part 3

Strategic MBA thinking: how to manage the big picture

Strategy n. a plan of action to achieve a long-term goal, overall aim or desired end result

In your organisation there are some things that are under your control and other things that are not. We usually think of those elements you can directly influence that push you forward as strengths and those that hold you back as weaknesses. What lies outside your control but could be used to your advantage are opportunities, and what you can’t control but which could restrict you are threats. These are the components of a SWOT analysis (see Figure P3.1). SWOT came out of the failure of long-range corporate planning in the US in the 1960s and 1970s and still typifies the sort of framework applied to strategic decision and policy making today.

The ‘internal–external’ dichotomy of a SWOT is an example of a compelling idea in strategic thinking which we will explore in this part. Strategic thinking is about making informed, intelligent choices from a set of considerations that extends beyond the boundaries, resources or culture of the organisation. Another way of looking at this is to say that strategy deals with what could be done in the future, and this future depends on the environment outside the organisation. But nothing in management is neat and tidy and strategic thinking requires managers to shift how they see the world.

FIGURE P3.1 SWOT analysis

Strategic thinking involves:

• understanding the delicate relationship between an organisation and its environment
• setting and communicating the goals and ensuring the survival of the organisation through value creation
• undertaking medium- to long-term planning and making a small number of (relatively) irreversible decisions
• keeping a cool head under pressure.

Strategic thinking in the early stages for any organisation is relatively simple. But as they grow and age, businesses develop more complex relationships with their internal and external environments. In particular they become more sophisticated regarding their customers. Or they should do. This requires a shift in management thinking beyond tactical decisions (though these remain important) to ones that deal with new and unpredictable variables. The cost of misjudgement may be high. In 2007, for example, the Royal Bank of Scotland under the leadership of Fred Goodwin purchased a large part of the Dutch bank ABN-AMRO. This was perfectly in line with RBS strategy – and very nearly precipitated a £46 billion government bailout to avoid the collapse of the world’s largest banking group.¹

There are four business areas associated with strategic thinking:

• marketing
• strategy
• corporate finance and governance
• global and international business.

We will see in turn how each of these is organised and how important it becomes to understand the language used to express ideas, concepts and theories at this level.

Note

1 www.theguardian.com/global/2011/dec/12/royal-bank-of-scotland-fsa-report