Managing Strategy

192 Pages·1996·18.991 MB·English

by  Cliff Bowman, David Asch (auth.)

MANAGING STRATEGY
Cliff Bowman
and
David Asch
© Cliff Bowman and David Asch 1996
All rights reserved. No reproduction, copy or transmission of
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No paragraph of this publication may be reproduced, copied or
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or under the terms of any licence permitting limited copying
issued by the Copyright Licensing Agency, 90 Tottenham
Court Road, London WlP 9HE.
Any person who does any unauthorised act in relation to this
publication may be liable to criminal prosecution and civil
claims for damages.
First published by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 6XS
and London
Companies and representatives
throughout the world
ISBN 978-0-333-60888-3 ISBN 978-1-349-24381-5 (eBook)
DOI 10.1007/978-1-349-24381-5
A catalogue record for this book is available
from the British Library.
Transferred to digital printing 2002
I
Contents
List of Figures and Tables vii
Preface ix
1 Introduction 1
Introduction 1
The content of strategy 1
Strategy processes 3
Personal preferences for particular strategy outcomes 10
Plan of the book 13
l Analysing the Competitive Environment 15
Introduction 15
What markets are we competing in? 15
Analysing the structure of the industry 18
Identifying key trends in the industry 23
Analysing the wider environment 27
3 Competitive Strategy 34
Introduction 34
Porter's generic strategies 34
The strategy compass 37
Analysing competitive position 48
Strategic groups and the strategy compass 54
4 Skills and Resources 56
Introduction 56
Issues in assessing skills and resources 57
Analysis of management and functions 59
Assessment of resources and the development of capabilities 66
Appendix: Summary of some financial ratios, their calculation
and interpretation 70
S Strategy, Structure and Systems 7l
Introduction 72
Organisational structure: some basic concepts 72
Linking strategy, structure and process 76
Coping with diversity 83
v
vi Contents
6 Strategy and Culture 85
Introduction 85
Culture and strategy 85
Realised strategy and performance 96
7 Managing Strategic Change 97
Introduction 97
Culture and strategic change 97
The role of the 'mission statement' 100
Using the status quo to change the status quo 105
Identifying barriers to change 114
8 Managing Corporate Strategy 119
Introduction 119
Basic choices in corporate strategy 120
Diversification strategies 122
Portfolio approaches to corporate strategy 129
Horizontal strategies 134
Synergy in corporations 137
Routes to growth 139
Strategy, structure and strategic styles 146
International corporate strategy 150
9 Managing Strategy in Not for Profit Organisations 157
Introduction 157
Comparing firms and NFPs 158
Power structures in NFPs 163
Managing NFPs 167
Conclusion 173
References 175
Index 179
I
List of Figures and Tables
Figures
1.1 Level of strategy 2
1.2 Strategy process outcomes 4
1.3 Zones of strategy debate 6
1.4 Ownership of the strategy process 9
2.1 The five competitive forces 18
2.2 Key issue matrix 29
2.3 Issues in environmental appraisal 31
3.1 The strategy compass 37
3.2 Competing on price 39
3.3 Competitor response to price competition 39
3.4 Competing by adding perceived use value 41
3.5 Offering higher PUV at higher prices 46
3.6 Dimensions of perceived use value 49
3.7 Comparative dimensions of perceived use value 50
3.8 The producer matrix 52
3.9 Combining the strategy compass with the producer matrix 52
4.1 Factors that influence a manager in defining strengths and
weaknesses 58
5.1 Functional organisation 73
5.2 Main contingent variables 79
5.3 Task, environment and structure 81
6.1 Culture and strategy 86
7.1 Example of a mission statement 102
7.2 Subunit mission statements 104
7.3 Mission statement for the Wilshire Reporter Group 106
7.4 Actions to achieve mission 107
7.5 Management structure of a regional newspaper- structure A 108
7.6 Achieving the mission 110
7.7 A regional newspaper- structure B 111
7.8 A regional newspaper - structure C 111
7.9 Forcefield analysis 115
8.1 Options for growth 122
8.2 Sequence of value chains: a value system 123
8.3 Sequences of value chains: parallel value system 126
8.4 Growth share matrix 130
8.5 Tangible relationships in a diversified firm 137
8.6 Post-acquisition integration 141
vii
viii List of Figures and Tables
8.7 Strategic management styles 148
8.8 Multinational corporation 152
8.9 Global corporation 153
8.10 Global integration and local responsiveness 154
8.11 Developing appropriate international strategies 154
8.12 Transnational corporation 155
9.1 NFP/NI/private sector objectives 171
Tables
9.1 Summary of four decision-making models 166
9.2 Some elements of the private and public domains 174
I
Preface
Since we first started researching and writing about strategic management over
ten years ago the topic has developed significantly. In tandem with such devel
opments we have seen an increasing degree of complexity in the business world
coupled with a rate of change in organisations that was probably unimaginable
over a decade ago.
