Business Strategy

George Stonehouse, Bill Houston

• Publisher: Routledge
• Year: 2003
• ISBN:
  9781136423208
• Edition: 2
• Topic: Business
• Subtopic: Business General
• Index: Business

'Business Strategy: an introduction' is an accessible textbook that provides a straightforward guide for those with little or no knowledge of the subject. It presents complex issues and concepts in a clear and compact manner, so that readers gain a clear understanding of the topics addressed. The following features are included: * A comprehensive introduction to the subjects of business strategy and strategic management
* Complex issues explained in a straightforward way for students new to this topic
* Student friendly learning features throughout
* Case studies of varying lengths with questions included for assignment and seminar work
* A discussion of both traditional theory and the most recent research in the fieldThis second edition features new and updated case studies as well as more depth having been added to the material in the book. New chapters on business ethics, types and levels of strategy, and how to use case studies have been incorporated. A range of pedagogical features such as learning objectives, review and discussion questions, chapter summaries and further reading are included in the text resulting in it being a user-friendly, definitive guide for those new to the subject.A web-based Tutor Resource Site accompanies the book.

Chapter 1 Strategy and strategic management

DOI: 10.4324/9780080476346-1

Introduction and chapter overview

Strategic thinking and strategic management are the most important activities undertaken by any business or public sector organization. How skilfully these activities are carried out will determine the eventual long-term success or failure of the organization. In this chapter, we introduce the most basic concepts in the study of these activities. The various definitions of the word strategy are discussed and then we explore the levels of decision-making in successful strategic management (at the strategic and operational levels). These are defined and the links between the levels are discussed. The different frameworks and ways of approaching strategy are introduced and then, finally, we discuss the nature of strategic objectives – who is responsible for setting them and what they are essentially about.

Learning objectives

After studying this chapter, students should be able to:

• define the word strategy using Mintzberg's five Ps framework;
• distinguish between deliberate (prescriptive) and emergent strategy;
• explain what strategy contains in practice;
• describe the different frameworks by which strategy is understood;
• describe what is meant by strategic, tactical and operational decisions;
• explain what is meant by hierarchical congruence and why is it important;
• explain the stakeholder model to show how strategic decisions are arrived at.

What is strategy

Definition

At the beginning of a book on business strategy, the question ‘what is strategy?’ seems to be the most obvious starting point. However, the answer to the question is rather more complicated than might at first appear.

Definitions

This is because we use the word strategy in many ways. You may have heard people talk about a strategy for a business, a strategy for a football match, a strategy for a military campaign or a strategy for revising for a set of exams. It was this multiplicity of uses of the term that led Henry Mintzberg at the McGill University in Montreal (Mintzberg, 1987) to propose his ‘five Ps’ of strategy.

Mintzberg's 5 Ps

Mintzberg suggested that nobody can claim to own the word ‘strategy’ and that the term can legitimately be used in several ways. A strategy can be:

• a plan;
• a ploy;
• a pattern of behaviour;
• a position in respect to others;
• a perspective.

It is important not to see any of these Ps in isolation from the others. One of the problems of dividing ideas into frameworks such as the five Ps is that they are necessarily simplified. The five Ps are not mutually exclusive – i.e. it is possible for an organization to show evidence of more than one interpretation of strategy.

Plan strategies

A plan is probably the way in which most people use the word strategy. This tends to imply something that is intentionally put in train and its progress monitored from the start to a predetermined finish. Some business strategies follow this model. ‘Planners’ tend to produce internal documents that detail what the company will do for a period of time in the future (say five years). It might include a schedule for new product launches, acquisitions, financing (i.e. raising money), human resource changes, etc.

Ploy strategies

A ploy is generally taken to mean a short-term strategy. It tends to have very limited objectives and it may be subject to change at very short notice. One of the best examples of a ploy strategy is that employed in a football match. If the opposing team has a particularly skilful player, the team manager may use the ploy of assigning two players to mark him for the duration of the game. However, this tactic will only last for the one game – the next game will have a completely different strategy. Furthermore, the strategy will only operate for as long as the dangerous player is on the pitch. If he is substituted or gets injured, the strategy will change mid-game.

Mintzberg describes a ploy as “a manoeuvre intended to outwit an opponent or competitor” (Mintzberg et al., 1998, p. 14). He points out that some companies may use ploy strategies as threats. For example, they may threaten to decrease the price of their products simply to destabilize competitors. A boss may threaten to sack an employee if a certain performance standard is not met – not because the boss intends to carry out the threat, but because he wants to effect a change in the subordinate's attitude.

Pattern strategies

A ‘pattern of behaviour’ strategy is one in which progress is made by adopting a consistent form of behaviour. Unlike plans and ploys, patterns ‘just happen’ as a result of the consistent behaviour. On a simple level, small businesses such as scrap dealers follow pattern strategies. They are unlikely to produce elaborate plans – they simply buy as much scrap metal as they can. If there is a batch of old scaffolding, then they buy it up without thinking about it. However, they would not buy old plastics because that would be outside their pattern of business behaviour. Eventually, following this con...