class 9 strategy formulation in japanese...

Copyright © 2007 Keio University

Strategy Formulation in Japanese Management

Class 9

Class 9Copyright © 2007 Keio University ｜ 2

Quote of the Day

“Cheshire Puss,“ she (Alice) began…“would you tell me, please,

which way to got from there?““That depends a good deal on where you want

to get to,“ said the Cat.Alice‘s Adventures in Wonderland, Lewis Carroll


This Lecture

• Theoretical overview of strategicmanagement

• Strategic planning in Japan• Japanese competitive advantages in the

world market• Japan`s drive for high quality and low cost


What is a Strategy??

• According to Hitt et al. (2003) a strategy

„is an integrated and coordinated set of commitments and actions designed to exploitcore competencies and gain competitiveadvantage“.


Strategic Management

• The same people say that strategicmanagement

„is the full set of commitments, decisions, and actions required for a firm to achieve strategiccompetitiveness and earn above-averagereturns.“


Strategy Dimensions

• Context• Content• Process

But where doesknowledge come in??


Strategic Context

• Every strategy context is unique, multidimensional and heterogenous and in recent years is strongly influenced by– Globalization– Innovation – Customers as drivers of corporational change


Strategic Process

• Environmental analysis• Strategy analysis• Strategy formulation• Strategy implementation• Strategy change


Step 1:Developing a

StrategicVision and BusinessMission

Step 2:SettingObjectives

Step 3:Crafting aStrategy

Step 4:ImplementingandExecutingtheStrategy

EvaluatingPerformance,

Monitoring New Developments

andInitiatingCorrective

Adjustments

Revise as needed

Revise as needed

Improve orChange

Improve orChange

EnvironmentalAnalysis


Levels of Strategy

Corporate Strategy

Business Strategy 1

Business Strategy 2

Business Strategy 3

OperationsManagement

StrategyR&D Strategy

Financial/AccountingStrategy Marketing Strategy

Corporate Level

Business Level

Functional Level


Strategic Content• Functional level

– Strategies for activities within organizations• Business level

– Bundling a number of functional strategies to achieve a competitive advantage by exploitingcore competencies in specific productmarkets

• Corporate level– Strategies to gain a competitive advantage by

managing the corporations business(es) in various industries and markets


Network Level Strategies

Creating strategies for networks in form of joint ventures or strategic alliances betweencorporations (often also includes thecorporate, business or functional level)


Important Definitions• Strategic Competitiveness

– When a firm successfully formulates and implements a value-creating strategy.

• Strategy– An integrated and coordinated set of commitments

and actions designed to exploit core competencies and gain a competitive advantage.

• Competitive Advantage– When a firm implements a strategy that its

competitors are unable to duplicate or find too costly to try to imitate.


Important Definitions (cont’d)

• Risk– An investor’s uncertainty about the economic

gains or losses that will result from a particular investment.

• Average Returns– Returns equal to those an investor expects to earn

from other investments with a similar amount of risk.

• Above-average Returns– Returns in excess of what an investor expects to

earn from other investments with a similar amount of risk.


Phase 1: Establishing Premises

• Corporate goals and philosophy areconstructed and revised

• Information gathering• Evaluation of past performance• Comparison with competitors• Future competitive positions of the

company are projected, opportunities and threats are clearly identified


Phase II: Clarifying Issues

• Goals, e.g. growth rate are determined• Future performance is forecast• Comparisons between the forecast future

performance and goals are made to discover any gaps

• New strategies are sought to close thesegaps


Phase III: Long-Term Strategy

• New product-market strategies arepursued for closing the gaps betweenforecast and aspiration

• Various issues are studied (e.g. costreduction)

• Development of a long-term plan (goals, projects and strategic policy)


Phase IV: Medium-Term Planning

• After the decision about long-term strategyis decided, medium-term goals and guidelines are established and medium-term plans are made– Medium-term project planning– Planning by product groups (change of

product mix and the competition strategy foreach product group)

– Corporate functional planning (by thecorporate functional department)


Phase V: Short-Term Planning

• The last step is short-term planning as well as implementation and control

• The whole process starts from generaldecisions and moves down to detaileddecisions


Policy Deployment-Hoshin kanri


Competitive Activities of JapaneseFirms

• Low cost production• High quality products• Strong R&D• Skilled adaptation of innovative ideas

class 9 strategy formulation in japanese...

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