Business Policy: Ola Mattisson

School of Economics and Management | Ola Mattisson | FEKH11 Business Policy|
Business Policy
Lecture 2

OLA MATTISSON
Development of strategy theory
Agenda
Two Swedish minutes
The development of strategy theory
Different perspectives on strategy
Strategy as a quest for value
Current trends within strategy theory
Historical periods
60s: Period of growth and expansion. Control and
financial budgeting needed. Corporate planning the
concept.
70s: Period of instability and increasing competition.
Planning useless.
80s: Strategic Management period. Focus on industry
environment. Competitive advantage.
90s: Strategies for competition on different arenas.
Source of profit within the firm. Resources and
capabilities.
00s: Global strategies. Competing for standards, winner-
takes-it-all markets. Ethics and CSR.
The strategic perspective of the
60s and 70s
Analytical or rationalistic perspective
Strategy as the result of plans and planning.

Behavioural or incremental perspective
Strategy as a result of the actions and decisions of
the managers.
1. Analytical perspective
Characteristics:
Strategy created deliberately by managers.
Tools and techniques of strategy analysis are used.
Plans are the result of this process.
2. Behavioural perspective
Rationalistic planning and design of strategy not
possible in a changing world. Instead:

Strategy is seen as consisting of:
Intended strategy
Realized strategy
Emergent strategy.

Strategy incremental actions

Realized strategy
Emergent
strategies
Plan
Unrealized
strategy
Intended
strategy
The realized strategy is a result of the intended strategy
an incremental decisions (Mintzbrg)
Time
80s: Competitive industry analysis
Analysis of the industrial environment

Focusing on competitors, customers and
suppliers.

Positioning towards competitors in order
to gain competitive advantage and
maximizing profit.

Porters five forces.
90s: Strategies for competition on
different arenas
The resource based view (RBV) identifying
unique strategic capabilities and combination of
resources

Dynamic models: industry life cycles

Joint cost leadership and differentiation

Developed management control systems
including strategic dimensions (BSC)
Four kinds of strategy .
Plan

Process

Position

Perspective
Strategy as a quest for value
Why and for whom do firms exist?

Profit generation = value generation

For who is this value created?

Shareholder value vs stakeholder value
Shareholder value
The purpose of the firm is to generate profit for the
owners.

Goal to maximize the value that the firm produces.

Focus is on developing instruments for calculating
and reporting shareholder value:
Example of tools: DCF (Discounted Cash Flow)

Stakeholder approach
Value more than just profit

A firm has many stakeholders and can be regarded
as a coalition of different interests

The manager ought to maintain a good relationship
with stakeholders in order to secure the survival of
the organisation

Shareholder vs Stakeholder

Different perspectives on why and for who firms
exists

In reality: owners as well as other stakeholders are
important for a firm
Current trends

Reflects the development of society today

What demands do companies of today face?
Current trends
Demands
Demands on ethical behaviour
Volatility
Unpredictibility
Fast technological devlopment
Corporate Social Responsibility
A company has a two mandatory responsibilities:
-Financial and legal

CSR is about going beyond the mandatory
responsibilities in order to create legitimacy and trust for
the company among the stakeholders.
- Ethical and moral responsibility
Strategy in the beginning of the 21st
century
Seeking more complex sources of competitive
advantage
Theory regarding hyper competition

Strategies that recognizes the need for
flexibility.
Complexity theory
Concluding remarks
Linkage between problems and theories over time

Useful models survive and develop, others are
forgotten

Models and theories are parts of the language in the
business community


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