Alfonso VARGAS SNCHEZ

STRATEGIC MANAGEMENT AND

BUSINESS POLICY
--PART I: FOUNDATIONS
THEME 1:
STRATEGIC MANAGEMENT AS A
MANAGEMENT SYSTEM
1

EXECUTIVES:
ACTIVE MANAGEMENT PLAYERS

MAIN FUNCTIONS

INNOVATION

LEADERSHIP

STRATEGY

TA HUOY MUNN CHEONG

YAU CHEK MUNN
FAI TIT LO PA SIN LAY
POOK CHO HOY!!
3

CIRQUE DU SOLEIL - STARBUCKS

EXPO 2008-ZARAGOZA, SPAIN

BLUE OCEAN STRATEGY

EXECUTIVES:
ACTIVE MANAGEMENT PLAYERS

MAIN APTITUDES

AS A LEADER
(EXPERTISE IN BUSINESS MATTERS)

SKILLS IN MANAGING PEOPLE

(COMMUNICATION SKILLS)

AS A STRATEGIST
(ORGANIZATIONAL CAPABILITIES)

CAPACITY FOR NEGOTIATING

AND SOLVING CONFLICTS

STRONG MARKET-CUSTOMER
ORIENTATION

FLEXIBILITY AND ABILITY FOR

MANAGING CHANGE

MANAGEMENT

TECHNICAL
COMPONENT

SYSTEMS &
PROCESSES

METHODS &
TECHNIQUES

based on

HUMAN
COMPONENT

ORGANIZATION
CULTURE

BEHAVIORS &
ATTITUDES

resulting in
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THE MANAGEMENT PROCESS

LEADERSHIP
HUMAN RESOURCES

Z E
NI
A
G
O R

SEQUENTIAL
FUNCTIONS

1
P L AN

ADMINISTRATION

PROBLEMS ANALYSIS

CO
N

IDEAS

MATERIAL RESOURCES

COMMUNICATION

T R
OL

REFLECTION

DECISION MAKING

CONTINUOUS FUNCTIONS
ELEMENTS
TASKS

THE ROLE OF STRATEGY IN SUCCESS

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Successful
Strategy

EFFECTIVE IMPLEMENTATION

Simple,
consistent and
long-term
objectives

Profound
understanding of
the competitive
environment

Objective
appraisal
of
resources
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WHAT ARE THE PURPOSES OF

STRATEGY IN AN ORGANIZATION?
PROVIDES
ORIENTATION

A SOURCE OF
ORGANIZATIONAL
COHERENCE

CONCENTRATES
THE EFFORTS OF
ALL MEMBERS

DEFINES THE
ORGANIZATION
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DANGER
The strategy is to the organization like the
blinders to the horse, an element which
forces it to go straight and doesnt allow it
to turn aside the glance (Mintzberg,
Lampel and Ahlstrand, 1998).

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STRATEGY: CHARACTERISTICS
INTERACTIVE PROCESS
BETWEEN COMPANY &
ENVIRONMENT

IMPROVEMENT OF
COMPETITIVENESS
(questioning the nature
and structure of the firm)

MANY CONCEPTS
BUT COMMON
CHARACTERISTICS

SHORT TERM
OBJECTIVES & POLICIES
(adjustment of means )

LONG TERM
OBJECTIVES

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DISTINCTIVE FEATURES OF THE FIRMS STRATEGY

It is decided at the upper echelon of the

organization.
Making it is a management skill that is both a
science and an art.
It must take into account not only the
companys environment but also its resources
and capabilities.
It is devised to achieve certain basic objectives,
and to determine the necessary lines of action
and the corresponding allocation of resources.
().

15

Strategy is conceived as an organizational intention, defined

and formulated in advance (deliberate strategy), but the
implemented strategy also has an emergent component.

DELIBERATE
STRATEGY
INTENDED
STRATEGY

IMPLEMENTED
STRATEGY
UNIMPLEMENTED
STRATEGY
EMERGENT
STRATEGY
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The 5 "P's" of Strategy

-Plan.
-Ploy.
-Pattern.
-Position.
-Perspective.
Henry Mintzberg

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THE FIRMS STRATEGY specifies

the general objectives of the company
and the main courses of action, in
agreement with the organizations
present and potential resources, in
order to secure its optimal insertion in
the socioeconomic environment
(Menguzzato and Renau, 1991).
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THE FIRMS STRATEGY:

STRATEGY A certain pattern
of behavior over a period of time. This
behavior implies a way of using the
companys resources according to specific
capabilities, taking into consideration the
determining factors of the competitive
environment, to reach a set of objectives
and goals. This behavior will be more or less
planned and emergent (AECA, 1999).
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STRATEGY: ELEMENTS OR COMPONENTS

