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Business

Business. Management in the Built Environment. Lesson Six : St r a t e gic F o r mul a tion using. V arious. St r a t e gic Options. T ools. &. sl/B M BE/2016. 1. Business Management. in the Built Environment. A review. of. the. strategy. process. V i s i o n

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Business

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  1. Business ManagementintheBuiltEnvironment Lesson Six : StrategicFormulationusing Various Strategic Options Tools & sl/BMBE/2016 1

  2. BusinessManagement intheBuiltEnvironment Areview of the strategy process V ision O bjectives analysis E vents S trategic history Strategic analysis analysis strategy E nvironm ental O rganisational C urrent •B asis •D irection •M ethods S o trategic ptions Feedback R evise objectives C om pare m easurem ent to standards Feedback •S uitability •Feasibility •A cceptability Evaluation M easure perform ance •Level of change •C om petencies •S tructure •S ystem s •R esources Im plem entation 2

  3. BusinessManagementintheBuiltEnvironment Strategicformulationusingtoolsandoptions Asorganisationsareoperatingin acompetitive world,strategiesare developedto copewith the need tosurvivein themarketplace. Strategicmanagementis supposedto help organisationssteerthrough changesand shifts the environmentto securefuturegrowth and sustainablesuccess through theprocessof analysis,selectionof optionsandthenmaking decisionsto moveforward sl/BMBE/2016 in 3

  4. Business Management in the Built Environment sl/BMBE/2016 4

  5. BusinessManagementintheBuiltEnvironment STRATEGIC TOOLSANDOPTIONS Formulations ofstrategiesaregenerally basedon thedifferentschoolsof thoughts which managementbasedtheir processof formulation on. in We needtorevisit thestrategies,approaches & tools, particularlythe4 perspectivesas mentionedby RichardWhittington, thetypeof formulation andprocessof working towards the outcomesdiffer.. sl/BMBE/2016 5

  6. BusinessManagementintheBuiltEnvironment RichardWhittington’stypology His 4 perspectiveswhich is called also the 2 X 2 framework sl/BMBE/2016 6

  7. BusinessManagementintheBuiltEnvironment 2x2matrixor 2x 2 framework •Xand Y axis usedastwobroad dimensionstoscopeout genericperspectiveson strategy – – •This Theoutcomes of strategy(profitmaximisation Processes (deliberate/emergent) /plural) is usedtoprovide 4 perspectives – – – – Classical Evolutionary Systemic Processual Profit Deliberate Emergent Plural sl/BMBE/2016 7

  8. BusinessManagementintheBuiltEnvironment Profit X Classical •Analyse,plan andcommand Emergent Deliberate Plural – – – Profitability/Rational planning Dominantview(linkedto classical schoolofthought Informedby economics-Rationaleconomic man ) •Self interest&preservationoforganisation •solelyconcernedwithmaximisingreturnoninvestment – – – – Topdownapproach(militaristic) Separatesformulationfrom implementation Implementationis based onthemilitary–styleorder; strategywill be carriedoutviadiscipline and obedience sl/BMBE/2016 8

  9. Business ManagementintheBuilt Environment Profit Systemic Deliberate Emergent X Plural •Play by the local rules •Thesocial system within which strategiesaredevelopedare crucial •Contextualsensitivityto: Markets;Countries& Cultures •Social systems(and theirassociated societies)are notsolely profit maximisingand social systemsare based on: Class ; Professionalism& Gender •Strategy& planning is also boundedbyparticularsocial systems/rules/norms. sl/BMBE/2016 9

  10. BusinessManagementintheBuiltEnvironment Profit Processual Deliberate Emergent X Plural •Staycloseto thegroundand go withtheflow! •Processual managersdo notbelieve inplanning •Strategyemergesfrom stickyand messy contextbased On Pragmatic;Learning & Compromise •Optimalstrategyisnotmain concernas managersusually concedes to bounded rationality– usingthe‘prisoners dilemma’ •Organisationsaresociallycomplex– bargaining and barter system betweeninterestgroups •Change disrupts power dynamics and thus strategicchange viewedwithsuspicion •Strategyisdiscovered in action(throughimplementation?) sl/BMBE/2016 is 10

