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Strategic Management Process, Content and Implementation


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OXFORD
strategic
management
Hugh Macmillan Mahen Tampoe
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Introduction
STRATEGIC management is the most exciting of the management disciplines. Stra-
tegic management is about success and failure, about the ability to plan wars and win them. Big mergers-perhaps the most visible sign of strategic management in action-catch the headlines. Effective strategic management can transform the per- formance of an organization, make fortunes for shareholders, or change the struc- ture of an industry. Ineffective strategic management can bankrupt companies and ruin the careers of chief executives.
Strategic management is both a skill and an art. It is a skill because there is a body of knowledge that can be learnt and techniques that can be used with greater or lesser competence. It is an art because it deals with the future that is unknowable and with the hearts and minds of people that transcend reason. Good strategic manage- ment requires both clear thought and sound judgement.
Strategic management is the formal and structured process by which an organiza- tion establishes a position of strategic leadership. Strategic leadership is about the achievement of sustained comparative advantage over the competition. Strategic leadership is the outcome of the strategic management process. It is a state of being rather than a management mechanism. So strategic leadership does not replace stra- tegic management; it results from it.
Strategic management skills are not only critical for those who have made it to the top. Executives and managers at earlier stages of their careers need to have an under- standing of strategic management to increase the value of their contribution in their present assignments. It can help them to master the corporate jungle and to achieve individual career aims. It instils the habit of reaching an identified goal by developing the necessary competence and seizing available opportunities. In short, an under- standing of strategy enhances performance and improves career prospects.
Aims of this book
VERALL our aim is to provide a summary of strategic management that will be U useful to readers who not only want to pass exams but also to put what they have learnt into practice. In support of this aim we have applied four principles throughout the book.
First, we hope that this book is easy to understand. It is intended to give easy access to strategic management to readers who have not studied the subject before, Strategic management is not a simple subject but its difficulty should derive from applying effective ideas to the complexities of a unique context rather than from the
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2 INTRODUCTION
application of complex theories. Managers fail when they do not apply relatively simple principles properly, not because they had not read the latest research article.
Secondly, we believe that it is necessary to combine the best of the accepted theory in the subject with a pragmatic viewpoint. We are concerned not just with the theory itself but also with how best to apply it in practice. To do this we have drawn on our own experience as managers and management consultants. We have tried to balance academic and pragmatic perspectives and to take the best from each.
Thirdly, we believe that good strategic management requires a particular way of thinking and a mental discipline rather than a specific body of knowledge. This book aims to provide an intellectual framework for the study and application of strategic management. We hope that this framework is clear enough to be quickly understood by all readers and yet robust and flexible enough to form a sound base for a lifetime of learning from further reading and experience. We have not tried to include every- thing that may be valuable to the body of knowledge of a strategist. As a result this book is significantly shorter than many of the textbooks in the field.
Fourthly, we have not attempted to chase too many of the current hares. Over the years, managers have been offered mantras and quick fixes that purport to avoid fundamental and hard thinking about the appropriate strategy for their particular enterprise. The quality movement and the concept of excellence both had their day. Most recently. E-commerce and knowledge management have been offered as stra- tegic panaceas. We do not deny the importance of either E-commerce or knowledge management but they are not a substitute for a proper process of strategic manage- ment to address all the relevant issues in a full perspective of the context. Our view is that a robust strategy making process effectively applied will take into account the constant stream of new ideas and new technological opportunities and position the enterprise to take advantage of them.
Fifthly. we hope that this book will help readers not only to think strategically but also to act to achieve strategic change in real organizations. Good strategic thinking is necessary and a good start to successful strategic management but it is not enough. Strategic thinking that does not lead to action that meets customer needs better is a waste of time and resources. We hope that this book will enable readers to understand the nature of the action that will be needed to make strategy happen. For this reason, this book gives as much weight to the implementation of strategy as to its formulation.
