(H&J: Chapter 1)
Actions in business are frequently directed at the achievement of superior performance, therefore a strategy can be defined as “an action a company takes to attain superior performance” (Hill and Jones, 2107). It is important to understand that this definition is one of many. Contrary to some views that there is one single definition of strategy, we argue that there is no such universally accepted definition and that the term differs in both practice and theory. Our intention in this unit is not to promote one definition of strategy, but to acquaint you with various uses of the concept. Henry Mintzberg (1987), consistent with the idea that there is no universally accepted meaning of strategy, has identified five definitions of the term, which he labelled the 5 P’s of strategy. These are: strategy as plan, ploy, pattern, position, and perspective.
One view of the strategy process equates it to a rational planning process driven by top management. Associated with this view is the assumption that the strategy process is a top down approach where top management formulates the strategy. This view also assumes that the steps are sequential and that formulation and implementation of strategy is separate argue that these assumptions reflect the military roots of strategy with generals sitting over a map deciding the grand strategy. As will be discussed later in this study guide, the strategy processes is not always so systematic and predictable, and in fact can emerge unplanned. However, an understanding of this rational approach to planning is useful at this stage and will be discussed next.
The term “strategy” is used in almost all facets of life - sport, war, politics, interpersonal relations, and business. Because of this, the term strategy carries different meanings. This study guide presents different views regarding the use of strategy in both theory and practice. In this study guide we essentially focus on some preliminary concepts as meanings of the concept of strategy, strategy process, strategic leadership, corporate governance and different levels of strategic managers.
Steps in the Strategy Process
The strategy process depicted in Hill et al. consists of the following six broad steps: 1. Determining corporate mission
2. External analysis
3. Internal analysis
4. Developing strategy alternatives
5. Strategy implementation
6. Evaluating strategy performance.
Determining corporate mission involves deciding what the company wants to achieve in the short, medium and long-term. External analysis involves analysing the company’s industry, national and macro environments and identifying threats and opportunities. Frameworks such as the industry life cycle and Porters five forces model and model of national competitive advantage help managers in this analysis. Internal analysis involves the identification of strengths and weaknesses of the company. This includes an examination of a company’s core competencies, value chain, and its ability to gain and sustain a competitive advantage. Strategic choice involves selection of a strategy after careful assessment of internal and external factors. As will be seen in later study guides, strategies are adopted at functional, business, corporate, non-market and global levels. These first four steps of the strategy process can be viewed as strategy formulation.
Strategy implementation involves all the activities for putting the chosen strategy into action including the design of effective structure and control systems and implementation of change. Strategy evaluation focuses on assessing the performances of strategies pursued by corporations. As will be discussed later, only by evaluating their strategies will corporations know if they have been successful or not. Viewing the strategy process in terms of strategy formulation, strategy...