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1998/04 1999/12 2001-2002 UMIST 2002/12 2003/12 151 PREST

Strategy management answers the fundamental economics question: Why the firm can gain the profit? orHow to gain the above-average rent?Three Core QuestionsWhat can do? What should do? How do it?

Integrating the management knowledge Integrating the functional strategies Integrating the internal & External Focusing on the long-term perspectives Designing the core competency and SCA Cognizing and experimenting strategies by integrating with the employees behaviors

Participation 10% Case analysis 30% Literature review 30% Assignment 30%

Case analysis Times: 3 per group (Chinese cases) Preparation after class PPT for presentation Every member one time Interviewees: Prof. and students Presenter not allowed to answer questions Assignment CASE STUDY FOR ONE INSTITUTE OR FIRM

20039 WEI JIANG, EDS. COLLECTIONS OF CLASSICAL LIERATURES IN STRATEGIC MANAGEMENT. 2006Arthur A. Thompson, Jr. A. J. Strickland III , 1998. Strategic Management: Concepts and Cases. 10th Ed., McGraw-Hill. Johnson G. and Scholes K. 1999. Exploring Corporate Strategy: Text and Cases. 5th edition. Prentice Hall. Johnson, G., K., Scholes, 1998.

2017

Strategy is the direction and scope of an organization over the long term: which achieves advantage for the organization through its configuration of resourceswithin a changing environment, to meet the needs ofmarkets and to fulfill stakeholder expectations.

PAST NOW FUTURE

john dunnings OLI(ownership-location-internalizationJohn Mathews LLL(linkageleverageLearning)

A general expression of the overall purpose of the organizationStrategic intent, the desired future state of the organizationA general aim in line with the missionAim that likely be quantified or more preciseSkills and know-how which distinguish it from competitors Direction and scopeCombination of processes, resources and competencyTo monitor the extent to which the action is achieving the objectives and goals

Strategy differences between MNCs, large and SMEs Dynamic balance between firms resources and scope Dynamics between diversification and risk-controlling Restructuring of governance in family companies Headquarters and subsidiaries controlling systems Boundary: Localization, regionalization and internalization ...

Discussion

Design school: Strategy as a process of conceptionPlanning school: Strategy formation as a formal process

Whether the strategy can be designed and planned because of the uncertainty and bounded rational?Is it possible to format the five-year-plan or ten-year-plan?

Strategy is the art to grasp the changing environment Contingency / Learning and learning how to learnStrategy is the balance between certainty and uncertainty What is/are certainty What is/are uncertaintyStrategy is an evolutionary process Short-term, middle-term and long-term strategy Dynamics and flexibility

Strategy management answers the fundamental economics question: Why the firm can gain the return? orHow to gain the above-average rent?Three Core QuestionsWhat can do? What to do? How to do?

Objectives Prerequisites of systemizing strategic management Framework of building strategic management Analysis of processing strategic management

Evaluating & ControllingImplementingStrategy Making Distinguishing the current situation Acting the policies and activities: Evaluating and controlling the results

Fundamentals of business choice Philosophies of value-oriented Description of strategic goal Description of mission

BlueprintsBusiness scopephilosophyperformanceoutlinesactivities

DESCRIPTION OF MISSION

CASE: TELECOM. FACILITIES MANUFACTURER

Discussion1 What is/are the ultimate factors to determine the business? 2 What is/are the roots to gain the competitive advantage?3 Why the users/customers need your products/services?4 Why one is successful and another is failure though they produce the same goods?

Customer-oriented philosophies To give what I need ( Not to give what I do not need ( To give what you need. ( To give what I need ( CHECKLISTS1What do the customers need 2What can I do for the costumers

Value component analysis Quality, Service, Cost, Speed, NoveltyServicing for customer Present and latentAppraising of customer Recommendation and Re-purchase

Defining the organizational direction and scopeCoordinating the organizations purposesIntegrating internal & external resources (A general rationale for allocating organizational resources).

