The discussion of “The Basic Framework for Strategy Analysis” (pp. 12-13) emphasizes the importance of strategic fit. McDonald’s strategy is based on the creation of standardized, tightly integrated business systems for the supplying a limited menu of hamburgers, fries, drinks, and several other items that are produced and served to meticulous standards of speed and consistency at low prices. The success of
McDonald’s reflects (a) the appeal of McDonald’s offerings to mass-market preferences of individuals and families for low-priced, popular meals.
(b) McDonald’s ability to create a set of capabilities that allow the replication of McDonald’s restaurants worldwide (e.g. highly standardized operational capabilities supported by meticulous human resource training and management).
In recent years, changes in the external environment have upset this close fit:
As a result, McDonald’s is in the process of adapting its strategy. Changes include:
The shift during the past four decades from “corporate planning” to “strategic management” was influenced, in part, by increasing volatility and unpredictability of the business environment. As a result strategic planning became less based upon forecasts of the future, less formal, shorter term, and concerned more with innovation and the creation of options rather than with incremental improvements to the status quo. These same influences are likely to create differences in the approach to strategy making among firms that face different industry environments. A company like Google has an industry environment characterized by rapid technological change, and the constant emergence of new market opportunities and competitive threats. A company like Coca-Cola faces a much more stable environment. The world market for soft-drink concentrates is dominated by two giant companies (Coke and Pepsi), and this is likely to continue for the foreseeable future: each firm’s market position is reinforced by long-term agreements with bottlers and massive brand equity. Consumer tastes change slowly; there is minimal technological change.
Hence, each company is likely to have a strategy-making process that differs in formality, precision, time horizon, and scope. For example: Coca-Cola Google
Precise operational and capex budgets Budgetary processes flexible Strong emphasis on short- and medium- Little emphasis on performance targets; focus term performance targets on first-mover advantage and creating options, Strategic planning based on narrow market Strategic planning based on broad market focus: soft drinks what is our core business?
Emphasis on design, with top management Emphasis on emergence, with top management
Exerting strong hierarchical control orchestrating bottom-up initiatives
Madonna derives revenue from a number of markets: recorded music, live concerts, movie/video acting, book author, and the management and production of other recording artists. In terms of size of revenues, then, recorded music is her “core business.” However, this does not recognize the links between the different markets in which she engages or the way in which Madonna positions herself in relation to them. At the broadest level, Madonna competes in the global entertainment business. However, her positioning within this is as a “superstar” – Madonna’s renown and appeal transcends the individual markets in which she competes.
The same principles that we apply to business strategy can also be applied to individuals’ career strategies (as I note on pp. 11-12). Indeed, several prominent “self-help” books are essentially about strategic approaches to self-development. (E.g. Stephen Covey’s Seven Habits of Highly Effective People is a systematic approach to life planning that begins with the choices about lifetime goals.
Markus Buckingham’s Go Put Your Strengths to Work is based on the simple observation that success results from individuals identifying and deploying their resource strengths.)
This exercise involves using the basic framework of Figure 1.2. The principle stages are:
Which careers offer the best prospects in relation to your chosen goals? (Career opportunities may relate to work type (brand manager, financial analyst, general manager, entrepreneur, and politician) and sector (financial services, manufacturing industry, public sector, international organization.)
What are your resources and capabilities? What are your strengths and weaknesses in relation to intelligence, skills and aptitudes, financial resources, qualifications, experience, contacts, etc.?
On the basis of these considerations, outline the principal elements of a career strategy in terms of:
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