STRATEGIC CASE TUDY

OVERVIEW OF STRATEGY
DAVID ABBAM ADJEI
THE CONCEPT OF STRATEGY
In an effort to define strategy, we shall concentrate on two
main expositions on the concept by Henry Mentzbeg, 1987 and
Johnson, Scholes and Whittington, 2011.
Henry Mintzbeg, 1987
Mintzberg is a noted management thinker and prolific writer on
strategy. Mintzberg provides five definitions of strategy with 5Ps:
 Plan
 Ploy
 Pattern
 Position
 Perspective.
Strategy is a plan
Strategy as a plan, is some sort of consciously intended course
of action, a guideline (or set of guidelines) to deal with a
situation.
By this definition strategies have two essential characteristics:
1. They are made in advance of the actions to which they
apply, and
2. They are developed consciously and purposefully.
Strategy is a ploy
As plan, a strategy can be a ploy too, really just a specific
manoeuvre intended to outwit an opponent or competitor.
Here, the strategy is planned and executed with a specific
intention to beat and outperform the competition in the market
gaining the competitive edge and advantage.
In this scenario, the organizations can come up with something
very bizarre and unexpected and surprise the market
environment that also creates the waves of commotion within
the minds of the competitors.
Strategy as a Pattern
If strategies can be intended (whether as general plans or
specific ploys), they can also be realised
Strategy is a pattern - specifically, a pattern in a stream of
actions.
Strategy is consistency in behaviour, whether or not intended.
The definitions of strategy as plan and pattern can be quite
independent of one another: plans may go unrealised, while
patterns may appear without preconception.
Plans are intended strategy, whereas patterns are realised
strategy.
From the above, we can distinguish deliberate strategies, where
intentions that existed previously were realised, and emergent
strategies where patterns developed in the absence of
intentions, or despite them.
Strategy as a position
Strategy as a position, is specifically a means of locating an
organisation in an "environment".
By this definition strategy becomes the mediating force, or
"match", between organisation and environment, that is,
between the internal and the external context.
In this regard, Strategy is essentially a descriptive idea that
includes an organization’s choice of niche or position and its
primary decision rules for coping with that niche or position”.
Strategy as a perspective
Strategy is a perspective or viewpoint shared by members of an
organisation, through their intentions and / or by their actions.
In effect, when we talk of strategy in this context, we are
entering the realm of the collective mind - individuals united
by common thinking and / or behaviour.
This definition argues that more than anything, strategy is a
concept.
The essential proposition of this argument is that all strategies
are ideas that occur only in the minds of “interested parties -
those who pursue them, are influenced by that pursuit, or care
to observe others doing so”.
This means that strategy as perspective can be seen more in the
consistency of the behaviors of the organization’s members
rather than in the expression of intent.
Johnson, Scholes and Whittington, 2011
Johnson, Scholes, and Whittington in their book, Exploring
Corporate Strategy, define strategy ‘as
the direction and scope of an organisation over the long-
term: which achieves advantage for the organisation through
its configuration of resources within a
challenging environment, to meet the needs of markets and to
fulfil stakeholder expectations".
According to them, the words ‘strategy’ and ‘strategic decisions’
are typically associated with the following issues:
1. The long-term direction of an organisation. Strategy involves
long-term decisions about what sort of company it should be,
and realising these decisions would take plenty of time.
2. Strategic decisions are likely to be concerned with the scope of
an organisation’s activities. It is to do with what they want the
organisation to be like and to be about. The boundaries
3. Advantage for the organisation over competition
4. Strategic fit with the business environment. Organisations
need appropriate positioning in their environment, for
example in terms of the extent to which products or services
meet clearly identified market needs
5. The organisation’s resources and competences. strategy is
about exploiting the strategic capability of an organisation,
in terms of its resources and competences, to provide
competitive advantage and/or yield new opportunities.
6. The values and expectations of powerful actors in and around the
organisation. The beliefs and values of these stakeholders will have
a greater or lesser influence on the strategy development of an
organisation, depending on the power of each.
According to Johnson, Scholes and Whittington, the
characteristics of strategic decisions highlights some
implications:
1. Strategy and strategic decisions are complexity
2. Uncertainty is inherent in strategy
3. Operational decisions are linked to strategy. It is at the
operational level that real strategic advantage can be
achieved.
4. Integration is required for effective strategy
5. Relationships and networks outside the organisation are important
in strategy.
6. Change is typically a crucial component of strategy.
LEVELS OF STRATEGY
Strategies exist at a number of levels in an organisation and it
is at the heart of every business.
To help understand strategy in business, we need to look at
four levels of strategy that are typically used by organizations.
Only when all four of these levels are carefully considered will
the business be able to get on the right path toward a
prosperous future.
Corporate Level Strategy
This is concerned with the overall scope and direction of an
