Aim
The aim of this module is to introduce the students to the theory and practice of strategic management, and the holistic way in which it draws upon a wide variety of managerial functions in its creation. It will establish the main principles against which strategic decisions are made, how strategy is created and the forms it might take, and the problems and issues associated with its implementation. Particular emphasis will be given to the process of business innovation and the implications of change and its management within organizations. Where possible, the module will draw on existing knowledge and develop it from a strategic perspective. Students will be encouraged to apply their knowledge and awareness of strategy to the practitioner environment in a variety of ways such as debates, discussions, case studies, analysis, presentations and problem solving.
Learning outcomes
On successful completion of this module, the student should be able to:
- Obtain a systematic understanding of the key aspects of strategy. This will be gained through the acquisition of coherent and detailed knowledge of relevant aspects of strategy, which will range from classical theories to the latest thinking in the subject.
- Develop the ability to accurately deploy established strategy techniques and approaches, as well as the latest thinking, regarding analysis, enquiry and application to strategy related concepts and practical situations.
- Gain a conceptual understanding which enables them to devise, contribute to and sustain strategy related arguments and discussions, whether concerning classical aspects of strategy, or the latest thinking on strategy and its environments.
- Develop a range of problem solving techniques and approaches which can be used to understand and resolve theoretical and practical situations.
- Be able to appreciate the areas of uncertainty, incompleteness, ambiguity, contradictions and the limits of knowledge relating to strategy and its environments.
- Be able to apply the methods, techniques and approaches learnt to review, consolidate extend and apply their knowledge of strategy and related areas to initiate strategy related tasks and projects, from theoretical or practitioner perspectives.
- Understand and critically evaluate arguments, assumptions, abstract concepts, uncertainties and data relating to strategy, which will enable them to frame questions, make judgements and develop solutions to theoretical and practical problems relating to strategy and its environment.
- Gain appropriate skills and knowledge which will allow them to enquire, make decisions and resolve problems in the complex, ambiguous, incomplete and unpredictable world of strategy and related areas.
- Be able to exercise their own initiative and responsibilities regarding undertaking further training and learning in strategy and related areas.
- Be able to develop and manage their own approaches to learning and training, identifying appropriate research articles and data, as well as identifying their future training needs in areas relating to strategy.
Students will obtain knowledge and information relating toa wide variety of topics on strategy and related areas including being able to:
- Describe the strategy process, and show an understanding of different approaches to strategy.
- Evaluate the business models of various organizations and discuss the appropriateness of their approaches to strategy.
- Distinguish between external and internal analysis, and how they are used in the strategy process.
- Discuss and apply various types of strategies that could be used at the business, corporate and global level.
- Describe the main factors and requirements for the successful implementation of new strategies, innovation and change.
- Select and apply appropriate strategic management tools and techniques to analyse business problems and issues and be able to evaluate the implications from such an application.
Specifically, students should obtain knowledge on:
- The strategy process and strategy creation
- Visions, missions and business models
- Strategic thinking and environmental influences: industry analysis
- Resource-led strategy
- Competitive advantage and its sustainability
- Business level strategy: differentiation or cost leadership
- Corporate level strategy: integration or diversification
- Corporate performance, governance and business ethics
- Globalisation of aspects of strategy
- Technology data and analysis
- Communicating strategy
You should hand in one copy of your assignment comprised of group and individual tutorial work and individual formal report by the time and date above tothe appropriate 'hand-in location' at Gulf College. Fill in the front cover (staple together with your assignment). This must be date stamped. MAKE SURE that you fill in all the relevant details on this form (these are given above!). One copy of the front sheet, date stamped, will be returned to you by the Office. This is your receipt, keep it. You can submit work by post, but you must send it recorded delivery. It must be postmarked two days before the deadline date and a copy must be kept by you in case it is lost in the post. Faxed assignments will not be accepted.
Assignments must be submitted by the due date. The only circumstance in which assignments can be submitted late is if a mitigating circumstances form is submitted at the same time. In these circumstances work may be submitted up to 10 working days late only. If the mitigating circumstances are upheld, the assignment will be graded; otherwise a 0 will be awarded.
