Business and environment - explained as to a friend

Module 1 in plain language

What is strategy, really?

Strategy is the long-term direction of an organisation. That is the definition in the book (Johnson and Whittington). You do not set that direction in a vacuum: you look at what the company can do itself (internal) and at what happens around it (external). The first two weeks are about exactly that.

There are many definitions. Chandler talks about goals and the allocation of resources. Drucker and Porter talk about competitive advantage: being different from the rest and delivering value to customers. Mintzberg is the odd one out: he says strategy is a pattern in a stream of decisions. People take decisions all day long, and only afterwards do you see a pattern. Strategy is then not what you thought up beforehand, but what you actually do.

The strategy statement: your strategy in a few sentences

Collis and Rukstad ask: can you write down your strategy in about 35 words? Such a strategy statement has three parts.

• Objective (goal): what do you want to achieve? It must be measurable and time-bound. “Most profitable player” is vague, “10% profit margin in 2030” is a real objective.
• Scope: where do you play? Which products, customers, markets and countries. And above all: what do you not do. In the Netherlands, Commerzbank only wanted to follow German clients and not to recruit just any small business.
• Competitive advantage: why does the customer choose you? That is the value proposition (what is valuable to the customer) plus your internal alignment (the activities and resources that mean only you can deliver this).

The use: an employee facing a difficult choice can pick up the statement and quickly choose in line with the strategy.

Honestly, real company texts are often vague (“fluff”). A mission, vision and objective get mixed up. If you write one yourself, make it as precise as possible.

Three levels of strategy

• Corporate strategy: the scope of the whole group. Which businesses belong to it (portfolio)? Vertical (make or outsource, like Nike), horizontal (diversification) and geographic.
• Business strategy: how do you compete in one market or industry? How do you gain competitive advantage? A business is a unit with its own value proposition.
• Functional strategy: R&D, IT, marketing. This contributes to realising the higher-level strategies.

Where does strategy come from?

The classic idea (rational-analytic): top management analyses, plans and executes. That is a prescriptive view: this is how it should work. Mintzberg describes how it works in reality (descriptive).

His picture:

• Intended strategy: what you planned.
• Deliberate strategy: the part of the plan that is actually carried out.
• Unrealized strategy: the part that does not work out.
• Emergent strategy: things that arise while people work, make mistakes and learn. Bottom-up, often more or less by accident.
• Realized strategy = deliberate + emergent. That is what you really do.

Example: Ikea discovered knock-down packages because someone tried to fit a table into a car. That was not planned.

Nijholt says: Mintzberg does not give a theory that you “apply”. He describes how reality is put together, like gravity.

PESTEL: look at the environment

Organisations depend on their environment. PESTEL is a lens with six corners:

Political, Economic, Social, Technological, Ecological, Legal.

So it is also a look at the non-market environment (government, society, nature). Next week comes the Five Forces: that is about the market and is much more economic.

Note: PESTEL is not a form with ready-made answers. You look for the key drivers for change: the factors with the greatest impact on the industry. There is no recipe; you as the strategist decide.

Forecasting versus scenarios

There are three ways to look ahead:

1. Single-point forecast: one number, for example 5% growth.
2. Range forecast: a band with probabilities.
3. Alternative futures: several really different futures, when uncertainty is high.

Scenario analysis

A scenario is a complete story about a possible future, in which the PESTEL factors interact. So you do not calculate the probability of one outcome. The goal is to learn and to prepare for uncertainty.

The steps:

1. Determine the scope (industry, region, number of years).
2. Choose the key drivers for change, usually two, that do not strongly influence each other.
3. Put them in a 2x2 matrix: four scenarios, each with a catchy name and a story.
4. Look at the impact: what does this mean for our strategy? Is it robust?
5. Monitor with early warning signals.

Pitfall 1: choosing two drivers that rise together (then scenarios drop out). Pitfall 2: immediately thinking about “my company”. First take the scenarios seriously, only then the impact.

