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0:00
Hello, and welcome
to this series
of introductory talks
on business strategy.
My name is Robert Grant.
I'm a professor of
strategic management at
Bocconi University
in Milan, Italy.
I'm also the author of
Contemporary Strategy Analysis,
a leading strategic
management textbook
used in business programs
throughout the world.
0:23
Why do firms need strategies?
Firms need strategies because
sound strategies could help them
to be successful. Why is that?
First, a strategy improves
the quality of a
firm's decisions.
It does so by acting as a
guideline or a heuristic,
thereby limiting the range of
decision alternatives the
firm needs to consider.
Recently, Elon Musk revealed
that during the difficult
days that Tesla experienced,
he had approached Tim Cook,
the CEO of Apple,
to ask if Apple
would acquire Tesla.
Tim Cook, however, would not
even meet with Elon Musk.
Now, why was this? My guess is
that Tim Cook was reflecting
on Apple's strategy.
Apple is a developer
of products.
It's a marketer of products.
It does no manufacturing.
Tesla, on the other hand,
is a manufacturer of
electric vehicles,
so there was no match there.
More recently, Apple has
revealed that it is negotiating
an alliance with Hyundai to
develop autonomous
electric vehicles.
This is much more consistent
with Apple's strategy.
Apple can do the design,
provide the software, and
contribute to the marketing.
Hyundai could deploy its
manufacturing expertise.
Second, strategy
improves coordination.
The whole process of
creating a strategy can
build consensus between
the different members,
particularly the top management
team of the company.
Then, once the strategy
has been agreed upon,
its dissemination to the rest of
the organization allows
everyone in the organization to
understand what that strategy
is and to ensure that
their decisions are consistent
with the overall
strategy of the firm.
Third, strategy provides
motivation to the organization.
The strategy could establish
a target for the future to
challenge and motivate the
members of the organization.
Back again to Elon
Musk and Tesla.
Musk has recently
announced the goal of
producing 20 million
electric vehicles by 2030.
The issue here is not
the feasibility of this,
but the fact that setting
this strategic intent
provides motivation to
the entire organization.