MarketCustomerExternalProduct/serviceLinkage

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Polaroid Perfecting and marketing instant photography to satisfy the needs of more affluent U.S. and West European families for affection, friendship, fond memories, and humor MCDONALDSServing a limited menu of hot, tasty food quickly in a clean, friendly restaurant for a good value to a broad base of fast-food customers worldwide

DiscussionProductivity improvement is the goal?Marketing share is the goalWhat the goal is?

GoalRoadWhen? What? How much?What? How? and Who?

The goal is the Finance terms: such as the desired sales, profit, rate of growth, dividend levels or share valuations.Three critical indicators: ----Net profit ----ROI ----Cash flow

Characteristics of GoalSMART Specific Measurable Attainable Relevant Time-bound

Interaction framework between environment and strategy Internal Condition Determinantism (Inside-out perspective) External Environment Constraintism (Outside-in perspective) Instruments for Environment Analysis

Inside-out

Outside-inTARGET/ CONSTRAINTANTExternalInternal

Where is Opportunity? Where is Threat?What is Strength? What is Weakness?

4.3 External Environment Constraintism

Entry barriers: Scale economy, Product differences, Capital investment, Transfer cost, Place & channel, Governance policyExit barriers: Assets dependence, Internal strategic relation, Emotion, Government & Social constraints

Procedure Identify the key changes in the organizations environment (No more than 7~8 key points) Identify Resource Profile and Competences of the Organization (No more than 8 key points) Descriptive Analysis to key Issues Provide some useful Strategic insights

Competitive Rivalry

Objectives Roadmap of business development Vertical Integration Strategy Horizontal Diversification Strategy Business Portfolio & Resource Restructuring

Quick LowerVelocity of entranceMergers & AcquisitionsM & A, Initiating or Alliance ?What are the preconditions of them?Cooperation & Alliance Joint Venture Cooperation Net Organization FranchisingInternalizing (Establishments)Difficulty of Integration Easy Difficult

MarketPresent

NewRelated Development

Backward IntegrationManufacturer

Discussion In the following examples, illustrate what factors should be taken into account in laying down a Vertical Integration Strategy---- Motorcycle sales company develops into motorcycle producers (backward integration) ---- CTV producer (Changhong) builds the self-established marketing channel by itself (forward integration)

Strategy:Make or Buy?

Related factorsTransaction cost, transaction risk, coordination possibilityNecessityBecause of the uncertainty in transaction, opportunism and bounded rationality fewer buyers or sellers High-specified assets Frequent transactionPossibilityMarket entry barrierresponse of competitorconflict of different culture

(1999)120200036200

DiscussionsIndustry analysisProduct differentiationMarket differentiationManagerial capabilityCorporate cultureMaturity & Pattern of managerial systemCore competitive advantage

Seeking developmentBalance between the external opportunity and internal capabilitiesDissipating riskBalance between risk negative correlation and resource and capabilities positive correlationStrengthening capabilitiesBalance between strengthening core competences and diversification; cultivate the core competences based on diversificationScope economyresource sharingcost reducing creating competitive advantage

priority to diversificationbalance merits and demerits of diversification

not to diversifynot to diversify

Competitive Advantage: ----Based on resources and organizational capability (activities)----Constrained by the institution and regulation----Providing more valuable products and services to customers----Quickening the innovation velocity and value delivery with competitors Sources : strategic assets (knowledge and unique resources) Constraints: system and social cognition; balance between mission, concept and social responsibility Fundamentals: consumer-oriented value innovation

6.2 Resources/Knowledge, Capabilities and their relationships Definition of resources and capabilitiesResourcesexplicit, static, tangible and objective goods for usageCapabilitiestacit, dynamic, intangible and subjective factor The relationship between resources and capabilitiesIf capabilities can be exerted only when attached to specific sources, people will become the slave of the resources;If capabilities can be exerted without special resources, people will independent of resources.