organization and how value will be added to the different parts
(business units) of an organization.
It is formulated by the top management and affect the whole
organization.
It is generally long range in nature, though it is valid for short-
range situations.
It is action-oriented and is more specific than mission and goals.
It is multi-dimensional and integrated
Corporate strategy deals with three key issues facing the
corporation as a whole
1. Directional strategy – the firm’s overall orientation towards
growth, stability and retrenchment.
2. Portfolio analysis – The industries or markets in which the
firm competes through its products and business units
[Link] strategy – the manner in which the management
coordinates activities and transfers resources and cultivate
capabilities among product lines and business units.
Business Level Strategy
The second level is business-level strategy, which is about how
the various businesses included in the corporate strategy
should compete in their particular markets
Business level strategies detail actions taken to provide value
to customers and gain a competitive advantage by exploiting
core competencies in specific, individual product or service
markets.
Business-level strategy is concerned with a firm's position in an
industry, relative to competitors.
So, whereas corporate-level strategy involves decisions about the
organisation as a whole, business level strategy decisions relate to
particular strategic business units (SBUs) within the overall
organisation.
A strategic business unit is a part of an organisation for which there
is a distinct external market for goods or services that is different
from another SBU
Firms choose from among two main business-level strategies
to establish and defend their desired strategic position against
competitors: cost leadership and differentiation.
The purpose of a business-level strategy is to create differences
between the firm’s position and those of its competitors.
Thus, the firm’s business-level strategy is a deliberate choice
about how it will perform the value chain’s primary and
support activities in ways that create unique value.
Functional Level Strategy
All organizations irrespective of the size, nature and scope of
business must perform the functions like marketing, finance,
production and operations, human resource management Research
& Development etc.
Careful planning, execution and coordination of these functions are
highly essential for effective strategic planning, implementation
and control.
Functional strategies are formulated at the functional /
departmental levels and developed from the business strategy
or corporate strategy. The main functional strategies include
marketing, financial, human resources and production
strategies for the implementation of corporate strategy.
So, for instance to increase market share, the functional level
strategy might include marketing to improve brand
recognition, quality improvement for the end products and the
hiring of specialized personnel.
The functional level approach should have the following key variables:
1. Alignment. The functional strategies must align with business and
corporate strategies alike.
2. Detail. The functional strategy should have a high level of detail
3. Existing Resources. Each functional strategy in place has to use
current resources present in each department, whether they are
personnel, equipment or opportunity
4. Progress. Frameworks to assist in determining whether there is
progress toward these objectives.
Operational Level Strategy
This is at the day-to-day end of the organization which is concerned
with how the components parts of an organization deliver effectively the
corporate or business level strategies in terms of resources, processes
and people.
Operations strategy is a plan specifying how an organization will
allocate resources in order to support infrastructure and production
Operations strategy has a long-term concern for how to best determine
and develop the firm's major operations resources so that there is a high
degree of compatibility between these resources and the business
strategy
Through the development of operational strategies, the firm
can evaluate and implement efficient processes and systems for
the use of resources and personnel.
The firm's operations strategy must be conducive to developing
a set of policies in both process choice and infrastructure
design (controls, procedures, systems, etc.) that are consistent
with the firm's distinctive competency
A major advantage of operational strategy is its focus on
competition. Businesses that lag behind their competitors can
implement company-wide operational strategies to close the
gap.
The success of operational strategies are also easy to measure,
such as increased profits, reduced costs and higher market
share in the industry.
Firms that fail to fully exploit the strategic power of operations
will be hampered in their competitive abilities and vulnerable
to attack from those competitors who do exploit their
operations strategy. To do this effectively, operations must be
involved throughout the whole of the corporate strategy.
STRATEGIC MANAGEMENT
Strategies do not happen just by themselves. Strategy involves
people, especially the managers who decide and implement
strategy. There must therefore, be a process to achieve it. And
the process is Strategic Management.
Johnson, Scholes and Whittington (2011) indicate that strategic
management can be thought of as having three main elements
within it. Strategic management includes understanding the
strategic position of an organisation, making strategic choices
for the future and managing strategy in action.
The strategic position
Understanding the strategic position is concerned with identifying the impact
