Slide 1.

Part 1
Introduction

Chapter 1
Strategic management

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.2

What is Strategic Management?

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.3

What is strategic management?

Recent research proposes the following definition of
strategy:
“The field of strategic management deals with the
major intended and emergent initiatives taken by
general managers on behalf of owners, involving
utilization of resources, to enhance the performance of
firms in their external environments.”
Nag et al (2007) Strategic Management Journal, p
944
See Lynch, Chapter 1 for more definitions

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.4

What is strategic management?

Strategic management is fundamentally about the
broad general direction of organisations
Both for private companies and for public sector
organisations

“The field of strategic management deals with the major

intended and emergent initiatives taken by general
managers on behalf of owners, involving utilization of
resources, to enhance the performance of firms in their
external environments.”
Nag et al (2007) Strategic Management Journal, p 944

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.5

What is strategic management?

‘Ownership’ goes beyond shareholders to other
stakeholders in the organisation, such as employees
and the general public

“The field of strategic management deals with the major

intended and emergent initiatives taken by general
managers on behalf of owners, involving utilization of
resources, to enhance the performance of firms in their
external environments.”
Nag et al (2007) Strategic Management Journal, p 944
See Lynch, Chapter 1 and Chapter 6 for more on stakeholders

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.6

What is strategic management?

Organisations deliver strategies through using their
resources - such as people, finance, brands and
factories
Organisations can also develop new resources

“The field of strategic management deals with the major

intended and emergent initiatives taken by general
managers on behalf of owners, involving utilization of
resources, to enhance the performance of firms in their
external environments.”
Nag et al (2007) Strategic Management Journal, p 944
See Lynch, Chapter 4 for more on strategic resources

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.7

What is strategic management?

The end product of strategic management must to
improve performance
But how do we measure this? Profits? Job
satisfaction? Share price? Support for ‘green’ issues?
Key measure: the organisation must add value

“The field of strategic management deals with the

major intended and emergent initiatives taken by
general managers on behalf of owners, involving
utilization of resources, to enhance the performance
of firms in their external environments.”
Nag et al (2007) Strategic Management Journal, p 944
Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.8

What is strategic management?

Organisations develop their strategies in the context
of the market place – the external environment
‘Environment’ means everything outside the
organisation, for example government policies,
‘green’ issues, competitive strategies and customers

“The field of strategic management deals with the major

intended and emergent initiatives taken by general
managers on behalf of owners, involving utilization of
resources, to enhance the performance of firms in their
external environments.”
Nag et al (2007) Strategic Management Journal, p 944
See Lynch, Chapter 3 for more on strategic environment
Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.9

What is strategic management?

But both the environment and the organisation are constantly changing: called
strategy dynamics
Opportunity: Threat:
growing Environment competitive
economy activity
Organisation’s
resources
Environment New strategies for Environment
such areas as people,
finance, brands,
networks Threat: new
Opportunity: technology allows
new new suppliers into
Environment
customers the market
See Lynch, Chapter 5 for more on strategy dynamics
Figure 1.4 Examples of how strategic management links the organisation’s resources
with its environment
Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.10

What is Strategic Management?

Some additional overheads

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.11

Analysing strategic management

What is strategic management?

Why is it important? Core areas

Process, content and context

Prescriptive and emergent approaches

Green strategy Public and non- International

profit strategy strategy
Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.12

Why is strategic management important?-1

Because it deals with the fundamental issues that
affect the future of the organisation
Strategic management...
involves the entire organisation
is likely to concern itself with the survival of the
organisation as a minimum objective
and the creation of value added as a maximum
objective

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.13

Why is strategic management important?-2

Strategic management covers the range and depth
of the organisation’s activities...
...it directs the changing and evolving
relationships of the organisation with its
environment
Two vital areas:
Strategic management is central to the
development of sustainable competitive advantage
in the organisation...
...and is crucial to value added

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.14

Three core areas of strategic management

Strategic analysis
Environment
Resources
Vision, mission and objectives
Strategic development
Options
Rational selection between options
Finding the strategic route forward
Strategy implementation
Resource allocation
Strategic planning and control
People issues and strategic change
Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.15

Three elements of the strategic decision

Context: the environment within which the
strategy is operating
Content: the main actions of the proposed strategy
Process: how the strategy will be developed and
achieved

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.16

What is strategic management? - 1

No universally agreed definition
Example of a prescriptive definition: “Strategic
management is the pattern of major objectives or
goals and essential policies for achieving those
goals, stated in such a way as to define what
business the company is in or is to be in and the
kind of company it is or is to be.”

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.17

What is strategic management? -2

Another emergent definition:
“The strategy of the firm is the match between its
internal capabilities and its external relationships.
It describes how it responds to its suppliers, its
customers, its competitors and the social and
economic environment within which it operates.”

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.18

What is strategic management? - 3

Strategy is developed by a consideration of the resources of
the organisation in relation to its environment, the prime
purpose being to add value.
Five key elements to strategy:
Sustainable decisions: what?
Processes to deliver strategy: how?
Competitive advantage: why?
Exploitation of linkages between the organisation and
its environment: where?
Vision: when? With what result?

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.19

What is strategic management? - 4

At the corporate level: At the business level:
•What business are we •How do we compete
in? What business should “What is the successfully? What is
we be in? purpose of the our sustainable
•What are our basic organisation? competitive advantage?
directions for the future? And what are •How can we innovate?
our strategies
•What is our culture and •Who are our
to achieve
leadership style? customers?
this?”
•What is our attitude to •What value do we add?
strategic change? What Where? Why? How?
should it be?

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.20

What makes “good” strategy? - 1

Important because of:
Lack of agreement on the nature of strategy
Difficulties in developing strategy
Two main test areas for strategy:
Application-related
Academic rigour

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.21

What makes “good” strategy? - 2

Application-related:
Value added test
Consistency with circumstances surrounding
business
Competitive advantage test
Academic rigour:
Originality
Delivery of defined purpose
Logical consistency
Relationship with risks and resources
Flexibility
Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.22

Prescriptive model of business strategy

The prescriptive
Options strategy process -
Environment see Lynch, Ch 1

Purpose Options
Choice Implement

Resources
Options

Perhaps more options...

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.23

Emergent model of business strategy The emergent

strategy process
– based on Quinn
1990, Senge 1990,
Argyris 1977,
Environment Mintzberg 1987
and others

Strategy
development and
Purpose
implementation
Key point:
creative,
experimental, more
Resources
difficult to describe
but essential

See: Lynch,
Chapters 7 and 11
Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015
Slide 1.24

What is green strategy and where does it fit in?

Green strategy concerns two related areas of the
organisation:
Activities that sustain the earth’s
environment
Development of the opportunities that
will arise as a result of such sustainable
activities
Fit within organisation: everywhere

Lynch, Strategic Management PowerPoints on the Web, 7th edition © Richard Lynch 2015