Strategic Management Process, Content and Implementation

349 Pages·2005·31.17 MB·English

strategic

management
Introduction

avec management isthe most exciting of the management disciplines. Sts
rege management s about success and failure, abont the ability te plan wars an
‘i them, Big mengers—perhaps tne most visible sige of strategie management i
Axctlon—eateh the headlines, Elective strategie management can transform the pet
formaace of an organization, make forsnes fr shareholders, or change the stre
ture of an industry Ineffective stategic management cin bankrupt compantes and
inthe careers of ee exceuives

‘Stotegic management i bt a skilland an at Isa sil becnose there isa body
‘of knowledge that can be leat and techniques that can be used ith greater or
fener competence. tisan art because t deals i the Rte that isunlnowable and
‘vith the hearts and minds of people that teascend reason. Good strategic manage:
‘men rauires both clear thought and sound judgement

Strategic managements the formal and structured process by which an organiza
tion establishes a postion of suategic leadership, Strategic leadership is about the
achievement of sustained comparative advantage over the competition, Strategic
leadership sche outcome of the stareie management proces. tea sate of being
rather than a management mechanism, So ststegiclendership docs not replace str
tee management; it resus fon it

‘Stategic management sills ae not ony critical for hose who have made ito the
top, Executives and managers a exit sages of tel atcers need to bave an under
‘Sanding of strategic management to incease the value of their contribution in theie
Dreseat assignments. tan help them fo master the corporate jungle and to achieve
India creer sts Testis the habit of reaching an identified goal by developing
the necessary competence and seizing avaiable opportunitics. in shor. an wer
standing of strategy enhances performance and improves career propects

ne SS
Aims of this book

Ov es ie mary pe mam ha wl
‘used to readers who not only want to pass exams bat aso to put what they
have leamt into practice, In support ofthis aim we have applied four principles
shronghout the book:

Fist we hope that his ook eat to understand Is ntended to give easy aceess
to stategic management to readers who have not stuied the subject before

Stentegle management is nat a simple subjet bu its diMiculy saould derive from
applying effective ideas othe complexities of unique context rather than from the
application of complex theories, Managers fll when they do not apply relatively
simple principles properly, not because they Radnor read the Latest research tice

Secondly, we believe tht itis necessary to combine tie best of the accepted theory
in he subject witha pragaacic viewpoint We are concerned not just with the theory
itself but also with how best to apply iin price. Tod this we have dram on our
own experience as managers and management consultans. We have red 1 balsnice

raymaic perapectives ano take the best fom each,
‘Thinll, we believe thar goed strategic management requires particular way of
thinking nd a mental discipline rather than a speci body of knowiege This book
alms to provid an inelectal framework forthe study and application of strategie
‘management. We hope chat this frameworks clear enovgh o be quickly aderstocd
byallreadersandyet robust and exible enough to form a sound base for erin of
earning fog further reading and experience. We have not tried to include evry
‘dng that may be valuable othe body of knowledge of a strategist. As resul this
book is sigificanty shorter han many ofthe textbooks inthe field

Fourthly. we have not arempted to chase to many ofthe current hare, Over the
years, managers have been offered mantras and quick fixes that purport: avoid
fundamental and han chinking about the appropmate sestey for thie particular
‘enterprise. The quality movement and the concept of excellence both ud thet day
Most recently, Beommerce and knowledge management have been offered 35st
tege panacea. We do not deny the importance of ether Fxonametve or knowledge
management bur they ae not «sibstitte for a proper process of ste manage
‘ment to aderessall he relevant issues in fll perspective othe context. Our view is
that a robus strategy making process effectively applied will ake ino acount the
constant strean of new ides ahd new technolgicil opportunities and postion the
‘emerprise tle avant of ther,

Pith. we hope cha this book wl help readers not only to think strategically but
soto actto achiev strategie change real ganizations. Good strategic thinking is
‘necessary and a good star to succesful strategie management but iti not ences
Suategie thing that doesnot tead to ston that meets customer needs beter i 8
‘vaste of time and resources, We ope that this book wi enable reaersto understand
the nature ofthe acon that wil be ness to make statezy happen. Hor his
*hisbook givesas much weight tothe plementation of strategy ato formulation,

ee
Distinctive contributions to thinking on
strategic management
eacrmonens, calms, and management consultants haveal contrite othe
urea undersiandng of suatege managers. Each group hss trengths snd

