mgt 3830- ch 1

has a broader scope, including decisions about which industries to operate in

Corporate strategy

A strategy can be described as:

Intended, emergent, or realized

-Is the primary legal obligation only in the English-speaking countries -Is not the only legal obligation in central & southern Europe, and in Asia. Firms here are legally obliged to take account of a broad range of stakeholder interests

Maximising shareholder value

A contemporary phenomenon is known as "winner-take-all markets". This concept is exemplified by:

Microsoft (PC software) and Intel (PC core processors)

The approach taken in the textbook primarily assumes that:

Profit making firms are seeking to maximise profits for the owners over the long term

The textbook limits attention to:

Profit-making companies in market economies

-They must create value for several stakeholder groups if this is to result in sustainable long-term profit generation -Value to some stakeholders eg customers, may be difficult to quantify in money terms

Profit-making firms are about creating value

By the 1980s, thinking on strategy had shifted to:

Research on the resource and capability approach

The difference between intended and realised strategy is:

So great that arguably only 30% of intended strategy becomes realized

If a firm's strategy ensures it is consistent with both its internal and external environment, it achieves:

Strategic fit

Determine how the firm will deploy its resources to satisfy its long-term goals, given the conditions in the competitive environment

The fundamental role of strategy

-Implies coherence between resources, capabilities, structure and systems -Expresses how well a firm's strategy fits its internal and external environment

The notion of "strategic fit":

The balance between designed strategy and emergent strategy depends mostly on:

The stability and predictability of a firm's environment

-To better understand the issues facing top managers -To work out how to best create value in the future

The underlying purpose of studying strategy

A good starting-point to identify a large firm's strategy is:

To read the annual corporate report

Two basic questions concern corporate and business strategy

Where and how to compete?

The means by which organisations achieve their long-term objectives

business strategy

Company law throughout the developed, industrialised world obliges firms to primarily focus on profit for shareholders.

false

Corporate strategy is also called business strategy, or competitive strategy.

false

Strategy today is essentially a detailed plan which every member of the organization must follow to ensure success.

false

To determine a large firm's strategy, it's sufficient to read the annual corporate report.

false

Usually, business success has been proved to rely in the end on superior resources.

false

Strategic goals should be:

simple, consistent, long term

relates to top level plan

strategy

Relate to achievement of overall long-term objectives, and multiple short-term objectives, respectively

strategy and tactics

is fundamentally linked to a soundly formulated and effectively implemented strategy

success

Strategy is fundamentally about:

success in achieving long term goals

a scheme of specific everyday actions, practices and techniques

tactics

For most firms, although good luck may play a part, success is more likely to be a result of a soundly grounded and well executed strategy.

true

In summary, strategy has evolved from "strategy as a detailed plan" to become "strategy as direction" in the early 21st century.

true

In the 1970's and 1980's, strategy evolved to be viewed more in terms of competition, competitive advantage, market share and profit.

true

Much can be learned about a firm's actual strategy by looking at where it invests most money, and what products, services and technologies it is working on.

true

Paradoxically, the most consistently profitable companies are those whose primary goals are not stated in terms of profits.

true

Some observers have noticed that there's only a weak link between a firm's intended or stated strategy, and its actual or realised strategy.

true

Sound strategy and implementation largely determine the probability and extent of the success of a firm.

true

Strategic decisions are likely to significantly affect the organisation as a whole and involve major resource commitment.

true

Strategy in the 1950's and 1960's was dominated by top-down corporate planning and so-called scientific management.

true

The essential purpose of a commercial firm can be seen as creating value for customers - and then to appropriate a portion of this value for the firm.

true

The shift from Corporate Planning to Strategy-Making implies:

-From the sources of profit outside the firm to the sources of profit within the firm -To the Resource-based view of the firm

In addition to just reading published information, to identify a firm's strategy you could

-Identify where the company is making most of its investments -Identify where the company is doing most of its business -Find out what new products and services the company is putting most effort into

From the three stories describing key attributes of strategy at the beginning of the chapter, four factors stand out:

Consistent goals, understanding the environment, objective appraisal of resources, and effective implementation

-Fits more readily with the central/southern Europe and Asian legal framework of broader stakeholder obligations -Is not seen as an imperative requirement by all influential thinkers -Is becoming more important for all firms to take account of due to the threat of adverse publicity

Corporate Social Responsibility

Modern strategy applied to the business world shares with military strategy:

Decisions of significance to overall success, and major resource commitment

A sound strategy relies on four factors: simple and consistent goals; sound understanding of the competitive environment; objective appraisal of resources; and effective implementation of strategic decisions.

false

Business strategy has largely evolved from the theories put forward by academics.

false

-Business school academics developing new theories, which are taught to new graduates -Can be seen as what top managers do and what lower level employees do, respectively

reasons Modern business strategy has evolved across time

-A unifying role underpinning all consequent decisions -A means by which top management can communicate and gain commitment to a sense of direction -A means by which top management can inspire and motivate the workforce

the role of strategy today

From the military arena, tactics are about actions and techniques for winning battles, whereas strategy is about winning the war.

true

Strategy is in essence a long-term plan for an organisation to achieve its long-term objectives.

true

Strategy today has been forced to evolve to cope with an increasingly fast-paced and volatile environment, making inflexible long-term plans redundant.

true

In regard to strategy making, most firms are likely to exhibit:

-A combination of design and emergence -A process labeled as "planned emergence" -An interaction between strategic design, through formal top-level processes, and strategic enactment through decisions made by all management levels of the organization

The success of an organization in general, depends on the following:

-Being consistently focused on an achievable goal -Having a strong and in-depth knowledge of the competitive environment -Realistic appraisal of its own strengths and weaknesses -the ability to implement strategy with commitment, consistency and determination

The 1950's/60's style of Corporate Planning assumed that:

-There would be almost no difference between the intended strategy and the realised strategy -The business world is essentially a predictable environment -There was unlikely to be anything unexpected to occur of sufficient importance to disrupt the strategic plan

In practice, strategy making is:

A combination of centrally-driven rational design and decentralized adaptation

If a firm has no formal, intended strategy:

A strategy of sorts will exist; an emergent strategy

The shift in strategy from a plan to a direction leads to

An overt reliance on flexibility and responsiveness

consists of Being very realistic yet creative about what can be achieved with what you've got

Appraising a firm's resources

Strategy remains just as vital a tool to navigate the firm through "stormy seas"

As the environment becomes more turbulent, or unpredictable

is subordinate to corporate strategy

Business Strategy

-The way a firm competes in a particular industry or market] -How a firm gains a competitive advantage over its rivals within a specific industry or market

Business strategy