  11. BusinessManagementintheBuiltEnvironment Profit Evolutionary X Deliberate Emergent Plural unpredictably •Costs lowandoptionsopen •Theenvironmentmovestooquicklyand towait forrationalised action soplanning based onbest fit; •Onlythebestperformerssurvive– law ofthejungle •Strategycanbe adelusion •Strategising method isday by day muddlingthrough •asmanagersbelieve that impossibleto predict. •Best planning methodis drawing uponondiversificationso survive sl/BMBE/2016 tomorrowisjust toodifficult and asto 11

  12. D39BU–BusinessManagementintheBuiltEnvironment Anotherlook at strategicpositioningin reality … As organisationsareoperatingin a competitiveworld, strategiesaredeveloped to copewith theneedtosurvivein the marketplace. Strategicmanagementis supposedto help organisationssteerthrough changesand shiftsin theenvironmentto securefuture growth andsustainablesuccess. sl/BMBE/2016

  13. D39BU–BusinessManagementintheBuiltEnvironment Strategicpositioningin reality … • Justlike youand I, without goal, we will beaimless,so need goals,vision,mission a long term organisations to enablethem to sailthrough thestormsof competition, changesin themarketetc.. In fact,strategicplanning issimilar to the art of war (SunTze)– youneedto understandstrategicpositioningandalso the processofanalysis,formulationand then implementationof yourtacticsand operationsin order to succeedin business sl/BMBE/2016

  14. D39BU–BusinessManagementintheBuiltEnvironment Strategiesare basedon certain schools ofthoughtson which differsin the strategicplanningis done way 3 basicthoughtsvia … 1. 2. 3. Classical/rational planning school The The designschool positioning school sl/BMBE/2016

  15. D39BU–BusinessManagement intheBuiltEnvironment IFTHEORGANISATIONUSESTHE CLASSICALSCHOOLOR APPROACH, THENTHESTRATEGYWILLBE: A)Top down, bureaucraticapproachof top managementdecisionwhich iscascadeddown to the bottomof thehierarchyin theorganisation B) Theleadershipstylewill be telling andinforming and not participativeor consultative C) Profit andshareholders’interestareparamountto reachgoalsand objectivesfor theorganisation sl/BMBE/2016

  16. D39BU– BusinessManagementintheBuiltEnvironment 2. IF THEORGANISATIONUSESTHEDESIGN SCHOOL ORAPPROACH a)It will practisethesystemsviewand everything willbe accordingto acertainsystemor design. b)The managementmayadopta sellingor collaboratingstyleof leadershipso that everyonebuysinto theorganisationgoalsand achievetogether. c)Going with thesystemsespeciallysocialand technologicalsystemsto be in place - systematic7 stepapproachis oftenused.. sl/BMBE/2016

  17. D39BU–BusinessManagementintheBuiltEnvironment Diagram showingtheprocessofstrategicplanning a7-stepmodel – Vision& mission Swotanalyss STEEP&ScenariosPlanning Strategicanalysis&options decisionmaking implementation Evaluation& monitoring sl/BMBE/2016

  18. D39BU–BusinessManagementintheBuiltEnvironment 3. THEPOSITIONINGSCHOOL: MICHAELPORTER’SMODEL–ALSOPARTOFTHE EVOLUTIONARY/COMPETITIVEPERSPECTIVE This isthe strategicapproachbasedon competition–survivalof thefittest–so thestrategic focuswillbeonmaximisingcompetitivestrategiesto stayaheadof competition Porter arguesthatprofitabilityof anorganisationlies in thepower of theorganisationto positionitself againsttheothersin theindustryandhow it usesits capabilitiesto handleits bargainingpositionto sustaingrowth andsuccess. sl/BMBE/2016