Distinctive contributions to thinking on strategic management
DRACTITIONERS, academics, and management consultants have all contributed to the
current understanding of strategic management. Each group has strengths and weaknesses so that the fullest understanding depends on combining their different perspectives.
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INTRODUCTION
3
The personal experience of practitioners can demonstrate an intensity of involve- ment that often lends strength and credibility to their perceptions. There are undoubtedly both specific lessons and more general principles to be deduced from studying exactly how the movers and shakers of successful companies achieved what they did and in their perspectives on what was important in achieving their success. The strength of these contributions is in their depth and coherence. They are also likely to be particularly credible to practising managers because they appreciate the manager's perspective and the constraints within which managers have to operate, One limitation is that they may be describing particular circumstances of limited general relevance. Sometimes, too, their views may reflect individual eccentricity as much as universal truth.
Good academic work contributes rigour and scholarship to the subject. There are few universal truths about business but good analysis can clarify the balance of probability by objective observation. Every strategist should have some of this cool objectivity to temper his or her enthusiasm. Another valuable contribution from the academic world is diversity of thinking about strategy. Academics have come to strategy from a wide variety of previous disciplines. Each discipline brings its own perspective to the subject. Originality is more likely to emerge from this diversity of thought than from any single view of the way the world works. One limitation of the academic contribution is that it sometimes seems a little weak in its appreciation of how managers work in practice to achieve results in real enterprises.
Management consultants have also made a notable contribution to thinking in strategic management. It may even be that more genuinely new ideas have come from consultants than from academics. Management consultants are paid to solve problems. Nothing focuses the mind as much as the need to come up with a solution to a problem in a limited time. Management consultants have to make ideas work in real enterprises and among real people. Good strategic management does not usually depend on the most complex or sophisticated ideas but rather from working with ideas that are relevant, understandable, and workable Management consultants usu- ally understand how to do this.
We hope that this book will help readers to understand strategic management and to apply this critical management discipline
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Preface
STRATEGIC management must form a core element of any business course as it pro-
vides the glue that holds the other business subjects together. The body of litera- ture on strategic management has grown rapidly and this increase means that many textbooks on the subject have become very large. There has not, however, been a corresponding increase in the time available for teaching strategic management so that few students read the thick textbooks. This suggests the need for a textbook shorter than the full texts but more comprehensive than the 'Basics' or 'Essentials books on the subject.
Secondly, most students are hoping to derive some usable knowledge from the time that they spend on strategic management as well as the academic knowledge to pass their examinations. This requires an approach to strategic management that takes practice into account as well as the academic literature and gives full weight to the problems of implementing strategy.
Our aim in writing this book has been to provide a text which has enough academic content to meet the requirements of degree courses but which is also practical enough to be useful to business practitioners. It is in short, the book we would like to have to support the teaching we do and have done. We hope to provide a summary of those elements of strategic management that will be useful to students who want to put what they have learnt into practice.
The study of strategy in action endeavours to understand and explain why some enterprises have been more successful than others in the past. This is useful know- ledge to the future strategist but it is not enough. Winners in today's or tomorrow's world will need to break outside the box of existing thinking. An effective strategist must be able to understand the current rules of the game but must also be able to
invent new rules for the future. In addition, strategic management is not just about ideas, it also requires the ability to implement those ideas in practice. We hope that this book will help its readers to do this.
Targeted readership The book is intended for students who wish to acquire a broad understanding of strategic management quickly. It will be easier for those who have had a few years of work experience to understand and interpret its contents. It should, therefore, be particularly suitable for both core MBA courses and for shorter professional man- agement courses in strategic management. It will also be of help as a strategy primer for those studying for other professional examinations such as personnel manage- ment, accountancy, company secretarial practice, or law.
We hope that the style is accessible so that the book will also be of value to general managers already in leadership positions in enterprises who wish to gain an overview of the subject of strategic management from their own reading.
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vi PREFACE
It is likely that both lecturers and readers will want to supplement the book with reading in areas where greater depth of discussion is relevant to their specific needs. Many suitable books and articles are referenced in the text and in the bibliography.