‘weaknesses so chat the fulles understand depends on combining thei different
perspectives.
‘The personal experience of practitioners can demonstrate an intensity of involve
iment that often lees strength and credibility to their perceptions. There are
tnsdoubudly both specific lesons and more geoeral principles tp be deduced froma
staying exactly how the movers and shakers of siecesail companies achieved what
‘hey did a in Ueie perspectives on what was important in achieving their sucess.
"The strength of these contribution fin thelr epts and coherence They are also
likey to be particularly czedible to practising managers Because they appreciate the
managers perspective and the constraints within which managers have to operate
(One limitation is that they may be describing partcular circumstances of mized
general relevance, Sometime, to, thelr views may relet individual eccentricity as
vc a ners ath

Good academic work contributes rigour and scholarship tothe subject, These are
fer universal truths about business but oud analysis tan lafy che balance of
probability by objective observation. Every strategist should have some ot this oo!
‘jeetiity to temper his or her enthusiasm, Aether valiable coatnibution from the
nealenic worl is diversky of thinking about stategy. Academics have come to
‘rategy fom a wie vansty of previous ditipines. Each disipliae Diags is own
perspective to the subject. Originality is more hkely to emerge fram this diversity of
‘though than from any single view ofthe way the word works. One Iisitaton of the
‘academic consti is thar Ar sometimes seems a tle weak in its appreciation of
how managers workin practice to achieve results in real enterprises.

Management constants have also made a notable canrnution to thinking in
stratepe mauagenent, fe may even be teat more genuinely new ideas have cme
from consultants than fom academics. Managemen consultants are po
problems, Nothing focuses Ube mn as much a the need to come up with solution
toa problem ina limiged tie. Management consultants have o make ideas work i
real enterprises and among eal people. Gaod strategic manayement does not usally
depend om the mos counplex or spiisiated dens bur ether fom working with
ideas that are eelevant, understandable, and workabie. Management consltans ws
ally understand how todo this,

‘We hope thar chis book wil help readers to understand strategic management and
te apply tistical management dieipie

to save
Preface

searecic management mus form 3 core element of any business couse as it pro-

vides the give that hols the other busines subjects together The body of liters
ture om strategic management has rows rapidly and his increase umes at many
texthooks on the subject have became very lange. There has not, however, been a
‘corresponding increase inthe time avaiable for teaching strategic management 50
that fo stents read the thick textbooks. This sguest the eed for 4 textbook
‘shorter than she fl eats but maze comprehensive than the “tasls' or Hssentas!
‘books on the subject:

‘Secondly, most students are hoping wo derive sone usable Knowledge from the
time that they spend on strategie management as well2s the academic knowledge to
pass their examinations This requimes an approach to strategic management that
fakes peactce ino account aswell atthe academic Mterarune and gives fll weight to
‘the problems of implementing strategy

‘hiram in writing this book ha been to provide text which has enough academic
content to meet the requirements of degree courses but which is also practical
“enough tobe useful to business practitioners. Iti in shor, the book we would ike to
hve to supper the teaching we do and have done. We hope to provide a mimamary of
those elements af strategie management that wil be wef fo studenss who waBt to
pur what they have learnt into practice

‘The study of strategy in action endeavours ta understand and explain why some
eralerpites ive been aire sucessful than othe in the past. Tai suse know
Jeg to te furure strategist but its not enough. Winners in today’s or tomorrow's
‘world wil need 1 break outside the box of existing thinking An eerie strategist
‘must beable to understand the current rules of the game bat must azo be able ro
lnvent ew rules for the Favare-In addition, strategic managemeat Is not just about
Seas tals requites the ability to implement those ideas in practice. We hope that
‘his 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 guicly 1 wil be easier for those who have had afew years of
‘work experience to understand and interpret its contents Ie should, therefore, be
partculsriy suitable for both core MBA cir an! for shorter professional ma
agement course in rates management. I wil also be of help asa stratepy’ primer
for those studying for other profesional examinations such as pesoanel manage-
ment, accountancy, company secretarial practice, o aw.

We tinge that dhe style accessible sa thatthe book willalgo be of value to general
managers alread in leadership positions in enterprises who wish o gain an overview
ofthe subject of strategie management fer thei own reading.
tes ikey that both leecurers and yeaers will want to supplement the Book with
reading in areas where greater depth of discussion is relevant to ther specific needs
Many suitable books and artces ae referenced i Use text an inthe bib ography.