The font type must be either Anal or Times New Roman with a font size 12 and with 1.5 line spacing. It should be a Microsoft Word Document based on required format.
Part 1. Analogical Measurement: Coherent and Relevant Aspects of Strategy.
Section A:
Instruction: Do you agree or disagree with the following statements? Why Yes or why No? Defend your answer in two lines.
1. A strategic capability to become a competitive advantage, it has to be unique.
2. Threat of new entrants is high when product differentiation is low.
3. It is important to distinguish between objectives and strategy.
4. The most important corporate objective is to maximise profit.
5. "Positioning" is how a firm fights competition.
Section B:
Consider yourself as a consultant of the following types of organisation, you are asked to develop and recommend a tagline that would create a space in the minds of the target clients the business organisation is in? Answers can be benchmark from the example shown below.
Examples:
a. Sarah del Serrano, the beauty expert, said "I don't sell cosmetics, I sell hope",
b. A marketing manager of an insurance company said, we sell "Peace of Mind".
1. A five-star hotel
2. A travel agent
3. A restaurant (specialising organic and healthy food)
4. A hypermarket
5. A house-builder
Part II.
Apple's profitable but risky strategy
When Apple's chief Executive - Steven jobs- launched the apple iPod in 2001 and the iPhone in 2007, he made a significant shift in the company's strategy from the relative safe market of innovative, priced computers into the highly competitive markets of consumer electronics. This case explores this profitability but risky strategy.
Note that this case explores in 2008 before Nokia had major problems with smartphones.
Early beginnings
To understand any company's strategy: it is helpful to begin by looking back at its roots. Founded in 1976, Apple built its early reputation on innovative personal computers that were particular Y easy for customers to use and as a result were priced higher than those of competitors. The inspiration for this strategy came from a visit by the founders of the company - Steven Jobs and Steven Wozniack - to the Palo Alto research laboratories of the Xerox company in 1979. They observed that Xerox had developed an early version of a computer interface screen with the drop-down menus that are widely used today on all personal computers. Most computers in the late 1970s still used complicated technical interfaces for even simple tasks like typing - still called `word-processing' at the time.
Jobs and Wozniack took the concept back to Apple and developed their own computer - the Apple Macintosh (Mac) - that used this consumer-friendly interface. The Macintosh was launched in 1984. However, Apple did not sell to, or share the software with, rival companies. Over the next few years, this non-cooperation strategy turned out to be a major weakness for Apple.
Battle with Microsoft
Although the Mac had some initial success, its software was threatened by the introduction of Windows 1.0 from the rival company Microsoft, whose Chief Executive was the well-known Bill Gates. Microsoft's strategy was to make this software widely available to other computer manufacturers for a licence fee - quite unlike Apple. A legal dispute arose between Apple and Microsoft because Windows had many on-screen similarities to the Apple product. Eventually, Microsoft signed an agreement with Apple saying that it would not use Mac technology in Windows 1.0. Microsoft retained the right to develop its own interface software similar to the original Xerox concept.
Coupled with Microsoft's willingness to distribute Windows freely to computer manufacturers, the legal agreement allowed Microsoft to develop alternative technology that had the same on-screen result. The result is history. By 1990, Microsoft had developed and distributed a version of Windows that would run on virtually all IBM-compatible personal computers. Apple's strategy of keeping its software exclusive was a major strategic mistake. The company was determined to avoid the same error when it came to the launch of the iPod and, in a more subtle way, with the later introduction of the iPhone.
Apple's innovative products
Unlike Microsoft with its focus on a software-only strategy, Apple remained a full-line computer manufacturer from that time, supplying both the hardware and the software. Apple continued to develop various innovative computers and related products. Early successes included the Mac2 and PowerBooks along with the world's first desktop publishing programme - PageMaker. These after remains today the leading programme of its kind. It is widely used around the world in publishing and fashion houses. It remains exclusive to Apple and means that the company has a specialist market where it has real competitive advantage and can charge higher prices.
