The Levels and

Formulation of Strategy
 Process of strategy
A sequence of developing plans that move from general to specific and intent to action would create several levels of planning, which could be
illustrated in the triangle below.

every organization will have a purpose for its continued existence. A

mission statement expresses their purpose and can therefore be a
brief statement Mission

do not only represent the end point of planning but are the ends
towards which management activities and resource usage is directed.
Objectives They therefore provide a sense of direction and a measure of success
achievement

relate to broad areas of an enterprise’s operations.

Their purpose is to furnish a framework for more
detailed tactical planning and action Strategies
are actions carried out to put into effect the details
of a strategic decision – tactics can therefore be
seen as the detailed implementation of a strategy.
Tactics In addition, some tactical decisions will be made
in response to changing circumstances
the operational practices that will
translate the intention of the
tactics into action by individuals
and are therefore detailed, short
Actions, programmes and rules
term and subject to immediate
control
 Levels of strategy
Competitive or business Operational or
Corporate strategy strategy functional strategies

Here strategy is about which products How the different functions of the
It relates to the future formula and or services should be developed and business support the corporate and
structure of the company, and affects offered to which markets and the extent business strategies. They are
the rationale of the company and the to which the customer needs are met concerned with how the various
business in which it intends to whilst achieving the objectives of the functions of the organisation contribute
compete organisation. A term that is often used to the achievement of strategy
in relation to business strategy is SBU,
or strategic business unit. SBU means It examines how the different
functions of the business (marketing,
a unit within the overall corporate entity
production, finance etc) support the
for which there is an external market for
corporate and business strategies.
its goods and services, which is distinct
from that of another SBU. Such corporate planning at the
operational level is means oriented
and most activities are concerned
Example Example only with the ability to undertake
directions.
Racal Electronics’ Ford’s MotorCo’s car division – an Example
decision to float off SBU - launched its Mondeo model, Revising delivery schedules and
Vodafone as a separate aimed at fleet car buyers, who had drivers’ hours to improve customer
company not favored the Sierra, its service or recruiting a German-
predecessor. speaking sales person to assist a
UK company’s sales drive in Europe.
 Types of Strategy

Unrealised strategy Imposed Strategy

Planned strategy Deliberate strategy Realised strategy

Emergent strategy Opportunistic strategy

Mintzberg and Waters

 Planned intended and deliberate strategy -
the Rational model
Organisations using this strategy should
Planned or deliberate strategies
come about where there are precise • be large enough to afford the costs of formal analysis
intentions, which are written down
and imposed by a central leadership. • have goals that are operational
• operate in an environment that is reasonably predictable and
Key features include a large number
stable
of controls to ensure surprise-free
implementation in an environment, • take a systematic and structured approach to its development
which is controllable, with managers • collect internal and external information and integrate decisions
who are able to ascertain, review into a comprehensive strategy
and evaluate every option available,
and they are then able to choose • focus on systematic analysis, particularly in the assessment of
the costs and benefits of competing proposals
what appears to be the best option in
the light of rational criteria.

Often there is a specialist Strategy

Department.
 Deliberate strategy: Case 1

The FedEx Intended Strategy

Frederick Smith, an undergraduate student at Yale in 1965, had the task to prepare a business plan for a company
as an assignment. His plan was of a courier service. Smith had described a new delivery system made effective by
shipping the packages via a central hub and then ship these packages to their destinations.

Smith liked the idea so much that he started Federal Express (FedEx) that followed the business plan he had
prepared as a project. Today, Frederick Smith has a wealth of over $2 billion, and FedEx is the eighth of World’s
Most Admired Companies as described by Fortunemagazine.

So, we can say that Smith’s intended strategy has worked out much effectively than even he could have
dreamed.
 Realized Strategy
A realized strategy is the strategy that an organization actually follows.
Realized strategies are a product of a firm’s intended strategy (i.e., what the firm planned to do), the firm’s
deliberate strategy (i.e., the parts of the intended strategy that the firm continues to pursue over time), and its
emergent strategy (i.e., what the firm did in reaction to unexpected opportunities and challenges).

