Strategy Planning 1
amhs2000
chapter_01.pptxChapter 1
The Concept of Strategy
Learning Objectives
By the time you have completed this topic you will:
appreciate the contribution that strategy can make to successful performance, both for individuals and for organisations;
be aware of the origins of strategy and how views on strategy have changed over time;
be familiar with some of the key questions and terminology in strategy;
understand the debates that surround corporate values and social responsibility;
comprehend the basic approach to strategy that underlies this book.
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Common elements in successful strategies
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Definitions of strategy
Strategy: a plan, method, or series of actions designed to achieve a specific goal or effect.
– Wordsmyth Dictionary
The determination of the long-run goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.
– Alfred Chandler, Strategy and Structure
Strategy is the pattern of objectives, purposes, or goals and the major policies and plans for achieving these goals, stated in such a way as to defi ne what business the company is in or is to be in and the kind of company it is or is to be.
– Kenneth Andrews, The Concept of Corporate Strategy
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Sources of superior profitability
Describing strategy
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Strategy as Decision
Support
Strategy as a Coordinating
Device
Strategy as Target
Improves the quality
of decision making
Creates consistency
and unity
Improves perform-
ance by setting
high aspirations
What Roles does Strategy Perform?
Strategy as Animation and Orientation
Motivates
and mobilises
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Profit and Purpose:
“Profits are to business as breathing is to life. Breathing is essential to life, but is not the purpose for living. Similarly profits are essential for the existence of the corporation, but they are not the reason for its existence”
Source: Quote from an interview by Robert M. Grant with Dennis Bakke, founder of the international power company, AES.
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Mission statements
HENRY FORD
“I will build a motor car for the great multitude . . . It will be so low in price that no man making good wages will be unable to own one and to enjoy with his family the blessing of hours of pleasure in God’s great open spaces . . . When I’m through, everyone will be able to afford one and everyone will have one.”
To organize the world’s information and make it universally accessible and useful
IKEA
To create a better everyday life for the many people. We make this possible by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.
SAP
To define and establish undisputed leadership in the emerging market for business process platform offerings and accelerate business innovation powered by IT for companies and industries worldwide.
GAIA HOUSE (a Buddhist retreat centre in England)
‘Exists for the liberation of all beings from greed, hatred and delusion’.
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Corporate Social Responsibility
Companies are increasingly accepting responsibilities that extend well beyond the immediate interest of shareholders:
For ethical reasons
For reasons of self interest
Sustainability (it is in both society’s and the firm’s interests to sustain the ecosystem)
Reputation (CSR enhances the firm’s reputation with consumers and third parties)
License to operate (firms need the approval and support of the constituencies on which they depend)
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The basic framework: strategy as a link between the firm and its environment
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