  19. D39BU – BusinessManagementintheBuiltEnvironment Porter’s diamond diagram Strategy, structure& rivalry Govt Factor conditions Demand conditions Related& supporting industries chance sl/BMBE/2016

  20. D39BU–BusinessManagementintheBuiltEnvironment According toPorter…. a) Factorconditions– highlyspecialised resourcesdevelopedin differentcountries where thereis alarge pool ofskilledmanpower or labour Relatedandsupportingindustrieswhich help to expeditetheprocessfor productionofgoods b) and services Demand conditionswhereconsumersforce companiestoinnovateand shapetheirmarket orientationin sucha waythatcaterstotheir needsandwants Strategy,structureandrivalrywhich will be highlighted in thestudyof 5-forcestheory sl/BMBE/2016 c) d)

  21. D39BU–BusinessManagementintheBuiltEnvironment STRUCTURALANALYSIS OF INDUSTRIES or COMPETITIVEANALYSIS OF THE INDUSTRY 5 FORCESAFFECTINGANYORGANISATION : THREATOF NEW ENTRANTS THREATOF SUBSTITUTES ARE SUPPLIERS’BARGAININGPOWER BUYERS’BARGAININGPOWER INDUSTRYCOMPETITIVERIVALRY sl/BMBE/2016

  22. D39BU–BusinessManagementintheBuiltEnvironment MICHAELPORTER’S 5 FORCES MODEL/THEORY sl/BMBE/2016

  23. BusinessManagementintheBuiltEnvironment OTHERSTRATEGICTOOLS& TECHNIQUES Using HistoricalAnalysis: • • • Analyse Analyse historicalaccountsof strategy past, presentand potentialfutureevents Analyse andseek tounderstand the lifecycleofthe market(s) theorganisationoperateswithin Doingastrategicgroupanalysis todeterminethestrategy of others (prisonersdilemma) •Analysethe segmentation ofthe market DoingafullSWOT analysis • •Conductingaresourceaudit andaresourceutilisation analysis todetermine howresourcesareactuallydeployed and on the organisation& ensl/vBMirBEo/2n01m6 ental analysis or audit 23

  24. BusinessManagementintheBuiltEnvironment OTHERSTRATEGIC TOOLS&TECHNIQUESSUCHAS USING AVALUECHAINANALYSISWITHTHECHECKLIST OF RESOURCES ANDACTIVITIES Supportactivities Corporatestructure Humanresources Technological development purchasing services Mktg &sales Outbound logistics Inbound logistics mfg Primary activsli/BtMieBEs/2016 24

  25. BusinessManagementintheBuiltEnvironment OTHER STRATEGICTOOLS& TECHNIQUES •USING APORTFOLIOANALYSIS: to seeif thecompanyis ina goodpositionto capitaliseonmarket growth in markets where they hold a large share sl/BMBE/2016 25

  26. BusinessManagementintheBuiltEnvironment PortfolioAnalysisorMarket Analysis: the growth / share matrix or the BCG Matrix Theoreticallyofferthebestprofit&growth Lowgrowthinapoormarket/weakness Profitsbestutilisedelsewhere Requireslargeinvestmentfordevelopment sl/BMBE/2016 26

  27. BusinessManagementintheBuiltEnvironment •PortfolioAnalysisorMarketAnalysis: •BCGproposed the matrixis presented in Fig 14 of Pg 19 Unit 5 Market Share High Low High Market Growth Low sl/BMBE/2016 27

