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CORPORATE STRATEGY IN PROJECT BASED INDUSTRIES

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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CORPORATE STRATEGY IN PROJECT BASED INDUSTRIES

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  1. CORPORATE STRATEGY IN PROJECT BASED INDUSTRIES

  2. Reading • Understanding Organisations, Charles Handy • Construction Management in Practice, Langford, Fellows, Newcombe & Urry • Construction Management, Newcombe, Langford & Fellows • Michael Porter

  3. 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

  4. Somedefinitions: Corporate strategy is "the basic characteristics of the match an organisation achieves with its environment.” • Hofer and Schendel: "Strategy Formulation: Analytical Concepts" 1978

  5. 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

  6. 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

  7. 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

  8. Types of strategy After Grinyer, 1972

  9. Types of strategy In what circumstances is a shrinkage strategy appropriate?

  10. Strategic management process -systems

  11. Strategic growth Chandler,1962

  12. Strategic mgt process - sequential

  13. Strategic mgt process - techniques

  14. Strategic mgt process cycle

  15. Strategic mgt process - Projects

  16. Porter’s five forces

  17. 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

  18. 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

  19. Porter’s Generic Strategies

  20. 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)

  21. 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

  22. 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

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

  24. Risks of focus • Focus strategy imitated • Target market becomes unattractive • Broadly-target competitors overwhelm the segment – differences from other segment low

  25. Porter’s Value Chain Model Primary activities • In bound logistics (inputs) • Operations (manufacturing & testing) • Outbound logistics (storage & distribution) • Marketing & sales • Service } Supply Chain

  26. Porter’s Value Chain Model Support activities • Firm Infrastructure • Human Resource Management • Technology Development • Procurement

  27. Porter’s Value Chain Model

  28. 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

  29. 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

  30. Competitive Advantage

  31. Elements of strategic management • Long range planning • Response management • Innovation

  32. 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

  33. 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."

  34. Competitive advantage How do we develop it? Give me an example from your industry or company

  35. Forces Driving Strategies Past 5 years: • quality • productivity • safety & reliability • worker relations • information systems • mergers & acquisitions • political pressures • closeness to clients

  36. 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

  37. Growth vectors

  38. Environmental analysis

  39. Competitive analysis Undertake an analysis of the forces affecting your company

  40. SWOT analysis Undertake a SWOT analysis of your company

  41. SWOT analysis

  42. Approaches to strategic planning • Reactor Approach • Planner Approach

  43. 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?

  44. 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?

  45. 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.

  46. 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.

  47. 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?

  48. Trends • Market segmentation • Social projects to remain (largely) in government control • Environmental (sustainability) issues will shape the workload • No escape from workload fluctuations

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