SEM 310 - Strategy

T/F Before the 1960s and 70s, companies mainly focused on "long-range planning," which means they predicted what resources they'd need in the future to keep growing.

T/F Before the 1960s and 70s, companies mainly focused on "long-range planning," which means they predicted what resources they'd need in the future to keep growing.

True

Why did companies stop using ‘long-range planning’ in the 80s?

• increased competition & uncertainty

• laws breaking up big companies to prevent monopolies

strategic planning

about making thoughtful decisions to guide the company toward success in the future (emphasizing iteration)

Key Practices in Modern Strategic Planning

• Industry and Portfolio Analysis

• Scenario Analysis

• Game Theory: Predicting how competitors will react to different actions based on their interests and options.

• Involving Middle Management: makes planning less isolated

• Building Flexible Management Systems

game theory

How will competitors respond to different moves, given their interests and options?

whats the main con of traditional planning?

too rigid and focused only on making plans without enough attention to actually carrying them out

what does it mean when “strategic management is about building management systems”?

iterative shaping of and learning from activity → plans become less fixed

key points of Strategic Management

• ongoing engagement with middle management and others → planning becomes less insulated

• Building management systems → iterative shaping of and learning from activity → plans become less fixed

• generate and implement an evolving strategy

open strategy

sharing strategy with outsiders; even involving them in strategy formulation → proving rationality to investors and stakeholders → more ideas & creativity

defining practices of open strategy

• Public strategy reporting, and strategic transparency

• Strategy jams and crowd-sourcing

In general, strategy is about the pursuit of:

sustainable, competitive advantage (usually profit, can be other stuff)

First order fit

Ensuring consistency across various activities within the company.

Second Order Fit

Activities not only consistent but also mutually reinforcing or enhancing each other.

Third Order Fit

Optimizing activities to maximize their effectiveness in supporting the company's position.

T/F Positioning is not just about being different; it's also about how well a company's activities fit together to support its position.

True

T/F Are Trade-offs part of making a position sustainable

True

Strategic Choices include:

• Corporate strategy

  • overall direction and scope of the entire organization

• Business strategy

  • focuses on how a business unit or division will compete within its specific industry or market segment

Current & Potential Positions are dependant on

• external environment

• internal capabilities

Current & Potential Positions → ? → Strategic Choices

Industry Analysis

porters five forces

• risk of new entrants

• rivalry b/w competitors

• market power of buyers

• market power of sellers

• risk of substitution

VRIO Framework

• Valuable

• Rare

• Inimitable (impossible to copy; unique)

• Organized

Resources

anything you can use to create value

• ex: tech, material, skills

competitive parity

defend a competitive position by not overspending on promotion and marketing budgets (spending same as competitors)

Competitive Dynamics

strategic choices → strategic position

what strategic position is best

dynamic

T/F strategy is about the pursuit of sustainable competitive advantage

True

what does strategy consist of:

• effective positioning

• strategic analysis

Schein’s model of organizational culture layers

• artefacts

• espoused beliefs & values

• underlying assumptions

Artefacts

• The ‘surface’ of culture / shallowest indicator of what an organization’s culture is actually like

• Visible, tangible aspects of culture that we can easily observe

• Activities (ex: meetings, retreats), Objects and Language

Espoused Values

• Principles or goals that we feel

  have intrinsic worth. Often ‘at

  the back of our minds’.

• ex: organizational values and behaviors, company or employee charters, team contracts

• changing them will provide some level of change to organizational culture but not huge effects

Underlying Beliefs

• held by members of organization

• deepest indicators of an organization’s culture

• ex: assumptions about how they should work with each other.

• Ex: A company's basic assumption might be that "employees are expected to work long hours to demonstrate commitment."

inertia

• resistance → impede change / innovation

pragmatic sources of inertia and its result

• loss of enjoyment / motivation

• fear of failure

  • it wont work

  • i cant do it

  • they wont like it

• loss of power / prestige

Result: resistance because of self-interest or perceived collective interest

result of pragmatic sources of inertia

resistance because of self-interest or perceived collective interest

Normative sources of inertia

• prevailing social norms

• moral disapproval

• evaluations of motivations in good faith

Result: Moral resistance, or concerns about appropriateness

result of Normative sources of inertia

Moral resistance, or concerns about appropriateness

Cognitive sources of inertia

• exhaustion

• uncertainty

• habituation

• the “taken-for-granted”

result of Cognitive sources of inertia

Resistance based on sense and understanding

4 levels of responses to change. (disapproval to approval)

• active resistance

• passive resistance

• compliance

• enthusiastic support

Disrupting existing structures

• Questioning moral associations, or social norms

• Undermining existing controls & sanctions

Building Momentum

• Coalition building

  • building

  • identification

• building spaces for moral support

Entrenchment / Making a new normal

• Enabling & Policing (ex: awarding adoption)

• Valorising & Demonising (ex: Publicizing

  Success)

• Normalizing & Routinizing

Which of the following is a good example of normative inertia:

a) People resist because they think a change will fail

b) People try to comply with a change, but don’t understand what they need to do

c) People resist because they think a change will make them less powerful

d) People resist because they think the reasons being given for a change are dishonest

e) People resist because they are exhausted, and feel unable to engage with a desired change

d) People resist because they think the reasons being given for a change are dishonest

Resistance based on perceived dishonesty suggests a clash with organizational values such as integrity, honesty, or transparency. People may resist change if they perceive the reasons behind it as contradictory to these values.

3 types of Organizational inertia

• pragmatic - dealing w stuff logically

• normative - dealing w norms

• cognitive - dealing w mental stuff

Institutional logic

underlying framework of beliefs, values, norms, and practices that guide behavior and shape the way individuals and organizations operate within a particular social or organizational context (through roles, relationships, activities and purposes)

• ex: family life

Institution

The facts of social life (fact about how people think/act in a certain society)

• ex: canadians drive on the right hand side of the road

* they seem so familiar that we take them for granted

dimensions in institutions

• Regulative/pragmatic dimension

  • make sure you follow based on self interest

• Normative dimension

  • what’s the norm? what will people think of you if you don’t follow it

• Cognitive dimension

  • what we expect

  • what makes sense to us

• Interdependencies

Regulative/pragmatic dimension

make sure you follow based on self interest

social legitimacy

belief that as an organization you are moral, rational and sensible

why do organizations pursue social legitimacy

• self interests

• member commitments (members believe in criteria stakeholders are using to judge to organization)

stakeholders invest time and resources based on social evaluations of what 3 things

• Of competency

• Of morality

• Of rationality

Substantive decisions

structures, governance, routines, incentives

Symbolism & Rhetoric social evaluations

espoused motivations, justifications, gestures

Two general approaches of instrumenting CSR

1. Cosmetic - PR for good deeds; token or serious gestures

2. Strategic - seek profitable lines of good behaviour

3 ways of strategically implementing CSR

1. thinking about social / ethical implications of your decisions

2. have an agenda (how social objectives can get you ahead competitively)

3. make CSR part of value proposition* most effective on consumers

instrumental case for Corporate Social Responsibility (CSR)

involves arguing for CSR initiatives based on their potential to bring about strategic or economic benefits for the organization

case for a complete CSR agenda

arguing for the integration of social and environmental concerns into all aspects of the organization's operations, rather than focusing solely on individual initiatives or actions.