Chapter 1
What key obstacles to good strategy?
1. Can we assess strategies by the current results?
2. Compromise (best or worst of both) Lack of focus.
Competitive success vs corporate strategy
3. The choice set is not known (induction problem)
What is strategy?
Strategic decisions are likely to…
• Be complex in nature
• Be made in situations of uncertainty
• Affect daily decisions
• Require an integrated approach (thus inside & outside an organisation)
• Involve considerable change
Defining strategy
• The long term direction of the organisation
o 3 horizons
▪ Horizon 1 (short term): extend and defend core business
▪ Horizon 2: build emerging businesses
▪ Horizon 3: (long term): create viable options
o Follow objectives or an emerging coherent pattern
o Firms as discrete entities or relates internal and external persons and groups
What is strategy for?
• To define and express the motivating purpose of an organization to stakeholders
• Four ways to define an organisation’s purpose:
o Mission statement
▪ To provide employees and stakeholders with clarity about what the
organisation is fundamentally there to do
• What would be lost if the organisation did not exist? (why)
• What business are we in? (what)
• How do we make a difference?
o Vision statement
▪ Is concerned with the future the organisation seeks to create.
▪ Desired future state of the organization. What do we want to achieve?
o Statement of corporate values
▪ The underlying and enduring core ‘principles’ that guide an organisation’s
strategy and define the way that the organisation should operate
▪ Values do not change with circumstances
o Statement of objectives
▪ Statements of specific outcomes that are to be achieved
▪ Often financial, market-based, competitive advantage, triple bottom limed
,Strategy statements – three main themes
• The fundamental goals (mission, vision, objectives) of the organisation
• The scope or domain of the organisation’s activities
o Scope: domain of the organisation’s activities
▪ Refers to three dimensions:
• Customers: who?
• Geographical location: where?
• Extend of internal activities: how much ourselves?
o Vertical integration / specialisation
• The particular advantages or competitive superiority
o Advantage: how the organisation will achieve the objectives set regarding its chosen
scope
▪ Commercial → competitive advantage
Ideally strategy statements in max 35 words.
Dia 30
, Chapter 2
Strategic position
• Potential: the environment / strategic capability
• Ambition: stakeholders and governance / culture
Macro: PESTEL: It categorizes societal influences into six main types
• Political
o The role of the state, for example as an owner, customer or provider of businesses
o Exposure to civil society organisations (lobbyists, campaign groups, social media)
o Governmental policy development
o Political risk in foreign markets (China-USA)
o Changes in trade blocks (EU – BREXIT)
• Economic
o Business cycles
o Interest rates
o Personal disposable income
o Exchange rates
o Unemployment rates
o Differential growth rates around the world
Some industries are particularly vulnerable to economic cycles:
▪ Discretionary spend industries: have some savings, but spend on a certain
moment
• Housing, cars
▪ High fixed cost industries: doesn’t disappear, costs keep running because
equipment and staff etc.
• Airlines, hotel sector
• Social
o Demographics (ageing population Japan vs Nigeria)
o Wealth distribution
o Geography
o Culture
o Social networks within an ‘organisational field’ (the community of organisations that
interact more frequently with one others)
• Technological
o New discoveries and technology developments
o Examples include developments on the internet, nanotechnology, or the rise of new
composite materials
• Ecological
• Legal
o Labour, environmental and consumer regulations
o Taxation and reporting requirements
o Rules on ownership (private vs stock listed)
o Foreign trade regulations (Russian bans)
o Competition regulations (app store fee)
o Regulation of corporate governance (voting rights, info disclose)
What key obstacles to good strategy?
1. Can we assess strategies by the current results?
2. Compromise (best or worst of both) Lack of focus.
Competitive success vs corporate strategy
3. The choice set is not known (induction problem)
What is strategy?
Strategic decisions are likely to…
• Be complex in nature
• Be made in situations of uncertainty
• Affect daily decisions
• Require an integrated approach (thus inside & outside an organisation)
• Involve considerable change
Defining strategy
• The long term direction of the organisation
o 3 horizons
▪ Horizon 1 (short term): extend and defend core business
▪ Horizon 2: build emerging businesses
▪ Horizon 3: (long term): create viable options
o Follow objectives or an emerging coherent pattern
o Firms as discrete entities or relates internal and external persons and groups
What is strategy for?
• To define and express the motivating purpose of an organization to stakeholders
• Four ways to define an organisation’s purpose:
o Mission statement
▪ To provide employees and stakeholders with clarity about what the
organisation is fundamentally there to do
• What would be lost if the organisation did not exist? (why)
• What business are we in? (what)
• How do we make a difference?
o Vision statement
▪ Is concerned with the future the organisation seeks to create.
▪ Desired future state of the organization. What do we want to achieve?
o Statement of corporate values
▪ The underlying and enduring core ‘principles’ that guide an organisation’s
strategy and define the way that the organisation should operate
▪ Values do not change with circumstances
o Statement of objectives
▪ Statements of specific outcomes that are to be achieved
▪ Often financial, market-based, competitive advantage, triple bottom limed
,Strategy statements – three main themes
• The fundamental goals (mission, vision, objectives) of the organisation
• The scope or domain of the organisation’s activities
o Scope: domain of the organisation’s activities
▪ Refers to three dimensions:
• Customers: who?
• Geographical location: where?
• Extend of internal activities: how much ourselves?
o Vertical integration / specialisation
• The particular advantages or competitive superiority
o Advantage: how the organisation will achieve the objectives set regarding its chosen
scope
▪ Commercial → competitive advantage
Ideally strategy statements in max 35 words.
Dia 30
, Chapter 2
Strategic position
• Potential: the environment / strategic capability
• Ambition: stakeholders and governance / culture
Macro: PESTEL: It categorizes societal influences into six main types
• Political
o The role of the state, for example as an owner, customer or provider of businesses
o Exposure to civil society organisations (lobbyists, campaign groups, social media)
o Governmental policy development
o Political risk in foreign markets (China-USA)
o Changes in trade blocks (EU – BREXIT)
• Economic
o Business cycles
o Interest rates
o Personal disposable income
o Exchange rates
o Unemployment rates
o Differential growth rates around the world
Some industries are particularly vulnerable to economic cycles:
▪ Discretionary spend industries: have some savings, but spend on a certain
moment
• Housing, cars
▪ High fixed cost industries: doesn’t disappear, costs keep running because
equipment and staff etc.
• Airlines, hotel sector
• Social
o Demographics (ageing population Japan vs Nigeria)
o Wealth distribution
o Geography
o Culture
o Social networks within an ‘organisational field’ (the community of organisations that
interact more frequently with one others)
• Technological
o New discoveries and technology developments
o Examples include developments on the internet, nanotechnology, or the rise of new
composite materials
• Ecological
• Legal
o Labour, environmental and consumer regulations
o Taxation and reporting requirements
o Rules on ownership (private vs stock listed)
o Foreign trade regulations (Russian bans)
o Competition regulations (app store fee)
o Regulation of corporate governance (voting rights, info disclose)