This poses a problem for authors with regard to what to include in or exclude
from a book like this since the literature in the field is now more sophisticated
and more comprehensive. Our experience of teaching MBAs and managers is
that many conventional texts are too academic, too long (though not necessarily
comprehensive) and of little practical value. As a consequence we have decided
to try a much more focused approach based not only on some new ideas con
cerning the content and process of strategy but also on some empirical findings
in the area. We believe that this blend of new ideas and empiricism is preferable
to merely rehearsing a range of theories. So the focus of the book is on 'doing'
strategy and it is designed to be more action orientated.
Strategic management is often used as a final integrating unit in many ad
vanced business and management courses because of a recognition that a 'stra
tegic perspective' is a desirable attribute for all levels of management. This book
is primarily aimed at managers who require further insights into the strategy of
their organisation. It will also be appropriate for postgraduate and final-year
undergraduate strategic management courses.
We would like to thank Eric Cassells for his valuable contribution to Chapter
8, 'Managing Corporate Strategy', and Frances Thomas for typing and tidying
up the drafts of the chapters.
CLIFF BOWMAN
DAVID ASCH
ix
I CHAPTER 1
Introduction
• Introduction
We have called this book Managing Strategy to distinguish it from other books
on the subject. Although some of the topics and techniques dealt with in the
following chapters can be found in most strategy texts, we have tried to treat
this material from the perspective of a senior manager who is responsible for
setting the strategy for the organisation, either as an individual or as part of a
team. So the emphasis is on the explanation and development of tools and tech
niques that can be practically applied, and on developing powerful insights into
the reality of strategy processes.
We begin this chapter by explaining the differences between the content of
strategy and the process of strategy. By the content of strategy we mean what
the strategy is about. To explain this we explore the different levels of strategy:
corporate, business and operational. The process of strategy refers to the ways
in which the strategy came about, which includes its implementation. There is a
good deal of evidence to suggest that the way a strategy is derived critically
affects the chances of it being successfully implemented. These issues are con
sidered later in this chapter. The chapter closes with an exploration of the per
sonal motives that you might have when engaging in the strategy process in
your organisation .
• The Content of Strategy
We usually distinguish between different levels of strategy:
• Corporate strategy
• Business strategy
• Operational strategy
It is important to separate these levels, otherwise it can lead to confusion in
strategic thinking. We shall first consider corporate strategy (see Figure l.l).
• Corporate Strategy
A corporation is typically a large organisation divided into a number of discrete and
essentially autonomous units or divisions. Corporate strategy is the responsibility
1
2 Managing Strategy
I I
Corporate
Headquarters
Level
I
Colours Household Industrial Paints Business
Division Products Cleaning Division Level
Division Division
I
Finance Operations R&D Sales and Operational
and Marketing Level
Admin
Figure 1.1 Levels of strategy
of managers at corporate headquarters. The fundamental issue at corporate level
is the logic, or rationale of the corporation. Put simply, what is the point of
grouping these separate businesses under one corporate roof?
Various arguments have been advanced to justify the corporation. These in
clude 'synergy' (by combining these units the whole performs better than the
=
sum of the parts, often written as 2 + 2 5). The thinking here is that business
units can benefit in some way from being under the corporate umbrella. These
potential benefits may include the sharing of expertise or exploiting scale economies,
for example bulk purchasing.
Some corporations are run almost as holding companies, where there is mini
mal interference from the corporate centre in the management of a division or
business unit (for example BTR, Hanson). Others are justified on the basis of
'core competences' that are nurtured, developed and leveraged into many di
verse product markets (for example 3M, Honda, Canon). In addressing the fun
damental logic or rationale for the corporation, key questions that need to be
answered are: what businesses should be in the portfolio, and how should they
be managed? These issues are explored in more depth in Chapter 8.
• Business Strategy
The key strategic issue at business level is determining competitive strategy.
This involves addressing the following five questions:
• What markets should we be trying to compete in? What segments of those
markets should we really focus on?
• How should we try to compete in those markets?
• What competences or capabilities do we need to compete successfully?