Not all of Apple's new products were successful - the Newton personal digital assistant did not sell well. Apple's high price policy for its products and difficulties in manufacturing also meant that innovative products like the iBook had trouble competing in the personal computer market place.
Apple's move into consumer electronics
Around the year 2000, Apple identified a new strategic management opportunity to exploit the growing worldwide market in personal electronic devices - CD players, MP3 music players, digital cameras, etc. It would launch its own Apple versions of these products to add high-value, user-friendly friendly software. Resulting products included iMovie for digital cameras and i
players. But the product that really took off was the iPod - the personal music player that for stored
DVD-hundreds of CDs. And unlike the launch of its first personal computer, Apple cooperation rather than keeping the product to itself. sought industry Launched in late 2001, the iPod was followed by the iTunes Music Store in 2003 in the USA and 2004 in Europe - the Music Store being a most important and innovators' development. 'Tunes was essentially an agreement with the world's five leading record companies to allow legal downloading of music tracks using the internet for 99 cents each. This was a major coup for Apple - it had persuaded the record companies to adopt a different approach to the problem of music piracy. At the time, this revolutionary agreement was unique to Apple and was due to the negotiating skills of Steve Jobs, the Apple Chief Executive, and his network of contacts in the industry. It shows that Apple's new strategy was beginning to pay off. The iPod was the biggest single sales contributor in the Apple portfolio of products.
In 2007, Apple followed up the launch of the iPod with the iPhone, a mobile telephone that had the same user-friendly design characteristics as its music machine. To make the iPhone widely available and, at the same time, to keep control, Apple entered into an exclusive contract with only one national mobile telephone carrier in each major country - for example, AT&T in the USA and 02 in the UK. Its mobile phone was premium priced - for example, US$599 in North America. However, in order to hit its volume targets, Apple later reduced its phone prices, though they still remained at the high end of the market. This was consistent with Apple's long-term, high-price, high-quality strategy. But the company was moving into the massive and still-expanding global mobile telephone market where competition had been fierce for many years the new iPhone was too new to have made any impact on sales or profitability in 2007.)
And the leader in mobile telephones - Finland's Nokia - was about to hit back at Apple, though with mixed results. But other companies, notably the Korean company Samsung and the Taiwanese company, HTC, were to have more success later.
So, why was the Apple strategy risky?
By 2007, Apple's music player - the iPod - was the premium-priced, stylish market leader with around 60 per cent of world sales and the largest single contributor to Apple's turnover. Its iTunes download software had been re-developed to allow it to work with all Windows-compatible computers (about 90 per cent of all PCs) and it had around 75 per cent of the world music download market, the market being worth around US$1000 million per annum. Although this was only some 6 per cent of the total recorded music market, it was growing fast. The rest of the market consisted of sales of CDs and DVDs direct from the leading recording companies.
In 2007, Apple's mobile telephone - the iPhone - had only just been launched. The sales objective was to sell 10 million phones in the first year this needed to be compared with the annual mobile sales of the global market leader, Nokia, of around 350 million handsets. However, Apple had achieved what some commentators regarded as a significant technical breakthrough: the touch screen. This made the iPhone different in that its screen was no longer limited by the fixed buttons and small screens that applied to competitive handsets. As readers will be aware, the iPhone went on to beat these earlier sales estimates and was followed by a new design, the iPhone 4, in 2010.
The world market leader responded by launching its own phones with touch screens. In addition Nokia also launched a complete download music service. Referring to the new download service' Rob Wells, senior Vice President for digital music at Universal commented: 'This is a giant leap. towards where we believe the industry will end up in three or four years' time, where the consumer will have access to the celestial jukebox through any number of devices.' Equally, an industry commentator explained: '[For Nokia] it could be short-term pain for long-term gain. It will steal some of the thunder from the iPhone and tie users into the Nokia service.'
'Nokia is going to be an internet company. It is definitely a mobile company and it is making good progress to becoming an internet company as well,' explained 0111 Pekka Kollasvuo, Chief Executive of Nokia. There also were hints from commentators that Nokia was likely to make a loss on its new download music service. But the company was determined to ensure that Apple was given real competition in this new and unpredictable market.