Value-oriented Rarcity/Immobility Inimitable Not to be substituted

Philosophy of Knowledge Management Knowledge flow supports the realization of cash flow and material flow Knowledge flow enhances the efficiency and effectiveness of information flow Firm activitiesinput knowledge & activities output Structure of KM System KM Circle KM Platform Supporting System of hardware and software

Right knowledge to the right person in theright time & placeMotivation systemOrganizational structureOrganizational cultureOrganizational Supporting systemDatabase embeddings Database capacityIntranetTechnologySupporting system

Hardware platform ---- Technical support system ---- Appliance for knowledge acquiring ---- Desktop of knowledge management Organization platform ---- Organizational incentive system and structure ---- System context and culture Knowledge network ---- Tangible and intangible network sharing Knowledge capacity ---- Tacit knowledge inventory: HRM ---- Explicit knowledge inventory: Database, etc Service platform

Source: Nonaka & Takeuchi, The Knowledge Creating Company, Oxford University Press, 1995.

Strategic positioning analysis: Uniqueness & differences Advantage building Tools for advantage buildingObjectives

Uniqueness performing different activities from rivals' or performing similar activities in different ways. Needs-based positioningVariety-based positioningAccess-based positioningThe choice of product or service varieties Serving most or all the needs of a particular group of customers segmenting customers accessed in different ways

;Integration is the effective choice of trade-offIntegrate competitive advantage, business development, market interaction and internal management togetherTrinity of corporation capabilities, internal and external environment, mission & goalsIntegration systematically of technology innovation, system innovation, organization innovation, management innovationMarket network synergy and resource synergy

Low cost strategy ----Scale economy ----Scope economy Differentiation strategy Focus strategy

Difference by customer Low cost positionIndustry

Strategy goal scope

Specific market levelfocus on the differencesfocus on low cost

What is the common tactic to create competitive advantage? Can the low price bring the competitive advantage?

Activities-Cost Chain PurchaseOperationConsignmentMarketingAfter-sales Service JIT, MRPIMRPIIERPCIMSSupply-Chain Management ExampleCost-retrospections (Handan Steel Corporation) Multi-activities index

On the corporation stock strategy, the Japanese and American corporation have different ways: Japanese corporate claim reasonable regional purchasing American corporate claim globally lowest cost purchasing

Supportingactivities

Customer value-oriented positioning Customer value-oriented dynamic innovation Customer value-oriented competitive regulations

1990

1992 1994 1996

Problems: whats factors fostering the customer loyalty? Internal value Transaction cost Sunk cost Social and emotion commitment

Value disadvantage areaValue advantage area

Concept of Core Competence Cultivating Core Competence Rules of sustained innovation Dynamic Organization Learning

Why did NEC and GTE, starting with comparable business portfolios, perform so differently?(2) What are the roots of competitive advantage?(3) How to identify the core competencies?(4) What is the core product?(5) How to link the core products to SBU? Why the core competence must be defined by the corporate leader not SBU leader?(6) What are the role of top managers to build core competencies?

(1) AnswersStrategic intent and strategic architecture (Scenario)Core competences and core productsGTEportfolio of businesses; NECportfolio of competences(2) AnswersCore Competences are the collective learning in the organization, especially how to coordinate diverse production skillsand integrate multiple steams of technologies. (Figure)(3) AnswersPotential access to a wide variety of marketsSignificant contribution to the perceived customer benefits of the end product.Difficulty for the competitors to imitate.

