COB 487 Chapter 1

King Arthur and his Knights of the Round Table

- Arthur allegedly considered himself and each of his knights to have an equal say in plotting the group's strategy - demonstrated importance of a central mission to guide organizational strategy and actions

Ethics

- Attention to the need for executives to act ethically when creating strategies increased dramatically in the early 2000s when a series of companies such as Enron Corporation, WorldCom, Tyco, Qwest, and Global Crossing were found to have grossly exaggerated the strength of their performance. - Like ethics, the implications of international competition are of central interest to strategic management.

Lessons offered by Military Strategy

- Machiavelli's "The Prince" offers clever recipes for success to government leaders -- quite devious - American Revolution - demonstrated potential value of strategic alliances (help from French navy) - Civil War -- the Union possessed greater resources, such as factories and railroad lines although Confederacy had better generals --> therefore, sometimes good strategies simply cannot overcome a stronger adversary

Strategy in Ancient Times

- Moses led fellow Hebrews out of enslavement in Egypt by delegating authority to other leaders who oversaw a group of people - Similarly, the demands of strategic management today are simply too much for a chief executive officer (the top leader of a company) to handle alone. Many important tasks are thus entrusted to vice presidents and other executives.

SWOT Analysis

- Strengths and weaknesses are assessed by examining the firm's resources, while opportunities and threats refer to external events and trends. - The value of SWOT analysis parallels ideas from classic military strategists such as Sun Tzu, who noted the value of knowing yourself as well as your opponent

Plan: Business Model

- a business model should be a central element of a firm's strategic plan - it describes the process through which a firm hopes to earn profits - important aspect: providing customers with a good or service more cheaply than they can create it themselves.

Ancient China: Sun Tzu

- believed winning a battle without fighting is the best way to win

3) Strategy Formulation

- involves developing specific strategies and actions

1) Understanding Strategy and Performance

- strategic management is both an art and a science, and it involves multiple conceptualizations of the notion of strategy drawn from recent and ancient history - leading strategically is needed if the firm is to achieve the longterm strong performance companies

The Strategic Management Process

1) Understanding Strategy and Performance 2) Environmental and Internal Scanning 3) Strategy Formulation 4) Strategy Implementation

An important lesson of history

Do not make assumptions about what your adversary can and cannot do. - Executives who make similar assumptions about their competitors put their organizations' performance in jeopardy.

Most famous example of strategy in ancient times: Trojan horse

Greek soldiers offered the horse to the Trojans as a gift - soldiers were hidden inside, led to a Greek victory - Trojan horse refers to gestures that appear on the surface to be beneficial to the recipient but that mask a sinister intent

Defining Strategy: The Five Ps described by Henry Mintzberg

It can be viewed as a: - plan - ploy - position - pattern - perspective

2) Environmental and Internal Scanning

Managers must constantly scan the external environment for trends and events that affect the overall economy, and they must monitor changes in the particular industry in which the firm operates

4) Strategy Implementation

One important element of strategy implementation entails crafting an effective organizational structure and corporate culture.

Plan

a carefully crafted set of steps that a firm intends to follow in order to be successful - strategic plans are the essence of strategy - "Because the landscape of business changes rapidly, other ways of thinking about strategy are needed."

Position

a firm's place in the industry relative to its competitors - firms can carve out a position by performing certain activities in a different manner than their rivals - deciding what a firm is not going to do is just as important to strategy as deciding what it is going to do - sometimes firms change positions which can be a risky move

Ploy

a specific move designed to outwit or trick competitors - often involve using creativity to enhance success

Emergent strategy

an unplanned strategy that arises in response to unexpected opportunities and challenges - sometimes they result in disasters or tremendous success

What is Strategic Management?

examines how actions and events involving top executives, firms, and industries influence a firm's success or failure. - mastering strategy is therefore part art and part science

Perspective

how executives interpret the competitive landscape around them - some strategists are willing to take a seemingly sour situation and see the potential sweetness, while other executives remain fixated on the sourness - Executives who adopt unique and positive perspectives can lead firms to find and exploit opportunities that others simply miss.

When an organization's environment is stable and predictable, strategic planning can provide enough of a strategy for the organization to gain and maintain success,

however only a few executives experience that.

Strategic management

is a process that involves building a careful understanding of how the world is changing, as well as a knowledge of how those changes might affect a particular firm. - CEOs must be able to carefully manage the possible actions that their firms might take to deal with changes that occur in their environment

Frederick W. Taylor

published "The Principles of Scientific Management" - stressed how organizations could become more efficient through identifying the "one best way" of performing important tasks - Although many later works disputed the merits of trying to find the "one best way," Taylor's emphasis on maximizing organizational performance became the core concern of strategic management as the field developed.

Nonrealized strategy

refers to the abandoned parts of the intended strategy

Pattern

the degree of consistency in a firm's strategic actions

Realized Strategy

the strategy that an org. actually follows - a product of a firm's intended strategy (what the firm planned to do), the firm's deliberate strategy (the parts of the intended strategy that the firm continues to pursue over time), and its emergent strategy (what the firm did in reaction to unexpected opportunities and challenges).

Intended strategy

the strategy that an organization hopes to execute - usually described in detail within an org.'s strategic plan

Business plan:

when a strategic plan is created for a new venture