ibm 6

1

Corporate-Level Strategy

Example

General Electric owns more than 100 businesses in a wide variety of areas. Typical corporate-level strategic decisions for GE relate to initiatives such as new business acquisitions and existing business expansions and cutbacks.

• It is the highest level of strategy that directs the organization for the total enterprise
• It answers the question of corporate level strategy which is “In what industries and markets should we compete?”
• It is to help allocate resources for the entire enterprise. It identifies how large and complex organizations can compete across multiple industries and markets.

Business-Level Strategy

2

• It sets the direction for a single business unit or product line.
• It involves asking and answering the question: “How are we going to compete for customers in this industry and market?”
• Usually it includes choices about product and service mix, facilities locations, and new technologies.
• It is the corporate strategy in single-product enterprises
• Strategic Business Unit (SBU) is a business that operates as part of a larger firm

Example

Volkswagen Group owned Porsche Automobile Holding SE. Historically a two-door sports car company, Porsche adjusted its business strategy and successfully marketed a sport utility vehicle, the Cayenne, that became the brand’s volume sales leader.

2

Functional Strategy

• Guides activities within one specific area of operations for example, finance, marketing, human resources, or manufacturing.
• The functional-level strategic question is: “How can we best utilize resources within a function to implement our business strategy?”
• The answers are to improve products, gain efficiencies, and enhance customer service

Example

Picochip produces specialized microchips using a “virtual” model where all chip production is outsourced. The CEO Nigel Toon says that the firm save a lot from not having expensive factories and the money is reallocated for R&D on state-of-the-art chip designs.

Mission and Stakeholders

• Stakeholders are people directly affected by the organization and its strategic accomplishment
• Example : Astra Motors, the biggest automotive company in Asia, from time to time, started when the company is built, has a mission to make their best car, by always developing their cars in technology, material, etc. When Astra be the biggest company, all the people which connected to it, might get better benefits.

• A mission statement expresses the organization’s reason for existence in society
• Mission : Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis
• Clear sense of mission inspire support and respect of stakeholders

Strategic Implementation

2

Strategic Control and Corporate Governance

When governance fails, most boards consist of inside directors chosen from the ranks of senior management and outside directors chosen from other organizations and positions external to the organization.

• Top managers exercise strategic control ( makes sure strategies are well implemented and that poor strategies are scrapped or modified ) to meet performance demands of changing conditions.
• When strategic control fails at the level of top management, is is supposed to kick in at the level of corporate governance ( is the system of control and performance monitoring of top management ).

Example: Uber manager going to do some strategic control like how he’s going to manage the app, etc. and he’s gonna planning how he’s gonna do some corporate governance to make Uber stay in the online taxi games.

Strategic Implementation

Strategic Leadership

3

Example

Apple resurrection begins when Apple co-founder, Steve Jobs returns to the company. Jobs had a daunting task ahead of him, but he wasn't afraid to make difficult decisions to get the company back on track. Cutting costly projects like Newton and aligning with known-competitor Microsoft were controversial decisions that showed Jobs' authority, confidence, and smarts.

• Strategic leadership is the capability to inspire people to successfully engage in a process of continuous change, performance enhancement, and implementation of organization strategies.
• Strategic leader has to maintain strategic control. This means the CEO and other top managers had to stay in touch with the strategy and they must know how well it is being implemented.

Strategic Implementation

A strategic leader needs to create a sense of urgency

They can’t allow the organization and its members to grow slow and complacent. They must retain focus on getting better and being alert to adjustments to the strategy

B

Strategic Leadership

3

Key responsibility of strategic leadership

C

A strategic leader needs to make sure that everyone understands the strategy

Unless strategies are understood, the daily tasks and contributions of individuals and teams lose context and purpose. Without alignment to strategy, the impact is dispersed and fails to advance common goal.

A

A strategic leader has to be the guardian trade-offs

They must ensure that the organization’s resources are allocated that consistent with the strategy. This requires discipline to stay on course.

A strategic leader needs to be a teacher

It’s the leader’s job to teach the strategy and make it a “cause”. This means that a strategic leader must be a great communicator. Everyone must understand the strategy and how it makes their organization different from others.

D