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Strategy

Topic 1 – Introduction

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Contents

Introduction 1
Learning objectives 4

Student activities 6

Summary 8

References 8

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Introduction
Strategy is a popular area of debate, publication and interest in the business
community because it is at the core of the generation of shareholder and
stakeholder value for organisations – public or private. Strategy is also the
focus of boards of directors, chief executives, and top managers leading
business units as well as the management consultants hired to advise them.
We will discuss the issues confronting directors, executives and management
consultants in thinking through strategy issues at the network, corporate,
business and functional levels of the organisation in this module.
Our choice of text for the course is the popular Strategic Management: The
Challenge of Creating Value by Peter Fitzroy, Mac Hulbert and Tim
O’Shannassy. Readings included in the units for this module have been
carefully selected for their insight into the field. A selection of journal articles,
trade articles from sources such as Harvard Business Review and the
business press are recommended.
The strategy discipline is complex and difficult with competing tensions and
challenges. The goal of this module is to encourage students to explore this
fascinating field, master the tools and techniques of strategic analysis and
use this insight to help create robust strategies for organisations. The practice
of strategy is more about the creativity and engagement of people than hard
data and rational planning, though we need both for sound practice.
There is some debate evident in the field of research and practice on a
definition of strategy. DeWit and Meyer (2014: 2) note: “There are strongly
differing opinions on most of the key issues and disagreement runs so deep
that even a common definition of the term ‘strategy’ is illusive.” An important
aspect of the study of strategy is engagement with these differing views and
perspectives as they frequently offer a sophisticated insight to the resolution
of business problems and opportunities – the focus of strategic thinking.
Michael Porter (1996: 77), from the analytical perspective of his training as an
industrial economist, sees strategy as ‘defining a company’s position,
making trade-offs, and forging fit among activities.’ Henry Mintzberg (1987:
67), from the creative perspective, identifies strategy as ‘both plans for the
future and patterns from the past’. Mintzberg (1994: 107) in his classic
Harvard Business Review article ‘The fall and rise of strategic planning’ notes
“Strategic planning as it has been practiced, has really been strategic
programming, the articulation and elaboration of strategies, or visions, that
already exist”(Mintzberg, 1994: 107). Strategic management is associated
with the activities of strategy formulation and implementation.
There is another important trend in international business that we need to
consider in our strategy course and that is the importance of design thinking
in profit and not for profit organizations. Corporations including Apple,
Mercedes Benz and Dyson have demonstrated the value of a design thinking
approach to product development and delivery. Design thinking is a human-
centred approach to innovation practice that uses ethnographic observation
and discovery to develop solutions to human needs. Examples include the
Apple iPhone, the safety systems in the Mercedes Benz S-Class or the
Dyson vacuum cleaner. Design thinking involves discovery, problem
definition, development of ideas to solve the design problem and delivery.
Design thinking can be applied to a specific consumer behaviour problem

Topic 1 – Introduction 1

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requiring a product solution, a financial management challenge (e.g. balance

sheet, profit and loss statement and cash flow statement design), an
operations management challenge (e.g. factory design), or an overall strategy
designed for an organization over the long term. How we use design thinking
depends on the problem and the situation, and we will talk about this
throughout the strategy course (Fitzroy, Hulbert and O’Shannassy, 2016).

About the Course BUSM3255/BUSM4350 Strategy

The topics for the course and case studies for each session are:
Unit 1 Introduction
Case Study Reading and Analysis techniques
Unit 2 Strategy Process and Practice
Apple Inc. in 2015 (HBSP)
Unit 3 Thinking Strategically About the Firm and the Business
Environment
Intel’s Mobile Strategy in 2015 and Beyond (HBSP)
Unit 4 Managing Resources and Capabilities
Colgate-Palmolive Staying Ahead in Oral Care (HBSP)
Unit 5 Creating Future Direction for the Firm
Louis Vuitton (HBSP)
Unit 6 Business-Level Strategy for Competitive Advantage
Raffles Holdings Limited: Valuation of a Divestiture (HBSP)
Unit 7 Corporate-Level Strategy for Competitive Advantage
Survey Monkey in 2014 (HBSP)
Unit 8 Managing Innovation and the Dynamic Scope of the Firm
Emirates Airlines: Connecting the Unconnected (HBSP)
Unit 9 Strategic Change
The Park Hotels: Designing Experience (HBSP)
Unit 10 Design, Organizational Architecture, Networks and
Ambidexterity
Tesla Motors in 2013 (HBSP)
Unit 11 Business Strategy, Competitive Advantage and
Organisation Performance
Making Balanced Scorecard Work to Implement Business
Strategies at Magic Technology (HBSP)
Unit 12 Corporate Governance, Ethics and Social Responsibility
Social Strategy at Nike (HBSP)
A Harvard business school Case Study will be allocated to each of sessions 2
to 12 for assessment and class discussion.