Structure of the book The book is divided into six parts. Part I defines the meaning of strategy and describes the structure and content of the book as a whole. Part II examines the importance of context in determining the agenda for strategic management and describes some distinctive classes of context. Part III describes the process by which strategies are formulated. Part IV looks at the content of strategy and suggests the questions to which business and corporate strategies should provide the answers. Part V examines how the practical problems of implementing strategy can best be approached. Part VI consists of case examples referenced in the text as examples of the principles described. Chapter 1 describes the overall structure in more detail.
Learning aids The book aims to help readers to understand how the principles of strategic man- agement apply in the real world. To assist in this aim we have incorporated a number of learning aids:
Clear division into parts to give focus to particular aspects of the subject as needed; Diagrams to illustrate the overall logic of the subject: Summaries of each part in the first chapter of that part; Summaries at the end of each chapter; Case examples to demonstrate the principles described in the text in practice: A brief commentary and questions for discussion on each case example: A glossary for easy reference to the definitions of special terms.
Acknowledgements We should like to thank the various people who have helped to bring this book to
completion First of all, we should like to thank Roger Lovell and Gary Saunders for contributing case examples, each of which is from an enterprise with which they have been associated over several years. Secondly, we must acknowledge the helpful comments of the two anonymous reviewers, who reviewed as it was written; we hope that they will recognize the effects of their comments in the final result. Thirdly, we should like to thank Brendan George, Ruth Marshall, Miranda Vernon, and Virginia Williams of Oxford University Press who have helped the writing of the book from inception to publication. Fourthly, and perhaps most importantly, we should like to thank Sheina and Judith for their support during the writing of this book.
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Chapter 1 The Structure of this Book
This book is divided into six parts. Readers who want a quick overview of the scope
and content as a whole should read the first chapters of Parts I to V-that is Chapters 1. 4.6. 13, and 16.
Part I is concerned with the basics of strategic management. Chapter 1 describes the structure of the book with more explanation than in the Table of Contents. Chapter 2 considers the nature of strategy and how ideas about strategy have origin- ated from military, academic, and practical origins. Chapter 3 attempts to structure the currently accepted body of literature on strategic management,
Parts II, III, IV, and V address each of the four elements of strategic management- context, the strategy formulation process, strategy content, and the strategy imple- mentation process. Figure 1.1 illustrates how these four elements form a conceptual framework for strategic management. This figure is the basis of the structure of this book.
Part II is devoted to examining the first element-Context,which forms the background to the model in Figure 1.1. Strategy and strategic management can only exist in a particular context. The context is unique for each enterprise and has numerous characteristics-both of the enterprise itself and of its external environ- ment. The context determines the issues which strategic management must address and hence the agenda and scope of strategic management for that enterprise, The context may present a range of strategic issues or a single strategic dilemma which strategic management has to resolve. All effective strategic management must start from a deep understanding of the context. Chapter 4 is concerned with context in general. Chapter 5 discusses some of the diverse contexts that exist in an attempt to alert the reader to the impact that different industry and organizational factors may have on strategy formulation and implementation
Part III addresses the second element of strategic management-the Strategy Formulation Process. This is the process by which strategies are thought about, conceived, compared, and chosen within a particular enterprise over time. It is the process of strategic thinking in that enterprise. There is no universally correct pro- cess that will generate successful strategies nor are there any proven means by which
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Figure 1.1 The four elements of strategic management
Strategy Guntent
Strategic Action
CONTEXT
ersteny
iontables
infallible strategic thinking can be caused to occur. Some processes may be formal and involve a large number of people; other processes may be completely informal and involve only a handful; a sudden flash of insight may sometimes be worth more than years of analysis. The purpose of the strategy formulation process is to arrive at an agreed view of how the enterprise will succeed in the future.
The strategy formulation process has three logical elements, as illustrated in Figure 1.2 and described further in Chapter 6.
