Strategic Management This Page Intentionally Left Blank Strategic Management From theory to implementation Fourth edition David Hussey Visiting Professor in Strategic Management, Nottingham Business School, Nottingham Trent University OXFORD BOSTON JOHANNESBURG MELBOURNE NEW DELHI SINGAPORE Butterworth-Heinemann Linacre House, Jordan Hill, Oxford OX2 8DP 225 Wildwood Avenue, Woburn, MA 01801-2041 A division of Reed Educational and Professional Publishing Ltd A member of the Reed Elsevier plc group First published by Pergamon Press 1974 Second edition 1982 Reprinted 1984 Third edition 1994 Fourth edition 1998 © David Hussey 1998 All rights reserved. No part of this publication may be reproduced in any material form (including photocopying or storing in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication) without the written permission of the copyright holder except in accordance with the provisions of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London, England W1P 9HE. Applications for the copyright holder’s written permission to reproduce any part of this publication should be addressed to the publishers British Library Cataloguing in Publication Data Hussey, David, 1934– Strategic management: from theory to implementation.4⬘012 ISBN 0 7506 3849 4 Composition by Genesis Typesetting, Laser Quay, Rochester, Kent Printed and bound in Great Britain Contents The structure of the book vii Introduction xvii Acknowledgements xxi Part 1 The Concept and the Need 1 1 From planning to strategic management and beyond 3 2 Strategic management: success or failure? 26 3 A look at the total process 45 Part 2 The Changing Environment 75 4 The challenge of the future 77 5 The environment: assumptions in planning 96 6 Forecasting 107 7 Techniques for assessing the environment 125 8 Business philosophy (ethics and morality) and strategic management 139 Part 3 The Making of Strategy 161 9 The corporate appraisal – assessing strengths and weaknesses 163 10 Analysing the industry and competitors 190 11 Analysing the UK management development and training industry: a case history 237 12 The search for shareholder value 254 13 Vision and objectives 277 14 Strategy 296 15 Strategic portfolio analysis 309 16 Portfolio analysis in practice 325 17 Strategic planning – a second look at the basic options 351 18 Multinational and global strategy 380 19 Technology and manufacturing 403 20 Financial planning 419 21 Strategic planning for human resources 432 22 Preparing the strategic plan 462 23 Evaluating a business plan 477 24 Operating plans 487 v CONTENTS Part 4 Implementation and the Management of Change 509 25 Project planning and appraisal 511 26 From plans to actions 527 27 Management of change 547 Part 5 Introducing Strategic Management to an Organisation 567 28 Introducing strategic management 569 29 Why planning sometimes fails 588 30 Strategic management to strategic change? 599 Part 6 Case Studies 603 31 SWK Zimbabwe Ltd (D. Hussey) 605 32 Colgate–Palmolive Oral Care Division in the Italian market (R.
Mockler) 617 33 Ratner/Signet Group plc: 1984–7 (D. Hussey) 631 34 AGIP Petroli entering the Indian market (R. Mockler) 649 35 Xerox: Transforming the corporation (F. Bounds) 671 Index of names and organisations 693 Index of subjects 699 vi The structure of the book To write about any subject, however complex, it is necessary to follow a linear path.
This has its limitations, in describing strategic management, as the connections between the subtopics are not linear, and resemble a plate of spaghetti where most strands are connected to many others. Perhaps a can of worms might be a better analogy, as the subject is continually moving and developing. One result of this is that many different choices could be made for the structure of the book, and for the cross-referencing inside the chapters. For this reason it is worth exploring how the parts fit together, to help readers who might come to the book with a different mindset.
The first three chapters set the scene for a study of the subject. Chapter 1 traces its evolution from the mid-1960s to date, showing the different schools of thought that have developed, and trying to help the reader put them in context. This is important because too many writers who develop a new slant to the subject overemphasise their own views at the expense of the existing body of knowledge. In reality, much that is new should supplement, instead of attempting to replace, that which already exists.
Other chapters discuss the issues in achieving strategic success, and examine the concept of strategic management. Part 2 of the book consists of five chapters which deal specifically with one aspect of strategy, the relation of the business with the external environment. Chapter 4 presents a way of thinking about the external environment which is more complete and integrated than the PEST approach (Political, Economic, Social and Technology) recommended in many books. This model lies behind some of the detailed techniques which are discussed later.
It is also used again when industry analysis is considered later in the book. Chapter 5 is about the need for setting common assumptions about the external environment by all those contributing to the development of a strategy. Chapter 6 has a broader scope than the business environment, and is about forecasting. It is positioned here because it is a key element of the discussion about external issues and trends, but the concepts it covers are applicable to other analytical aspects of strategic decision making.
Chapter 7 provides some techniques and methods for ensuring that issues from the external environment are considered when strategies are being made. It includes discussion of scenario planning as a method of doing this. In Chapter 8 the subject of ethics and morality is introduced. This is one of those chapters that could have been placed elsewhere in the book.
