Definition

What is strategy, what strategic management?

Andy Weeger

Neu-Ulm University of Applied Sciences

September 3, 2024

Learning outcomes

After this session, you should have a solid understanding of

  • the different perspectives on strategy, the related schools and their impact on strategic management;
  • the role and importance of objectives for strategic management;
  • the phases, outcomes, challenges, and interrelations of the strategic management process;
  • and the difference between strategies and tactics.

You are able to apply the knowledge gained to real-life scenarios to describe and provide explanations for strategic decisions made by firms.

Reflection

Before we start:

  1. Are there review and consolidation questions from the previous chapter that need to be discussed?
  2. Any questions or comments regarding the perspectives on strategy outlined by Mintzberg (1987)?

Recap

Strategy?
A plan to create value.

Is it that simple?

Perspectives

5 Ps for Strategy

Strategy as plan, ploy, pattern, position, and perspective.

Interrelating the Ps

Some Possible Relationships Between Strategy as Plan, Pattern, Position, Perspective (Mintzberg 1987, 18)

 

 

 

 

 

 

 

 

Exercise

Turn to your neighbor and identify at least one example where we can observe the interplay of different dimensions of strategy (e.g., where one perspective led to another).

  • How do the strategies impact the value stick?
  • What can we learn from these examples about strategy?

Prepare to present your findings.

Schools of strategy

Overview

Design, positioning, planning, entrepreneurial, cognitive, learning, power, cultural, environmental & configurational schools

Exercise

Form groups of 4 and work on the following task:

Imagine you are the top management team of Tesla, Inc, a leading manufacturer of electric vehicles (EVs) known for its innovative approach to sustainable energy solutions.
You adopt the [assigned] school of strategy.

  • Consider how their school’s perspective would be reflected in your strategizing?
  • How would it influence your decisions, plans, and positions?
  • Weigh up the strengths and weaknesses of your approach.
  • Prepare to present your findings.

Strategic management

Definition

Strategic management is a process that encompasses the formulation, implementation, and adaptation of cross-functional decisions to achieve organizational objectives (Mintzberg 2014).

Process-oriented,
deliberate and emergent,
influenced by cognition, politics, and culture.

Phases

Phases of strategic management based on (Mintzberg 1987, 70)

 

 

 

 

 

 

 

 

 

Discussion

What are concrete implication for the strategic management process for each perspective on strategy (5 Ps)?

Additional key concepts

Strategies vs. tactics

Strategies are about what needs to be done, while tactics are about how it will be done.

Competetive advantage

A set of unique attributes or capabilities that enable an organization to outperform its competitors in the marketplace.

Operational effectiveness

Executing similar day-to-day activities better than rivals perform them.

M. Porter (1996) argues that operational efficiency is important, but it cannot be a source of sustainable competitive advantage. Do you agree?

Review and consolidation

The following questions are designed to review and consolidate what you have learned and are a good starting point for preparing for the exam.

  1. Discuss relationships among strategy as a pattern, plan, and perspective. What do these perspectives imply for strategic management? Give examples.
  2. Edward Deming, a famous businessman, once said, “In God we trust. All others bring data.” What did Deming mean in terms of formulating a strategy? To which school does that attitude belong?
  3. What strategies do you believe can save newspaper companies from extinction?
  4. Why are objectives are essential for organizational success?
  5. What role do policies play in the strategic management process? Give examples.
  6. Why is strategy implementation often considered the most difficult stage in the strategic-management process?
  7. Give an example of a recent political development that changed the overall strategy of an organization.
  8. Why is it that a firm can sustain a competitive advantage normally for only a limited period of time?
  9. How can a firm best achieve sustained competitive advantage?

Homework

Read Galbraith, Craig, and Schendel (1983) and make notes on following questions:

  • Based on the empirical data, what are the strategy types identified by the authors, and what are their key characteristics?
  • How relevant are the strategy types identified in the study?
  • How applicable are these strategy types for modern organizations? Can you provide examples of real-world companies that fit into each category?
  • What other classifications of corporate strategies do you know? How do the findings of this study align with or challenge these?
  • How can the strategy types identified in the study be related to configurational thinking?
  • How might an organization’s choice of strategy type be influenced by factors such as industry dynamics, competitive pressures, and its own capabilities?

Q&A

Literature

David, F. R., and F. R. David. 2016. Strategic Management: A Competitive Advantage Approach, Concepts and Cases, Global Edition. Psychology Express. Pearson Education.
Galbraith, Jay R., Cynthia A. Craig, and Dan Schendel. 1983. “An Empirical Analysis of Strategy Types.” Strategic Management Journal 4 (2): 153–73.
Mintzberg, Henry. 1987. “The Strategy Concept i: Five Ps for Strategy.” California Management Review 30 (1): 11–24.
———. 2014. The Strategy Process: Concepts, Contexts, Cases. Pearson education.
Porter, M. E. 1998. Competitive Advantage: Creating and Sustaining Superior Performance. Free Press.
Porter, ME. 1996. “What Is Strategy?” Harvard Business Review 74: 61–78.
Porter, Michael E. 1986. Competition in Global Industries. Harvard Business Press.
Prahalad, Coimbatore K, and Gary Hamel. 2009. “The Core Competence of the Corporation.” In Knowledge and Strategy, 41–59. Routledge.

Footnotes

  1. Goals (or objectives) state what is to be achieved, and by when.

  2. Policies are rules or guidelines that express the limits within which action should occur.

  3. Programs specify the step-by-step sequence of actions necessary to achieve major objectives, i.e. how objectives will be achieved within the limits set by policy.