What is Strategic Management? (1.2.)

Creating and Presenting Strategic Plans

The ‘Parable’ of John Smith

The ‘Parable’ of John Smith

The ‘Parable’ of John Smith

The ‘Parable’ of John Smith

The ‘Parable’ of John Smith

The ‘Parable’ of John Smith

The ‘Parable’ of John Smith

Actually ‘What is strategy?’

Clearly all have a Strategy

The Economist’s view

Structure Conduct Performance Equilibrium

The Strategist’s viewConduct Structure Performance Winning

Two Views on Firm Behaviour

Rule makers or Barons Largest and most profitable: GE, Toyota, Apple,

Google

Rule takers or Serfs

Smaller and less profitable: Suzuki, Volvo

Rule breakers or revolutionariesInitially small rebels who wreck the rules: Ryanair,

Amazon

Source: Hamel and Prahalad

How Firms Influence Industry Structures

• Strategic

Organisational Decisions

•Administrative

• Operationa

l

Strategic Administrative Operational

Whole firm Department wide

Long run Many years

Highest level Department Level

Fixed Assets Current Assets

Difficult to reverse

Easily changed

Very risky Low risk

Visionary No vision

Infrequent Frequent

Unique Repetitive

Characteristics of Firms’ Decisions

Som

ethi

ng in

bet

wee

n

Where managers spend timeKey

Examples of Strategic Decisions

Characteristic Example

Scope Whole firm: Disney

Time span Long run: BP

Level Highest - iPhone

Assets used Large and fixed: Airbus

Reversability Difficult: Channel Tunnel

Riskiness High: Bet the firm:Boeing

Visionary Yes: iPhone

Frequency Rare: Takeover:PayPal

Uniqueness Yes: Spotify

The end