Econ 551 Chapter Summaries

ECON 551 Chapter Summaries  

Limit your summary to one page. 12 pt (no going down to 10 Pt to cram more info like I did in MIS Case write-ups

Chapter One:

The focus of the book is on strategic thinking, not strategic planning. It is aimed at the manager, not the C-suite, as the one who has to act strategically. They state that a multidimensional company cannot come up with meaningful strategy for disparate business units, so they aim the book at business unit managers.  

1.          Actions – the acquisition and deployment of a firm’s assets

2.          The goal of every firm is profit. Exceptions are in firms with social goals (Patagonia), or when managers have different goals than the firm (think of Patton’s example’s of short run goals of managers vs. long run goals of firms). Strategy must include thinking of politics, influence, incentives and agendas.

3.          Strategy, in the sense of the book, does not define tactics.

4.          Context and action combine to determine performance (fig 1-2)

5.          To think strategically, ask “what actions will be most likely to achieve the organization’s goals given the internal and external context?”

a.          This question is necessary but not sufficient to form strategy. Must also have a way of communicating the strategy to create a framework for people to make decisions in.

6.          Strategic Planning vs. Strategic Thinking: planning is methodical, regular and often budget focused. It can impede strategic thinking which is the day to day application of strategy. The book focuses on how to help managers use the firm’s strategic planning to build a mental model of the firm’s goals and strategize within it for the business unit.

7.          Strategy should be dynamic (flexible). However, in stable environments, the focus is on implementation rather than on shifting the environment.

Managers: Their strategic thinking is often distracted from strategy by day to day work. They are expected to be the “captain of the ship” - which is a model that often fails.

a.          smaller companies or more dynamic environments have a decentralized structure

b.          Responsibility without authority

c.          Firms often act or expect to act in “routine” manner rather than strategically. So strategy needs to incrementally adjust but firms may not shift with them in a timely way

Chapter 2: Business Strategy

2.1 Introduction

                 Strategy acts as a guide to the decision making for all members of the organization.  Strategy is different from Vision, Mission, Values and Purpose.

2.2 Describing Business Strategy

                 Strategy must have elements that define the firm’s goals and the direction it will take to achieve them.  Any coherent strategy should have 4 parts.

1.       Include a clear set of long-term goals

2.       Defined the scope of the firm, the products it will offer and the markets it will pursue