The Part B Course Guide details each session, including recommended

reading. An introductory course note has been prepared for all units. These
sessions are supported by detailed PowerPoint files which summarize and
highlight the reading content. You are expected to keep up to date with the
required reading in the course for each session.
A feature of the course is connection of theory to practice. The case study
assessment tasks and discussion provides work integrated learning (WIL).

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Learning and Teaching Philosophy

Strategy is an important integrative unit in your MBA degree program. In this
course we embrace the RMIT University principles of inclusive teaching
developing a community of learners with careful attention to curriculum
design, teaching explicitly, flexible delivery, feedback on well-designed
assessment tasks and reflective practice.
The Strategy Course Learning Outcomes (CLOs) are:
CLO1: Apply business concepts to construct a strategic plan for a
business
CLO2: Create a sustainable competitive strategy for an ongoing
business entity
CLO3: Develop strategy alternatives using design thinking to facilitate
organisational decision-making and problem solving
CLO4: Demonstrate an understanding of legal, ethical, social, economic
and environmental implications of business processes

Text Book
Fitzroy, P., Hulbert, J. and O’Shannassy, T. 2016. Strategic Management: The
Challenge of Creating Value, 3rd Edition, (Chapter 1) Routledge Publishing,
London, UK.
Fitzroy, Hulbert and O’Shannassy (2016) is a world class strategy text book
co-authored by your Course Coordinator. You will have the opportunity to
develop mastery of the strategic management field using this text, balancing
theory and practice with the assistance of RMIT University developed and
specialised teaching resources. We will make extensive use of Harvard
Business School Publishing teaching resources in conjunction with the
textbook for Work Integrated Learning (WIL).

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Learning objectives
The learning objectives for this unit are:
1. To build understanding of the terms strategy, strategic thinking, strategic
decisions, strategic planning and strategic management
2. To develop an understanding of the important role of strategic management
for business and society
3. To understand the determinants of firm success
4. To build understanding of the importance of innovation practice
5. To become familiar with the levels of strategy for the firm
6. To gain understanding of the course structure
7. To develop understanding of how to read and analyse a case study

The following is required reading for Unit 1:

Reading 1
Fitzroy, P., Hulbert, J. and O’Shannassy, T. 2016. Strategic
Management: The Challenge of Creating Value, 3rd Edition,
(Chapter 1) Routledge Publishing, London, UK.

There are a number of foundation insights and definitions we will be using

throughout the course in this chapter. We introduce our model of the
strategic management process incorporating four interrelated elements:
• context–the internal and external environment in which the firm
competes;
• strategy - what the firm decides to do in response to environmental
changes;
• implementation – putting strategy into practice; and
• performance–how well the firm performs.
We then differentiate strategic decisions (those affecting the long term well-
being of the firm), strategy (the theme underlying a set of strategic decisions)
and strategic management (the process of creating an organization which
generates value).
We then discuss major theories about what determines firm success and the
longevity of that success. Next, we review the firm’s economic structure
introducing some of the alternatives as they relate to economic exchange and
firm boundaries: for example, which processes the firm should own and which
should be outsourced. We briefly cover the importance of innovation and
change, major themes to which were turn later. We then develop the strategic
management model in detail, relating the structure of the book to this model.
We next discuss developments influencing the evolution of strategic
management, such as corporate social responsibility.

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Reading 2
Finkelstein, S. 2016 ‘Managing yourself: Secrets of the
superbosses’, Harvard Business Review, January-February,
pp. 104-107.