Structure of the book

‘The books vided to six parts. Part defines the meaang of strategy and descbes
the structure and content of the book asa wrole. az Il examines che importance of
context in decermining the agenda for seategke management and describes some
Alacnctve clases of context. art Ill describes the process by which strategies are
formulated, Fatt IV looks at the coalent of strategy and suggests the questions to
which business ad eotporate trategesshonld provide the answers Part V examines
how the practical problems of implementing strategy can best be approached art VI
‘consists of ease examples referenced in the text as examples of the principles
described, Chapter deseribes the overal structure in more detail,

Learning aids

‘The book sims to help readers to understand how the principles of stategie man
agement apply in the eal world Toasistin this im we have incorporated a number
‘feat ai:

1 Cleardvision Sno parts ove focus to particular aspect of the subject as nended
{ Diggrame to ilstrate the overall logic of the subject:

1 Summaries ofeach pat inthe Rist caper of at pat

1 Summaries at the end ofeach chapter

1 Case examples to demonstrate the principles deserbed in the tex in practice!

1 brie commentary and questions fr discussion on eich case example

1A glossary for easy reference othe definitions of special terms,

Acknowledgements

‘We shoul lke to thank the varios people who have helped to bring this book to
completion, st ofall we show Hie to tum Roger Lovell and Gary Saunders for
Contributing case examples, cach of which is from an enterprise with which they
have been associated over several years. Secondly, we mst ackowledge the bly
comments ofthe wo 3nenymas reviewers. who eviews ait uas writen: we Hope
that they wil eoanize the effects of theix comments in the fin rest Thirdly. we
should like wo thank Brendan George, Ruch Marshall, Masa Vernon ad Vigna
\Waltams of Oxford University Press wo have helped the writing a the book frm
Inception to publication. Fourthly. and perhaps most importantly. we should Uke >
thank Sheina and judith forthe support daring the weting of tes book.
es See
Chapter 1

The Structure of this
Book

ns bok vided nos pars. Readers who wana quick overview fhe scope
‘Testeosect asa wie snl rd tne fee chapter of rsa Yt
haps 46,9. and

Pers coer win the tsi ig manage. Chapin + drs
the scture of the book with ore explanation tan a he Table of Contents
(Sopra odes hc tate of rtgy tl iw ar sont tg re rg
ed rm way. aden, an praca orig, Chapter 3 eng ese
thecarentaceted body fleur oa stele mnagonent

Pans Vn V ates each oft our desments of eeegi mangemen—
Seton jrcmn gse a stu ny hse fe ccoess ta onc
[Eason Ar esege stsagzmene Tl gry we tro i rc

Tart I is deo (0 exaniag the fst lens—Content—which forms
tsctpoind tothe mode i gue 1. Sate sod sae mnageient
nerout Carcestir—both te enters elf and of exe enon
then Th comer eerie he hes which rate managements aie
tnt hence the nds a ope of reste manspeen or tat exert The
froma dag underaning ofthe cnet. Caper cone wth ae
fecal Copter dscuse some of he dene cons hat exit nan attempt
este ede tn inact eiferent tty and patna actor ay

Tut il lds heed cent of seg cami

the Strategy

Formulation Process. Tis isthe process by which strategies are thought about,
conceived, compared, and choien vain 4 particular enterprise over time. eis the
process of strategie thinking i thit enterprise, There so uniersaly cornet pO
‘es that wil generate mcf strategies nor ave sere any proven means by which
Inanibie strategic thinking canbe caused to occu. Some procesies may be Formal
And involve 2 large numberof people: ather processes may be completely formal
and involve only. hand ik siden fash of insight may sometimes be wocth more
than years of analysis. The purpose of the strategy formulation proces ito arrive at
an agreed vew of how the enterprise wil sacceed in the future

‘The strategy formulation process has thee lgcl elements, aluetrated in igure
1-vand descobed further in Chapter 6

Strategic Intent Is the highest level parpose of the enterprise, es therelbre a
driver ofthe strategy process since all weaning action must exiginat in purpose

Flgures.2 The strategy formulation

strategie

Strategic
Strategie intent may also change or develop as a result of the strategy formulation
proces, Strategic intent is desribed3t more length in Chapter 7