Example 1 Realized strategy Example 2 Nonrealized strategy

1. In the case of FedEx, the intended strategy Success of Non-realized Strategy at Avon
devised by its founder many years ago—fast David McConnell was an aspiring and struggling
package delivery via a centralized hub—remains author looking to sell his books. He decided to offer
a primary driver of the firm’s realized strategy. complimentary perfume with his books. McConnell’s
2. Analysis of Honda’s successful entry into the U.S. books never tasted success, but his perfumes
motorcycle market has provided a battleground became popular.
for the debate between those who view strategy
making as primarily a rational, analytical process The California Perfume Company was born, which is
of deliberate planning (the design school) and now known as Avon. For McConnell, a non-realized
those that envisage strategy as emerging from a strategy to become a successful writer never took
complex process of organizational decision shape, but through Avon, a very successful realized
making (the emergence or learning school). strategy evolved.
 Emergent Strategy
An emergent strategy is the one that emerges with time.
It is an unplanned strategy that is created by an organization while acting in response to the various unexpected
threats, opportunities, and challenges. Emergent strategies are also dynamic in nature. Emergent strategies may
result in both success and failure depending on the effectiveness of the strategy.

Example 1 Top-down Example 2 Bottom-up

A culture of like-minded people who have values which coincide Out in the field, a salesman visits a customer. The product isn’t
on a focus - on quality or a desire to be internationally known right, and together they work out some modifications. The
etc. salesman returns to the company and puts the changes through;
after two or three more rounds, they finally get it right. A new
The top down method breaks down a system into sub- product emerges, which eventually opens up a new market.
categories to acquire an insight at the senior level. This The company has changed strategic course’.
approach is an excellent tool for management oversight and
better assists the management team to isolate areas that are in The bottom-up method is a more complex approach. However, in
need of improvements using monthly matrix goals and quotas. some cases, the employee will be empowered and more
There areas of this approach that may have a negative effect motivated to provide higher quality work. In this method,
including the inclusion of employees in the process. This information is processed starting at the lowest level and
approach may also have a negative effect on the morale of the communicated up to the managers. This may be helpful due to
organization due to this strategy being motivated through the fact that managers may not be completely understanding of
incentives and fear. processes.
 Emergent Strategy: Case 2

Failure of FedEx’s ZapMail Emergent Strategy

In the mid-1980s, FedEx drifted away from its intended strategy to focus on package delivery to monetize from
a new and an emerging technology: the facsimile (fax) machines.
FedEx developed a new service, known as ZapMail, where documents were faxed between FedEx offices and
then delivered to customers’ offices.
The ZapMail system had been plagued by technical glitches that only frustrated the customers.

ZapMail was discontinued before long, and the company lost hundreds of millions of dollars.
 Q&A
1. What is an intended strategy?
2. What is a realized strategy?
3. Why is it important to understand the difference between intended and realized strategies?
4. Why is there not a perfect match-up between realized and intended strategies?
5. What might interfere with the realization of an intended strategy?
6. What is the difference between an intended and an emergent strategy?
7. How might you manage the balance between design and emergence strategizing processes in an
organization?
8. What is the difference between strategy formulation and strategy implementation?
9. What is the difference between business strategy and corporate strategy?
10. Can you think of a company that seems to have abandoned its intended strategy? Why do you suspect it
was abandoned?
 Discuss: Case 1 Intended, Emergent, and
Realized Strategies
David McConnell aspired to be a writer. The perfumes McConnell gave out with The company changed its name to Avon
When his books weren’t selling he his books were popular, inspiring the in 1939, and its direct marketing system
decided to give out perfume as a foundation of the California Perfume remained popular for decades. Avon is
gimmick. Company. now available online and in retail outlets
worldwide

As the network became successful, When father and son team Scott and ESPN is now billed as the worldwide
ESPN has branched out beyond the Don Rasmussen were fired from the leader in sports, owning several ESPN
local softball games and demolition New England Whalers, they envisioned affiliates as well as production of ESPN
derbies that were first broadcasted. a cable television network that focused magazine, ESPN radio, and
on sports events in the state of broadcasting for ABC.
Connecticut.

When father and son team Scott and Today the Home Shopping Network has
An idea emerged. Soon the radio station
Don Rasmussen were fired from the evolved into a retail powerhours. The
featured a regular show called
New England Whalers, they envisioned company sells tens of thousands of
“Suncoast Bargaineers.” In 1982,
a cable television network that focused products on television channels in
Paxson and a partner launched the
on sports events in the state of several countries and over the internet.
Home Shopping Club on local cable
Connecticut.
television in Florida.
 Discuss: Case 2 Facebook

As shown in 2010’s The Social Network, Zuckerberg’s original concept in 2003 had a dark nature. After being
dumped by his girlfriend, a bitter Zuckerberg created a website called “FaceMash” where the attractiveness of
young women could be voted on. This evolved first into an online social network called The Facebook that
was for Harvard students only. When the network became surprisingly popular, it then morphed into
Facebook, a website open to everyone.

Facebook is so pervasive today that it has changed the way we speak, such as the word friend being used as
a verb. Ironically, Facebook’s emphasis on connecting with existing and new friends is about as different as it
could be from Zuckerberg’s original mean-spirited concept.