Introduction to strategic management
9.3 Introduction to strategic management
Set out below are two seemingly contrasting but remarkably similar tasks that a manager (or a potential manager) might undertake.
Case 1
You have been asked to provide an analysis and appraisal of the media production group within the multinational for which you work. This film and video unit, comprising about 20 people, has been producing corporate training, PR and communication products for the last 50 years. It is part of the infrastructure of the business and generates little capital. It is well respected within the film and video industry, and its programmes are used
Managing in the Media
widely by schools and other educational establishments. However, it is a period of cost cutting, and senior management have turned their eye on this group as an expensive luxury that the business can no longer afford.
Your task is to conduct a business analysis into the value of the unit.
Case 2
You and two associates have hit upon a good idea; a new method for producing computer graphics, both faster and cheaper than traditional methods, or so you believe.
How do you go about testing this in the market place, and how do you decide whether you have a viable business or not?
Before you read on, make some notes as to how you might go about exploring the issues in these cases. Where would you start? What information would you need; What is relevant? Who would you talk to? Why would you talk to them? When would you stop the research and start the writing? How would you structure the report?
Whatever you do, both cases require a clear and cogent argument to explain what is going on. You need first to tell the story of the events, to create the narrative, by possibly using the seven questions given above. By doing so, you clarify the issues for yourself and for those who will be influenced by and then make decisions on the basis of the report you produce. In Case 1, the report will be aimed at senior business managers and ideally produced in partnership with the production team. In Case 2, it could be aimed at potential business partners, shareholders or a finance manager.
In this chapter, we examine methods by which we may structure our strategic analysis, choice and implementation to provide a pathway through the complex issues that surround any decision made in an organisation. The steps are:
1 Analysis – explain what is going on
2 Choices – examine options then select and devise a strategy
3 Implementation – recommend and act on the chosen course of action. The term ‘strategy’ comes from the Greek strategos – the art of the military
general. In recent years there has been much debate about what strategic management actually encompasses, but essentially it is still about the main objectives or goals of an organisation. Many businesses try to capture this
Strategic management
objective in a mission statement. This attempts to provide a point of reference for all of those involved in the business, both those employed by it and those possibly buying or using goods created by it. The strategy for a business is something that sets up the policies and guidelines for that entity. Throughout the rest of this chapter, we will use the term ‘organisation’ to represent any business entity or enterprise. Strategic management can apply to almost any organisation; after all, an individual could set out a strategy to become the British Prime Minister. Their tactic could be:
1 Become a lawyer
2 Join a political party
3 Get voted into local government
4 Become a member of the Shadow Cabinet
5 Become elected leader
6 Get voted in at the next election. Thus we have defined the strategy and the tactics; the only hurdle is the
implementation. There is often little point in suggesting ‘get yourself a job and you’ll no longer be impoverished’ to someone who is impoverished and unemployed. The strategy might be sound, but the tactic has little chance of implementation. The second point to make, then, is that strategies have to
be effective and achievable.
The strategy challenge
䊉 You’re running a small company that is successful in providing
services to a particular part of the media industry, and you make extensive use of computers.
䊉 The particular skills that you’ve been applying to support the
industry are no longer required – technology has changed and the particular area of support is no longer needed.
䊉 The repair and maintenance skills of your team have grown greatly
over the period – you are a good team. 䊉 Is it a viable strategy to become a repair and maintenance company?
䊉 Is that in the mindset of yourself and your colleagues? 䊉 Would such a strategy work?
Strategy is also about trying to build in a position or posture for the unpredictable or unknowable. This often comes down to devising a set of
Managing in the Media
scenarios – the ‘what ifs’ – but if it is truly unpredictable, then by definition at this stage it cannot be predicted. Yet any manager should consider the extremes in future possibilities. For example, in Case 1 the future for the film and video group could be:
1 There is no video group within the business – all work is contracted out
2 The group is expanded to take on all sorts of areas of work – not only internal but external contracts – to become self-funding.
Therefore, if a strategy is devised it should be cohesive but also testable. The definitions of what can be tested and how are often reflected in key performance indicators (KPIs) or benchmarks. These measures, along with the organisation’s reports and accounts, define how the business has met its strategic goals.
Strategic management has been summarised and expressed by Ralph Stacey 3 as the five ‘P’s. These are:
䊉 Plan 䊉 Position 䊉 Ploy 䊉 Perspective 䊉 Pattern.
By keeping these factors in mind as you go forward in making a more detailed analysis of the strategy as a potential strategic manager, you will maintain a clear view of the objectives of that strategy.
In Exploring Corporate Strategy 4 , Johnstone and Scholes devised a sum- mary model for the elements of strategic management. Figure 9.1 provides a framework and a model from which a manager may structure strategic decisions. It is a generic model that can be used to interpret the inter-relationships of the media firm (Figure I). It is one of the strategic models that will be suggested throughout this text as a means of analysing the working environment within which managers find themselves.
Comprehensive management texts tend to take a historical perspective when reviewing strategic management and management theories. We recommend that the student of strategic management in the media industry should take some time to look at the work of those who have shaped modern concepts and terms of management. Carol Kennedy’s
Guide to Management Gurus 5 provides a succinct text on the subject.
Strategic management
Culture and stakeholder
Resources The
expectations
and environment
strategic capability
Strategic analysis
Identifying Planning strategic
and options
Strategic Strategic
choice implementation
allocating resources
Evaluating Organisation options
structure and Managing
design Selecting
strategic strategy
change
Figure 9.1
A summary model of strategic management. (©Prentice Hall Europe 1988, 1993, 1997, 1999. Reprinted by kind permission of Pearson Education Limited.)
These thought leaders have come from widely diversified backgrounds – engineering, psychology, sociology, economics etc. Included in the book are many of the names that, even with the most superficial of management reading to date, a manager would have come across
–Ansoff, Taylor, Maslow, Herzberg, Handy, Peters, Fayo, Drucker, Weber etc. These people, along with many others, have conducted research and provided theories that have shaped and modified management behaviour over the last 100 years.
We now consider some of the management tools that can assist you to make effective strategic management decisions. This chapter will reference aspects of the models and theories by some of the leading authors and writers on management.
Managing in the Media