Finkelstein (2016) discusses the attributes of elite strategists such as Ralph

Lauren, Larry Ellison, Bill Walsh and George Lucas. He notes that each of
these leaders has established innovative business models, products or
services contributing to the creation of great shareholder value. Finkelstein
(2016) observes that each of these leaders exhibits the characteristics of
high personal confidence, a highly competitive nature, imagination and
personal integrity – with an authentic personality and style.
Another trait of these superbosses is the disposition to identify and groom
elite talent. There human resource practices are interesting. They practice
unconventional hiring – seeking out people who will help to redefine
success. They look for intelligence, creativity and flexibility in the person.
They can dispense with the usual job interview process instead undertaking
unusual interview activities (e.g. hiking), asking quirky questions or using
observation. Superbosses might also tailor a job or their business to suit a
person and accommodate their talent, and they are generous of spirit
accepting talented people may wish to move on to further their career.
Superbosses are also inspirational. They expect high performance and give
their people the confidence that can high-achieve. Superbosses are
prepared to delegate, customize career paths for their talent and build lasting
relationships with past employees.

Reading 2
Porter, M. 1996, ‘What is strategy?’ Harvard Business Review,
November-December, pp. 61-78.

Porter (1996) sets out to distinguish the difference between operational

effectiveness and strategy – which are both required for effective firm
performance. Porter (1996) defines operational effectiveness as doing
similar activities better than rival firms. Operational effectiveness can be very
beneficial for a firm however best practices in this area can be easily copied
by rivals. Management practices including continuous improvement and total
quality management are operational effectiveness
Competitive advantage refers to maintaining a sustainable edge over rival
firms. Strategic positioning seeks to achieve a sustainable competitive
advantage for the firm by establishing and defending what is distinctive
about that firm. Strategy requires that the firm makes trade-offs in its
activities choosing thoughtfully what it should do and what it should not do.
Competitive advantage is about delivering superior or comparable customer
value at lower or comparable cost. Cost advantage comes from doing similar
activities at lower cost compared with rival firms. Differentiation advantage
comes from choice of value-adding activities and how well they are
performed with some proximity on cost.
Porter (1996: 8) defines strategy as ‘the creation of a unique valuable
position, involving a different set of activities’. He identifies three basis for the
firm to tailor its positioning – variety, access, needs or some combination of
the three.
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Websites
Strategic Management Society

During the course we are going to look at a variety of web sites with relevance to the
field of strategy. Examples of web sites of interest to us in Strategy include but are
not limited to:
• Strategic Management Society - the peak international body for academics,
business executives and management consultants
• McKinsey and Company a world class management consulting firm
• The Organisation for Economic Co-operation and Development
• Apple Inc.
• The Australian Stock Exchange.
For the first session we will look at Strategic Management Society to give some
context to the course and the people who have contributed so much to the
development of this subject area, to management education and to strategy practice.
To prepare for class discussion please go to:
https://www.strategicmanagement.net/

Student activities

Reflection on Strategy
Unit 01 Introduction

Students are encouraged to practice professional reflection throughout the

course.
Students should be conscious that the field of strategy integrates much of the
learning from other modules in the Executive MBA program. There will need
to be engagement with issues such as accounting, finance, economics, law,
marketing, human resource management, operations management,
information technology and organisational behaviour, to name a few areas in
solving case study problems.
Another consideration for students throughout the course will be engaging in
some synthesis of the courseware materials, the readings, case studies and
situations described in the business press. Students should look at the date
an article is written, the strategy school of thought (Mintzberg and Lampel,
1999) possibly associated with the writer (e.g. Porter and the Positioning

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School), and how the material relates to readings and insight from other units.
Big areas of debate in recent years have been the usefulness of strategic
planning (Mintzberg, 1994), trying to understand the activity of strategic
thinking (Mintzberg, 1994; Liedtka, 1998), the value of strategic innovation
(Tushman and O’Reilly, 1997) and the resource-based view of the firm (e.g.
the business experience, training and professional networks of the CEO
creating the human and social capital of the CEO) (Barney, 1991). Look for
these issues throughout the course.