(5) AnswersUnderinvestment in developing core competencies and core productsImprisoned resourcesBounded innovation

(6) AnswersDeveloping strategic architectureRedeploying to exploit competencies (corporate assets)

Core competence : a combination on a series of complementary skills and knowledge which contains the following characteristics:Value-orientedRareHard to imitate Not to be substituted

If we compare the core competence of a corporate to the root system of a tree: In order to grow up and become a towering tree, internal conditions of the seed and elements of nutrient are deeded.The development process of core competence:Fundamental state of core competenceSecondary state of core competenceMature state of core competence

SurviveStage of Competitive advantageSCACore Competence RigidityCompetitive advantage

Core competence should be able to control the power structure of an organization Must be chosen and impelled by the CEO rather than SBU In a certain period, only one or two core competence to cultivate Exploit resources to architect, cultivate and strengthen the core competences with long- term strategic vision.

Coopetition Mode Coopetition Thinking Typical Coopetition Strategy

Coopetition basissustainable relationship, importance of future relationship/impactCoopetition optimization strategycooperate firstthen competenot zero game strategyCore of coopetition strategy:keep the self ability of constraint or return to betray or cooperate Coopetition objectUnite everyone that can be united (customer, supplier, competitor, society)Coopetition resultwin-winout of prisoner dilemma

Cases:

possibility resource complementrisk sharing market development necessity multi-skillsdifficult to develop independently sufficiency relationship persistenceimplement of approachesMutually beneficial; strategy consistent

Typical strategic alliancejoint venturestrategic outsourcingVirtual firmscooperative productionprice alliance

Fundamental condition reciprocal and mutual benefit common enemySpecific condition Players Added value Rules Tactics Scope-space & Time

Human Resource Allocation

Step Identify and enumerate specific strategic-oriented key strategic element listStep Verify and make sure the sufficiency of these elements to gain competitive advantageStep Establish specific dynamic performance standards for supporting the gaining of competitive advantage Step Evaluate rigidity of each core capacity and possibility of being imitatedStep Decide impact of latent competitive factors to enterprise and replying strategy

Scarcity of knowledge talented persondisappearance of reserves to the unemployedInimitableness of knowledge talented personhardness of substitutionIntegration of organizational activitiesspecial activities of forming assignment should have a specific individual supporting, individuals becomes parts of organizational life, vacancy of knowledge talented individuals lead to recession and even shock of organizational vitalityHuman resource management is transforming from hired for life to may be hired in life

Objectivebuild dynamic competitiveness centered in the ability of study and practiceOrganizationfulfill the human resource management system which regards persons to be strategic assetsSurroundingsenterprise institution and culture contribution team spirit cultivationRootcreate cheerful life experienceKey pointschange the notion of hiring persons, exert employees potentialFundamentalThe sea can hold water from thousands of rivers, it's big because of its capacity

Objectivecultivate dynamic competitiveness which takes knowledge as the first production factors Premiseuse identified criteria to define special organizational resourcesPathindividual and organizational knowledge allocationbring employees into playingactualize the balance between stability and dynamics build learning organization create particular knowledge coupling modeManagementknowledge managing circle, knowledge platformsupporting system of software and hardware implicit and explicit Knowledge interaction core knowledge internalization and non-core knowledge externalizationExploiturestrategic input to knowledgecomposes strategic assets

Three elementsInformation communicationIT development and organization structure transformationPower Relationshipevolution of power originationProduct and service flowhow to adapt4 Satisfactions

Three standards Smoothermore symmetrical& swifter information communication Easiermore reasonable& legible power relationship Better customer value oriented product& service flow

Developing dynamicsEnterprise life circle theoryObjective orientation0rganization structuring and innovation served for enterprise strategy and core capacityEnvironmental adaptability of organizational developmentorganizational change adapted to environmentRelatively stability of organization innovationDestroying to organization capital from frequent organizational changeEnterprise centralization and decentralization combinationCentralization in core main business and important functional departmentDecentralization in non-core business to approach market vitality (e.g. SBU)

Characters of learning organization Flatteningflexibilityindividual capability Equality in knowledge and information network

