Concepts of strategy: formula sheet

Key formulas

Definition of strategy

Strategy = long-term direction + scope + advantage, in a changing environment, to meet stakeholder needs

Use these elements when asked to define or explain strategy. Tie each to the scenario.

Three levels of strategy

Corporate (where to compete) → Business (how to compete) → Functional (how to support)

Corporate is about scope of the whole group. Business is about advantage in one market. Functional is about delivery.

Strategic management process

Analysis → Choice → Implementation

Also known as position, choices and action. Feedback and review link the stages.

Realised strategy

Realised strategy = Deliberate strategy + Emergent strategy

Deliberate strategy is the part of the intended strategy that is carried out.

Intended strategy outcome

Intended strategy = Deliberate strategy + Unrealised strategy

Unrealised strategy is planned but not carried out.

Mintzberg's 5 Ps

Plan, Ploy, Pattern, Position, Perspective

Five different definitions of strategy. Pattern is the link to emergent strategy.

Rational model sequence

Objectives → Analysis → Options → Evaluation → Choice → Implementation → Control

Typical order. Real versions vary, so state the stages you use. Feedback loops are sometimes added.

Lindblom's incrementalism

Small changes to current policy → test → adjust → repeat

Also called muddling through. Managers compare options close to the current position, not all possible options.

Quinn's logical incrementalism

Broad direction + deliberate step-by-step development + learning and support-building

Purposeful and managed, which separates it from Lindblom's approach.

Suitability test for the approaches

Stable and predictable environment → rational leans stronger; uncertain or complex environment → incremental leans stronger

A guide, not a rule. Size, culture, speed of decision and stakeholder views also matter.

Design lens

Analyse → choose → plan → implement (top-down)

Strategy is deliberate, rational and led by senior management. Best in stable settings. Weak where change is fast or staff resist.

Experience lens

Strategy = past experience + culture + habits

Change is incremental and path-dependent. Gives continuity but risks inertia.

Variety lens

Diversity → variation of ideas → selection → new strategy

Strategy emerges from many sources, and innovation comes from the diversity, variation and selection of ideas. Helps innovation but may reduce control and direction.

Discourse lens

Strategy shaped by language, narrative and power

Look for the words managers use, who controls the story and how it gains legitimacy.

Strategic position

Environment + Strategic capability + Purpose, culture and expectations

Diagnoses where the organisation stands. Use PESTEL, Five Forces, resource and value chain analysis, stakeholder and culture analysis.

Strategic choices

Business-level + Corporate-level + International + Development methods

Generates the options. Test each option for suitability, acceptability and feasibility.

Strategy into action

Structure + Processes + Relationships + Resources + Change management

Covers implementation. Link to leadership, people, finance, technology and managing change.

Option evaluation

Suitability, Acceptability, Feasibility

Suitability: fits the position. Acceptability: stakeholders and returns accept it. Feasibility: can it be done with available resources.

Strategic chain

Vision → Mission (with values) → Objectives → Strategies

Use this to show how each level supports the next.

Mendelow's matrix: Low power, low interest

Box A: Minimal effort

Monitor only. Do not spend scarce management time.

Mendelow's matrix: Low power, high interest

Box B: Keep informed

Communicate regularly. They may lobby or influence powerful groups.

Mendelow's matrix: High power, low interest

Box C: Keep satisfied

Avoid alienating them. Interest may rise if they feel threatened.

Mendelow's matrix: High power, high interest

Box D: Key players (manage closely)

Involve in decisions. Their support is critical to strategy.

SMART objectives

Specific, Measurable, Achievable, Relevant, Time-bound

A common test for the quality of an objective.

Core competence tests (Prahalad and Hamel)

Core competence = gives access to a wide variety of markets + adds significant value for customers + hard for competitors to imitate

Use all three tests. A skill that fails one is a strength, not a core competence.

Resources versus competences

Strategic capability = resources (what you have) + competences (how you use them)

Having resources alone does not give advantage. They must be deployed well.

Threshold versus distinctive capability

Threshold = needed to compete; Distinctive (unique resources, core competences) = needed to outperform

Threshold capabilities can still be critical to survive. They just do not differentiate.

VRIO test for sustained advantage

Valuable, Rare, hard to Imitate, Organised to exploit

Valuable only: parity. Valuable and rare: temporary advantage. All four: sustained advantage.

Quick revision

• Strategy is the long-term direction of an organisation, matching resources to the environment and stakeholder expectations.
• Three levels: corporate (scope and portfolio), business (how to compete) and operational (day-to-day delivery).
• Strategic management covers analysis, choice and implementation, and these overlap in practice.
• Position, choices, action: where are we, where could we go, how do we get there.
• Mintzberg: realised strategy combines deliberate strategy that is carried out with emergent strategy that arises over time.
• The rational approach is formal and analytical. The incremental approach moves in small steps and adjusts through learning.
• Johnson, Scholes and Whittington lenses include design, experience and ideas. Each gives a different view of how strategy forms.
• Vision is the desired future, mission is purpose, objectives are measurable targets.
• Stakeholders differ in power and interest, so their influence on strategy differs too.
• Advantage comes from resources and competences that are valuable, rare and hard to imitate.
• In answers, always link the concept to specific case facts and end with a recommendation.

Common mistakes

• Defining strategy in general terms with no link to the case. Fix: Give a short definition in one sentence, then spend the rest of the answer on case facts.
• Mixing up corporate and business level strategy. Fix: Ask: is this about which businesses to hold, or how to win in one market? The first is corporate, the second is business.
• Treating emergent strategy as having no strategy at all. Fix: Say that emergent strategy is a pattern that forms from actions over time. It is a real strategy, just not planned in advance.
• Confusing intended strategy with realised strategy. Fix: Remember that realised = deliberate + emergent. Intended strategy that is not carried out is unrealised, so it is not part of realised strategy.
• Treating logical incrementalism as the same as Lindblom's muddling through. Fix: State that Quinn's version has a broad intended direction and is managed deliberately. Lindblom's is reactive and has no overall plan.
• Listing textbook advantages and drawbacks with no link to the scenario. Fix: Tie every point to a fact in the case, such as a volatile market, a new CEO or a regulatory deadline.
• Describing the lenses without applying them to the scenario. Fix: For every point, name a fact from the case. Use the pattern: lens, evidence, meaning.
• Treating the design lens as the only correct view of strategy. Fix: Explain that design is one view. Say where it works and where experience, variety or discourse explain more.
• Describing the model instead of applying it. Fix: Spend almost all your words on the scenario. Mention the model in one line, then use case facts.
• Stopping at position analysis. Fix: Always move to options and action. Ask what the analysis means for the decision.

Exam tips

• SBL rewards application. Use the process and levels as a structure, but every point must carry a case fact.
• Label your headings clearly with the three levels or three stages so the marker can award marks quickly.
• Look for where the case shows a gap, such as strong analysis but weak implementation, and build your advice around it.
• Show professional skills by matching tone and format to the reader, such as a short report for the board.
• Keep definitions to one or two sentences. Marks come from analysis and judgement.
• Use the exact terms (intended, deliberate, unrealised, emergent, realised) and attach each to a fact from the case. Labels alone earn little.
• Do not recite the 5 Ps unless asked. Choose the ones that fit the scenario and show what each reveals.
• When asked to advise, give a judgement. A balanced recommendation that links the approach to the environment usually scores better than a one-sided view.