Summary Exploring Strategy Chapter 1 – 15
Chapter 1: introducing strategy
Strategy is the long-term direction of
an organisation.
Three-horizons framework suggests
organisations should think of
themselves as comprising three types
of business or activity, defined by their
‘horizons’ in terms of years.
What is a strategy for? the core of a strategist’s job is defining and expressing a clear and
motivating purpose for the organisation.
Ways to define purpose:
- Mission statement aims to provide employees and stakeholders with clarity about what
the organisation is fundamentally there to do.
- Vision statement is concerned with the future the organisation seeks to create.
- Statement of corporate values communicate the underlying and enduring core ‘principles’
that guide an organisation’s strategy and define the way that the organisation should
operate.
- Objectives are statements of specific outcomes that are to be achieved.
Strategy statements should have three main themes: the fundamental goals (mission, vision or
objectives) that the organisation seeks; the scope or domain of the organisation’s activities; and the
particular advantages or capabilities it has to deliver all of these.
Scope an organisation’s scope or domain refers to three dimensions: customers or clients;
geographical location; and extern of internal activities (‘vertical integration’).
Advantage described how the organisation will achieve the objectives it has set for itself in its
chosen domain.
Levels of strategy:
- Corporate-level strategy is concerned with the overall scope of an organisation and how
value is added to the constituent businesses of the organisational whole.
- Business-level strategy is about how the individual businesses should compete in their
particular markets.
1
, - Functional strategies are
concerned with how the
components of an organisation
deliver effectively the corporate-
and business-level strategies in
terms of resources, processes and
people.
Exploring strategy framework includes
understanding the strategic position of an
organisation; assessing strategic choices
for the future; and managing strategy in
action.
Strategic position is concerned with the
impact on strategy of the macro-
environment, the industry environment, the organisation’s strategic capability (resources and
competences), the organisation’s stakeholders and the organisation’s culture.
- Macro-environment: organisations are influenced by political, economic, social,
technological, economical and legal forces. The fundamental question here relates to the
opportunities and threats available to the organisation in complex, changing environments.
- Industry environment: at the industry level of analysis, competitors, suppliers and customers
present challenges to an organisation.
- Strategic capability: Each organisation has its own strategic capabilities, made up of its
resources (machines and buildings) and competences (technical and managerial skills).
- Stakeholders: how can the organisation be aligned around a common purpose?
- Culture: how does culture fit with the required strategy?
Strategic choices involve the options for strategy in terms of both the directions in which strategy
might move and the methods by which strategy might be pursued. Types:
Business strategy and models
Corporate strategy and diversification
International strategy
Entrepreneurship and innovation
Mergers, acquisitions and alliances
Strategy in action is about how strategies are formed and how they are implemented
Strategy performance and evaluation
Strategy development processes
Organising systems
Leadership and strategic change
Strategy practice
2
,strategy lenses are ways of looking at strategy issues differently in order to generate additional
insights. The lenses are:
Strategy as design views strategy development as ‘designed’ in the abstract, as an architect
might design a building using pens, rulers and paper.
Strategy as experience recognises that an organisation’s future strategy is often heavily
influenced by its experience and that of its managers.
Strategy as variety: sees strategy as emergent from within and around organisations as new
ideas bubble up through an unpredictable process in response to an uncertain and changing
environment.
Strategy as discourse focuses attention on the ways managers use language to frame
strategic problems, make strategy proposals, debate issues and then finally communicate
strategic decisions.
3
, Chapter 2 macro-environment analysis
Macro-environment consists of broad environmental factors that impact to a greater or lesser
extent many organisations, industries and sectors.
industry/sector consists of organisations producing the same sort of product of services.
Competitors/markets specific competitors/markets immediately surrounding organisations.
Analytical tools and concepts that can help keep organisations alert to macro-environmental change.
The point is to minimise threats and to seize opportunities. The chapter is organised in three main
sections:
- PESTEL factors (include market and nonmarket aspects)
- Forecasting, which aims to predict, with varying degrees of precision or certainty. This often
makes use of three conceptual tools: megatrends, inflexion points and weak signals.
- Scenario analysis, a technique that develops plausible alternative views of how the
environment might develop in the future. Scenario analysis differs from forecasting because
it avoids predictions about the future; it is more about learning different possibilities for
environmental change.
PESTEL Political, economical, social, technological, ecological and legal
highlights six environmental factors
the market environment consists mainly of suppliers, customers and competitors. These are
environmental participants with whom interactions are primarily economic. Pricing and innovation
key strategies.
The nonmarket environment involves primarily the social, political, legal and ecological factors, but
can also be impacted by economic factors. NGO’s, politicians, government departments, regulators,
political activists, campaign groups and the media. In the nonmarket environment, organisations
need to build reputation, connections, influence and legitimacy.
Nonmarket factors are particularly important where the government or regulators are powerful (for
instance in the defence and health sectors); where consumer sensitivities are high (for instance in
the food business).
Political two steps: first, identifying the importance of political factors; second carrying out political
risk analysis.