Construction of learning organization Learning conception as a forerunnerstudy for life Shared vision as a baseseek common points while reserving difference Humanism as a guideenvironment creation Mechanism and institution as assuranceopen system Knowledge sharing as a coremutual acceleration Life value as a concepttwo transformations

Generalized institutional view Cultureproductsconcepts be inosculated with customs traditions social responsibility in organizations Specialized institutional viewInstitution is: worked for strategic objective & orientation not centered in controlling employees, but in enterprise development for guiding employees behavior, inspiring potential, and achieve self-management

Organizational vision conceptValue-creating centered: Creating value for both customers and employees, seeking organizational and employees development togetherImplemental view to psychic viewRegard working as an instrument for achievement changed into seeking for inner value and life value at workMachinery view to life viewRegard enterprises as a machine for output and input transformation changed into a self-organized being. Human-oriented concept Create working environment for employees Earn a life changed into getting a happy life through work Right perception of employees and enterprises interrelation

Concept a specifically communitycreatefind and build a set of basic hypothesis mode in the process of gradually disposing environment adaptation and interior unification. (Shein, 1990)Concept a value go without saying: employees realize whats accepted and whats not.Concept Intrinsic valuethinking waybehavior customs and faith systems accepted and shared by the crew are embodied in all behavior criterion

Power culture: a minority of senior managers execute most of their authority by commanding-the basic believe is that flinty standpoint is propitious to organizational benefitsRole culturepay attention to bureaucratic process such as rulesregulations and unambiguous defined roles, the believe is role culture is good for systematic stabilizationSupport Culturegive mutual supporting to people searching for unification and sharing valueAchievement cultureencourage self-expression and independence pursuing, aim at success and achievement

Result oriented: contribution exhibits in the exterior (objective )People oriented: be an upright person before doing right things (center Do right in one time: habit becomes (attitude) Systematical thinking: optimization comes out of cooperation (access Begin with small things: great events begins with tiny ones (foundation) Innovate continuously: change is the spirit (method)

Mission cultureSpirit Institutional cultureManagement institution is a machinerystructure Material cultureExamine inspiring institution as lubricant Behavioral cultureCore of corporate culture

These 4 levels of cultures systematically conformed and will lose foundation and nutrition of cultivating and developing culture without institutional conformity material culturebehavioral culture

Objectives Strategy Evaluation Framework Strategy Decision-making Principles Strategy Decision-making Influencing Factors Strategy Decision-making Pitfall Avoiding

Fundamental behaviorLawful, Reasonable and Fair()Fair, Equal, and Public()Concrete rulesEnvironment, Capabilities, Mission()

Risk attitude of strategic decision-maker Pressure of organizational external environment Corporate culture and value Personal needs of strategic decision-maker Balance between internal and external political sides Personal conception level of strategic decision-maker

Sense of Innovation Sense of risk Assertive Capabilities Interpersonal Capabilities Strategic Motivation

(81), (17) (57)

Result-oriented Strategy Compatibility of Business, strategic unit and functional department Compatibility of customer value, stockholder returns and employees interests Criteria of strategic motivation InquirementReasonable, efficient and effective in designing, action and performance appraisal Example customer valuerate of second glance , recommending and losing stockholder returns employees interestsPhysical & Spiritual motivation Core Interaction among customer value, stockholder returns and employees interests FocusQualify all the performance-influencing criteria

Process Monitoring GoalsResult-oriented, Process excellence

Process Monitoring OrientationMatching between worker and working Everyone is the elite and manager--No management is the best management

Pitfall PreventionDislocation of the objective and methodPut the rewards before the appraisal Short-term behavior orientationMotivation mistaken behavior

Mainly Internal motivation Goal motivation Positive motivation Team motivation Complementally External motivation Process motivation Negative motivation Individual motivation

Vision-designingStrategy-clarifyingParticularity-creatingCustomer-orientingDifferentiation-competing Business-sustainingProcedure-implementingManagement-cooperating

institutional viewcommunity?