PART I. STRATEGIC POSITION
CHAPTER 1 INTRODUCING STRATEGY
1.1. INTRODUCTION
Strategy is about key issues for the future of organizations. E.g. should universities concentrate their
resources on research excellence or teaching quality or try to combine both? Such questions are vital to
the future survival of the org involved. They mostly concern entrepreneurs and senior managers at the
top of their organizations but they matter more widely. Middle managers have to understand it, there are
careers of strategy consultants etc.
1.2. WHAT IS STRATEGY?
Strategy is the long-term direction of an organization. E.g. the long-term direction of Amazon is from book
retailing to internet services in general.
1.2.1. Defining strategy
Defining strategy as the long-term direction of an organization implies a more comprehensive view than
some other influential definitions. There are another 3 definitions by leading strategy theorists. Alfred
Chandler says strategy is ‘the determination of the long-run goals and objectives of an enterprise and the
adoption of courses of action and the allocation of resources necessary for carrying out these goals’.
Michael Porter says that ‘competitive strategy is about being different. It means deliberately choosing a
different set of activities to deliver a unique mix of value’. Henry Mintzberg calls it ‘a pattern in a stream
of decisions’. Chandler makes it a more logical process, whereas Porter focuses on competitive advantage
while Mintzberg recognizes that strategy can be planned but it can also emerge.
The three elements of the definition – the long term, direction and organization can each be explored
further:
- The long term – strategies are often measured over years. The importance of the long-term
perspective is emphasized by the three-horizons-framework which suggests organizations should
think of themselves as comprising of three types of business or activity defined by their ‘horizons’ in
terms of years. Horizon 1 are the current core activities (defend them and extend but expect decrease
of value over time). Horizon 2 businesses are emerging activities that should provide new sources of
profit (new market maybe). Horizon 3 are possibilities, for which nothing is sure. Typically, risky
research and development projects, start-up ventures, test-market pilots or similar. Horizon 3 may be
decades ahead and generate profits years from now. The basic point about the framework is that
managers should not only focus on the short-term issues but push the horizon 1 as far as it goes and
at the same time look for horizons 2 and 3.
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CHAPTER 1 INTRODUCING STRATEGY
1.1. INTRODUCTION
Strategy is about key issues for the future of organizations. E.g. should universities concentrate their
resources on research excellence or teaching quality or try to combine both? Such questions are vital to
the future survival of the org involved. They mostly concern entrepreneurs and senior managers at the
top of their organizations but they matter more widely. Middle managers have to understand it, there are
careers of strategy consultants etc.
1.2. WHAT IS STRATEGY?
Strategy is the long-term direction of an organization. E.g. the long-term direction of Amazon is from book
retailing to internet services in general.
1.2.1. Defining strategy
Defining strategy as the long-term direction of an organization implies a more comprehensive view than
some other influential definitions. There are another 3 definitions by leading strategy theorists. Alfred
Chandler says strategy is ‘the determination of the long-run goals and objectives of an enterprise and the
adoption of courses of action and the allocation of resources necessary for carrying out these goals’.
Michael Porter says that ‘competitive strategy is about being different. It means deliberately choosing a
different set of activities to deliver a unique mix of value’. Henry Mintzberg calls it ‘a pattern in a stream
of decisions’. Chandler makes it a more logical process, whereas Porter focuses on competitive advantage
while Mintzberg recognizes that strategy can be planned but it can also emerge.
The three elements of the definition – the long term, direction and organization can each be explored
further:
- The long term – strategies are often measured over years. The importance of the long-term
perspective is emphasized by the three-horizons-framework which suggests organizations should
think of themselves as comprising of three types of business or activity defined by their ‘horizons’ in
terms of years. Horizon 1 are the current core activities (defend them and extend but expect decrease
of value over time). Horizon 2 businesses are emerging activities that should provide new sources of
profit (new market maybe). Horizon 3 are possibilities, for which nothing is sure. Typically, risky
research and development projects, start-up ventures, test-market pilots or similar. Horizon 3 may be
decades ahead and generate profits years from now. The basic point about the framework is that
managers should not only focus on the short-term issues but push the horizon 1 as far as it goes and
at the same time look for horizons 2 and 3.
1
