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CORPORATE STRATEGY IN PROJECT BASED INDUSTRIES. Reading. Understanding Organisations, Charles Handy Construction Management in Practice, Langford, Fellows, Newcombe & Urry Construction Management, Newcombe, Langford & Fellows Michael Porter. Some definitions:.

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reading
Reading
  • Understanding Organisations, Charles Handy
  • Construction Management in Practice, Langford, Fellows, Newcombe & Urry
  • Construction Management, Newcombe, Langford & Fellows
  • Michael Porter
some definitions
Somedefinitions:
  • "Corporate Strategy is the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals."
      • A D Chandler: "Strategy and Structure" 1962
some definitions4
Somedefinitions:

Corporate strategy is

"the basic characteristics of the match an organisation achieves with its environment.”

  • Hofer and Schendel: "Strategy Formulation: Analytical Concepts" 1978
some definitions5
Somedefinitions:
  • "Corporate Strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organisation it is, or intends to be, and the nature of the economic and non-economic contribution it intends to make to its shareholders, employees, customers and communities."
      • K R Andrews: "The Concept of Corporate Strategy" 1980
some definitions6
Somedefinitions:

Strategic decisions are primarily concerned with external, rather than internal, problems of the firm and specifically with selection of the product-mix which the firm will produce and the markets to which it will sell. To use an engineering term, the strategic problem is concerned with establishing an 'impedance match' between the firm and its environment ………….

it is the problem of deciding what business the firm is in and what kinds of business it will seek to enter

H Igor Ansoff. "Corporate Strategy" 1965

some definitions7
Somedefinitions:

What business strategy is all about - what distinguishes it from all other kinds of business planning is, in a word, competitive advantage. Without competitors there would be no need for strategy, for the sole purpose of strategic planning is to enable the company to gain, as efficiently as possible, a sustainable edge over its competitors. Corporate strategy thus implies an attempt to alter a company's strength relative to that of its competitors in the most efficient way......

K. Ohmae: "The Mind of the Strategist" 1982

slide8

Types of strategy

After Grinyer, 1972

slide9

Types of strategy

In what circumstances is a shrinkage strategy appropriate?

slide11

Strategic growth

Chandler,1962

slide17

Porter’s Generic Strategies

Companies must seek sustainable competitive advantage through either:

  • Lower cost – being the low-cost producer in the industry
  • Differentiation – being unique in its industry
slide18

Porter’s Generic Strategies

A company may target its competition:

  • Broadly – the entire industry
  • Narrowly – selecting a niche market and seeking sustainable competitive advantage in that segment
slide20

Porter’s Generic Strategies

  • The combinations of these tyes of advantages and targets create four different approaches
  • Firms that attempt to do all four, but specialize in none, are “stuck in the middle”

(Such firms lose competitive advantage, and are usually heading toward poor performance)

slide21

Risks of these strategies

Sustainability:

  • Selecting one strategy means less ability to compete on others
  • Knowing a competitor’s strategy suggest was to compete with that competitor
  • Barriers to imitation of a strategy are never perfect

Hence, continuous innovation and change to upgrade competitive position is desired

slide22

Risks of cost leadership

  • Competitors imitate
  • Technology changes
  • Other bases for cost leadership erode e.g. supply and demand
  • Cost focusers achieve even lower cost in segments
slide23

Risks of differentiation

  • Competitors imitate
  • Bases of differentiation become less important to buyers
  • Differentiation focusers achieve even greater differentiation in segments
slide24

Risks of focus

  • Focus strategy imitated
  • Target market becomes unattractive
  • Broadly-target competitors overwhelm the segment – differences from other segment low
slide25

Porter’s Value Chain Model

Primary activities

  • In bound logistics (inputs)
  • Operations (manufacturing & testing)
  • Outbound logistics (storage & distribution)
  • Marketing & sales
  • Service

}

Supply

Chain

slide26

Porter’s Value Chain Model

Support activities

  • Firm Infrastructure
  • Human Resource Management
  • Technology Development
  • Procurement
slide28

The Value Chain Model

It is used to:

  • Evaluate a company’s process and competencies
  • Investigate whether adding extra activities enhance and support the value chain

Analyzing strengths/weaknesses, opportunities/threats

slide29

Sustaining competitive and strategic advantage

Approaches:

  • Create inward systems that are not visible to competitors
  • Provide comprehensive, innovative systems that are difficult to imitate
  • Introduce structural changes and improvements e.g. BPR and organizational transformation

Improved internal efficiency, decision making processes, productivity

slide31

Elements of strategic management

  • Long range planning
  • Response management
  • Innovation
slide32

Strategic response strategies

  • Growth – increase market share, expanding customer base
  • Improve internal efficiency
  • Alliances – working with business partners to create synergy and provide growth opportunies
  • Innovation – Developing new products/services
strategic management
Strategic management
  • "Strategic management is a systematic approach to a major and increasingly important responsibility of general management: to position and relate the firm to its environment in a way which will ensure its continued success and make it secure from surprises."
competitive advantage
Competitive advantage

How do we develop it?

Give me an example from your industry or company

forces driving strategies
Forces Driving Strategies

Past 5 years:

  • quality
  • productivity
  • safety & reliability
  • worker relations
  • information systems
  • mergers & acquisitions
  • political pressures
  • closeness to clients
forces driving strategies36
Forces Driving Strategies

The next ten years

  • speed in production innovation and delivery
  • environmental consciousness & sustainability
  • people development & organisational learning
  • automation and information management
  • global scenarios & flexibility
  • closeness to customers and users markets
  • partnering, joint ventures and alliances
  • financial engineering
competitive analysis
Competitive analysis

Undertake an analysis of the forces affecting your company

slide41

SWOT analysis

Undertake a SWOT analysis of your company

approaches to strategic planning
Approaches to strategic planning
  • Reactor Approach
  • Planner Approach
self assessment
Self assessment
  • Think about your organisation. Can you identify three strategic choices that have been made in the last three years?
  • What do you think are the advantages and disadvantages of having an external consultant to fill the strategic management role?
self assessment45
Self assessment
  • 'Organizations do not have objectives, only people have objectives.' Discuss this statement in the context of setting strategic objectives fora construction firm.
  • Why is profit maximization seldom a practical objective for construction firms despite the dominance of owner-managers in the industry?
self assessment46
Self assessment
  • Describe the steps involved in conducting an internal appraisal of a construction or real estate business to determine its strengths and weaknesses.
  • Discuss the relative importance of factors which may present opportunities or pose threats to a construction or real estate firm.
self assessment47
Self assessment
  • 'Synergy is greater in expansion than in diversification.' Discuss.
  • In formulating business strategy, is the sequence of activities important? Why or why not?
  • Distinguish between strategies and strategic modes and outline the strategic choices open to a construction firm.
key elements of long range planning
Key Elements Of Long Range Planning
  • Where do we want to go?
  • Where are we now?
  • What do we have to do to get there?
  • How are we progressing?
trends
Trends
  • Market segmentation
  • Social projects to remain (largely) in government control
  • Environmental (sustainability) issues will shape the workload
  • No escape from workload fluctuations