1. CHAPTER 2 The Strategic Context

2. The importance of strategy What an organisation is trying to achieve and how it intends to go about it Fundamental choices involved – Which customers? Which competitors? – Which resources? The basis for all other functional plans – Marketing, finance, HR, operations, etc Originates from the world of business, but is just as important for all types of organisation

3. Definitions Some variations from one text to another, but: – An organisation’s mission is a statement of what it is for, why it exists – Strategic goals are the hoped-for results of pursuing the mission over a period – A strategy sets out the means through which the goals will be achieved

4. Analysing the environment Familiar ‘five forces’ model (Porter, 1980) – Within-industry rivalry – Customer power – Supplier power – Threat of new entrants – Threat of substitutes P ESTEL framework – Ensures that high-impact background factors are fully considered

5. Analysing the organisation Portfolio models (eg the ‘Boston box’) ask how attractive an organisation’s market is and how well the organisation is doing in that market – Sorts group’s businesses into four categories, in order to determine current and future cash needs Can be adapted to public sector context

6. The resource-based view The resource-based view of strategy holds that each organisation has a unique history and set of resources – Strategy development is about understanding those resources (assets and capabilities) and determining how they are to be matched to the particular needs of the chosen market(s) – Key distinctive resources must be nurtured and developed Human resources are usually an important part of the organisation’s total resources

7. Competing Why should customers choose one organisation over its rivals? Sustainable competitive advantage may be based upon: – Differentiation – Cost leadership – Focus Choice of competitive strategy largely determines type of resource needs (amount and type)

8. Strategy implementation Choice of strategy implies resource choices – Each part of the organisation’s value chain has to support the organisation’s competitive efforts in its markets – Strategies have to be dynamic to respond to rapid external change: so must resources – Implications for maintaining key resources, developing new ones and disposing of those that are no longer needed and cannot be transformed