Instructors Manual With Case Notes

Instructor’s Manual With Case Notes Exploring Strategy Text and Cases Twelfth edition Richard Whittington Patrick Regnér Duncan Angwin Gerry Johnson Kevan Scholes 1 / 4

23 © Pearson Education Limited 2020

CHAPTER 1

Introducing strategy Introduction Some changes to this introductory chapter include a new Section 1.1.1 on ‘Why exploring strategy’?There are a great number of books on strategy and this new section explains what is distinctive about Exploring Strategy; its comprehensiveness and multi-disciplinary approach, its emphasis upon the practice and practicalities of strategy, and its exploration of world class and cutting-edge research covering a broad set of key of strategic issues in a wide range of organisational and geographic contexts. There is also another new piece, Section 1.2, ‘What is strategy’ which contains a brief discussion on the origins of strategy and how we arrive at our definition of what strategy is. It is worth noting that, at this stage in the chapter, this is just the broad definition that has been used in earlier editions, but it is now unpacked and fully defined later on, on page 17. Section 1.3.1 on Strategic Position now gives greater prominence to ‘Purpose’ which is described earlier in the text (1.2.2). In the Sections 1.3.1 to 1.3.3, that summarise the main topics covered in the book, there is now much greater attention to key frameworks and models that will be discussed in each chapter. Section 1.6.1, that discusses exploring strategy in different contexts, now has a new subsection on an important type of organisation, the family business. In the summary at the end of the chapter, the fuller definition of strategy is discussed. Overall the structure of the chapter is now shown visually by a new figure, Figure 1.1.Illustration 1.1

Tesla Motors: the future is electric!

Many students will be familiar with the distinctive electric cars of Tesla. They may not be so aware that it is part of an overall energy system vision. Anyway, the main purpose of this Illustration is to introduce students to the range of issues that make up strategy. It touches directly on key topics introduced in this chapter, for example, strategic purpose (to offer the world a sustainable energy system); corporate-level strategy (moving from car manufacture to battery production for homes and businesses); and business level strategy (using disruptive technology). With respect to the specific

questions:

• On the definitions of strategy: in terms of Figure 1.1, Tesla seems to be more Chandlerian than

Mintzbergian with a clear determination of long run goals and objectives (‘…which fits our overarching purpose to move from mine-and-burn hydrocarbons towards a sustainable solar electric economy’). It might be worth discussing whether this is typical of entrepreneurial start- ups than larger corporations and the pros and cons of this (a business plan can be pretty important to early-stage investors: see Chapter 10). At the same time, Tesla has a Porterian concern for using disruptive innovation to gain advantage in the car market. The theory behind Tesla’s purpose of offering the world a sustainable energy system is not clearly articulated in the illustration. However, from Drucker’s point of view it might be that burning hydrocarbons is 2 / 4

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causing global warming and the provision of an alternative sustainable and clean energy source will remove our carbon dependency (‘we also provide zero emission electric power generation’).

• Accounting for Tesla’s success: on the Porterian principle, Tesla is clearly offering a different

product to the rest of the industry with a high performance luxury, electric car priced competitively. Its follow on car, model 3, is designed to be a higher unit volume car with lower prices – again disrupting the car market. Its customers also value Tesla cars differently to other cars, as these products are attractive due to their sporting performance, zero emissions and free power. There is also no denying the important role that Elon Musk plays as a charismatic visionary as well as the enthusiasm of Tesla’s other entrepreneurs. However, Elon Musk’s recent outspoken comments have been taken badly by critics and investors, with shares plummeting both due to his comments and admissions and a company failing to meet its stated targets. This shows that entrepreneurs have a darker side, such as a propensity to take higher risks, that may not be palatable to more conservative investors. In addition, some entrepreneurs are excellent as visionaries, presenting entirely plausible futures, sometimes described, as ‘remembering the future’, but are far less able to deliver on promises, needing others to actually manage the process and implementation of strategy. This can lead to separation of vision from what can actually be implemented. Also, characteristic of many mega projects that need a certain amount of hyperbolae to ‘get off the ground’, it is perhaps not surprising that they do not always deliver to the extent promised. In broader terms, this also illustrates the difficulties of companies such as Tesla, implementing a strategy that aligns with its stakeholder context.Illustration 1.2 Strategy Statements An important point in this Illustration is to show how strategy applies to widely different kinds of organisations – both a large technology company and a public university. Although the precise content of the two organisation’s materials vary, they both cover the major issues involved in a

strategy statement: goals, scope and advantages/capabilities.

• Strategy statements for Samsung Electronics and York University. Samsung is very clear about

its goals ($400bn. in revenue, and top five brand by 2020; note its vision. According to Samsung’s new motto it intends to give the world inspiration to create the future of electronics – sounds more like a mission statement); its scope is clearly expanding, from mostly consumer electronics into health, medicine and biotechnology; and Samsung believes its competitive advantages lie in new technologies, innovative products, creative solutions and the brightest talent in the world.York University is clear about its mission (to be a world leader in research, offer outstanding teaching and learning and offer all students an outstanding experience). Its scope is equally education, research, research training and addressing social issues. It does not say much about its distinctive capabilities although mentions important resources such as departments, colleges, clubs and societies and its link with the City of York.On the face of it, there is not much difference between Samsung and York: strategy statements – and strategy – are relevant to both private and public sectors. However, you might notice that Samsung features a financial goal (revenues), while York prioritises a quality goal (world leading research, outstanding teaching and learning). 3 / 4

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It might be worthwhile challenging the claims to competitive advantage of both Samsung and York. How unique are Samsung’s competitive advantages (vis-à-vis Apple or HTC)? Does York have very substantial competitive advantages over many other universities internationally (for instance, your own!)? Here one could refer forward to Chapter 4, and its discussion of valuable, rare, inimitable and non-substitutable resources.

• Strategy statements for students’ own organisations. This may well surface the fact that some

provide more public information than others, and are often vaguer about particular issues, especially sources of competitive advantage. You might encourage students to discuss the reasons for this. Clear statements of detailed strategy – competitive advantage, precise objectives and so on – are rather more difficult to construct than broad claims about where organisations want to go. Asking students why they think this is the case should surface issues of the complexity of strategy development, competition and accountability.Illustration 1.3 Strategists This Illustration is intended to reinforce the theme that strategy is something that students could get involved in personally – as a middle manager (Galina), as a strategy consultant (Chantal), as a strategic planner – ‘in-house strategy specialist’ (Harminder). All of these roles are further discussed in Chapter 16.The two questions ask students to think about strategy in relation to their own education and careers.The references at the end of the chapter point them to the major consulting firms’ websites and graduate employment website www.vault.com, all of which have an abundance of interesting and attractive material relating to strategy consulting in particular.The three strategists also usefully raise concepts and techniques that appear later in the book. You might like to note particularly how Galina raises issues to do with the role of strategic planning versus emergence (Chapter 13), how Chantal talks of problem solving (Chapter 16) and Harminder explains the importance of analysis (Chapters 2, 12 and 16) and stakeholder management (Chapter 5) in order to achieve strategic outcomes.Assignment 1.1 Strategy statements The purpose of this assignment is to get students to engage with strategy in real organisations. These could be their own university or – better, in order to get a range – their actual employer or a desired employer. Students should be told to expect that the extent of information is likely to be variable.Students could be asked to ponder why some organisations are more informative than others.

Published strategy information is often particularly deficient in two areas:

• Details with regard to objectives: Vision and mission statements are common. However, organisations are often reluctant to reveal much about their detailed objectives both for fear of

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