What must you be able to do on the exam?

The sample exam asked for PESTEL on a newspaper article: name the acronym, choose the factor that fits best and explain the difference with Five Forces. So always use the English technical terms and write full sentences with an argument.

Business and environment - exam level

Module 1 - Business and environment (exam level)

Sources: Whittington et al. (2023), Fundamentals of Strategy (6th ed.), chapters 1 and 2; Collis and Rukstad (2008); videos 1.1 to 1.6 and College 1 by Nijholt.

Definition of strategy

Strategy is the long-term direction of an organisation (Johnson and Whittington). Other definitions: Chandler (long-term goals, actions and allocation of resources), Drucker (theory of how you gain competitive advantage), Porter (deliberately choosing a different set of activities for a unique mix of value), Mintzberg (a pattern in a stream of decisions) and Rumelt (good strategy has an essential logic with three elements: diagnosis, guiding policy and coherent actions).

• When to use: for “what is strategy” and to compare perspectives: top-down direction (Chandler, Porter) versus a pattern that becomes visible afterwards (Mintzberg).
• Pitfall: strategy is not the same as a list of goals or an annual plan. Direction takes the internal organisation and the external environment into account.
• Link: the environment is in modules 1 and 2, the internal side (resources and capabilities) in module 3.

Three horizons, purpose, vision, mission and objectives

The three horizons show that an organisation at the same time defends core activities (horizon 1), builds new opportunities (horizon 2) and explores options for later (horizon 3).

Purpose answers why the organisation exists. Vision is the desired picture of the future, mission the core business, objectives the concrete, measurable goals. Montgomery: purpose is about how you contribute and for whom.

• Pitfall: in real company texts these concepts get mixed up. On the exam, Nijholt wants to know whether you recognise a strategic objective: measurable and time-bound.

Strategy statement (Collis and Rukstad)

A strategy statement summarises the strategy in about 35 words and has three parts:

1. Objective (goal): quantifiable and time-bound; not the same as mission or values.
2. Scope: customers and offering (products, markets, segments), geography and vertical integration. A good scope also says what you do not do.
3. Competitive advantage: the customer value proposition plus the internal alignment (the activity system that only you can deliver in this way, with trade-offs).

• Applying: find the three parts in a case text; judge whether the objective is measurable and whether the scope excludes choices.
• Pitfall: “most profitable player” is not a quantified objective. Targets alone are not a strategy: the “what makes us special” is then missing.
• Link: the sources of the advantage (resources and capabilities) return in module 3.

Rumelt: good and bad strategy

You recognise bad strategy by fluff, failure to face the challenge, mistaking goals for strategy, and bad strategic objectives (a “dog’s dinner” of everything that seems important). Good strategy has a diagnosis, a guiding policy and coherent actions.

Levels of strategy

• Corporate level: scope of the group. Vertical, horizontal (diversification) and geographic; so the portfolio of businesses and the question which value the parent adds.
• Business level: competing in an industry or market; a business has its own value proposition.
• Functional level: R&D, IT, marketing; contributes to realising the higher-level strategies.

The book stresses that the levels must fit together (integration). Example from the video: Philips (own businesses) versus units Philips no longer owns, such as Signify.

Exploring Strategy Framework

The book arranges strategy in three blocks: strategic position (external environment, resources and capabilities, goals and culture), strategic choices (business, corporate, international, acquisitions, entrepreneurship) and strategy in action (evaluating, leadership, organising, changing). Modules 1 and 2 cover the external position.

Strategy development: rational-analytic versus emergent

• Rational-analytic / conventional account (prescriptive): analyse, plan, execute; this is how it should work.
• Emergent (descriptive, Mintzberg): how strategy arises in reality: through learning, experimenting and mistakes, bottom-up.

