Introducing Strategy and Strategic Management Bent Steenholt Kragelund benk@itu.dk

1. Introducing Strategy and Strategic Management Bent Steenholt Kragelund benk@itu.dk

2. The need for a strategy Would you tell me, please, which way I ought to go from here? That depends a good deal on where you want to get to, said the Cat. I don’t much care where, said Alice. Then it doesn’t matter which way you go, said the Cat. So long as I get SOMEWHERE, Alice added as an explanation. Oh, you’re sure to do that, said the Cat, if you only walk long enough. (Alice's Adventures in Wonderland

3. Definitions of strategy Strategy is ‘a pattern in a stream of actions’ (Mintzberg and Waters, 1985) Strategy is the pattern or plan that integrates an organisation’s major goals, policies and action sequences into a cohesive whole (Quinn, J., 1980) Strategy is the overall plan for deploying resources to establish a favourable position. (Grant, 1995) Strategy, in effect, is management’s game plan for strengthening the organisation’s position, pleasing customers and achieving performance objectives. (Thompson and Strickland, 1996) Strategies are means to ends, (Thompson and Martin, 2010)

4. Five Views of Strategy

5. The Business Model • Positioning the company • A narrow product (or service) range for a broad range of customers • A broad product range for a defined segment • A narrow range for a targeted niche • A broad range for a wide market • Key questions to address • What is different about our value proposition? • Who are our customers? • What do customers value today? • What will customers value tomorrow?

6. Three Perspectives of Strategic Analysis

7. Understanding of a company’s current strategyMOST analysis Mission (Vision) Objectives Strategy Tactics

8. Mission statements • Why mission statements ? • Motivate and inspire the organisations employees • Provide a set of criteria for choosing between alternative strategic options • Provide a yardstick for measuring the organisation’s performance and re-evaluating strategy • Project a vision to the outside world of where exactly the organisation is going

9. 5 key characteristics of a mission statement • It will contain a formulation of objectives that enables progress towards them to be measured • It differentiates the company from its competitors • It defines the business(es) that the company wants to be in, not necessarily is in • It is relevant to all stakeholders in the firm, not just shareholders and managers • It is exciting and expiring Russell Ackoff (1987)

10. Mission Statements

11. Mission Statements

12. Mission Statements

13. Objectives • Helps translate overall goals into more narrowly defined and accessible ends • Clear, focussed and specific • Measurable • Feasible and acceptable to the stakeholders • Consistent with the strategy • Economic as well as non-economic objectives

14. Exercise • Why do organisations need to spend time defining missions and objectives ? • Analyse 3-4 of the mission statements against Russel Ackoff’s criteria. Use either the ones supplied or chose by looking at company web-sites. How could the mission statements be improved ?

15. Groups • Group 1 • Frederik Emil Busk Fenger • David Bo Bjerring • Edward Hansen • Giuliano Eugenio Hasberg Carette • Jeppe Boesen Agerbo • Group 2 • Andres Alejandro Nadal Llabres • Eunice Teshela Munthali • Johann Tau Gundersen • Jacob Larsen • Nikolaj Thiesen Nielsen • Group 3 • Simon Gough • Danil Rumenov Grancharov • Laura Marie Holdrup • Maria Pétursdottir • Harprit Singh • Group 4 • Olivier Bélanger • Despoina Stavrianou • Philip Nørregaard Hargett • Laila Mohamed Abdel S Abrahim • John Mark Burnett • Group 5 • Stephan Kallienke Hartmann Larsen • Villads Riber Mink • Alexander Adam Ryle • Kristian Almlund Virkelyst • Noah Ikpegbu • Group 6 • Sabina Østerby • Joachim August Keittelmann • Sigurd Tao Lyngse • Søren Louv-Jansen • Per Kiil • Group 7 • Martin Dam • Anne Dorthe Bolther Andersen • Barbara Carboni • Eman Hassen Mohamed Haioty • Kasper Hansen • Group 8 • Jens Bak Frølund • Tayaba Parveen • Lasse Boisen Andersen • Jakob Skovmand Fonsbøl

16. Strategic Management Expectations, objectives and power The environment Resources Strategic analysis Generation of options Resource planning Strategic choice Strategic Implemen- tation Evaluation of options Organisation structure Selection of strategy People and systems Johnson & Scholes (1993)

17. Strategic Management

18. Strategic Management: Awareness and Change

19. Strategic Change

20. SWOT Analysis • Useful to summarize the external and internal analysis of the company • Strengths and weaknesses relates to the internal aspects of the firm and can be influenced by the organisation • Opportunities and threats are factors in the external environment that has an effect on the firm and which the firm can’t influence • Remember: • Be specific – avoid generalisations • List items in order of importance • Limit items to most important 6-7

21. Case: Nokia SWOT Analysis

22. Case: Nokia • Founded in 1865 – Headquarter in Finland • Initial business was paper mill, divested into electricity, galoshes, tires, cables, television, PC’s, consumer electronics etc. • Divested most of the businesses in 1990s to focus on telecommunication • Operates globally – largest market is China (2010) • Worlds largest manufacturer of mobile phones with a (declining) market share of 30% in Q1’11 • Substantial part of Finland's export and economy • New CEO Stephen Elop joined Nokia on September 21, 2010 from Microsoft • Partnership with Microsoft announced on February 11, 2011 • Four business Units • Smart Devices • Mobile phones • NAVTEQ • Nokia Siemens Networks • http://www.nokia.com/about-nokia/company

23. Case: Nokia – Key figures

24. Comparison of Apple, Nokia and Nasdaq index Source: Nasdaq.com – accessed 30.08.2011 @ 18.20

25. Task • Assess Nokia’s • Strengths • Weaknesses • Opportunities • Threats Internal External

26. Backup

27. Successful companies • Identify the key success factors inherent in the economics of each business. • Segment their markets so as to gain decisive competitive advantage • Measure and analyse any competitive advantage • Anticipate their competitors response • Stay ahead by looking for new competitive opportunities • Invest in businesses that promise a competitive advantage

28. The Entrepreneurial Strategic Leader Typically such managers will exhibit the following skills and attributes: • A tolerance of calculated risks • A combination of leadership, general management and financial skills • Planning, time and project management skills • Receptiveness to innovation • A commitment to continuous learning • A willingness to delegate • Motivated by factors other than financial gain • Self-confident, resilient and persevering • Good communication skills.

29. Positioning the Model • A narrow product (or service) range for a broad range of customers • A broad product range for a defined segment • A narrow range for a targeted niche • A broad range for a wide market

30. Figure 1.5 E-V-R congruence