Strategy paper free essay sample

The two cases, New Town Council and Castle Press, illustrate the process of strategy development within different organisational contexts. Both cases are based on the views of the strategy development process as seen by members of the respective top management teams. The Castle Press case describes how five members of the top management team view the process. Both cases are con ­ structed around two general themes. The process of strategy development and the organisational context in which it takes place. The two cases illustrate differences in the strategy development process, demonstrating that the pro ­ cess of managing strategy development in one organisation may not be the same as, or necessarily appropriate to, managing strategy development in another organisation. I am not a commanding manager. I seek consensus, I am methodological, Im a planning type of manager. MANAGING DIRECTOR Castle Press is a specialist publisher of educational materials and the largest subsidiary of a significant, UK-based publishing and media group. Despite the companys long history in the UK and a strong tradition in its specialist field, it markets its products and related services to an increasingly global audience. Castle Press is the largest company of those in the corporate group, with 200 people working from the UK office creating an annual turnover of ? 30m in 1995 and accounting for more than 40 per cent of total group revenue. CHANGING TIMES For more than a decade, prior to 1995, Castle Press was the market leader in its field, but it had slipped into second place. This change in market status provided a new incentive for organisational change, after a long period of relative internal stability (some now say, complacency). Internal dete1mination to regain market dominance was supported by a new strong message from corporate headquarters to go for growth, with the stated objective of doubling turnover by the year 2000. Because we didnt change in the past, now we are having to make major changes. We were locked into the past and into the way we did things before. If an area had a certain level of This case study was prepared by A. Bailey and J. Verity, Cranfield School of Management. it is intended as a basis for class discussion and not as an illustration of either good or bad management practice.  © A. Bailey and J. Verity, 1996. resources one year, it would get more of the same next year. That was the business approach, more of the same and building on what we already had. PUBLISHING DIRECTOR We have been too conservative, too slow to respond to the market, too conservative in the way we progress careers, too slow to embrace new technology. MANAGING DIRECTOR MARKETS Castle Press found the global market place to be increasingly challenging. Since the late 1980s the com ­ pany had been exposed to recession-bound Europe, the growth prospects of the Pacific Rim and newly opened communist countries, and the highly volatile and regulation-prone South American markets. Overall, demand for its products was growing, but competition was strong and the competitive map was also changing. From an intemational perspective the market is becoming more competitive as the result of smaller companies being bought-up by (mainly) UK and American groups whose aspirations are to become truly global. As far as the local perspective is concerned, were getting ferocious competition, as we have done for many years, but it is now in our core markets from local publishers who are becoming experts in producing this material, and they are becoming more effective because theyre learning the tricks. MARKETING DIRECTOR IN The top management team (TMT) consisted of five executive directors (the managing director, finance director, publishing director, marketing director and production director) and one non-executive dir ­ ector from the corporate group. With the exception of the finance director (who was relatively new to the organisation), all TMT members were promoted from the business, either from within the subsidiary or from the group. Only two years before, however, the team was much bigger: Two years ago, inherited a TMT of twelve people. It was impossible to discuss strategy with that number of people. Six months later, three key people and myself retreated for a few days and thought about what we needed rather than what we had. The outcome was implemented about eighteen months ago. We now have a TMT of six people and the focus of our meetings is higher level discussions and strategic planning. MANAGING DIRECTOR As a group, the TMT thought that they were compatible and rarely in conflict with each other. The col ­ lective criticism of team meetings was the danger that discussions gravitated towards the operational rather than the strategic, since this was the one time that team members found themselves together in one place at one time. The finance director (only two years with Castle Press) noted that he could bring a different contribution to the teams discussion: I think we were very internally focused. It is easier when you come from outside the organisation and from this position I can be constructive. Im the only person on the Team who hasnt been with Castle Press for the past twenty years, so I do have some useful external benchmarks. FINANCE DIRECTOR A TRADITION OF PLANNING Planning had a long history at Castle Press and was an established part of the yearly routines of the TMT. The five-year planning horizon did, however, have its critics, as did the emphasis and reliance on the planning process: We have a five-year business plan. We revise it every year, so its ongoing. It is continuous, changing annually as we progress. PRODUCTION DIRECTOR The strategy process is mainly planning. But because we are dealing with global markets and there are always things happening, like economic changes in various parts of the world, we have to react to these rather than plan for them! We might be able to plan that something could happen; but to predict when and where is not so easy we have to react to these external influences. PUBLISHING DIRECTOR We are commissioning new books now that will reach a peak of sales in the year 2000. So I think there is too much emphasis on the shmt term. We need to force ourselves to think longer term, not just five years down the line. MARKETING DIRECTOR In my view, the information for strategy development tends to be more informal than formal. We are not very good at collating centrally what is key information about the external environment. It tends to be much more in peoples heads rather than having a resource that can be consulted and information taken from there. PUBLISHING DIRECTOR A PARENTAL DRIVE FOR PLANNING The strong emphasis on planning, while driven from within Castle Press, was reinforced by the corpor ­ ate group. At this group level, a recent change in TMT make-up had changed the style of downward communication to Castle senior management. New planning formats were being imposed with clearer monitoring and review systems. In general, the Castle top team looked on these changes favourably, but also felt that strategy was a very downward (rather than upward) process and that there was a lot of time spent making plans. The group require each of their Strategic Business Units [SBUs] to prepare