Strategic Intent is the highest level purpose of the enterprise. It is therefore a driver of the strategy process since all meaningful action must originate in purpose.
Figure 1.2 The strategy formulation process
Strategic Intent
Strategic Assessment
Strategic Choice
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THE STRUCTURE OF THIS BOOK 9
Strategic intent may also change or develop as a result of the strategy formulation process. Strategic intent is described at more length in Chapter 7.
Strategic Assessment is an overall assessment of the context at a particular time and the effects of possible future actions. Strategic assessment involves standing back from the everyday activities of the business. It requires consideration in broad terms of the capabilities of the enterprise and the characteristics of the business environment in which the enterprise operates. Strategic assessment considers how likely the enterprise is to realize its strategic intent as the business environment changes. Strategic assessment takes into account current performance, expected future trends, the aims of the enterprise, and the success of past strategies. Strategic assessment involves both analysis and judgement. The principles of strategic assess- ment are described in Chapter 8. Some of the tools and techniques that may be useful in practical strategic assessment are described in more length in Chapters 9 and 10.
Strategic Choice involves deciding what action to take and how to take it for the future health and direction of the enterprise. It requires faith that actions taken now will improve future outcomes. The degree of uncertainty in strategic choice is often very high. But if there are no choices to be made, there is no value in the strategy formulation process. Strategic choices should address strategic issues or resolve the strategic dilemma posed by the context in a way that fits with the strategic intent. Strategic choice is described in more detail in Chapter 11.
Formulating strategy usually involves analysis and the manipulation of data and ideas. Chapter 12 describes how analytical tools (usually programs running on per- sonal computers) can support the strategy formulation process in practice.
The strategy formulation process delivers the Content of Strategy. This is the third element of strategic management and is addressed in Part IV. Chapter 13 exam- ines the content of strategy in general and discusses what results can reasonably be expected from a strategy process. Chapter 14 focuses on Business Strategies and on what is likely to make the business strategy of an enterprise more effective. Chapter 15 is devoted to the subject of Corporate Strategy-the additional component of strategy required if an enterprise has more than one business.
Strategic management is incomplete and of little value without effective imple- mentation. The final element of strategic management is the Strategy Implemen- tation Process described in Part V. Implementation is too often seen as separate from strategic management. Our view is that implementation is an integral part of strategic management so that the process and content of strategy should take the needs and capabilities for implementation into account. Many strategic change ini- tiatives fail to achieve their stated objectives. Often this failure is due as much to underestimation of the difficulties of implementing the changes as to poor execution
Figure 1.3 shows the parts of the strategy implementation process.
Chapter 16 summarizes the key themes of the strategy implementation process. Chapters 17 and 18 distinguish between the leadership of strategic change and the management of a change programme. Leadership and management are both essential for successful implementation and form the vertical dimension of Figure
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Figure 13 The strategy implementation process
Programme and Project Management
Change Leadership
Culture Change Structure Change Process Change
Transformed Enterprise
1.3. To implement a new strategy it is likely that change will be needed in the business processes, the culture, and the structure of the enterprise. Practical approaches for causing change in each of these three are described in Chapters 19 to 21.
Chapter 22 addresses the question of Adaptability-an organizational com- petence which adds to the chances of future success in an unpredictable world,
The four elements of strategic management relate closely to each other. The con- text sets the scene, poses the issues to be resolved, and constrains the style of the strategic management process. The quality of the strategy formulation process and its suitability to the context will tend to determine the quality of the strategy content that results. The strategy content is of little value unless it has taken implementation issues into account and leads to an effective process of implementation that turns ideas into realities. The results of the strategic implementation and other unrelated changes) will in due course affect the context so that the elements of strategic man- agement interact in a cycle. Figure 1.4 combines the content of Figures 1.1 to 13 into a single diagram.
Figures 1.1 to 1.4 are original to this book. They are derived from classical models of strategic management. The main extensions to other models are that context is spe- cifically represented and implementation is given more emphasis.
Part V ends with a brief Epilogue to conclude the book.