Strategic Assessment isa overall astesstent of te context aa pater time
and the effects of possible future actions. Strategic aseesamentinvaives standing
‘back fom the every activities of the hasiness, Ie equi considerations he
terms of the apatites of the enterprise and the characteristics of the business
‘envizonment in which the enterprise operates. Sategic assessment considers how
likely the enterprise is to realize its strategic intent as the business environment
‘changes, Strategic atsesmient takes into acount current performance, expected
fue trends, the aims ofthe enterprise, and the sucess of pst strates. Strategie
assessment invelves bot: analysis and judgesnent. The prineples of suateyc sey
rent are described in Chapter 8 Some of the fools and techniques thar way be
‘ref in practical strategic assessment are desribed in more length in Chapters 9

Strategic Choice involves deciding what action to take and how to ake i for the
ature heath and dsection of the enterprise. requires faith that actions taken now
will improve future outcomes. Tae degree of uncertainty in strategic choice seen
‘ey igh, Bur if There arene eheies to be made, there fo vale He strategy
formulation process Strategic Choices show addres strategic Isses o resolve the
strategic lemma posed by the conte in a way that fis with the srteyic intent
sSutepiechoice is deseribed in more detail in Chapter,

Formulating strategy usualy invoWes analysis and the manipulation of data and
Seas. Chapter 12 describes how acl tools fsually prods nung on pet
sonal computers can suppor the strategy formlaion process in practic.

‘The steategy formulation procest delivers the Content of Strategy. This isthe
third element of stale mansgement and is addressed in ar (V.Chapterx9 exam
ins the content of strategy in general and discusses what results can reasonably be
expected trom a strategy process. Chapter 1s focuses on Business Strategies and on
‘what i likely to make the busines strategy ofan enlerpese more effective, Chapter
45 is devoted tothe subject of Corporate Strategy—te additional component of
steaegy rete ian enterprise hs more that one basins

Strategic management is Incomplete and of litle value without efeetive imple
mentation. The fial element ofststegic management isthe Strategy Implemien-
tation Process described in Fart V, Implementation is too often seen as separate
fhom strategie management. Ou view is that implementation isan integral part of
strategic management so that the process and content of strategy should take the
reeds and capabilities fo impernentaion inta account. Manystateple change in
tities fal to achieve their stated objectives. Often tis flue is due as much to
underestimation of the difcuities of implementing the changes as to. poor
execution

Figure 13 shows the parts of the strategy implementation proces

Chapter 16 summaries the Key Vhemes of the strategy fmplementation proces
(Ghapters 17 and 18 distinguish berwcen the leadership of strategic change and the
‘management of a change programme Leadership and management are both
‘essential for suecessful implementation and form the vertical dimension of Figure
doe edeshp

anagerent
ier! ra ‘rastormed
Stractarehange (seer
Process Change

1a. To implement a new strategy iti key that chauge will be needed in the
Dsiness processes, the culture, and the structure of the enterprise. Practical
for cusing ehange in each of these thees are eserbed in Chapters 19

Chapter a addresses the question of Adaptebility—an organizational com
petence which ads tn the chances of Tatar sucess n an unpreditable world

The four elements of strategic management relate closely to eae ther, The com
text sets the scene, poses the iss to be esnived, and con atthe
steatogic manageient proces. The quality ofthe strategy formulation process and its
Suixabity to the context wil wend to determine the quality ofthe strategy content
‘hat resis The strategy content hile Valve ness it has taken implementation
issues into account and leads to an effective process of implementation that tums
ideas into twats, The results ofthe rategicsmplementation (and athe voreated
changes! vil in due couse affect the contest wo that the elements of stritegc man

sent interact na eycle-Figure 1.4 combines the content of Higwes 44 (01. 3i5t0a
Single diagram

Figures «1 (01.4 ovina to this bok. They ae derived from classical models of

snagement. Te main extensions to other models are that context spe

cifically represented aia implementation i given mire emphasis,

ar V ends wit a brief Epilogue to cance the book

Part Vi contains six ase examples. case example differs rom a ese study in that
seis stricture tobe use na example of principles described inthe text. Specie
references to these case examples occu thoughout the book. I is hopes hat the
‘ave examples give a fuller understanding of the coatext than is possible in beet
igneeteexzmplos on their own Reade hay find it use to read te ate examples
‘hrough in pale with che main texto ge a wider foe fo each ofthe six contexts,

We hope that we have avoided unnecessary jrgon, Terms that are cefined in the
text areal listed in the Glossary for ean reference

The sfractur of the Book was designed to focus on key elements of strategic man
agement. Esch element stands on sown ad wil olfer a grounding in te themes