The book (pp. 14-15) distinguishes intended and emergent strategy. The further elaboration by Mintzberg and Waters (1985) is extra material, not core exam material:

• Pitfall: the two views do not exclude each other. A descriptive theory is not “applied”; it explains. A descriptive theory explains how strategy arises, a prescriptive one says what you should do.
• Examples: Ikea (knock-down packages), Slack/TinySpeck.

PESTEL

PESTEL analyses the macro environment: Political, Economic, Social, Technological, Ecological, Legal. Synonyms: STEEP, SEPTEMBER.

• Purpose: see opportunities and threats and find the key drivers for change (greatest impact on the industry).
• Difference with Five Forces: PESTEL looks at the non-market environment and the macro level; Five Forces at the market environment (economic, competitive relations) at industry level.
• Pitfall: PESTEL is not a fill-in matrix and gives no ready-made answers; you must choose what really matters. Factors are linked (AI touches economic, ecological and social).

Political matrix (book p.24, Figure 2.2). Two variables show how political an environment is: the role of the state (customer, supplier, owner or regulator) and exposure to civil society (lobbyists, campaign groups, media). The defence industry scores high on both; food companies have less direct state involvement.

Ecological motives (Bansal and Roth, Figure 2.6). Three contextual pressures (ecological, organisational field, internal organisation) lead to three motives: responsibility, legitimacy and competitiveness. Example of competitiveness: less polluting waste lowers costs and sustainable products often command a price premium.

Forecasting

Three forms: single-point forecast (one number), range forecast (band with probabilities) and alternative futures (high uncertainty). Concepts: megatrends, inflexion points, weak signals.

• Pitfall: forecasting predicts; scenario analysis does not predict.

Scenario analysis

A scenario is a coherent story about a possible future, in which PESTEL factors interact with each other.

Steps: (1) determine the scope, (2) choose key drivers on impact, uncertainty and mutual independence, (3) work out scenarios as a story with a name, (4) test the impact and robustness of the strategy, (5) monitor with early warning indicators.

• Two drivers: 2x2 matrix, four scenarios. More drivers gives, for example, a 2x2x2 matrix.
• Strength: an alternative future that does justice to the interplay between PESTEL factors. No probabilities are calculated.
• Pitfall: drivers that strongly influence each other; thinking about the company too early; ghost scenarios (implicit “business as usual” assumptions about the future that steer decisions without anyone testing them).
• Example: Europe 2040 (wind-tunnelling) with the axes exclusionary/inclusionary and resisting/demanding change.

How you use models in a case

• PESTEL on an article: first name all six factors with the correct term, then choose the factor that is strongest in the article and justify it with a sentence from the text. A factor without justification earns few points.
• Strategy statement on a text: point out the objective, the scope and the competitive advantage. Check three things: is the objective measurable and time-bound, does the scope say what the company does not do, and is the advantage a value proposition with a unique way to deliver it?
• Scenario analysis on a case: check whether the chosen key drivers are independent of each other and whether the scope (industry, region, years) is clear. Only then move to the consequences for the strategy.
• Mintzberg on an example: ask whether the outcome was planned (deliberate) or arose from experience on the shop floor (emergent). The difference between intended and realized strategy is exactly the part that is not realised plus the part that is emergent.

Common mistakes

• Mentioning “competitors” under PESTEL: that is Five Forces (module 2).
• Translating scenarios into probabilities: no probabilities are calculated.
• Mixing up corporate and business strategy: corporate is about scope and portfolio, business about competing in one market.
• Writing a general management truism (“clear communication is important”) without naming a concept from the course. That earns no points.

Exam tips

• Closed book, six questions, maximum answer length per question. Write full sentences and use the English technical terms (“when in doubt, do not translate”).
• The sample exam (PESTEL on a wine article): name the factors, argue the best-fitting factor, explain the difference with Five Forces.

