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Concept of Strategy

Strategy sits at the heart of business; it frames long-term direction and resource allocation.
At its simplest: a plan to reach a desired goal.
Broader view: acquisition & deployment of resources to realise that goal.
All decisions, at any level, should align with the ultimate objectives / mission.
Strategies must retain flexibility—markets, technologies, and stakeholder expectations evolve.

Formal Definitions

Johnson & Scholes: “Strategy is the direction and scope of an organisation over the long term which achieves advantage for the organisation through its configuration of resources within challenging environments, to meet the needs of markets and fulfil stakeholder expectations.”
Mintzberg & Quinn: “A strategy is the pattern or plan that integrates an organisation’s major goals, policies and action sequences into a cohesive whole … based on its relative internal competencies and shortcomings, anticipated changes in the environment and contingent moves by intelligent opponents.”

Drucker’s Five Fundamental Questions

What is our mission?
Who is our customer?
What does our customer value?
What results do we seek?
What is our plan? – metric-setting, mission relevance check, goal & strategy formulation.

Core message: start with customers; anticipate their changing values (e.g., sustainability concerns).

Knowledge-Check Example – Irish Pub

Target: ages $21!–!35$ , sports & socialising, rugby niche.
Customer values chosen:
- Show live sports on big screen (A)
- Casual gathering spot (D)
- Hearty food (F)

Public Company Strategy Summaries (Jan 2018)

GM: “Earn customers for life”; passion, loyalty, breakthrough technologies; serves communities → aim: world’s most valued automotive company.
Walmart: Every Day Low Price (EDLP); one-stop convenience; deep product assortment across on-line, mobile & store.
Royal Dutch Shell: Maintain leadership in oil & gas, pivot to low-carbon world; safety & social responsibility; reshape to be simpler, resilient, cash-generating via compelling projects, cost reduction, divestments.

Mission vs Vision

Vision: aspirational, future-oriented, “Where do we want to be?”
Mission: fundamental purpose, “What do we do?”
Examples (2017):
- Whole Foods — Vision: Whole Foods, Whole People, Whole Planet; Mission: high-quality food leadership.
- Southwest — Vision: world’s most loved, most flown, most profitable airline; Mission: high-quality customer service with warmth & pride.
- Cisco — Vision: Changing the way we work, live, play & learn; Mission: shape the future of the Internet.
- GoDaddy — Vision: Radically shift the global economy toward life-fulfilling independent ventures; Mission: help customers “kick ass”.

Linking Values, Strategy, Vision & Mission – GSK Case

Mission: Help people do more, feel better, live longer.
Three strategic priorities:
1. Grow a balanced business across Pharmaceuticals, Vaccines, Consumer HC
2. Deliver more products of value (pipeline focus, R&D productivity)
3. Simplify operating model (reduce complexity, free resources).
Highlights: $\$36.6\text{bn}$ turnover; $39\%$ outside US/EU; up to $20$ asset filings by 2020; $82\%$ Dow Jones Sustainability Index.
Values: patient focus, integrity, respect for people, transparency; reinforced via leadership, development & incentives.

Importance of Strategy

Anticipates environmental change, reinforces mission, chooses positioning.
Communicates guiding principles externally & aligns employees internally.
Website disclosures balance investor information vs competitor secrecy.

Strategic Decisions – Key Characteristics

Long-term, organisation-wide, resource-heavy, set direction & scope.
Harmonise capabilities with external threats/opportunities.
Influence tactical & operational choices; sustain competitive advantage.

Levels of Strategy

Corporate: growth/stability/retrenchment; allocates resources across portfolio; pursues synergies; sets investment & governance (e.g., Textron multi-industry growth).
Business: how each unit competes in its industry (Bell, Textron Aviation etc.).
Functional/Operational: day-to-day value-chain optimisation (finance, HR, supply chain, IT…).

Corporate Control Styles (Goold & Campbell)

Corporate Planning – centre does detailed plan; units implement.
Financial Control – units autonomous; centre sets financial performance targets.
Strategic Control – units plan within guidelines; centre intervenes if off-track.

Strategic Management Process (Classical Model)

Vision, Mission, Objectives – “Where do we want to be?”
Analysis – external (PESTEL, market, competitors) + internal (resources, value chain) → SWOT → “Where are we now?”
Formulation – generate/evaluate options, check resource & environmental impact → “How do we get there?”
Implementation – communicate, allocate resources, execute.
Review & Control – monitor KPIs, feedback loops; iterate.

Not always rational; biases & bounded rationality exist; teamwork mitigates.

Strategic Questions a Plan Answers

$\text{Q1}$ Where are we right now?
$\text{Q2}$ Where would we like to be?
$\text{Q3}$ How do we get there?
(Who implements? → everyone, hence not core strategic-plan question.)

Alternative Approaches to Strategy

Rational/Formal Planning
- Pros: risk identification, foresight, decision discipline, goal congruence, coordination.
- Cons: time-consuming, rigid, may stifle initiative, ignores politics, bounded rationality.
Incrementalism – small extensions of past policy; lower risk, stakeholder-friendly; danger: strategic drift.
Emergent Approach – objectives evolve during action; ad-hoc trial & error; high experimentation; suits dynamic markets.
Freewheeling Opportunism – no formal plan; exploit opportunities instantly; flexible but risky, hard to finance.

Emergent Strategy Mechanics

Patterns visible only in retrospect (Mintzberg); arise via:
1. Managerial ad-hoc responses to environment/competitors.
2. Bottom-up initiatives (e.g., sales staff push a rising-demand product).
Pros: agility, employee initiative, fit with dynamic environments.
Cons: may contradict long-term goals; requires top-level recognition & integration.

Inside-Out vs Outside-In (Complementary Views)

Inside-Out / Resource-Based
- Leverage internal assets & capabilities for cost leadership or differentiation.
- Tools: resource audits, Porter value chain, 9M’s (Men, Machines, Money, etc.).
- Risk: miss market shifts → strategic drift.
Outside-In / Position-Based
- Market orientation, customer value & experience drive strategy.
- Early spotting of new tech & unmet needs; differentiates via positioning.
- Risk: aspiration may exceed internal capability/cost tolerance.
Best practice: integrate both for sustainable advantage & shareholder value.

Illustrative Scenarios

Irish Pub Start-Up

Vision: Making everyone feel at home through food, drink & music.
Mission: Own & franchise multiple local Irish pubs within $5$ years.
Customer values: sports screening, casual gathering, hearty food.

VIRBUA Technologies (VR Game Consoles)

Operates in fast-paced tech; formal plan aided venture-capital funding (risk IDs, congruence).
Drawbacks: rigidity, cost, slow response to competitors’ software moves.
Moving toward recognising emergent strategies to regain agility.
For formal planning: contingency planning, clear framework, experienced managers.
Against: industry dynamism, high cost/time, forecasting inaccuracy, rigidity.
Issues emergent approach mitigates: rigidity, planning cost, forecasting accuracy.

KDM Autos (SUV Manufacturer, China)

Senior-team perspectives mapped to views:
- Inside-Out: efficiency, economies of scale, craftsmanship competencies.
- Outside-In: customer orientation, adapting to global market expectations.

Key Take-Aways

Strategy = direction + scope + advantage; must align mission & vision, anticipate change, and mobilise resources.
Effective strategy blends structured planning with flexible adaptation: formal processes set intent; incremental & emergent actions keep relevance.
Multi-level alignment (corporate → business → functional) and balanced inside-out/outside-in analysis underpin sustainable competitive advantage.
Ultimate success depends less on the chosen methodology and more on shared vision, consistent goals, and collective execution across the organisation.