LECTURE 03 MGT686

Objectives needed at all levels Parts supporting the whole Top-down objective-setting - cohesion - leadership

Corporate Strategy Builds portfolio of businesses Harnesses synergies between businesses –Eg pepsi: cola sold via restaurant chain Makes resourcing/ investment decisions Reviews/ unifies business unit strategies

Business Strategy Aims to strengthen long-term competitive position & build sustainable competitive advantage Build competencies and capabilities Respond to changing circumstances Unify functional strategies

Functional Strategy Support the business strategy –Eg. Bank: more automated transactions Defined for a function of the business –Eg. IT function ensures 99% up-time for atms by having superior software and backup/ recovery mechanisms

Operational strategy Lower level units of the organisation Specific means and approaches for these units –Eg. Software development group trains people in use of GUI/ client-server development

Approaches to performing the strategy making tasks –Master strategist: manager is chief architect –Delegate to others –Collaborative approach –Champion approach

Factors that shape strategy Craft a Strategy Craft a Strategy Industry Attractive- ness Society political regulatory Opportunity threat Company’s strategic situation Strengths weakness Manager values / ambitions Culture Evaluation Choice External Internal

Societal, Political, Regulatory Conditions Limit the strategic actions that a company can or should take May cause company to change strategy –anti-smoking lobby (direct mkg/advertising) –lead-free petrol (eg Pura) –recycling

Industry Attractiveness Strategy must be matched to industry and competitive conditions eg. –technology shift –change in cost structure of industry

Market Opportunities and Threats Be open to opportunities Aim at capturing best growth opportunities Defend against threats to well-being and future performance

Organisational Strengths and Weaknesses Strategy must be well-matched to the company’s strengths –strategy should be grounded in what company is good at doing –perilous to depend on what it’s not good at

Manager’s Values, Beliefs and Ambitions Management play a pivotal role Strong leadership builds commitment Management communication - ‘buy-in’

Strategy formulation: deciding what to do what you might do: opportunity what you can do:resources what you’d like to do:values/ ambitions what you ought to do:ethics

Tests for a good strategy Goodness of fit test –matches well the company’s situation internal external Competitive advantage test –leads to sustainable competitive advantage Performance test –leads to superior performance profitability long term business/ market position strength

Benefits of a Strategic Approach Direction Adaptable / in-tune with environment Basis for budget/resource allocation Unifies decisions across organisation Encourages pro-active management Requires strategic thinking rather than gut- feel/drift

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