Class Discussion and Assessment Activity

Creating Business Strategies Harvard Business School Case Studies
How to Read and Analyse a Case Study

The module will also make extensive use of case studies to ensure students
are able to blend theory and practice effectively.
Please read the following resource located in the learning hub:
Hubbard, G 1996 Analysing a case. In Cases in Strategic Management:
Australia and New Zealand, G Lewis, A Morkel, G Hubbard, G Stockport, and S
Davenport (eds), 2nd ed., pp. viii-xvi. Sydney: Prentice Hall.
We will be looking at one case study per unit for the duration of the module. It
is important that you provide yourself with a sound foundation in the analysis
of case studies and creative development of solutions to the case under
consideration that enhances shareholder and stakeholder value.
You will be required to analyse the following issues in your case study
presentations and writing:
(i) External environment: Economic, legal, political, technological,
demographic, socio-cultural issues influencing the organisation or industry.
(ii) Industry analysis: Apply the Porter five forces model to the industry or
industries that are the subject of the case.
(iii) Identify critical success factors (CSFs) required for the organisation to
survive in the industry.
(iv) Company analysis: Identify the competitive strategy for the organisation.
What businesses are they in? What is the organisation structure? Who are
the key stakeholders and what are their values? What are the critical
functional level issues? Do the functional level issues interact?
(v) SWOT: Analyse organisation strengths, weaknesses and external/industry
opportunities and threats.
(vi) Recommendations or solution: Identify recommendations at the network,
corporate, business and functional level. Can you demonstrate your solution
cascading through the organisation (e.g. CEO succession in head-quarters,
leadership development program in business units)? What can be achieved
in the short, medium and long term? Can you provide a sketch of a financial
forecast for your solution to the case? Can you draw your revised
organisation structure if appropriate?
Critical will be your ability to identify and analyse the key factors impacting
shareholder and stakeholder value and how to influence them.

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Summary
Unit 1 sets an important foundation for the course this semester. There are
two critical insights we need from this unit, going forward.
The first insight is in understanding the theoretical foundation and practical
insight provided by Fitzroy et al. (2016). Please ensure you are familiar with
Fitzroy et al. (2016) Chapter 1.
The second insight is developing understanding of effective case study
analysis from Hubbard (1996) and building a sense for using the courseware
and text learning to inform the development of solutions to complex
strategy problems which benefit shareholders and stakeholders.
This module has sought to clarify terminology for you on the meaning of
strategy, strategic planning and strategic management. Fitzroy et al. (2016)
also introduce students to the terms and the issues embedded in strategy
process, content and context. There are real challenges, trade-offs ad
tensions which emerge in practicing strategy. Building an awareness of
these issues will assist you going forward into forthcoming modules.

References
De Wit, B and Meyer, R 2014, Introduction (Chapter 1), in B De Wit and R
Meyer (eds), 2014, Strategy: An International Perspective, 5th Edition, Cengage
Learning, Andover, UK.
Fitzroy, P., Hulbert, J. and O’Shannassy, T. 2016. Strategic Management: The
Challenge of Creating Value, 3rd Edition, (Chapter 1) Routledge Publishing,
London, UK.
Finkelstein, S. 2016 ‘Managing yourself: Secrets of the superbosses’, Harvard
Business Review, January-February: 104-107.
Porter, M. 1996, ‘What is strategy?’ Harvard Business Review, November-
December: 61-78.
Hubbard, G 1996 Analysing a case. In Cases in Strategic Management:
Australia and New Zealand, G Lewis, A Morkel, G Hubbard, G Stockport, and S
Davenport (eds), 2nd ed., pp. viii-xvi. Sydney: Prentice Hall.
Liedtka, J.M. 1998 ‘Strategic thinking: can it be taught?’, Long Range Planning,
31: 120-129.
Mintzberg, H 1994, ‘The fall and rise of strategic planning’, Harvard Business
Review, 72 (1): 107-114.
Mintzberg, H, Ahlstrand, B and Lampel, J 1998, Strategy Safari, Free Press,
New York.
Mintzberg, H and Lampel, J 1999, ‘Reflecting on the strategy process’, Sloan
Management Review, 20 (3): 2-30.

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