SUMMARY FOR:
strategic management book grant (9th edition)
Latest update.
week 1:
chapter 1: the concept of strategy
task of business strategy = determine how the firm will deploy its resources within its
environment and so satisfy its long-term goals, and how it will
organize itself to implement that strategy.
strategic fit = the consistency of a firm’s strategy with (1) the firm’s external environment and with
(2) its internal environment (goals, values, resources and capabilities)
activity system = how activities fit together to form a consistent, mutually reinforcing system.
contingency theory = there is no single best way of organizing or managing. the best way depends
upon circumstances (characteristics of that organization’s environment).
strategy = the overall plan for deploying resources to establish a favourable position.
tactic = a scheme for a specific action.
1
,characteristics of strategic decisions:
2
,- they are important
- they involve a significant commitment of resources
- they are not easily reversible
corporate planning = long-term planning, a 5-year corporate planning document that set goals and
objectives, forecasted key economic trends, established priorities for
different products and business areas of the firm, and allocated capital
expenditures.
in 1970s and 1980s: recession planning for 5 years was too far shift from planning to strategy
making.
1990s: shift from focus of strategy analysis on the sources of profit in the external environment to
the sources of profit within the firm.
□ resource-based view
= resources and capabilities of the firm became regarded as the main source of
competitive advantage and the primary basis for formulating strategy.
- “how are we different from other companies?”
budgeting:
strategy = budgeting
1950
- focused on achieving certain goals
- involves allocating resources planning:
- implies some consistency, integration or
cohesiveness of decisions and action 1960 economic forecasts
strategy assists effective management by:
- enhancing the quality of decision making 11997700//11998800
- facilitating coordination
- focusing organizations on the pursuit of long-term goals
strategy improves decision making in several ways: 1990
- simplifies it by constraining the range of decision
alternatives considered and acts as a heuristic (= rule)
- permits the knowledge of different individuals to be
pooled and integrated 22000000//22001155 • Strategic alliances
- it facilitates the use of analytic tools
strategic intent = strategy should be less about fit and Fig. 1.4: The evolution of strategic management
resource allocation and more about
stretch and resource leverage.
collis and rukstad: 4 types of statements through which companies communicate their strategy:
1. the mission statement describes organizational purpose (“why we exist”)
2. a statement of principles or values (“what we believe in and how we will behave”)
3. the vision statement (“what we want to be”)
4. the strategy statement articulates the company’s competitive game plan (objectives,
business scope, and advantage)
corporate strategy = the scope of the firm in terms of the industries and markets in which it
competes (industry attractiveness “where to compete?”)
business strategy = how the firm competes within a particular industry or market (a.k.a.
competitive strategy competitive advantage “how to compete?”)
strategy design (mintzberg):
3
, intended strategy = conceived by the leader or top management team.
realized strategy = the actual strategy that is implemented.
emergent strategy = the decisions that emerge form the complex process in which individual
managers interpret the intended strategy and adapt to changing
circumstances.
the design school: view strategy as a rational, analytical process of deliberate planning.
the emergence school: (or learning school of strategy) view strategy making as an emergent process.
planned emergence = strategy making combines design and emergence.
- turbulent environment = less predictable strategy making becomes less about detailed
decisions and more about guidelines and general direction.
applying strategy analysis (fig. 1.7, blz.25):
1. identify the current strategy
2. appraise performance (how are we performing?)
3. diagnose performance (what drives this?)
4. industry analysis (analysing the fit between strategy and the firm’s industry environment)
5. analysis of resources and capabilities (fit between strategy and r&c)
6. formulate strategy
7. implement strategy (link strategy to performance goals, resource allocations and establishing
appropriate organizational structure and management systems)
chapter 3: industry analysis: the fundamentals
business environment = all the external influences that impact a firms decision and performance.
pest analysis: keeping a firm alert to what is happening in the world.
