BAHONS Business Policy

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• BA(HONS) Business Policy
• BMG527J1 BMG542J1
• Semester 1 2004-5
• Lecture 1

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Learning Outcomes
At the end of this session you will have

• A brief overview of the course
• Been introduced to Web CT
• Received an introductory lecture where you
  will
• Appreciate the meaning of the term business
  policy and its relation to strategy
• Understand the nature of the rational model of
  strategic planning
• Understand the complexity of strategic decisions
  through the conduct of a strategic analysis and
  choice

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Brief overview of course

• Module coordinator - Dr Rosalind McMullan
• Module teaching staff
• Mr Alan McKittrick P/T students
• Dr Rosalind McMullan F/T students
• Module Handbook
• Introduction to module, reading list, week by
  week lecture and seminar structure
• Assignment, submission dates
• WebCT/web page
• http//www.busmgt.ulst.ac.uk/modules/businesspolic
  y/index.html

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Your commitment to Business Policy
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Course Content

• Strategic analysis
• PESTEL, Scenario Planning, Strategic Group
  Analysis, SWOT, Value Chain, Stakeholder analysis
• Strategic choice
• Bases of choice (Porters Generic
  Strategies/Bowmans Clock), directions and
  methods of choice (Ansoffs Matrix)
• Strategic implementation and evaluation
• Feasibility, acceptability and suitability,
  Ranking analysis

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Business Policy

• has a general management orientation and tends
  primarily to look inward with its concern for
  properly integrating the corporations many
  functional activities. Strategic
  managementincorporates the integrative concerns
  of business policy with a heavier environmental
  and strategic emphasis.
• (Wheelen Hunger, 1998)

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Define the term "Strategy"
Schendel Hofer (1979)
'the mediating force or 'match' between the
organisation and the environment'
Andrews (The Concept of Corporate Strategy, 1987)
'corporate strategy is the pattern of decisions
in a company that determines and reveals its
objectives, purpose or goals, and produces the
principal policies and plans for achieving these
goals'
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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 a changing environment, and to
fulfill stakeholder expectations.
(Johnson Scholes, 2002)
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Further Definitions of Strategy
Mintzberg (1998)
Plan (intended) Ploy Pattern (realised) Position P
erspective
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Academic Approaches to Strategy

• There are two distinct approaches to the study of
  strategic management
• Planned (Prescriptive) e.g. Porter
• strategic decisions should be reached rationally
• objectivity/economics and
• Organisational (Descriptive) e.g. Mintzberg
• strategic decisions are evolutionary
• strategy emerges as a result of negotiation
• influenced by preferences of management
  organisational culture

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Chronology of Strategy Literature

• Design Learning Schools
• Essential fit
• SWOT analysis
• Incrementalism
• Chandler/Andrews 1950s-1960s
• Lindblom
• Planning School
• Formal process of distinct steps, check lists,
  objectives, budgets operating plans
• Ansoff 1970s-1980s

• 1980s
• Positioning School
• Growth Share
• BCG Matrix
• Generic positions
• Strategic groups
• Value chain
• Very analytical
• Porter/Ohmae
• Logical Incrementalism
• Quinn

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Different Levels of Strategy

• Corporate - what business(es) should we be
  in?
• Business - how should each business compete?
• Functional - how should the functional
  (operational) areas support the
  corporate/business strategies?

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Whose responsibility is strategy?

• Every manager has a strategy- making/strategy
  implementing role
• Strategy is not solely the responsibility of
  senior executives

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Strategic Planning Vs Strategic Management

• Strategy
• A course of action including the specification
  of resources required, to achieve a specific
  objective
• Strategic Plan
• A statement of long-term goals along with a
  definition of the strategies and policies which
  will ensure achievement of these goals (CIMA,
  1996 terminology)
• Strategic Management
• An integrated management approach drawing
  together the elements involved in planning,
  integrating and controlling a business strategy

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Strategic Planning Model

• Strategic analysis (position)
• Strategic choice
• Strategic implementation (strategy into action)

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(No Transcript)
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Need for Strategy
Managers need strategies to guide HOW the
organisation's business will be conducted and
HOW performance targets will be
achievedWithout a strategy, managers have
No clearly established course to follow No
roadmap to manage by No cohesive action plan
to produce successful performance
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Case For Long-Term Strategy (1)

• Irreversible nature
• Risks involved
• Environmental appraisal
• Could have performed much better
• Long term approach
• Information
• Resources - planned and rationed

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Case For Long-Term Strategy (2)

• Early warning system
• Integrative aspect
• 'Corporate' objectives and nature
• Alternative strategies
• Yardsticks
• Continuous, not a 'one-off'
• Responsibility and authority
• Communication, participation/incentive

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Arguments Against Long-Term Strategy

• Setting corporate objectives
• Difficulties of forecasting accurately
• Short-term pressures
• Rigidity
• Stifling initiative / innovation
• Cost
• Lacks dynamism
• Why start now?
• Management distrust of techniques
• Clash of personal and corporate loyalties

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Characteristics of Strategic Decisions

• Scope of an organisation's activities
• Matching of the activities of anorganisation to
  the environment
• Matching of the organisation'sactivities to its
  resource capability
• Major resource implications
• Affect operational decisions
• Values and expectations, power
• Long term direction
• Complex in nature

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Strategic Decisions

• Substantially affect a company's ability to
  generate cash and profits
• Relate to the company as a whole
• Are taken by the top executive team and the board
  of directors
• Take effect in the long-term and therefore tend
  to be made infrequently
• Reflect the values of top management are taken
  in accordance with corporate philosophy and
  culture

(Dietger Hahn, LRP vol 24, 1991, pp 26-39)
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Why is strategy on-going?

• Managers have an ever present responsibility for
  detecting when new developments require a
  response
• track progress, spot problems, monitor and adjust
• Tasks are not neat, departmentalised
• These tasks are carried out alongside managers
  other duties
• Change does not happen in an orderly or
  predictable fashion
• Day to day strategic management is about ensuring
  current strategy is working

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The Three Big Strategic Questions
Where are we now?Where do we want to
go?How will we get there?
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Summary

• Reviewed definitions of strategy and demonstrated
  link with business policy
• Identified different levels of strategy
• Explored the relationship between strategic
  management and planning
• Argued case for and against long term strategy
• Described how the course would develop

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Please check

• that you can access WebCT (see handout)
• that you can access the Business Policy web page
  and
• if you name does not show on the attendance sheet
  please let the member of teaching staff know
  and check if your registration is complete for
  this module.