Designing the set of strategies

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En provenance du cours de National Research University Higher School of Economics

Business Strategies for Emerging Markets

58 notes

National Research University Higher School of Economics

Business Strategies for Emerging Markets

58 notes

The course aims to transfer the fundamental knowledge and to form the basic competencies necessary for the development and the implementation of a business strategy in an emerging market. The students are going to improve their analyzing, decision making, and planning skills as well as the ability to recognize strategic opportunities and threats. The course requires the knowledge of basic economics concepts as the pre-requisite. It is preferable that the students have some practical entrepreneurial or marketing experience, but this is not obligatory. The course has a distinct stress to the practice of strategic management. Although a few fundamental theories are mentioned, the bulk of the ideas are based on simple though efficient applied model that are easy to understand and convenient to use. The multitude of examples and stories from the personal consulting and managerial experience of the author are the hallmark of the course. The author’s original drawings make the key concepts well memorable ad cozy to deal with.

À partir de la leçon

Choosing and supporting strategies

Dear student! In this module you will learn how to choose and support the strategies for the different aspects of your business. You are going to study the fundamental strategies for finance, marketing, business structure and human resources. On completing the module you will be able to design a congruent set of strategies that can produce synergy. Follow the given examples. Do your best to apply all the ideas of the module to your business idea, discuss it with your friends and colleagues, do all the tasks, and you will have good progress in your learning. Good luck on this way!

Designing the set of strategies8:38

Rencontrer les enseignants

Mikhail Plotnikov
Professor
Department of General and Strategic Management

[MUSIC]

Any business model or value proposition, no matter how good they are,

need efficient implementation.

The upper level of an implementation plan is the level of functional strategy.

The general direction or

scheme how to develop the specific function of an organization.

In this module, we're going to discuss how to choose proper

strategies and how to make them coherent and synergetic.

Any business organization is a complex system that comprises a number of

subsystems.

One of the fundamental rules is that the subsystems should be integrated and

congruent.

Otherwise, these integration forces can paralyze or even destroy the company.

In order to avoid this and achieve balance,

you need to look at the company from different perspectives.

One of the most popular ways to do so

is to use the approach suggested by Kaplan and Norton about 20 years ago.

And speaking about finance, customer, internal processes, and learning and

growth perspectives.

Business strategy, too, has different aspects and can be split

into more specialized strategies that are often called the functional strategies.

They should be balanced and support each other with synergy.

Although there can be several ways to adjust the functional strategies to each

other, the classic approach is to start with financial goals, objectives and

strategies.

What financial results should be achieved?

What strategies shall we use for it?

Set the objectives and decide the strategy.

Then ask yourself, what results should we achieve in our work with clients?

What markets and what products should be covered so

that they could provide the given financial results.

Choose a markets and strategy, and go on with the following perspective.

The question then is how we should organize our activities so

that we could provide and sustain the necessary client results.

Finally, think of the human resource dimension.

What and how we should learn and

develop in order to be able to support the new system of the processes.

This leads us to a coherent chain of functional strategies

starting with finance.

This logics and sequence work pretty well in the advanced markets but

they fail in the emerging ones.

The matter is the number of peculiarities here.

First, it is almost impossible to set the correct financial objectives as there

is neither enough relevant statistics, nor the economic and political stability.

More than that, very often there is no evident market reaction as the demand and

the segments are not stable enough.

You should expect failures in process implementation.

So it is necessary to think of the alternative vendors and

process organization schemes.

And you need to take into account that the emerging markets often lack high quality

professionals.

And it is impossible to get the right people for the supposed job profiles.

That is why you need to rethink the chain of functional

strategies in emerging markets.

One of the most widespread ways is to start with marketing goals and strategies.

Then proceed to the internal processes and learning and growth perspectives.

How we should be organized and what people would do this

in order to achieve the planned results for the customers.

The two latter strategies should be corrected in order to meet each other.

The closest strategy in this logic is the finance.

That is how to support all the change and development.

Where and how to attract the necessary money and resources.

Designed this way, the chain of the functional strategies

is much more prepared for the uncertainty of the emerging markets.

Although it is less definite in its financial results.

Many companies in the emerging markets of the East

prefer the competence-based sequence of the strategies.

They start with the key competencies as the sharpest and

ultimate point of their learning and development strategies.

Then, they design the optimal system of internal processes,

in order to sustain and develop the key competencies.

After that, they choose marketing strategies.

Where and with what products based on the competencies that are supported by

internal processes the company can be successful.

Again, the final point is the financial strategies.

What financial results can be achieved in the markets and how they can be sustained.

This logics presents a tree of strategies

with different branches at each perspective.

They are rooted in the same set of key competencies.

Although the sequence of functional strategies may be planned well enough,

there are some more challenges concerning the process of implementation.

As soon as the objectives within the different functional strategies

are very often set by different people, they sometimes turn out to be ungrounded,

incoherent and even contradictory.

The process of cascading the objectives through the perspectives and

functional strategies often leads to the biases in the initial priorities.

Many managers in emerging markets demonstrate inability to develop rational

and transparent action plans, which lead to the actual lack of process control.

[INAUDIBLE], the system of objectives, of course,

turns out to be a failure on the level of implementation.

That is why some companies in emerging markets prefer to use

the action-based sequence.

It implies that a strategic vision is projected

to a set of three to six priority challenges.

The major directions of development such as production, modernization,

retail chain development or a boost in active sales.

The priority challenges then are specified to a number of more specialized

tasks that have target results for each specific period of time.

After the targets are balanced in content and

time, they become the basis to design the multiple action plans and schedules.

Thus, the strategic sequence becomes a project implement.

This way it has better action orientation and manageability.

You may use any of these sequences we've just talked about.

Choose the market-based one if you need to achieve better competitive ability.

Choose the competence-based sequence if you want to build

a better realization of your abilities.

Choose the action-based sequence if you need to provide better implementation and

manageability.

Let's get back to our throwout case of Business School.

We decided to choose the action-based strategic sequence.

As soon as the proper implementation is the cornerstone of an emerging business

school.

Besides, we yet didn't have outstanding competencies, nor

a clear understanding of the market to choose priority positions.

We formulated three major priority challenges.

To create products that could boost the market, to build a team that is able to

produce and deliver the products, and to market school the products and the team.

Then we set a number of specific tasks for the priority challenges and

design targets for them.

This all was converted to the action plans that showed us how big is the amount of

the work ahead, and what people we need to implement this.

So let's sum it up.

A business strategy is supported by a coherent sequence of

functional strategies.

That is the strategies for finance, customers,

internal processes, learning, and growth.

The classic sequence does not the emerging markets, due to a number of reasons.

The proper sequences may be market based, competence based, or action based.

All the three are suitable for emerging markets.

Choose one according to your priorities.

And don't forget about the implementation challenges.

Good luck on this [INAUDIBLE].

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