- political, economic, social and technological factors
industry environment = the core of the firm’s business environment is formed by its
relationships with 3 sets of players: customers, suppliers and
competitors.
the stronger competition is among producers, the more value is received by customers as customer
surplus (= the difference between the price they actually pay and the maximum price they would
have been willing to pay) and the less is received by producers (producer surplus or economic rent)
profits earned by firms are determined by 3 factors:
1. the value of the product to customers
2. the intensity of competition
3. the bargaining power of industry members relative to their suppliers and buyers
how industry structure drives competitive behaviour and determines industry profitability
4
strategic management book grant (9th edition)
Latest update.
week 1:
chapter 1: the concept of strategy
task of business strategy = determine how the firm will deploy its resources within its
environment and so satisfy its long-term goals, and how it will
organize itself to implement that strategy.
strategic fit = the consistency of a firm’s strategy with (1) the firm’s external environment and with
(2) its internal environment (goals, values, resources and capabilities)
activity system = how activities fit together to form a consistent, mutually reinforcing system.
contingency theory = there is no single best way of organizing or managing. the best way depends
upon circumstances (characteristics of that organization’s environment).
strategy = the overall plan for deploying resources to establish a favourable position.
tactic = a scheme for a specific action.
1
,characteristics of strategic decisions:
2
,- they are important
- they involve a significant commitment of resources
- they are not easily reversible
corporate planning = long-term planning, a 5-year corporate planning document that set goals and
objectives, forecasted key economic trends, established priorities for
different products and business areas of the firm, and allocated capital
expenditures.
in 1970s and 1980s: recession planning for 5 years was too far shift from planning to strategy
making.
1990s: shift from focus of strategy analysis on the sources of profit in the external environment to
the sources of profit within the firm.
□ resource-based view
= resources and capabilities of the firm became regarded as the main source of
competitive advantage and the primary basis for formulating strategy.
- “how are we different from other companies?”
budgeting:
strategy = budgeting
1950
- focused on achieving certain goals
- involves allocating resources planning:
- implies some consistency, integration or
cohesiveness of decisions and action 1960 economic forecasts
strategy assists effective management by:
- enhancing the quality of decision making 11997700//11998800
- facilitating coordination
- focusing organizations on the pursuit of long-term goals
strategy improves decision making in several ways: 1990
- simplifies it by constraining the range of decision
alternatives considered and acts as a heuristic (= rule)
- permits the knowledge of different individuals to be
pooled and integrated 22000000//22001155 • Strategic alliances
- it facilitates the use of analytic tools
strategic intent = strategy should be less about fit and Fig. 1.4: The evolution of strategic management
resource allocation and more about
stretch and resource leverage.
collis and rukstad: 4 types of statements through which companies communicate their strategy:
1. the mission statement describes organizational purpose (“why we exist”)
2. a statement of principles or values (“what we believe in and how we will behave”)
3. the vision statement (“what we want to be”)
4. the strategy statement articulates the company’s competitive game plan (objectives,
business scope, and advantage)
corporate strategy = the scope of the firm in terms of the industries and markets in which it
competes (industry attractiveness “where to compete?”)
business strategy = how the firm competes within a particular industry or market (a.k.a.
competitive strategy competitive advantage “how to compete?”)
strategy design (mintzberg):
3
, intended strategy = conceived by the leader or top management team.
realized strategy = the actual strategy that is implemented.
emergent strategy = the decisions that emerge form the complex process in which individual
managers interpret the intended strategy and adapt to changing
circumstances.
the design school: view strategy as a rational, analytical process of deliberate planning.
the emergence school: (or learning school of strategy) view strategy making as an emergent process.
planned emergence = strategy making combines design and emergence.
- turbulent environment = less predictable strategy making becomes less about detailed
decisions and more about guidelines and general direction.
applying strategy analysis (fig. 1.7, blz.25):
1. identify the current strategy
2. appraise performance (how are we performing?)
3. diagnose performance (what drives this?)
4. industry analysis (analysing the fit between strategy and the firm’s industry environment)
5. analysis of resources and capabilities (fit between strategy and r&c)
6. formulate strategy
7. implement strategy (link strategy to performance goals, resource allocations and establishing
appropriate organizational structure and management systems)
chapter 3: industry analysis: the fundamentals
business environment = all the external influences that impact a firms decision and performance.
pest analysis: keeping a firm alert to what is happening in the world.
- political, economic, social and technological factors
industry environment = the core of the firm’s business environment is formed by its
relationships with 3 sets of players: customers, suppliers and
competitors.
the stronger competition is among producers, the more value is received by customers as customer
surplus (= the difference between the price they actually pay and the maximum price they would
have been willing to pay) and the less is received by producers (producer surplus or economic rent)
profits earned by firms are determined by 3 factors:
1. the value of the product to customers
2. the intensity of competition
3. the bargaining power of industry members relative to their suppliers and buyers
how industry structure drives competitive behaviour and determines industry profitability
4