It is in its present position because there is a close connection with what is considered to be ethical behaviour and the legal and social environment in which an organisation operates. A discussion on pressure groups shows how the business environment vii THE STRUCTURE OF THE BOOK can be changed. The chapter also includes a discussion of the stakeholder concept, which if followed would link the internal elements of the organisation to the external in all its decision making. Because the stakeholder concept is not universally accepted an alternative approach is discussed, and this too requires a consideration of various elements in the business environment.
In Part 3 the emphasis is on a number of other aspects of the formulation of strategy. It has sixteen chapters which cover all the main concepts behind the making of strategy, and many of the techniques that can be used in analysis. In all cases the explanations are in depth, and emphasis is given to applying what is discussed to real situations. There is a research-based chapter on the use of a shareholder value approach in decision making.
We look at concepts of vision and objectives, and start an exploration of the nature of strategy and the broad options that are available (for example, the virtual organisation, acquisition and alliances). There are specific chapters dealing with global strategies, technology, manufacturing, financial and human resource strategy. Finally in this part there are some chapters covering plan preparation and evaluation. By this point in the book we have covered three of the five elements of the model presented in Chapter 1.
There has been a lot on analysis, some emphasis on creative decision making and leadership, and we have started a consideration of strategic management as a process. In Part 4 full attention is given to the fifth element of this model, implementation, although one can argue that it has already received some attention in the emphasis I have given throughout to the application of concepts. The three chapters in this part cover both the system/ administrative aspects of implementation and the behavioural issues, and include a way of thinking about transformational leadership. In the final part of the book we return to complete the discussion of strategic management as a process, looking at the particular issues which arise when introducing such a process into an organisation, and examining the research evidence on the pitfalls of planning.
The final chapter offers some brief thoughts on the future direction of strategic management. A chapter analysis is provided below to help the reader see where particular concepts are covered. Chapter Main concepts covered Some key authorities discussed 1 From planning to Evolution of the subject and main Ansoff (1965), foundation of the strategic modern schools of thought, against an subject, and later (1972), the management increasingly turbulent and global concept of strategic management and beyond environment. Comparison of many of The Boston Consulting Group the views.
The chapter includes a contribution to analytical thinking. five-point model showing the critical The PIMS database factors for strategic success, and ends Global strategy thinking of Prahalad by suggesting that a contingency and Doz (1987), Yip (1992) and approach may be more valuable than Ohmae (1990). Ohmae (1982) searching for the one right answer (strategic thinking) McKinsey 7S model viii THE STRUCTURE OF THE BOOK Chapter Main concepts covered Some key authorities discussed Porter industry analysis, competitor analysis, the value chain The incremental/emergent strategy views of Lindblom, Quinn, and Mintzberg Core competency approach of Hamel and Prahalad, Ansoff’s modern views of a contingency approach, and related concepts from others 2 Strategic An analysis of the research evidence The research quoted is from a wide management: of the success of strategic range of studies. Part of this chapter success or management, contrasted with some is based on the experience of the failure? obvious failings by some who claim to author.
The warnings about the things practise it. Failure of many that can cause strategy to fail. acquisitions, and most BPR initiatives Reference is made to the contingency/situational factors emphasised by Ansoff in his recent thinking, and Goold and Campbell’s work on strategies and styles. Both authorities are treated more thoroughly in the next chapter 3 A look at the The elements that must be covered Much of this chapter is original to the total process when a strategy is considered (e.
the author, although debts are effect of a marketing strategy on acknowledged to various authorities in structure and processes, etc. The the thinking behind some of the importance of vision and leadership, conceptual models. Ansoff’s scales of and the brief discussion of an turbulence are discussed, and his approach to transformational recommendations are used to examine leadership. Styles of strategic the findings of Gluck et al.
on the management, a contingency approach evolution of planning. Strategy and to strategic management, research on styles relationships found by Goold the evolution of strategic management and Campbell are explored. The main from long-range planning, description scenario planning authority referred to of strategic management, with is van der Heijden illustrations of a planning process. Scenario planning as a process.
Elements of a business plan 4 The challenge of This chapter argues that organisations The issue of relating to the business the future must heed the trends and forces in environment is a commonplace in the the environment, and discusses the literature of strategic management. need for creative thinking, and some The model presented here was of the things that block it. Most of developed by the author, and offers a ix THE STRUCTURE OF THE BOOK Chapter Main concepts covered Some key authorities discussed the chapter discusses a nine-step more comprehensive and integrated approach to considering the approach than the familiar PEST environment, with examples method. 5 The environment: The examination of the business Much of this chapter comes from the assumptions in environment continues with a chapter experience of the author.
The other planning dealing with the practical issue of authorities are some of the earlier determining the assumptions on which researchers such as Ringbakk and a strategy may be based.