  28. BusinessManagementintheBuiltEnvironment Portfolioanalysisormatrix istoassessthebalance andcontributiontothestrategiccapabilityof theorganisation. Implicationsofusingthismatrix: a) b) c) ThisanalysisisappliedtoSBUsandnotthewholemarket Managementmustdevelopthecapabilitytoreviewthe Differenttargetsaresetfordifferentsegments SBU d) Toomuchfocussingononepartmaybebadforthe wholeorganisationforexamplestarsandcashcows mustbe managedwelltopreventconflict e) Dogsmayberetainedinordertobecomeloss leaders sl/BMBE/2016 28

  29. BusinessManagementintheBuiltEnvironment OTHERSTRATEGICTOOLS&TECHNIQUES DIVERSIFICATIONANALYSISOR MATRIX New/Related New/Unrelated Services/ Products: Model ExistingPortfolio Services/ Products: Services/ Products: Expansion Strategy Existing Strategy ExistingClients: SameGeographical Expansion Strategy Area Expansion Strategy Expansion Strategy Diversification Strategy ExistingClients: NewGeographicalArea Expansion Strategy Diversification Strategy Conglomerate Diversification NewClients: SameGeographicalArea Expansion Strategy sl/BMBE/2016 Diversification Strategy Conglomerate Diversificati2o9n NewClients: NewGeographicalArea

  30. BusinessManagementintheBuiltEnvironment All the toolsusedarefor understandingand determining which optionsto choose;how resourceshavebeendeployedin thepastand how effectivethesestrategieswere; how effectiveis theperformanceof the organisationagainsttheindustrynormsand to seeif the firm ableto benchmark acrossother industriesto determinethescopefor change and strategyaswell astocheckthebalanceof resourcesan organisationownsor controls– Is theorganisationbalancedenoughtobe flexible? sl/BMBE/2016 30

  31. BusinessManagementintheBuiltEnvironment SELECTIONOF OPTIONS:PORTER’SGENERICSTRATEGIES UNIT 6 PG 1-3 CompetitiveAdvantage Lower cost Differentiation Cost Leadership Broad Differentiation Broadtarget Competitive scope Cost Focus Differentiation Focus Narrowtarget sl/BMBE/2016 31

  32. BusinessManagementintheBuiltEnvironment SELECTIONOFOPTIONS: PORTER’SGENERICSTRATEGIES PG 2-UNIT6 3. Hybrid 5. Focused Differentiation 4.Differentiation Stra Strategic 2. Low Price Choice/options 6.Increased Price/ StandardValue Whatisofvalueto the user ofthe product/ service? 7. Increased Price/Low Value 1. Low Price/ AddedValue 8. Low Value/ StandardPrice sl/BMBE/2016 32

  33. BusinessManagementintheBuiltEnvironment DISCUSSIONANDASSIGNMENT 1.Criticallyappraisethepurposeandprocessof strategicanalysisand,fullydescribethreetoolsor techniquesthatthoseresponsibleforstrategy developmentinabuiltenvironmentorganisationmay choosetoadopt. 2.ExplainwhatyouunderstandbyRichard Whittington’s2x2Frameworkofgenericperspectiveon strategy.Drawthediagramsdepictingthe4 perspectivesrelatingtohistheory. sl/BMBE/2016 33

  34. D39BU–StrategicManagementintheBuiltEnvironment Corereading formodule Useful reading material Carter,C.,Clegg,S.,Kornberger,M(2008)Averyshort,fairly interestingandreasonablycheapbookaboutstudyingorganisations, Sage,London Clegg,S.,Kornberger,M.,Pitsis,T.(2005)Managingand ◦ ◦ Organisations:Anintroductiontotheoryandpractice,Sage,London ◦ (2nd Whittington,R.(2001) Ed.)WhatisStrategy–anddoesit matter?,Thomson,London ◦ Mintzberg,H.,Ahlstrand,B.,Lampel,J.(1998)StrategySafari:the completeguidethroughthewildsofstrategicmanagement,Prentice Hall,London Langford,S.,Male,S.(2001)StrategicManagementinConstruction, Blackwell,Oxford Journalpapers..................... ◦ ◦

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