Lesson 1: Introduction Flashcards
(35 cards)
What are the characteristics of strategic decisions?
Long term perspective
Create strategic and competitive advantages
Concerning the scope of the organisation
Involves big amounts of resources
Influence operational decisions
Reproduce the power balance between stakeholders
What is the definition of strategy?
Strategy is the direction and scope of an organisation over the long term which achieves advantages in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholders’ expectation.
Or the long term development of the firm.
What are the 3 horizons for strategy?
1) Horizon 1: extend and defend core business. Implementing the existing strategy.
2) Horizon 2: build emerging businesses: new products
3) Horizon 3: create viable options: 5/8y: discover new markets.
What are the levels of strategy?
1) Strategy at the functional level
2) Strategy at the corporate level
3) Strategy at the SBU level (Strategic Business Unit)
4) Operational strategy
What is the strategy at the corporate level
Finance and legal
Aim and scope of the organisation
Value creation for the shareholders
Portfolio management
Organisational design and human resource management
Accounting and finance –> to have control over the different departments
Corporate values
Corporate communication with key stakeholders
What is the strategy on the level of SBU?
Marketing and Technology
Strategic business unit level
Competitive strategy
Price strategy and marketing
Choice of distribution channels
Market and product development
Production and services
Choices of production technology
Resource allocation within the SBU
Structuring and control within the SBU
Strategy levels on the operational level?
Integration of resources, processes, people and skills
Strategy implementation
What is strategy level at the functional level
Marketing strategies
Organisational development
Control strategies
Investment and risk strategies
Purchase, production and distribution strategies
What is a mission?
Definition: overriding purpose of the organisation. The reason for existing.
What business are we in.
Eg. To transport people over long distances very fast = airline.
Personal example: be healthy and fit
What is a vision?
Vision or strategic intent is a desired future state = the aspiration of the organisation.
Eg. To be the leading company in Europe.
Personal example: to run the London Marathon.
What are goals?
General statement of aim or purpose (qualitative)
Deliver a good service to a reasonable price to all customer segments.
Personal example: lose weight and strengthen muscles.
What are objectives?
Quantitative or more specific statements of goals.
Eg: number of passengers, market share, return on investment.
Personal: lose 5 kilos by end of the year
What is strategy?
Long term direction, goals, action poan, timable and budgets.
Eg. Buy 25 new airplanes, buy new gates, develop booking system.
Personal example: diet program, exercise program.
What are the elements in strategic management?
1) Strategic positioning = strategic analysis:
Analysing the environment, company, political and cultural context
2) Strategic choices = strategy development
Developing competitive strategies, corporate and growth strategies, internationalisation, strategies for innovation
3) Strategy in practice = strategy implementation
Strategy through organisational design, design of management systems, functional design, managing changes
What is the strategy in small businesses?
The manager is often also the owner.
Strategy have the form of a vision in the owners head.
Action, analysing and thinking happens simultaneously.
Strategy have the form of flexibility, moving fast and niche.
What is the strategy in multinational companies?
Geographical and business scope of the organisation
Strategy is about organisational structuring and resource allocation
Management is about control, finances and communication.
Focus on corporate values
What is the strategy in professional service firms?
Professional standards and norms set the strategy
Strategy is about positioning and development of competences
Strategy is a dialog and and emergent process
It is the professional that negotiates the strategy
What is the strategy in public organisations?
Strategy is divided between politicians and administrators
Strategy is a discourse
Strategy is about political power, efficiency/quality and legitimacy.
Strategy is very often of symbolic nature
What are challenges for strategic management?
1) Strategic drift
Gap between organisation and stakeholder expectations
Often connected to a strong culture and earlier successes
2) Continued pressure on strategy development
Globalisation and international competition
It and technology
Politics and legislation
New cultural trends
Economic development
What are some other dilemmas in strategic management?
Complexitiy and ambiguity
Combining of both vision and action
To be both analytical and creative
To build a bridge between different stakeholder
Create new posibilities
Create continuity and efficiency on one hand and change and innovation on the other hand.
Why do we combine strategy and economic theory?
The strategy field is highly fragmented and is made up by many concepts and models.
There is a need for getting an economic overview of strategic managment
A need to uncover the assumptions, ideas and theories behind the strategy models and concepts.
What are the models for economic value creation by positioning of the firm?
Porter’s Five Forces model and Generic Competitive Strategies
Draw on the SCP paradigm and neoclassical theory = monopoly rent.
B&O as an example.
What is value creation through developing competences?
Categories for resources, competences and VRIO
Resource based theory and Penrose (Ricardo Rent) and evolutionary theory
Danske Bank as an example.
What is value creation through organising?
Diversification, growth methods and the corporate structure
Transaction cost theory
FLSmitdh as an example
