Strategy

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: Any questions or comments regarding the perspectives on strategy outlined by Mintzberg (1987)?

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

Find a real-life example of possible relationships between the perspectives and dicuss their relevance for strategy development today (10 minutes).

Schools of strategy

Overview

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

Comparison

School Illogical extreme Intended message Realized message
Design Fixation Fit Think (strategy making as case study)
Planning Ritual Formalize Program (rather than formulate)
Positioning Fortification Analyze Calculate (rather than create or commit)
Entrepreneurial Idolatry Envision Centralize (then hope)
Cognitive Fantasy Cope or create Worry (being unable to cope in either case)
Learning Drift Learn Play (rather than pursue)
Power Intrique Promote Hoard (rather than share)
Cultural Essentricitiy Coalesce Perpetuate (rather than change)
Environmental Conformity React Capitulate (rather than confront)
Configurational Degeneration Integrate, transform Lump (rather than split, adapt)
Table 1: Dimensions of the then schools (Mintzberg 2014)

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)

 

 

 

 

 

 

 

 

 

Exercise

Get back to your small group and discuss what each perspective (5 Ps) implies for the strategic management process (10 minutes).

Few key terms

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.

Exercise

What are sources of competitive advantage?

Operational effectiveness

Operational effectiveness (OE) means executing similar day-to-day activities better than rivals perform them, while strategic positioning means performing different activities from rivals, or performing similar activities in different ways (M. Porter 1996).

OE is important, but it cannot be not a source of sustainable competitive advantage.

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. Read Tzu and Cleary (2019) (or an abridged version of the book). What lessons can be drawn from this book for companies? Name and explain five, if possible, using specific examples.
  7. Why is strategy implementation often considered the most difficult stage in the strategic-management process?
  8. Give an example of a recent political development that changed the overall strategy of an organization.
  9. Why is it that a firm can sustain a competitive advantage normally for only a limited period of time?
  10. 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?
  • In your opinion, how relevant and applicable are these strategy types for modern organizations? Can you provide examples of real-world companies that fit into each category?
  • In your opinion, how relevant are the strategy types identified in the study?
  • 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.
Tzu, S., and T. Cleary. 2019. The Art of War. Shambhala Pocket Library. Shambhala.

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.