Chapter 1: Introducing strategy
Strategy is the long-term direction of an organization. More specifically, it is the long term
direction of an organization, formed by choices and actions about its resources and scope, in
order to create advantageous positions relative to competitors in changing environmental and
stakeholder contexts.
- Amazon: from book retailing to internet services in general.
- Disney: from cartoons to diversified entertainment.
This definition of strategy encompasses 3 elements:
1. The long-term: strategies are measured over years, or even a decade.
a. Emphasized by the 3 horizons framework: the idea that companies should think
of their activities in 3 horizons defined by time.
i. Horizon 1: businesses as current core activities. For Tesla motors: the
original car and subsequent models.
ii. Horizon 2: businesses as emerging activities that should provide new
future sources. For
Tesla: a new
mega-battery
business.
iii. Horizon 3:
possibilities that are
more open and are
more uncertain, like
start-up ventures.
Would include risky
research, for Tesla this could be space transportation.
2. Strategic direction: strategies follow a long-term direction or trajectory. For Tesla this is
from an electric car to a diversified set of solar power offerings. On the other hand, for a
football club this could be moving up from one league to a higher one.
3. Organization: consist of people internally. Externally surrounded by relationships with
suppliers, customers, and more. For Tesla, these relationships are crucial.
A summary of a strategy is called a strategy statements, and should have 3 main themes:
- The fundamental goals the company seeks, the scope of the activities, and the
advantages it has to deliver these.
There are 3 levels of strategy:
1. Corporate-level strategy: concerned with the overall scope of an organization: the
geographical scope, diversity of products or acquisitions of new businesses.
a. For tesla: moving from car manufacturing to battery production for homes.
2. Business-level strategy: how individual businesses should compete in their markets:
start-ups or business units. Concerned with innovation, scale and competitors.
, a. For tesla: rolling out a lower cost vehicle to capture market share in advance of
potential competitor entries.
3. Functional strategies: how components of a company deliver the corporate and business
level strategies in terms of resources, processes and people.
a. For tesla: raising funds to fund its growth in order to meet investment needs.
The 4 strategy lenses cover different ways of looking at strategy issues in order to gain new
insights:
1. Strategy as design: like an architect, systematic, analytical and logical.
2. Strategy as experience: recognizing that biases, routines & assumptions affect strategy.
3. Strategy as variety: new ideas and innovation affecting an organization.
4. Strategy as discourse: the ways managers use language to influence strategy making.
The lenses encourage the exploration of different perspectives through different views.
Notes:………………………………………………………………………………………………………
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
, Chapter 2: Macro-environment analysis
The macro-environment consists of the broad
environmental factors that impact to a greater or lesser
extent many organizations, industries and sectors: the
internet, economic growth rates, climate change, and more.
- Changes in this bubble can often seem big, such as
the introduction of the internet. However, there are
several analytical tools (PESTEL, forecasting and
scenario analysis) to detect changes in this area.
The PESTEL framework is a framework that categorizes 6 environmental factors: political,
economic, social, technological, ecological and legal.
- The market environment: suppliers, customers, competitors → economic interactions.
- The nonmarket environment: involves interactions with NGOs, politicians, government
departments, (political) activists, the media and more → networking and lobbying.
The political element highlights the role of the state and other political factors.
- Political risk analysis: the analysis of threats and opportunities from political change.
- 2 dimensions: macro-micro and internal-external dimension.
The economical element is important as the macro-environment is influenced by
macro-economic factors such as currency exchange rates, interest rates and fluctuating growth
rates. Economic growth rates have a tendency to rise and fall in cycles.
The social elements can influence the nature of the demand and supply and shape innovation.
- A social aspect of the macro-environment are organizational fields: communities of
organizations that interact more frequently with one another than with those outside the
field. These are also partly economic.
The technological element deals with the internet, nanotechnologies or new composite material.
The ecological element stands for environmental issues such as pollution, waste & the climate.
- Environmental regulations can impose additional costs.
The legal analysis can cover labor, environmental and consumer regulation, taxation, etc.
Key drivers for change are the environmental factors likely to have a high impact on industries
and sectors, and the success or failure of strategies within them.
Forecasting takes 3 approaches to the future based on varying degrees of certainty:
1. Single-point: a company has so much confidence about the future that they will provide
just one forecast number.
