5 Strategy is about the integration and focus of organisation functions. Strategic decisions are designed to impact on the whole organisation, not just a particular function or activity. Decisions about what particular geographic market to serve do not simply affect the marketing function. They also affect the operations (where to produce), logistics (how to store and transport to serve the market), personnel (which market to hire in), finance (where to locate the accounting) and other functions.
6 Strategy is about implementation of the decisions. While many organisations are good at strategic thinking and analysis, if they do not implement, they will not achieve the expected outcomes from their strategy. Many organisations want to be 'world class’, but very few achieve it. Implementation—often the forgotten part of strategy—is critical to successful strategy. This aspect is the 'management' part of strategic management.
7 Strategy is about outperforming competitors. If the organisation is satisfied being a ’me-too' competitor, it does not need strategy. It simply needs to copy its competitors’ actions unthinkingly. However, if the organisation does nothing different, it is unlikely to create any special Value for its customers and key stakeholders. Most restaurants and cafes are good examples of organisations where strategy is either not used or not wanted (but consider the McDonald's restaurant and Starbucks coffee shop chains as examples of applying strategy to those industries). The end purpose of strategy is to do something better than competitors and so to outperform them. Public sector organisations often do not have 'competitors', but their work can be outsourced, and they can be closed down, privatised or opened up to competition, so even public sector organisations in monopoly positions need to consider what might" happen if they are not efficient.
Strategy @ work 1.1 on Singapore Airlines gives an example of some of the strategic decisions that have resulted in Singapore Airlines being consistently voted one of the best airlines in the world for many years.
Together, the elements of strategy aim to assist an organisation to achieve its long-term aims, which is the essence of operating an organisation, whatever, its size or nature. However, the essential question in strategy is not just achieving its aims but:
Why do some organisations perform better than others?
For individual organisations, this translates to:
How can my organisation perform better than my competitorst?
Some organisations perform better than their competitors, whatever their aims are. For instance, some sports teams perform better than others consistently, over long time periods: for example, Manchester United, Real Madrid and Inter Milan in football* Australian swimming and cricket teams; New Zealand rugby teams and Chinese gymnastics teams. Strategy is concerned with understanding what factors enable such outperformance,
highlighting the thinking, analysis and action that brings those results, whatever the field of endeavour, and implementing them appropriately in our own organisation.
In this chapter, we first outline how the field of strategy has developed and built its ideas over its relatively short history as an identifiable academic discipline. We then outline the wide variety- of current theoretical perspectives in the discipline. It is the existence of this wide variety of perspectives and the lack of agreement in the field that causes us to be cautious about the use of the term ’strategy’ in the title of this chapter and throughout the book.
Next, we discuss the three levels of strategy that exist within a typical organisation. We then outline the environment-strategy-capability gap analysis model of strategic thinking, analysis and action that we will use as the main framework for discussion in this book. Finally, since the development and most of the main concepts of strategy have originated in the United States, a country with a large economy, we consider to what extent the concepts, issues and solutions of strategic management might be different for countries with small economies, which is pertinent, in fact, to most countries in the world. We also consider how strategy is developed in China, given the importance China and Chinese organisations now play in most industries.
Strategic management is an exciting subject, critical for delivering good performance for most organisations. It requires understanding and integration of material from functional areas such as marketing, operations, human resources, finance, accounting and information technology, which you have probably already studied.
A warning, however! Strategy looks easy, but it requires an understanding of and an ability to integrate and manage many variables in a world of rapid change, widening scope and uncertainty about the future. It requires an ability to critically evaluate, and not just accept, analysis, and to be flexible and adaptable as organisation circumstances change in the dynamic world in which we live. In fact, it is very difficult to be a good strategist and to implement good strategy. We hope this book will help you to understand the nature of strategy and improve your strategic skills.
THE BUSINESS STRATEGY OF SINGAPORE AIRLINES AND HOW IT IS SUPPORTED BY FUNCTIONAL STRATEGIES
strategy is to I defiver the highest quality of customer service that I is safe and reliable, and to deliver a satisfactory j return to its shareholders. Consistent strategic I decisions have been taken over the last 40 years I that have created a highly successful company in I an industry that is dogged by volatility and poor I performance.2
SlA's core competency is its service excellence.
. This is based on its innovation capabilities (in terms of continually upgrading its service quality on and off board), its aligned and supportive human resource management practices (focusing on customer service excellence), its diversified global revenue base (meaning it is not impacted
regional downturns and is aware of new trends anywhere in the global industry), its : modern and technologically leading fleet, its support for high-quality, fast-service maintenance, catering, training and other support facilities from having a strong home base at Changi Airport in i Singapore (an airport renowned foF high-quality customer service) and strong long-term capital support from the Singapore government (helping to avoid short-term industry volatility). This set of consistent, globally-benchmarked functional strategies has enabled SIA to rise from nothing to global industry leader and retain its position over the last 5 years.