Variables to identify the importance of political factors:
- The role of the state
- Exposure to civil society organisations
4
Chapter 1: introducing strategy
Strategy is the long-term direction of
an organisation.
Three-horizons framework suggests
organisations should think of
themselves as comprising three types
of business or activity, defined by their
‘horizons’ in terms of years.
What is a strategy for? the core of a strategist’s job is defining and expressing a clear and
motivating purpose for the organisation.
Ways to define purpose:
- Mission statement aims to provide employees and stakeholders with clarity about what
the organisation is fundamentally there to do.
- Vision statement is concerned with the future the organisation seeks to create.
- Statement of corporate values communicate the underlying and enduring core ‘principles’
that guide an organisation’s strategy and define the way that the organisation should
operate.
- Objectives are statements of specific outcomes that are to be achieved.
Strategy statements should have three main themes: the fundamental goals (mission, vision or
objectives) that the organisation seeks; the scope or domain of the organisation’s activities; and the
particular advantages or capabilities it has to deliver all of these.
Scope an organisation’s scope or domain refers to three dimensions: customers or clients;
geographical location; and extern of internal activities (‘vertical integration’).
Advantage described how the organisation will achieve the objectives it has set for itself in its
chosen domain.
Levels of strategy:
- Corporate-level strategy is concerned with the overall scope of an organisation and how
value is added to the constituent businesses of the organisational whole.
- Business-level strategy is about how the individual businesses should compete in their
particular markets.
1
, - Functional strategies are
concerned with how the
components of an organisation
deliver effectively the corporate-
and business-level strategies in
terms of resources, processes and
people.
Exploring strategy framework includes
understanding the strategic position of an
organisation; assessing strategic choices
for the future; and managing strategy in
action.
Strategic position is concerned with the
impact on strategy of the macro-
environment, the industry environment, the organisation’s strategic capability (resources and
competences), the organisation’s stakeholders and the organisation’s culture.
- Macro-environment: organisations are influenced by political, economic, social,
technological, economical and legal forces. The fundamental question here relates to the
opportunities and threats available to the organisation in complex, changing environments.
- Industry environment: at the industry level of analysis, competitors, suppliers and customers
present challenges to an organisation.
- Strategic capability: Each organisation has its own strategic capabilities, made up of its
resources (machines and buildings) and competences (technical and managerial skills).
- Stakeholders: how can the organisation be aligned around a common purpose?
- Culture: how does culture fit with the required strategy?
Strategic choices involve the options for strategy in terms of both the directions in which strategy
might move and the methods by which strategy might be pursued. Types:
Business strategy and models
Corporate strategy and diversification
International strategy
Entrepreneurship and innovation
Mergers, acquisitions and alliances
Strategy in action is about how strategies are formed and how they are implemented
Strategy performance and evaluation
Strategy development processes
Organising systems
Leadership and strategic change
Strategy practice
2
,strategy lenses are ways of looking at strategy issues differently in order to generate additional
insights. The lenses are:
Strategy as design views strategy development as ‘designed’ in the abstract, as an architect
might design a building using pens, rulers and paper.
Strategy as experience recognises that an organisation’s future strategy is often heavily
influenced by its experience and that of its managers.
Strategy as variety: sees strategy as emergent from within and around organisations as new
ideas bubble up through an unpredictable process in response to an uncertain and changing
environment.
Strategy as discourse focuses attention on the ways managers use language to frame
strategic problems, make strategy proposals, debate issues and then finally communicate
strategic decisions.
3
, Chapter 2 macro-environment analysis
Macro-environment consists of broad environmental factors that impact to a greater or lesser
extent many organisations, industries and sectors.
industry/sector consists of organisations producing the same sort of product of services.
Competitors/markets specific competitors/markets immediately surrounding organisations.
Analytical tools and concepts that can help keep organisations alert to macro-environmental change.
The point is to minimise threats and to seize opportunities. The chapter is organised in three main
sections:
- PESTEL factors (include market and nonmarket aspects)
- Forecasting, which aims to predict, with varying degrees of precision or certainty. This often
makes use of three conceptual tools: megatrends, inflexion points and weak signals.
- Scenario analysis, a technique that develops plausible alternative views of how the
environment might develop in the future. Scenario analysis differs from forecasting because
it avoids predictions about the future; it is more about learning different possibilities for
environmental change.
PESTEL Political, economical, social, technological, ecological and legal
highlights six environmental factors
the market environment consists mainly of suppliers, customers and competitors. These are
environmental participants with whom interactions are primarily economic. Pricing and innovation
key strategies.
The nonmarket environment involves primarily the social, political, legal and ecological factors, but
can also be impacted by economic factors. NGO’s, politicians, government departments, regulators,
political activists, campaign groups and the media. In the nonmarket environment, organisations
need to build reputation, connections, influence and legitimacy.
Nonmarket factors are particularly important where the government or regulators are powerful (for
instance in the defence and health sectors); where consumer sensitivities are high (for instance in
the food business).
Political two steps: first, identifying the importance of political factors; second carrying out political
risk analysis.
Variables to identify the importance of political factors:
- The role of the state
- Exposure to civil society organisations
4
