Strategic Analysis
ANDYXU666
L1Introducingstrategyvt.pptStrategic Management
Module 1 Introducing Strategy
Dr Xueli (Charlie) Huang
School of Management
RMIT Classification: Trusted
Learning Objectives
- After studying this module, you should have a good understanding of
Strategy
Definitions
Three levels of strategy and their major focuses
Strategy statements: vision, mission statement and their role in organizations’ strategic management.
The strategic management process and its three interrelated and principal activities
Strategic management perspective
How does this course differ from others?
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School of Management
School of Management
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RMIT Classification: Trusted
Why study strategic management?
- One of the fundamental questions of strategic management is
Why some organizations can outperform others in a long run?
This translates to:
How can my organization perform better than my competitors?
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School of Management
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RMIT Classification: Trusted
The demise of Holden
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Let’s look at more specifically for some organisations, such as Holden: the death of Holden - A very interesting story.
A variety of factors have been said to contribute to Holden’s demise, such as high cost, small domestic market, failure to adapt to the change of customer preferences, lack of investment in technology and new products,
Why Holden fails?
This is one of the key issues this course is going to address
The first 3 minutes before ScoMo’s speech.
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RMIT Classification: Trusted
The demise of Holden (cont’d)
- What strategic factors drive Holden the end of the road?
High production cost, small domestic market size, shift in consumer preferences, lack of investment, or competition?
School of Management
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School of Management
RMIT Classification: Trusted
What is strategy? (1/4)
- Strategy has its military origin
The word of strategy derives from Greek word strategia, which means “generalship”.
- Strategic decisions in business context, as in military, have three characteristics
They are important
They involve a significant
commitment of resources
They are not easily reversible
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School of Management
School of Management
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RMIT Classification: Trusted
What is strategy? (2/4)
- Definitions of strategy
The determination of the long-run goals and objectives of an enterprise, and the adoption of course of action and the allocation of resources necessary for carrying out these goals (Alfred Chandler 1962).
- Strategy is a pattern in a stream of actions (activities) /decisions (Henry Mintzberg).
Strategy is consistency in behaviour, whether or not intended (Mintzberg, et. al, 2003)
- Question: What is the major difference between these two definitions of strategy?
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RMIT Classification: Trusted
What is strategy? (3/4)
- Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value (Michael Porter, 1980)
- Strategy is the long-term direction of an organisation (Johnson et al., 2020).
It enables the organization to outperform competitors and/or fulfill stakeholders’ expectations through the development and deployment of resources and competency within the changing environment
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The definition provided by the textbook is very simple reflecting the consideration of envirnment complexity, dynamics of market and competition on one hand, at the same time, the long term orientation and intention of strategy.
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RMIT Classification: Trusted
What is strategy? (4/4)
- In summary, strategy is about “HOW”
It is a major means to achieving organization's objectives;
It is action-oriented; and
It is forward thinking. How can we get from the present position to our future position?
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School of Management
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RMIT Classification: Trusted
Key elements in the concept of strategy
Strategy: long-term scope and directions
Competitive advantages
Stakeholder satisfaction
Organizational
performance
External environment
Organisation’s resources and skills
Organization purpose and stakeholder expectation
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This is one of the take-home point for this course.
RMIT Classification: Trusted
Level of strategy
- Corporate-level strategy
It is concerned with the overall purpose and scope of an organization and how value can be added to different parts of the organization.
e.g., Apple Corp, Haier, Google, Lenova
Business-level strategy (at SBU level)
A strategic business unit (SBU) is a part of an organisation for which there is a distinct external market for goods or services that is different from another SBU.
How should a firm compete successfully in particular market?
e.g., Most SMEs, a division in a large corporation,
such as Ikea China, Singapore airline cargo
business in Singapore Airlines.
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Corporate
Business
Function (e.g., marketing, HR)
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Domain selection vs domain navigation
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Level of strategy (cont’d)
- Functional or operational strategy
It is concerned with how the component parts of an organization deliver effectively the corporate- and business- level strategies in terms of resources, process and people.
How should each function of the business contribute towards achieving the business strategy formed?
e.g., marketing strategy, HR strategy, production strategy, IT strategy.
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School of Management
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RMIT Classification: Trusted
Strategic Thinking Question
- Corporate strategy is about domain selection while business strategy is about domain navigation. How do you understand this statement?
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Understand many domains and select one or some for doing business;
Understand the domain it is operating and to compete successfully in that domain.
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RMIT Classification: Trusted
Strategic management
- Definition
“the superordinate and the continuous organizational process for maintaining and improving the firm’s performance by managing, that is, enabling, formulating, and realizing, its strategies” (Farjoun, 2002)
SM consists of the analyses, decisions and actions an organization undertakes in order to create and sustain competitive advantages.
It involves three broad sets of managerial tasks: Strategic analysis, strategic choice, and strategy implementation.
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Business model, fit, and trade-off
It is about external consistency, that is how your business model must fit with the realities of the environment;
It is about internal consistency: That is how the all activities conducted by the organization can be consistent in directions, fit each other, and reinforced each other;
It is about dynamic consistency. In other words, how the organization can maintain its internal and external consistency with the change in the environment and the development of the organisation
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Strategic management (cont)
External and internal environment of the firm
Organization's purpose and stakeholder expectation
- Strategic choices/strategy formation
Business strategy: How should we compete in those industries?
Corporate strategy: What industries should we compete in?
International strategy: international expansion
Merger and acquisition (M&A)
- Strategy in action / strategy implementation
Strategy evaluation and measurement
Designing the organization to bring intended strategies to reality; strategic control and corporate governance
Leadership and managing strategic changes
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External environment analysis: Understand business landscape and the strategic position (which positions can be more strategic for better financial return);
RMIT Classification: Trusted
A model of strategic management - The exploring strategy model
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These three sets of managerial tasks are inter-related
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RMIT Classification: Trusted
Strategic management perspective: Its unique focus
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| Field of study | Level of analysis |
| Macroeconomics | The economy |
| Microeconomics | Industries and markets |
| Strategy | Firms and Businesses |
| Finance | Investment project |
| Marketing | Products and services |
| Organizational behaviour | Individual |
| Operations management | Plants |
School of Management
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RMIT Classification: Trusted
Module summary (1)
- Strategy is the long-term direction of an organisation. A ‘strategy statement’ should cover the goals of an organisation, the scope of the organisation’s activities and the advantages or capabilities the organisation brings to these goals and activities.
- Corporate-level strategy is concerned with an organisation’s overall scope; business-level strategy is concerned with how to compete; and operational strategy is concerned with how resources, processes and people deliver corporate- and business-level strategy.
School of Management
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School of Management
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RMIT Classification: Trusted
Module summary (2)
- The Exploring Strategy Model has three major elements: understanding the strategic position, making strategic choices for the future and managing strategy-in-action.
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RMIT Classification: Trusted
Preparation for next lecture
- Read Chapter 2 for lecture on the macro-environment
- Read the following illustrations for in-class activities
Illustration 2.1 A PESTEL for the FANGs (p.38)
Illustration 3.3 Steps in an industry analysis (p.74)
The Australian Department Store Industry (case study materials for class exercise) (can be downloaded from the course canvas).
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RMIT Classification: Trusted
Reading for Assignment
- Read the assignment guide. Start collecting information on the assigned company (https://www.colesgroup.com.au/about-us/?page=about-us)
- One relevant and important industry report
IBISWorld Industry Report G4111 Supermarkets and Grocery Stores in Australia – Which can be downloaded from RMIT’s Library
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