Part VI contains six case examples. A case example differs from a case study in that it is structured to be useful as an example of principles described in the text. Specific references to these case examples occur throughout the book. It is hoped that the case examples give a fuller understanding of the context than is possible in brief vignette examples on their own. Readers may find it useful to read the case examples through in parallel with the main text to get a wider feel for each of the six contexts.
We hope that we have avoided unnecessary jargon. Terms that are defined in the text are also listed in the Glossary for easy reference.
The structure of the book was designed to focus on key elements of strategic man- agement. Each element stands on its own and will offer a grounding in the themes
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THE STRUCTURE OF THIS BOOK 11
Figure 1.4 Our complete model
Straleny Content
Strategic Action
Strategis Thinking
CONTEXT
covered. Taken as a whole the book offers, in a comprehensive and digestible format, a manual of strategic management from which either students or practitioners can benefit quickly.
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Chapter 2 What is Strategy?
2.1 The nature of strategy
This book is about strategic management. Almost everyone thinks that they
know what strategy is. However, if you ask what the word strategy means to them, the range of replies is surprisingly varied. To some the term strategic' is no more than a synonym for 'important; to others it may be a plan of action and for a third group it might be a blueprint for success. More considered replies are likely to reveal different shades of meaning within this broad range. To lis, strategic management is about envisioning and realizing the future. Note that this definition requires that strategy should both provide an idea of the future and generate the action necessary to realize that idea. Implementation is part of strategy and not a separate activity.
2.2 Strategy from the manager's point of view
M ANAGERS are responsible for the health of their enterprises both in the present IV and in the future. Strategic management is the part of their job that relates to the future. Strategic management is about taking action today to achieve benefits in the future. The future is always uncertain so that strategic management decisions must be made with information that is always incomplete and often wrong. This is not a new issue. Peter Drucker (1955: 85) put this very clearly:
Management has no choice but to anticipate the future, to attempt to mould it and to balance short-range and long-range goals. It is not given to mortals to do either of these things well. But
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lacking divine guidance, business management must make sure that these difficult responsi- bilities are not overlooked or neglected, but taken care of as well as is humanly possible
It is not easy for managers to manage strategically. Henry Mintzberg (1989) has observed and most managers will be personally aware that: 'Managers work at an unrelenting pace and their activities are characterised by brevity, variety and dis- continuity Managers have to manage strategically within this pattern of work. The objective of strategic management is to prepare an enterprise for future success to conceive and secure the future of that enterprise. The objective of this book is to help managers to achieve this.
Strategic management requires both thinking and action. Strategic management only takes place when action follows thought. Thought on its own may be intel- lectually stimulating but it is not strategic management. There are limits to the abil- ity of managers to foresee the future, to understand the significance of changes, to conceive strategies, and to implement strategies successfully. Managers need to be aware of these limits but cannot avoid their responsibility for taking action.
In summary, the manager's perspective of strategy has three characteristics. First of all, the concern of managers is with a particular enterprise at a particular time. Secondly, they need to have a concept of what the future will be like. Thirdly, they have to take action. This is the essence of strategic management
2.3 Definitions of strategy
M ANY writers have attempted to define strategy. Such definitions emphasize one
or more of the aspects described above. A definition that included all the aspects would have to be very long.
One of the earliest definitions of strategy comes from the ancient Greek writer Xenophon (Cummings 1993: 134): 'Strategy is knowing the business you propose to carry out'. This definition stresses that strategy requires a knowledge of the business, an intention for the future, and an orientation towards action. This definition also emphasizes the link between leadership and strategy formulation. Xenophon saw strategy as a direct responsibility of those in charge, not as a spectator sport.
Kenneth Andrews (1971) defined strategy as: "The pattern of major objectives, pur- poses or goals and essential policies or plans for achieving those goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be'.