on strategy of the external environment, an organisation’s strategic capability
(resources and competences) and the expectations and influence of
stakeholders.
The environment. The organisation exists in the context of a complex
political, economic, social, technological, environmental (i.e. green) and legal
world. This environment changes and is more complex for some
organisations than for others.
Therefore, it is necessary to distil out of this complexity a view of the key
environmental impacts on the organisation.
One way of thinking about the strategic capability of an
organisation is to consider its strengths and weaknesses (for
example, where it is at a competitive advantage or
disadvantage).
It is usually a combination of resources and high levels of
competence in particular activities, called core competences,
that provide advantages which competitors find difficult to
imitate.
The major influences of stakeholder expectations on an
organisation’s purposes.
Purpose is encapsulated in an organisation’s vision, mission
and values.
Here the issue of corporate governance is important: who
should the organisation primarily serve and how should
managers be held responsible for this?
This raises issues of corporate social responsibility and ethics.
Strategic choices
Strategic choices involve the options for strategy in terms of both the
directions in which strategy might move and the methods by which
strategy might be pursued.
For instance, an organisation might have to choose between alternative
diversification moves, for example entering into new products and
markets. As it diversifies, it has different methods available to it, for
example developing a new product itself or acquiring an organisation
already active in the area.
At the highest level in an organisation there are issues of
corporate-level strategy, which are concerned with the scope,
or breadth, of an organisation. These include diversification
decisions about the portfolio of products and the spread of
markets.
There are strategic choices in terms of how the organisation
seeks to compete at the business level. Typically, these involve
pricing and differentiation strategies, and decisions about how
to compete or collaborate with competitors.
Strategy in action (Implementation)
Organising strategy in action is concerned with ensuring that
chosen strategies are actually put into action and are working in
practice.
First of all, it is important to consider the strategy development
processes of an organisation. The strategies that an organisation
actually pursues are typically a mixture of the intended and the
emergent.
Intended strategies are the results of formal strategic planning
and decision making, but the strategy that is actually pursued is
typically somewhat emergent, including bottom-up initiatives,
rapid responses to unanticipated opportunities and threats, and
sheer chance.
Strategy in action also involves Structuring an organisation to
support successful performance. This includes organisational
structures, processes and relationships (and the interaction
between these elements).
Resourcing strategies in the separate resource areas (people,
information, finance and technology) of an organisation in
order to support overall strategies.
Managing strategy very often involves strategic change. This
will include the need to understand how the context of an
organisation should influence the approach to change and the
different types of roles for people in managing change.
APPROACHES TO ORGANISATIONAL
STRATEGY
Business strategy is essential to the success of organizations. Given the importance of
strategy to organizational success, attempts have been made to study and capture the
best approaches to formulate and implement business strategy.
We shall be looking at the following approaches to organisational strategy:
 Systems Based Approach
 Resource Based Approach
 Core Competence Based Approach
 Rational Based Approach
 Adaptive Based Approach, And
 Emergent Based Approach
Systems based approach to Strategy
This approach to strategy is based on how the organisation
interacts with its environment.
In an increasingly complex business environment, companies
need to reassess their strategic choices on a regular basis.
Systems based approach to Strategy tries to provide companies
with the tools they need to effectively prepare for constant
environmental changes.
Organizations depend on their environments for several essential
resources:
1. customers who purchase the product or service,
2. suppliers who provide materials,
3. employees who provide labour or management,
4. shareholders who invest, and
5. governments that regulate.
The organisation is seen as a system which is enclosed from the
environment by a boundary and interacts with the environment through
inputs and outputs. The function of the system can be described as the
difference between the input and output variables.
Theoretically, systems can be considered either open or closed. Open
organizations exchange information, energy, or resources with their
environments, whereas closed systems do not. In reality, because no
social systems can be completely closed or open, they are usually
identified as relatively closed or relatively open.
The distinction between closed and open systems is determined by the
level of sensitivity to the external environment. Closed systems are
insensitive to environmental deviations, whereas open systems are
responsive to changes in the environment.
This theory can also be useful in understanding the role of research and
feedback in creating a thoroughly analysed and consistent strategy.
Systems theory enables us to deal with complexity and a large amount
of knowledge.
Resource based approach to Strategy
Resource based view (RBV) analyse and interpret resources of the
