18 March 2024

♟️Strategic Management: Strategy (Notes)

Disclaimer: This is work in progress intended to consolidate information from various sources. 
Last updated: 18-Mar-2024

Strategy

  • {definition} "the determination of the long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals" [4]
  • {goal} bring all tools and insights together to create an integrative narrative about what the  organization should do moving forward [1]
  • a good strategy emerges out of the values, opportunities and capabilities of the organization [1]
    • {characteristic} robust
    • {characteristic} flexible
    • {characteristic} needs to embrace the uncertainty and complexity of the world
    • {characteristic} fact-based and informed by research and analytics
    • {characteristic} testable
  • {concept} strategy analysis 
    • {definition} the assessment of an organization's current competitive position and the identification of future valuable competitive positions and how the firm plans to achieve them [1]
      • done from a general perspective
        • in terms of different functional elements within the organization [1]
        • in terms of being integrated across different concepts and tools and frameworks [1]
      • a good strategic analysis integrates various tools and frameworks that are in our strategist toolkit [1]
    • approachable in terms of 
      • dynamics
      • complexity
      • competition
    • {step} identify the mission and values of the organization
      • critical for understanding what the firm values and how it may influence where opportunities they look for and what actions they might be willing to take
    • {step} analyze the competitive environment
      • looking at what opportunities the environment provides, how are competitors likely to react
    • {step} analyze competitive positions
      • think about  own capabilities are and how they might relate to the opportunities that are available
    • {step} analyze and recommend strategic actions 
      • actions for future improvement
        • {question} how do we create more value?
        • {question} how can we improve our current competitive position?
        • {question} how can we in essence, create more value in our competitive environment
      • alternatives
        • scaling the business
        • entering new markets
        • innovating
        • acquiring a competitor/another player within a market segment of interest
      • recommendations
        • {question} what do we recommend doing going forward?
        • {question} what are the underlying assumptions of these recommendations?
        • {question} do they meet our tests that we might have for providing value?
        • move from analysis to action
          • actions come from asking a series of questions about what opportunities, what actions can we take moving forward
    • {step} strategy formulation
    • {step} strategy implementation
  • {tool} competitor analysis
    • {question} what market is the firm in, and who are the players in these markets? 
  • {tool} environmental analysis
    • {benefit} provides a picture on the broader competitive environment
    • {question} what are the major trends impacting this industry?
    • {question} are there changes in the sociopolitical environment that are going to have important implications for this industry?
    • {question} is this an attractive market or the barrier to competition?
  • {tool} five forces analysis
    • {benefit} provides an overview of the market structure/industry structure
    • {benefit} helps understand the nature of the competitive game that we are playing as we then devise future strategies [1]
      • provides a dynamic perspective in our understanding of a competitive market
    • {question} how's the competitive structure in a market likely to evolve?
  • {tool} competitive lifestyle analysis
  • {tool} SWOT (strengths, weaknesses, opportunities, threats) analysis
  • {tool} stakeholder analysis
    • {benefit} valuable in trying to understand those mission and values and then the others expectations of a firm
  • {tool} capabilities analysis
    • {question} what are the firm's unique resources and capabilities?
    • {question} how sustainable as any advantage that these assets provide?
  • {tool} portfolio planning matrix
    • {benefit} helps us now understand how they might leverage these assets across markets, so as to improve their position in any given market here
    • {question} how should we position ourselves in the market relative to our rivals?
  • {tool} capability analysis
    • {benefit} understand what the firm does well and see what opportunities they might ultimately want to attack and go after in terms of these valuable competitive positions
      • via Strategy Maps and Portfolio Planning matrices
  • {tool} hypothesis testing
    • {question} how competitors are likely to react to these actions?
    • {question} does it make sense in the future worlds we envision?
    • [game theory] pay off matrices can be useful to understand what actions taken by various competitors within an industry
  • {tool} scenario planning
    • {benefit} helps us envision future scenarios and then work back to understand what are the actions we might need to take in those various scenarios if they play out.
    • {question} does it provide strategic flexibility?
  • {tool} real options analysis 
    • highlights the desire to have strategic flexibility or at least the value of strategic flexibility provides
  • {tool} acquisition analysis
    • {benefit} helps understand the value of certain action versus others
    • {benefit} useful as an understanding of opportunity costs for other strategic investments one might make
    • focused on mergers and acquisitions
  • {tool} If-Then thinking
    • sequential in nature
      • different from causal logic
        • commonly used in network diagrams, flow charts, Gannt charts, and computer programming
  • {tool} Balanced Scorecard
    • {definition} a framework to look at the strategy used for value creation from four different perspectives [5]
      • {perspective} financial 
        • {scope} the strategy for growth, profitability, and risk viewed from the perspective of the shareholder [5]
        • {question} what are the financial objectives for growth and productivity? [5]
        • {question} what are the major sources of growth? [5]
        • {question} If we succeed, how will we look to our shareholders? [5]
      • {perspective} customer
        • {scope} the strategy for creating value and differentiation from the perspective of the customer [5]
        • {question} who are the target customers that will generate revenue growth and a more profitable mix of products and services? [5]
        • {question} what are their objectives, and how do we measure success with them? [5]
      • {perspective} internal business processes
        • {scope} the strategic priorities for various business processes, which create customer and shareholder satisfaction [5] 
      • {perspective} learning and growth 
        • {scope} defines the skills, technologies, and corporate culture needed to support the strategy. 
          • enable a company to align its human resources and IT with its strategy
      • {benefit} enables the strategic hypotheses to be described as a set of cause-and-effect relationships that are explicit and testable [5]
        • require identifying the activities that are the drivers (or lead indicators) of the desired outcomes (lag indicators)  [5]
        • everyone in the organization must clearly understand the underlying hypotheses, to align resources with the hypotheses, to test the hypotheses continually, and to adapt as required in real time [5]
    • {tool} strategy map
      • {definition} a visual representation of a company’s critical objectives and the crucial relationships that drive organizational performance [2]
        • shows the cause-and effect links by which specific improvements create desired outcomes [2]
      • {benefit} shows how an organization will convert its initiatives and resources–including intangible assets such as corporate culture and employee knowledge into tangible outcomes [2]
    • {component} mission
      • {question} why we exist?
    • {component} core values
      • {question} what we believe in?
      • ⇐ mission and the core values  remain fairly stable over time [5]
    • {component} vision
      • {question} what we want to be?
      • paints a picture of the future that clarifies the direction of the organization [5]
        • helps-individuals to understand why and how they should support the organization [5]
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    References:
    [1] University of Virginia (2022) Strategic Planning and Execution (MOOC, Coursera)
    [2] Robert S Kaplan & David P Norton (2000) Having Trouble with Your Strategy? Then Map It (link)
    [3] Harold Kerzner (2001) Strategic planning for project management using a project management maturity model
    [4] Alfred D Chandler Jr. (1962) "Strategy and Structure"
    [5] Robert S Kaplan & David P Norton (2000) The Strategy-focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment

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