Note that in this definition strategy is concerned with both purpose and the means by which purpose will be achieved. It implies that strategy must address the funda- mental nature of the business in the future. This suggests that strategy will be sensi- tive to values and culture as well as to business opportunity. It also implies that managers are able and responsible for making deliberate choices about the future nature and scope of their business.
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Igor Ansoff (1987: 1965) offers a brief definition: 'Strategy is a rule for making decisions'. Ansoff also distinguishes between policy and strategy. A policy is a general decision that is always made in the same way whenever the same circumstances arise. A strategy applies similar principles but allows different decisions as the circumstances differ.
Kenichi Ohmae (1983: 92) defines strategy as: 'The way in which a corporation endeavours to differentiate itself positively from its competitors, using its relative strengths to better satisfy customer needs'. This definition addresses both the competitive aspect of strategy and the need to build capabilities. It also explicitly mentions customers and the satisfaction of their needs as a driver of strategy.
More recently and reflecting his perspective as a practising management consult- ant. Michael de Kare-Silver (1997) suggests that strategy should have just two elements-future intent and sources of advantage. He is therefore restating the view that intent and strategy are inseparable. The word 'source of advantage' has a similar meaning to capability but emphasizes that capabilities only have value when they meet the real needs of customers.
Our own definition of strategy is: 'Ideas and actions to conceive and secure the future'. This definition highlights the fact that strategy requires thought about the future but also effective action to realize the conception. This definition, though brief, does not imply that strategy cannot have the many aspects discussed above.
It is apparent that definitions of strategy vary. To understand the reasons for this variation, it may help to have some understanding of where the ideas come from. Military thinkers, political thinkers, academics, and practitioners have all considered the issue of strategy
2.4 The military origins of strategy
The concept of strategy is an ancient one and originated in the study of success in
war. The word strategy comes from the Greek 'stratos" (army) and agein' (to lead). The 'strategos" in Athens was an elected general, a post created when Athens was at war with Persia in 506 BC. The Greeks saw strategy setting as one of the responsi- bilities of a leader, a connection that continues in modern thinking, The Greeks also gave serious thought to what kind of person would be suitable to the role and how they should be trained. Interestingly, they concluded that intellectual skills, while essential for a good strategist, were not sufficient unless supported by practical learn- ing gained from experience.
At about the same time, and quite independently, the Chinese general, Sun Tzu (tr. 1997) wrote about strategy. also relating it closely to the duties of a leader: 'Only a brilliant ruler and an excellent leader, who is able to conduct their intelligence with superiority and cleverness, is certain to achieve great results. The entire force relies on this for every move. This is the essence of strategy'.
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Sun Tzu saw the aim of strategy as defeating the enemy by fighting as few battles as possible. He defines priorities for gaining advantage over an adversary. The highest priority is to foil the enemy's plots, second to ruin his alliances, third to attack his armies, and lowest of all to besiege his castles. In his view. strategy is as much about avoiding battles as it is about fighting them, Sun Tsu's book The Art of War has some- times been used as a management text because of the relevance of its insights to business strategy.
Perhaps the best-known military strategist of more recent history is Carl von Clausewitz (1832). One often-quoted sentence highlights an important paradox about strategy in that good strategies are inherently simple but hard to conceive: "Thus, then, in Strategy everything is very simple, but not on that account very easy".
Von Clausewitz saw good strategies as difficult to conceive and even more difficult to implement so that only very few people ever succeed as strategists:
A Prince or General who knows exactly how to organize his war according to his object and means, who does neither too little nor too much, gives by that the greatest proof of his genius.
But to follow that way straightforward, to carry out the plan without being obliged to deviate from it a thousand times by a thousand varying influences, requires besides great strength of character, great clearness and steadiness of mind, and out of a thousand men who are remark- able, some of mind, others for penetration, others again for boldness or strength of will, per- haps not one will combine in himself all those qualities which are required to raise a man above mediocrity in the career of a general
Military thinking certainly has some relevance to business strategy. Its emphasis on winning, on the importance of leadership, and on taking action to achieve desired results are all themes which resonate. On the other hand, war campaigns are a limit- ed analogy to the realities which modern enterprises face. The military analogy lacks any equivalent to the customer. Modern enterprises rarely have the simple hier- archical structures nor obedience to orders which military models assume. Military writers and particularly Clausewitz saw war as a zero-sum game. Business competi- tion often allows opportunities to avoid the destructive results of a zero-sum game by creating diversity.