organizations to understand how organizations achieve sustainable
competitive advantage.
The RBV focuses on the concept of difficult-to- imitate attributes of the
firm as sources of superior performance and competitive advantage
Resources that cannot be easily transferred or purchased, that require an
extended learning curve or a major change in the organization climate
and culture, are more likely to be unique to the organization and,
therefore, more difficult to imitate by competitors.
A key insight arising from the resource-based view is that not all
resources are of equal importance, nor do they possess the potential to
become a source of sustainable competitive advantage.
There are two types of resources: tangible/physical and intangible.
Tangible resources or assets are physical things. Land, buildings,
machinery, equipment and capital – all these assets are tangible.
Physical resources can easily be bought in the market so they confer
little advantage to the companies in the long run because rivals can soon
acquire the identical assets.
Intangible resources or assets are everything else that has no
physical presence but can still be owned by the company.
Brand reputation, trademarks, intellectual property are all
intangible resources or assets.
Intangible resources usually stay within a company and are the
main source of sustainable competitive advantage.
The two critical assumptions of RBV are that resources must
also be heterogeneous and immobile.
The key managerial tasks under this strategy are:
a. Identify the firm's potential key resources.
[Link] whether these resources fulfil the following criteria
(also known as VRIN (Barney, 1986) criteria: Valuable, rare,
Imperfectly imitable and Non-substitutable.
c. Develop, nurture and protect resources that pass these
evaluations.
The resource-based view helps in determining the resources
available within the firm and relates them with the capabilities
of the firm in a silent manner.
RBV helps managers of firms to understand why competences
can be perceived as a firms’ most important asset and, at the
same time, to appreciate how those assets can be used to
improve business performance.
Core Competence Based Approach to Strategy
According to Prahalad and Hamel, the term “core competency” is “the
collective learning in the organization, especially how to co-ordinate
diverse production skills and integrate multiple streams of technologies.
The concept of core competency states that firms must play to their
strengths or those areas or functions in which they have competencies.
Core competence is communication, involvement and a deep
commitment to working across organizational boundaries.
In addition, the theory also defines what forms a core competency and
this is to do with it being not easy for competitors to imitate, it can be
reused across the markets that the firm caters to and the products it
makes, and it must add value to the end user or the consumers who get
benefit from it.
In other words, companies must orient their strategies to tap into the
core competencies and the core competency is the fundamental basis for
the value added by the firm.
To determine if something is a core competence, the companies need to
find out, "Does this 'thing' give the company a unique advantage over its
competitors and help make the company profitable?"
Core competence is a firm-specific organizational mark that
introduces winning products to market that provides a firm
with competitive advantage. The corporate signature emerges
from organizational knowledge, expertise, experience, systems,
technology, skills, capabilities, and resources.
Core competence does not diminish with use. Unlike physical
assets, which deteriorate over time, competencies are enhanced
as they are applied and shared. But competencies still need to
be nurtured and protected; knowledge fades if it is not used.
Core competence has an ability to give a company power to control the
future shape of markets and industries, and to determine the destiny of
organizations
The Rational Based Approach to Strategy
This takes a logical and rational view of the strategic management
process and strategies are developed by undertaking a series of logical
and rational steps.
This approach will usually involve having a strategic planning
department within the organisation to carry out each of the key steps and
should lead to the best strategy being chosen.
The rational approach demonstrates that the actual preparation of a
strategy is as a result of a clear direction that the entity wants to take as
well as various forms of appraisals.
This approach breaks down the process of strategy and
strategic management into three distinct steps:
 Strategic position or analysis
 Strategic choice
 Strategic in action or implementation.
The rational model assumes that the decision maker has
accurate information and knowledge of the situation, the
underlying cause and effect relationships to evaluate various
situations, and the necessary tools and competence.
This model also assumes that conditions remain stable. The
real world always remains in a constant state of flux and, very
often, the information needed to make a decision either
remains incomplete or keeps constantly changing, forcing the
decision makers to improvise.
The rational approach to decisions is based on scientifically
obtained data that allow informed decision-making, reducing
the chances of errors, distortions, assumptions, guesswork,
subjectivity, and all major causes for poor or inequitable
judgments.
This model also allows a clear evaluation of potential
strategies to be undertaken and explicitly includes
implementation as part of the process.
The rational method infuses the decision-making process with
discipline, consistency, and logic.
The Adaptive based approach to strategy

