and strategy implementation
In reality these elements are interdependent and should
not be considered in isolation
Strategy analysis, formulation, and implementation all
need to be considered if the organization is to meet the
needs of its environment

What is Strategy?
Strategy analysis is a useful starting point for crafting
strategy
It includes the general and competitive environment
facing the organization
It also deals with the organizations internal environment
Strategic analysis helps the organization evaluate how
well it is positioned to exploit external opportunities

What is Strategy?
Strategy formulation usually takes place at the business
and corporation level
Strategic analysis is important for strategy formulation
So too is creative insights which synthesize experiences
that exist within the organization to form a novel strategy
An organization is seldom faced with only one strategy
which means it is necessary to evaluate competing
strategies

What is Strategy?
Strategy implementation requires the organization to be
sufficiently flexible
A given strategy must be effectively communicated with
stakeholders inside and outside the organization
The organizations values are crucial in sign-posting to
individuals what the organization considers important
An organizations culture will determine how it responds
to opportunities that exist

What is Strategy?
A vision is often associated with the founder of an
organization
It represents a desired state the organization aspires to
achieve in the future
A mission seeks to answer the fundamental question of
why an organization exists
Campbell et al. (1990) make a distinction between
mission and sense of mission

What is Strategy?
The assumptions on which an organization has been
built and the basis on which it is run are its theory of
business
It includes assumptions about markets, customers,
competitors, and its internal capabilities
Organization encounter difficulties when their theory of
business no longer fit with reality
A organizations theory of business becomes obsolete
when it has achieved its objectives

What is Strategy?
Corporate strategy is concerned with which markets an
organization wants to compete in
Business strategy deals with how an organization will
compete in its chosen industry or market
Functional strategy occurs according to functional lines
such as R&D, marketing and finance

What is Strategy?
The Design School seeks to match the capabilities of the
organization to the opportunities within its competitive
environment
This rationalist approach is exemplified by Michael Porters
generic strategies
The Learning School emphasizes deliberate and emergent
strategies
A deliberate strategy is one the organization intends to pursue
An emergent strategies involves managerial learning and
experience that coalesce into a realized strategy

What is Strategy?
A strategic management framework
A strategy must
take account of
the organizations
stakeholders if it is
to succeed
Figure 1.3