If we accept the analogy that business is a war then the military model of strategy can be an important starting point for an exploration of business strategy. Strategy also has a political role.
2.5 The political role of strategy
MICCOLO Machiavelli (tr. 1961) added a political dimension to the study of strategy.
The Prince published in the early sixteenth century was notable for its detached observation of events. Francis Bacon said of Machiavelli (Jay 1987) 'He set forth openly and sincerely what men are wont to do and not what they ought to do'.
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Machiavelli is also the earliest writer to concern himself with the realities of implementing strategies. One particular example of this quoted by Jay is how to handle take-overs. Machiavelli was, of course, writing about a prince taking control of a country. His advice was that it was necessary either to treat the powerful citizens well or to crush them so completely so that they could not retaliate. Jay points out that there is a parallel in how to manage companies which have been recently taken over and that advice on such matters is rarely available in conventional management books. Machiavelli moved beyond the ancient writers in his concern for effectiveness as much as describing ideals.
2.6 The academic contribution to strategy
ANOTHER major source of knowledge about strategy is provided by academics.
Modern thinking on business strategy first evolved into a recognizable form in the 1960s in the USA. Writers such as Drucker (1955), Chandler (1962), Ansoff (1987. 1965), and Andrews (1971) studied the development of large successful American cor- porations before and during the Second World War. Their work set the scene for what is now usually referred to as the 'Classical School' of business strategy. The classical school saw direction setting (strategy formulation) as an important responsibility of top managers and believed that it could be separated from strategy implementation, Corporate thinkers in headquarters headed by the chief executive formulated the strategy: divisional management teams implemented it. The analogy with the general and his headquarters staff and field officers is clear so that the classical school seems to have its roots in the military model of strategy. One major addition to thinking was the introduction of ecomomic goals particularly return on capital-as the driving objective of business.
The thinking of the classical school has never been replaced by a better total view of what business strategy is all about but it has come in for significant criticism from at least three directions. First, the companies that based their strategies on the clas- sical theories have not necessarily been more successful than others who did not. Over-rigid application of classical approaches led to strategic planning becoming a staff role separated from, and often not well regarded by, line management. As a result, the concepts themselves were rejected even though the failures may have resulted from poor application of the concepts as much as from the limitations of the concepts themselves.
Secondly, it was suggested that the techniques and concepts of the classical school could well have been appropriate to large companies based in the USA at a time when America had a dominant share of world economic activity. The same techniques and ideas might be less relevant in other business contexts. For example, it might be possible for DuPont in 1960 in a growing chemical market to set world-wide strategies centrally and to expect them to be implemented successfully. It might not be possible
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for a small company struggling in a depressed economy to go about strategy making in the same way.
Thirdly, the classical school thinking was too closely tied to its military and eco- nomic models. Other fields of thought-particularly psychology, sociology, and biology-offered new and relevant ways of thinking about strategy.
The volume of academic writing in the field of strategic management is both very large and diverse. The value to the business strategist is in providing multiple differ- ent ways of thinking about strategy. It is, however, important to realize that academ- ics are looking for general patterns that they can prove by analysis. This may not be directly helpful to the strategist who is seeking a unique solution to a unique strategic dilemma for a particular enterprise. The academics are seeking to understand the rules: the manager is seeking to get round the rules for the advantage of his or her own enterprise. In addition, academics can sometimes seem unaware of the realities of the constraints and pressures within which managers have to work. Political pres- sures and imperfect knowledge can make cold logic less relevant to the needs of the practising manager. Business success may often come from carrying people along with an imperfect strategy.