Adaptive management is an ongoing process of planning, doing,

assessing, learning and adapting, while also applying what was learned
to the next iteration of a management process.

It is a flexible decision-making process that allows a conservation plan

or project to be adjusted as the results of various actions become better
understood.
Put another way, adaptive management offers a way for
managers to “learn while doing” and apply what they learn
from each action to subsequent strategies and actions.
In short, adaptive management is designed to mindfully
facilitate action with a specific purpose (strategic), facilitate
learning while doing and facilitate stakeholder engagement and
empowerment (participatory).
An adaptive approach works when the business environment is
hard to predict and to shape, and when advantage may be
short-lived.
Ongoing, substantial changes in technologies, customer needs,
competitive offerings, or industry structure may all signal the
need for an adaptive approach.
Emergent Based Approach to Strategy

The rational planning school defines an objective in advance, describes

“where we are now,” and uses a prescriptive approach in which “the
three core areas—strategic position/analysis, strategic
choice/development and strategy in action/implementation—are linked
together sequentially”

The emergent approach to strategy formulation has been characterized

by trial, experimentation, and discussion; that is, by a series of
experimental approaches rather than a final objective.
The idea of emergent strategies is that within an organization, strategy
emerges out of practice in a bottom-up or undirected way.
Emergent strategies also rely on the organization’s ability to learn from
the actual experiences of employees at all levels
This approach to developing strategy may have a number of advantages:
1. It allows the company to develop strategy quickly in periods of rapid
change
2. It uses the skills of entrepreneurial chief executives who do not feel
hampered by a long rational process
3. The emergent strategy is a much cheaper approach to developing
strategy than the rational model
Arguments in favour of a strategic approach

1. Strategy helps minimise risk

2. Avoids short-term behaviour
3. Improves stakeholder perceptions
4. Encourages environmental analysis e.g. critical to react to
change
5. Evidence indicates performance can be improved using
strategic approaches
6. Integration and coordination of activities and processes
Arguments against a strategic
approach
1. Difficult to plan when environment changing, uncertain or
complex
2. Encourages ‘conformity’ stifling innovation e.g. the
corporate straightjacket
3. Infrequently reviewed e.g. chosen long-term strategy may
not keep pace with change
4. Implementation often managed poorly
5. Rational planning a complex methodology and costly for
small businesses