Here lay the strategic risk for Apple. Apart from the classy, iconic styles of the iPod and the iPhone, there is nothing that rivals cannot match over time. By 2007, all the major consumer electronics companies - like Sony, Philips and Panasonic - and the mobile phone manufacturers - like Nokia, Samsung and Motorola - were catching up fast with new launcheS that were just as stylish, cheaper and with more capacity. In addition, Apple's competitors were reaching agreements with the record companies to provide legal downloads of music from websites.
Apple's competitive reaction
As a short term measure, Apple hit back by negotiating supply contracts for flash memory for its iPod that were cheaper than its rivals. Moreover, it launched a new model, the iPhone 4 that made further technology advances. Apple was still the market leader and was able to demonstrate major increases in sales and profits from the development of the iPod and iTunes. To follow up this development, Apple launched the Apple Tablet in 2010 - again an element of risk because no one really knew how well such a product would be received or what its function really was. The second generation Apple tablet was then launched in 2011 after the success of the initial model. But there was no denying that the first Apple tablet carried some initial risks for the company.
All during this period, Apple's strategic difficulty was that other powerful companies had also recognised the importance of innovation and flexibility in the response to the new markets that Apple itself had developed. For example, Nokia itself was arguing that the markets for mobile telephones and recorded music would converge over the next five years. Nokia's Chief Executive explained that much greater strategic flexibility was needed as a result: 'Five or ten years ago, you would set your strategy and then start following it. That does not work anymore. Now you have to be alert every day, week and month to renew your strategy.'
If the Nokia view was correct, then the problem for Apple was that it could find its market-leading position in recorded music being overtaken by a more flexible rival - perhaps leading to a repeat of the Apple failure 20 years earlier to win against Microsoft. But at the time of updating this case, that looked unlikely. Apple had at last found the best, if risky, strategy.
The Case Brief:
1 Undertake a competitive analysis of both Apple and Nokia on Who is Stronger, applying relevant concepts on value added, sustainability, processes to deliver strategy, competitive advantage, linkages, vision.
2 Identify possible prblems knowing how the mrket and the competition will change over the next few years?o What are the implications for strategy devepment?
3 Based from your analysis results, what lessons do you think other companies learn from Apple's strategies over the years?
LEARNING OUTCOMES:
This portfolio will test the following learning outcomes:
- Obtain a systematic understanding of the key aspects of strategy. This will be gained through the acquisition of coherent and detailed knowledge of relevant aspects of strategy, which will range from classical theories to the latest thinking in the subject.
- Develop the ability to accurately deploy established strategy techniques and approaches, as well as the latest thinking, regarding analysis, enquiry and application to strategy related concepts and practical situations.
- Gain a conceptual understanding which enables them to devise, contribute to and sustain strategy related arguments and discussions, whether concerning classical aspects of strategy, or the latest thinking on strategy and its environments.
- Develop a range of problem solving techniques and approaches which can be used to understand and resolve theoretical and practical situations.
- Be able to appreciate the areas of uncertainty, incompleteness, ambiguity, contradictions and the limits of knowledge relating to strategy and its environments.
- Be able to apply the methods, techniques and approaches learnt to review, consolidate extend and apply their knowledge of strategy and related areas to initiate strategy related tasks and projects, from theoretical or practitioner perspectives.
- Understand and critically evaluate arguments, assumptions, abstract concepts, uncertainties and data relating to strategy, which will enable them to frame questions, make judgements and develop solutions to theoretical and practical problems relating to strategy and its environment.
- Gain appropriate skills and knowledge which will allow them to enquire, make decisions and resolve problems in the complex, ambiguous, incomplete and unpredictable world of strategy and related areas.
- Be able to exercise their own initiative and responsibilities regarding undertaking further training and learning in strategy and related areas.
- Be able to develop and manage their own approaches to learning and training, identifying appropriate research articles and data, as well as identifying their future training needs in areas relating to strategy.