SCOPE OF THE BUSINESS
(product-market combinations)

SYNERGIES
(multiplying effect)

CAPABILITIES
(resources, skills)

COMPETITIVE ADVANTAGES
(defensible position)

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STRATEGIC MANAGEMENT
MANAGEMENT AS A PROCESS
CONTINUOUS FUNCTIONS
F
o
r
m
u
l
a
t
i
o
n

SEQUENTIAL FUNCTIONS
Plan

Analysis of Problems
Organize
Decision Making

Integrate

C
o
n
t
r
o
l

Manage
Communication
Control

Implementation
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STRATEGY

PRESENT
SITUATION

DESIRED
SITUATION

Limited and uncertain

information.
Limited resources,
present and future.
Coordination in time
and space.

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A
T
T
I
T
U
D
P O S I T I O N E
P THINKING
R
O
B
L
E
M

THE CARDINAL POINTS OF

STRATEGIC MANAGEMENT
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The expression FIRMS STRATEGY sounds so

familiar that people suppose that devising it is an
activity undertaken very often. The familiarity of
the word contradicts the difficulty of the task. Most
of the directors do not think strategically, in the
sense that they do not usually question the
main premises of the business in which they
are operating. They fight for their market share in,
say, the steel sector, instead of asking themselves
if steel will continue being used in the same form
or if the same amounts will be needed. They
accept the knowledge of how steel is made,
without asking themselves if it is out of date
(Bower, 1988).
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25

STRATEGIC MANAGEMENT:
Process Organization
F
O
R

Vision & Mission

(Strategic Business Units)
STRATEGIC ANALYSIS

M
U
L

External
Analysis

Internal
Analysis

A
T
I
O

Attractiveness:

Competitive Position:

Opportunities
& Threats

Strengths &
Weaknesses

Strategic Problem

Challenges & Impacts

Scenarios Generation
STRATEGIC PLANNING

Objectives
Organizational Culture
Strategic Alternatives:
Formulation & Evaluation

Corporate Social
Responsibility

Strategy Selection
I
M
P
L
E
M
E
N
T
A
T
I
O
N
C
O
N
T
R
O
L

Planning:
Strategic Plan &
Contingent Plans
Organization
HH. RR. Management
STRATEGIC CONTROL

Control

-Functional Plans

General Scheme of
Planning in IBERIA

-Division Plans
-Plan of Activities and
Financial Investments
-Annual Operative Plan

Board of Directors

Strategic
Plan

General Guidelines
Scenarios:

Analysis:

-Opportunities

-Environment

-Threats

-Competitors
-Clients

-Strengths

-Internal situation

-Weaknesses

Scenarios
generation:
Basic
Assumptions

General
Objectives
&
Strategic
Options

Evaluation
&
Decision

Strategic
Surprises

Contingent
Plans
Control Dynamic Update

27

DYNAMIC MODEL OF THE STRATEGY FORMATION PROCESS (AECA, 1999)

STRATEGIC
THINKING

STRATEGIC

STRATEGIC
FORMULATION

ANALYSIS

STRATEGIC
MANAGEMENT
STRATEGIC
IMPLEMENTATION
& CONTROL

STRATEGIC
PROGRAMMING

EMERGENT

PLANNED

STRATEGY
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A DECISION IS STRATEGIC IF ...

Adopting it changes some essential
aspect of the nature of the company ,
like its product, its market and/or its
technology.
It gives rise to a different company in
the future.
It is based on the aims and missions of
the company.
(and more...)
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STRATEGIC
DECISIONS
INFORMATION:

ACTION:

Not very specific and

of informal origin
(intuition, experience,
personal contacts,
specialist media, etc.).

Risky - it may
jeopardize the present
and future resources
of the company.

CONTROL:
Results are difficult
to evaluate, because
enough time must be
allowed for results to
become evident.

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EMPHASIS ON
ACTION
SIMILTANEOUS
CENTRALIZATION &
DECENTRALIZATION

PROXIMITY TO CLIENT

8
SIMPLE STRUCTURES

GOLD RULES
7 FOR EXCELLENCE 3

FOSTERING CREATIVITY

(Peters and Waterman)

6
5
SPECIALIZATION

EFFECTIVE PARTICIPATION
OF EMPLOYEES

CLEAR AND
SHARED VALUES
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COMPETITIVENESS EVOLUTION
ENJOY WHAT YOU DO
Emotional Intelligence
DO DIFFERENT
DO BETTER
DO WELL
DO
KNOW

LEARN

32

KEYS FOR BUSINESS EXCELLENCE

Preferential attention to human resources.

Creativity, innovation and quality.
Shared values, strongly implanted
organizational culture.

33

"The best way to predict the

future is to invent it"
(Alan C. Kay, 1971)

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