1. 1 Business Strategy Lecture 8 - Making Strategy Work People and Relationships John Birchall

2. 2 Linking Purpose to Action Adapted from Harrison (2003: 37) and De Wit & Meyer (2005: 5) Organisational Purpose Vision, Mission, Ethics Strategy Process Strategy Content Business Definition, Competitive Strategies Strategy Context Broad and Operating Environments Involves Stakeholders

3. Organisational Architecture Concept developed by John Kay (1993) Foundations of Corporate Success: How Business Strategies Add Value. Oxford: University Press. Architecture: a distinctive capability founded on relationships Remember Porter’s Value Chain? Capabilities strengthen the chain: Co-ordinating the efforts of different functional departments Improving communications to improve new product design, generating extra customer value

4. 4 Administration (Firm Infrastructure) Human resource management Technology development Resource procurement Support activities Primary activities Profit Inbound logistics Operations Outbound logistics Marketing and sales Service Profit Link to : Porter’s Value Chain (Harrison 2003: 83)

5. Linking Marketing and Operations Long-Range Market Forecasts: guide decisions about facility size and process Marketing Data on Customer Needs: can help location decisions Which is most important? - cost, customer convenience or access to scarce resources? Promotions and Ordering Cycles: should be built into production schedules seasonal peaks matter too

6. People and Relationships Kay (1993: 66) says: “Architecture…is a network of relational contracts within, or around, the firm” Internal architecture: relationships of management with employees, and employees with each other External architecture: relationships with suppliers and customers Networks: relationships “among a group of firms engaged in related activities

7. 7 Link to : Stakeholder Analysis The Mendelow Grid, as shown in Johnson, Scholes and Whittington (2005: 182) LEVEL OF INTEREST POWER LOWHIGH LOW HIGH Minimal effort Keep informed Keep satisfied Key players

8. 8 External Stakeholders: A Positive View (Harrison 2003: 268) Formal Power Strategic Importance of External Stakeholder Economic Power Political Power Influence on Environmental Uncertainty Facing the Firm Possession of Knowledge or Resources not Found in Firm Partnering and Inclusion in the Firm’s Activities Monitoring and Traditional Management Techniques HighImportance LowImportance

9. 9 Link to : Stakeholders and Environmental Change (Harrison, 2003: 37) The Organization The Organization Owners/Board of Directors ManagersEmployees The Operating Environment The Operating Environment The Broad Environment The Broad Environment FinancialIntermediaries Government Agencies and Administrators LocalCommunities Competitors SuppliersCustomers ActivistGroups Unions Socio-cultural Influences Technological Influences Economic Influences Political/Legal Influences The Media

10. Internal Stakeholders The world is complex and changing (Stacey 2003) Businesses need to avoid complacency, slow reactions or resistance to change: strategic drift Junior managers with fresh ideas can stop chief executives getting set in their ways Learning is key to success, and often comes from staff directly involved in operations and sales Frontline staff can help the organisation develop proactive strategies to anticipate and shape the process of change within its industry Emergent strategy, well directed, can turn the leader’s vision into reality (Mintzberg et al 1998: 175- 231)

11. A good architecture… Information flows freely upwards, downwards, and across functional divisions People are willing to play with new ideas and help each other develop them further Strategy can emerge in flexible response to issues and challenges The organisation can learn: from its own experiences and from its stakeholders

12. May be now is the time to collaborate? Strategic Alliances Joint ventures Research partnerships Franchising Outsourcing Start-up assistance, training

13. 13 Supplier value chains Customer value chains Channel value chains Organisation’s value chain From Porter’s Value System …