2.7 The contribution of practitioners
MAANAGERS have to face strategic issues and take action to resolve them. Some IVI have written convincingly about their experiences. Alfred P. Sloan (1963) was president and then chairman of General Motors between 1923 and 1946. The strategic issues facing Sloan were how to handle the vast enterprise that General Motors had become and how to catch Ford who had taken a lead in mass production techniques. Sloan (who writes of policy' rather than strategy') pioneered the Divisionalized Corporation that became a model for many large companies. The divisionalised form allowed policy making by the centre to be separated from execution by the divisions. It thereby allowed General Motors to become more diverse than Ford without giving up any economies of scale, The central strategy makers were able to gather detailed knowledge of what execution involves and so set strategies for the separate divisions that were both different from each other and achievable. Sloan faced a particular dilemma and describes his solutions.
John Harvey-Jones (1988) wrote his book Making it Happen just after he retired as chairman of ICI. One of his principal dilemmas was how to make the board of ICI work better. As a result, his particular contributions to the concept of strategy include his insights into how boards should operate and on the mix of people neces- sary to devise strategy for a large organization at the highest level. He also
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emphasizes the responsibility for communicating the strategy to all concerned and stresses the importance of people in making any strategy happen. To him success lies in getting a larger part of a strategy implemented rather than conceiving a more brilliant strategy. Again Harvey-Jones's solutions were effective for the particular issues faced by ICI at the time.
Andrew Grove (1996) wrote as president and CEO (chief executive officer) of Intel Corporation. Intel faced particular issues in the micro-electronic industry. This indus- try may be atypical of business in general because of its rapid speed of technological advance. Such a rapidly changing environment provides an opportunity to study strategic change at higher speed—just as geneticists study fruit flies because their reproduction cycle is so short. Grove describes strategic inflexion points in which radical changes in business parameters require radical strategic change in response. His ideas are relevant to other industries as they face moments of radical change but may be less useful in slower-moving strategic contexts.
The advantage of studying strategy as seen by practitioners is that they approach the issues of strategy from the perspective of practising managers-the need to take action to solve a problem. The disadvantage is that the dilemma is different for each case and so the lessons may not be relevant to other situations.
Case studies have had an important role in the teaching of strategic management. The purpose of a case discussion is to cause the participants to address the two gen- eric questions: 'What are the strategic issues in this case' and 'What would you do?" While the particular dilemma described in a case will never reoccur, each will build a useful body of knowledge for tackling other dilemmas. Case studies therefore illuminate strategic management from the same perspective as reading the accounts of practitioners. We have included six case examples in Part VI of this book. Each case example describes a different context and therefore different issues and dilemmas to be resolved.
2.8 A theoretical general solution to strategic dilemmas?
NE interesting question is whether it will ever be possible to have some general U theory for strategic management. John Kay considered this question and con- cludes that strategy is still at a level of development equivalent to early medicine when doctors based their conclusions on unscientific categorization such as humours and elements. He observes (Kay 1993) that: "The prestige of a doctor rested more on the status of his patients and the confidence of his assertions than on the evidence of his cures'. It is evident that an equivalent state of affairs exists in the field of strategy at the present time but Kay seems to be optimistic that greater knowledge will in time make the subject more scientific
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Chapter 3 Schools of Thought on Strategy and Strategic Management
3.1 Introduction
-HAPTER 2 introduced strategy and strategic management and looked at the origins
of ideas about strategy. The purpose of this chapter is to outline the structure of strategic management as it is now accepted as an academic subject. Readers whose interests are more practical than academic may choose to omit this chapter at a first reading. It will be of more value to those wishing to bridge the gap between practice and the academic literature-a gap which sometimes seems to be wider than it should be.
3.2 Aspects of strategy
TRATEGY has multiple aspects. Some of the more important aspects are listed below.
Strategy as a statement of ends, purpose, and intent
Purpose or intent must act as the driver of the future. No useful activity can occur without some underlying purpose. The role of strategy is to determine, clarify, or

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