Semester 1, Block I - complete summary and studynotes

University of Amsterdam 2024/2025

Business Administration: Strategy (full time)

Master's in Business Administration Semester 1, Block I - complete summary and studynotes

Pages: 62

Reading time: 180 min.

In plain English

Literature used: contemporary strategy analysis Grant 12

th ed. 2024 1 / 4

Chapter 1: Introducing Strategy

Strategy is defined as the long-term direction of an organization. A more extensive definition is: ‘Strategy is the direction and scope of an organization over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations’.Chandler: emphasizes a logical flow from the determination of goals and objectives to the allocation of resources.Mintzberg: uses the word ‘pattern’ to allow for the fact that strategies do not always follow a deliberately chosen and logical plan, but can emerge in more ad hoc ways.The three elements of strategy definition - long term, direction and organization - can each be explored further.-The long term. The importance of the long-term perspective is emphasized by the three horizons framework, suggesting every organization to think of itself as compromising three types of business defined by their ‘horizon’ in terms of years.-Horizon 1 are current core activities -Horizon 2 are emerging activities that should provide new sources of profit -Horizon 3 are possibilities for which nothing is certain -The strategic direction. Managers and entrepreneurs try to set the direction of their strategy according to long-term objectives.-Organization. Involve complex relationships, both internally and externally since they have many internal and external stakeholders. 2 / 4

Levels of Strategy

Inside an organization, strategies can exist at three main levels:

1.Corporate-level strategy is concerned with the overall scope of an organization and how value is added to the constituent businesses of the organizational whole.

2.Business-level strategy is about how the individual businesses should compete in their particular markets.

3.Operational strategies are concerned with how the components of an organization deliver effectively the corporate- and business-level strategies in terms of resources, processes and people.The need to link these three levels underlines the importance of integration in strategy. Each level needs to be aligned.David Collis and Michael Rukstad have argued that all entrepreneurs and managers should be able to summarize their organization's strategy with a strategy statement. This should have three main themes: the fundamental goals that the organization seeks, which typically draw on the organization's stated mission, vision and objectives: the scope or domain of the organization's activities: and the particular advantages or capabilities it has to deliver all of these.

Various contributing elements of a strategy statement are:

•Mission (goals and overriding purpose - ‘what business are we in?’) •Vision (also relates to goals, refers to desired future state of the organization - ‘what do we want to achieve?’) •Objectives (‘what do we have to achieve?’) •Scope (three dimensions: geographical location, customers or clients and extent of internal activities) •Advantage (how the organization will achieve the objectives it has set itself in its chosen domain)

There are three main branches of strategy as a subject (fig 1.3):

Strategy context refers to both the internal and the external contexts of organizations Strategy content concerns the nature of different strategies and their probability of success Strategy process examines how strategies are formed and implemented.The Exploring Strategy Model (fig 1.4) includes understanding the strategic position of an organization (context); assessing strategic choices for the future (content) ; and managing strategy in action (process).Elements of strategic management 1.The Strategic position is concerned with the impact on strategy of the external environment, the organization’s strategic capability, the organization's goals and the

organization's culture.There are four factors of importance:

-Environment (opportunities and threats) -Strategic capability (resources and competences / strengths and weaknesses) -Strategic purpose (vision, mission and objectives) -Culture (influencing strategic drift) 2.The Strategic choices involve the options for strategy in terms of both the directions in which strategy might move and the methods by which strategy might be pursued. Typical

strategic choices are:

-Business strategy (how to compete at the individual business level: differentiation, cost focus etc.) 3 / 4

-Corporate strategy and diversification (which businesses to include in the portfolio?) -International strategy.-Innovation and entrepreneurship (is the organization innovating appropriately?) -Acquisitions and alliances 3.Managing strategy into action is about how strategies are formed and how they are

implemented, fundamental questions are about:

-Strategy evaluation (suitable, feasible) -Strategy development processes -Organizing -Leadership and strategic change -Strategy practice (who should do what in the strategy process?) The exploring strategy model can be applied in many contexts, however in each context the typical balance of strategic issues might differ. Issues arising from the exploring strategy model can vary in three important contexts:1. Small businesses - certainly need to attend closely to the environment 2.Multinational corporations - positioning in a complex global marketplace is important 3.Public sector and not-for-profits - positioning issues of competitive advantage will be important even in these contexts Michael Porter (1996), ‘What is Strategy?’, Harvard Business Review •in defense of criticism on positioning / cost efficiency vs product differentiation •the ‘strategy’ of companies is often no more than competing for operational effectiveness •managers fail to choose, neglecting trade-offs, focus too much on growth and measurable goals •operational effectiveness is not strategy •the essence of strategy is choosing to perform activities differently than rivals do •a sustainable strategic position requires trade-offs •strategy is the creation of a unique and viable position A comprehensive assessment of an organization's strategy needs more than one perspective. The strategy lenses are ways of looking at strategy issues differently in order to gain many insights.The four lenses are:-Strategy as design (analysis and planning, top management responsibility) -Strategy as experience (adaption, analysis and bargaining) -Strategy as variety (focus on innovation, managing conditions) -Strategy as discourse (language)

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