2. Range forecasting: companies have less certainty and suggest a range of outcomes.
3. Alternative futures forecasting: even less certainty, focusing on different futures.
Strategy is the long-term direction of an organization. More specifically, it is the long term
direction of an organization, formed by choices and actions about its resources and scope, in
order to create advantageous positions relative to competitors in changing environmental and
stakeholder contexts.
- Amazon: from book retailing to internet services in general.
- Disney: from cartoons to diversified entertainment.
This definition of strategy encompasses 3 elements:
1. The long-term: strategies are measured over years, or even a decade.
a. Emphasized by the 3 horizons framework: the idea that companies should think
of their activities in 3 horizons defined by time.
i. Horizon 1: businesses as current core activities. For Tesla motors: the
original car and subsequent models.
ii. Horizon 2: businesses as emerging activities that should provide new
future sources. For
Tesla: a new
mega-battery
business.
iii. Horizon 3:
possibilities that are
more open and are
more uncertain, like
start-up ventures.
Would include risky
research, for Tesla this could be space transportation.
2. Strategic direction: strategies follow a long-term direction or trajectory. For Tesla this is
from an electric car to a diversified set of solar power offerings. On the other hand, for a
football club this could be moving up from one league to a higher one.
3. Organization: consist of people internally. Externally surrounded by relationships with
suppliers, customers, and more. For Tesla, these relationships are crucial.
A summary of a strategy is called a strategy statements, and should have 3 main themes:
- The fundamental goals the company seeks, the scope of the activities, and the
advantages it has to deliver these.
There are 3 levels of strategy:
1. Corporate-level strategy: concerned with the overall scope of an organization: the
geographical scope, diversity of products or acquisitions of new businesses.
a. For tesla: moving from car manufacturing to battery production for homes.
2. Business-level strategy: how individual businesses should compete in their markets:
start-ups or business units. Concerned with innovation, scale and competitors.
, a. For tesla: rolling out a lower cost vehicle to capture market share in advance of
potential competitor entries.
3. Functional strategies: how components of a company deliver the corporate and business
level strategies in terms of resources, processes and people.
a. For tesla: raising funds to fund its growth in order to meet investment needs.
The 4 strategy lenses cover different ways of looking at strategy issues in order to gain new
insights:
1. Strategy as design: like an architect, systematic, analytical and logical.
2. Strategy as experience: recognizing that biases, routines & assumptions affect strategy.
3. Strategy as variety: new ideas and innovation affecting an organization.
4. Strategy as discourse: the ways managers use language to influence strategy making.
The lenses encourage the exploration of different perspectives through different views.
Notes:………………………………………………………………………………………………………
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………..
, Chapter 2: Macro-environment analysis
The macro-environment consists of the broad
environmental factors that impact to a greater or lesser
extent many organizations, industries and sectors: the
internet, economic growth rates, climate change, and more.
- Changes in this bubble can often seem big, such as
the introduction of the internet. However, there are
several analytical tools (PESTEL, forecasting and
scenario analysis) to detect changes in this area.
The PESTEL framework is a framework that categorizes 6 environmental factors: political,
economic, social, technological, ecological and legal.
- The market environment: suppliers, customers, competitors → economic interactions.
- The nonmarket environment: involves interactions with NGOs, politicians, government
departments, (political) activists, the media and more → networking and lobbying.
The political element highlights the role of the state and other political factors.
- Political risk analysis: the analysis of threats and opportunities from political change.
- 2 dimensions: macro-micro and internal-external dimension.
The economical element is important as the macro-environment is influenced by
macro-economic factors such as currency exchange rates, interest rates and fluctuating growth
rates. Economic growth rates have a tendency to rise and fall in cycles.
The social elements can influence the nature of the demand and supply and shape innovation.
- A social aspect of the macro-environment are organizational fields: communities of
organizations that interact more frequently with one another than with those outside the
field. These are also partly economic.
The technological element deals with the internet, nanotechnologies or new composite material.
The ecological element stands for environmental issues such as pollution, waste & the climate.
- Environmental regulations can impose additional costs.
The legal analysis can cover labor, environmental and consumer regulation, taxation, etc.
Key drivers for change are the environmental factors likely to have a high impact on industries
and sectors, and the success or failure of strategies within them.
Forecasting takes 3 approaches to the future based on varying degrees of certainty:
1. Single-point: a company has so much confidence about the future that they will provide
just one forecast number.
2. Range forecasting: companies have less certainty and suggest a range of outcomes.
3. Alternative futures forecasting: even less certainty, focusing on different futures.