a strategic planning document, once every two years. Derived from that is the operating plan, and from that the budgets. The group have actually imposed a new strategic planning and implementation structure, which we think is going to work very well. For once we agree with what our parent company has said. What is good about the new planning system is that it provides us with a clear evaluation document that we can use in the future to measure whether weve done what we said we would do, whether its been successful or not. MANAGING DIRECTOR However, despite a clear requirement for planning from corporate headquarters, what was planned was largely down to the Castle Press team. Where parental constraint was obvious, it was in the financial demands made by the parent and in agreeing budgets and profit expectations. Apart from the go for growth message, no one limits what we can do, anything can be considered. One of the key things is that our part of the business is very profitable and cash generative. We are also big relative to the other parts of the group. These factors allow us a lot of freedom. FINANCE DIRECTOR The group do constrain us in the level of profit they demand. They have the power to tell us to make 5% or 15% profit this year; this limits what we can do. The divisional structure does mean we operate in a fairly well-defined area of operation. When we have suggested operating outside these areas, we have been told it is not our responsibility. So while there is a lot of discussion about going for growth and being entreprenemial, there are constraints placed on individual business units which perhaps go against that. MARKETING DIRECTOR A Formal planning activities were associated with more informal team needs, such as the need to arrive at a consensus, coupled with a strong sense of community, respect and belonging. Once agreed at this level, the strategy was cascaded down through the organisation and more consensus was sought from employees. Without this, the TMT argued, little of the plan would be implemented. I think there is an element of tradition. We have our plans every year, we continue to do them every year, and I think its also a reflection of the function of doing everything by consensus, and the planning approach we take here is very much about developing a consensus view. PUBLISHING DIRECTOR We are very consensual and we like to debate everything and then reach an agreement. If somebody is in disagreement with something, it is unlikely that it will proceed very far. PRODUCTION DIRECTOR Because we employ people who are intellectual and academic, we take into account that they will have strong opinions on how the business is run and ignoring them will mean trouble. It is the nature of the people we employ that means that we have to have a more consensual and sensitive approach to management. At the beginning of this year we decided within our management board what our key objectives were. We took twenty of our senior managers away for two days and spent time explaining our key strategies. Then we asked them to work out action plans for how they would implement those strategies within the units. This is important because we have had problems with implementation before. We assumed that senior managers understood what we were trying to do after a short briefing! Now we are involving the senior guys more. This is a very traditional and conservative division and people are resistant to change, so we spend a lot of time trying to get people thinking in a different way. MANAGING DIRECTOR AND Because of the drive towards consensus, the issues of power and politics were not seen as very strong, although they were not absent: I dont think there is really any conflict. I think there are differences- we all know where were trying to get, but the difference is about how we should get there. PUBLISHING DIRECTOR At board level I think we are quite well balanced power wise; people respect each other. I dont see that there is any one dominant player. However, influence comes about because of the business were in- publishing and selling your product. So it is these groups who have influence at the end of the day decisions come down in their favour rather than on the processing side like my department. My area is only here on sufferance, because they need the product to be produced. PRODUCTION DIRECTOR CULTURAL INFLUENCES Employees at Castle Press were proudly professional and passionate about publishing quality books the best in their specialist area. These commonly shared values about their trade directed strategy by keeping Castle Press away from certain areas of business and certain markets. There is a strong feeling here and within the group of we have always done things this way. It is an even stronger culture in Castle Press where, in its specialist area of publishing, it is very much in a world of its own. I think people in this area of publishing around the world are just a family apart from the rest. They are very committed to this area rather than to publishing. I think people have this work in their blood and that is one of the things that gives it a very strong culture. Wherever you go worldwide, we get sucked into that culture. PRODUCTION DIRECTOR Long service among the workforce was common in Castle Press. This helped to reinforce the common culture of the organisation. Even when new people were recruited from outside the organisation, the tendency was that these were selected from the publishing arena and publishing houses which were very similar to Castle Press. In the top management team and more generally, we are limited [in terms of experience] to Castle and then to a slightly wider level of publishing. We have deliberately recruited people who dont have any experience in either, but there arent many of them at the moment. PUBLISHING DIRECTOR I think our strategy is principally historical, to some extent dictated by our wish to be the number one and our assumption that we can be that. In order to be number one, we have got to have fairly high objectives and to some extent that assumption dictates the overall strategy that weve got to be a major player wherever we operate. There are accepted industry ways of producing, selling and promoting materials in our business. There are common strategies, and following these is only restrained by size ­ the bigger and closer in size the competitors are to us, the more similar the strategies are. MARKETING DIRECTOR REACTING TO A CHANGING ENVIRONMENT While there had been a strong focus on strategy development through planning processes, the changing nature of the operating environment, changes in economic conditions and the speed of environmental change were dictating a different response from the organisation. Exploring Corporate Strategy by Johnson, Scholes Whittington 5 This incremental approach thats what we re getting more of now and its because the environment is changing. New opportunities are arising. Before, we never really took them. Over the last couple of years we have started to take more risks in the hope that they will work. We try to set things up in a way where we can keep it low key and we can withdraw if it doesnt work, but if it looks as if its a success, we can build on it. PUBLISHING DIRECTOR I think that we should experiment more and when theres