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Business Strategy Lecture 8 - Making Strategy Work

Business Strategy Lecture 8 - Making Strategy Work. People and Relationships John Birchall. 1. Linking Purpose to Action. Adapted from Harrison (2003: 37) and De Wit & Meyer (2005: 5). Strategy Context. Broad and Operating Environments. Strategy Content

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Business Strategy Lecture 8 - Making Strategy Work

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  1. Business Strategy Lecture 8 - Making Strategy Work People and Relationships John Birchall 1

  2. Linking Purpose to Action Adapted from Harrison (2003: 37) and De Wit & Meyer (2005: 5) Strategy Context Broad and Operating Environments Strategy Content Business Definition, Competitive Strategies Organisational Purpose Vision, Mission, Ethics Strategy Process Involves Stakeholders 2

  3. Organisational Architecture • Concept developed by John Kay (1993)Foundations of Corporate Success: How Business Strategies Add Value. Oxford: University Press. • Architecture: a distinctive capability founded on relationships • Remember Porter’s Value Chain? • Capabilities strengthen the chain: • Co-ordinating the efforts of different functional departments • Improving communications to improve new product design, generating extra customer value

  4. Link to : Porter’s Value Chain (Harrison 2003: 83) Administration (Firm Infrastructure) Human resource management Support activities Profit Technologydevelopment Resource procurement Service Profit Marketingandsales Outboundlogistics Inbound logistics Operations Primary activities 4

  5. Linking Marketing and Operations • Long-Range Market Forecasts: • guide decisions about facility size and process • Marketing Data on Customer Needs: • can help location decisions • Which is most important? - cost, customer convenience or access to scarce resources? • Promotions and Ordering Cycles: • should be built into production schedules • seasonal peaks matter too

  6. People and Relationships • Kay (1993: 66) says: • “Architecture…is a network of relational contracts within, or around, the firm” • Internal architecture: relationships of management with employees, and employees with each other • External architecture: relationships with suppliers and customers • Networks: relationships “among a group of firms engaged in related activities

  7. Link to : Stakeholder Analysis The Mendelow Grid, as shown in Johnson, Scholes and Whittington (2005: 182) LEVEL OF INTEREST Minimal effort Keep informed LOW POWER Keep satisfied Key players HIGH LOW HIGH 7

  8. External Stakeholders:A Positive View (Harrison 2003:268) Formal Power High Importance Economic Power Partnering and Inclusion in the Firm’s Activities Political Power Strategic Importance of External Stakeholder Influence on Environmental Uncertainty Facing the Firm Monitoring and Traditional Management Techniques Low Importance Possession of Knowledge or Resources not Found in Firm 8

  9. Link to : Stakeholders and Environmental Change(Harrison, 2003: 37) The Broad Environment Technological Influences Socio-cultural Influences The Operating Environment Competitors Local Communities Activist Groups The Organization Suppliers Customers Owners/Board of Directors Managers Employees The Media Unions Financial Intermediaries Government Agencies and Administrators Economic Influences Political/Legal Influences 9

  10. Internal Stakeholders • The world is complex and changing (Stacey 2003) • Businesses need to avoid complacency, slow reactions or resistance to change: strategic drift • Junior managers with fresh ideas can stop chief executives getting set in their ways • Learning is key to success, and often comes from staff directly involved in operations and sales • Frontline staff can help the organisation develop proactive strategies to anticipate and shape the process of change within its industry • Emergent strategy, well directed, can turn the leader’s vision into reality (Mintzberg et al 1998: 175-231)

  11. A good architecture… • Information flows freely upwards, downwards, and across functional divisions • People are willing to play with new ideas and help each other develop them further • Strategy can emerge in flexible response to issues and challenges • The organisation can learn: from its own experiences and from its stakeholders

  12. May be now is the time to collaborate? • Strategic Alliances • Joint ventures • Research partnerships • Franchising • Outsourcing • Start-up assistance, training

  13. Supplier value chains Channel value chains Customer value chains Organisation’svaluechain From Porter’s Value System … 13

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