Business and environment - as the lecturer says it

Module 1 - as Nijholt says it

The quotes are given literally, in the original language (Dutch, except one by Mintzberg), as they appear in the transcripts. The transcripts are generated automatically, so sentences can look messy. Under each quote is what it means for your exam, in English.

What the exam looks like

Gezegd door Jurriaan Nijholt in College 1 (04-09-2026), minuut 08:59:

wij zouden een slechte tentamen bouwen als wij bepaalde onderwerpen van dit vak helemaal gaan overslaan.

This means you must know every topic of the module. Material that is in the module can also be on the exam.

Gezegd door Jurriaan Nijholt in College 1 (04-09-2026), minuut 09:58:

als je de juiste woorden gebruikt krijg je punten.

So write full sentences with the technical terms of the book. A bullet list of terms earns little, because the marker cannot see whether you understand it.

Gezegd door Jurriaan Nijholt in College 1 (04-09-2026), minuut 10:59:

bij twijfel vertaald dan niet.

Use the English terms: PESTEL, key drivers for change, intended strategy, and so on.

Gezegd door Jurriaan Nijholt in College 1 (04-09-2026), minuut 12:00:

Ja, dan heb ik het wel de hele tijd over buyer power.

An example of a term that is more precise in English than as a Dutch translation.

What is strategy

Gezegd door Jurriaan Nijholt in Video 1.1, minuut 00:05:

Zij omschrijven strategie rechtsonder als de lange termijn richting van een organisatie.

This is the definition of the book. Learn it by heart, with the addition that internal and external both count.

Gezegd door Jurriaan Nijholt in Video 1.1, minuut 02:12:

je bij het vaststellen van die richting rekening moet houden met intern de organisatie en extern de omgeving.

Gezegd door Jurriaan Nijholt in Video 1.1, minuut 04:27:

Strategie is niet iets dat je van tevoren bedenkt maar vooral wat je daadwerkelijk doet.

This is the Mintzberg definition a pattern in a stream of decisions: a pattern that becomes visible afterwards.

Strategy statement

Gezegd door Jurriaan Nijholt in Video 1.2, minuut 02:00:

Die moet altijd kwantificeerbaar zijn en tijdsgebonden.

This is about the objective. “Measurable and time-bound” is the requirement on which you judge an objective in a case.

Gezegd door Jurriaan Nijholt in Video 1.2, minuut 03:06:

Een goed strategy statement laat dus ook zien dat er keuzes zijn gemaakt om bepaalde initiatieven niet te ontplooien

The scope also says what you do not do.

Gezegd door Jurriaan Nijholt in Video 1.2, minuut 04:21:

De waardepropositie zegt iets over de vraag waarom moet de klant jouw product kopen?

The competitive advantage has two parts: the value proposition and the internal alignment.

Gezegd door Jurriaan Nijholt in College 1 (04-09-2026), minuut 101:52:

Dan zou ik wel. Gewoon. Echt. De strategic objective. Duidelijk in de tekst. Verstoppen.

He says that in an exam question on strategy statements he would hide the strategic objective clearly in the text, to test whether you know what a strategic objective is. So practise recognising the objective in running text.

Gezegd door Jurriaan Nijholt in College 1 (04-09-2026), minuut 96:38:

Maak hem zo precies mogelijk.

If you make a strategy statement yourself, be precise, even though real company texts are often vague.

Gezegd door Jurriaan Nijholt in College 1 (04-09-2026), minuut 36:44:

Doelen die zeg maar uitdagend maar haalbaar zijn, zijn altijd het meest motiverend.

This is goal setting theory: a goal that everyone understands and that is challenging but achievable motivates.

Levels of strategy

Gezegd door Jurriaan Nijholt in Video 1.3, minuut 00:11:

Nou, business level strategie gaat met name over concurrentie en concurrentievoordeel binnen de industrie en markt.

Corporate level is about scope (vertical, horizontal, geographic) and the portfolio, functional is about the departments.

Gezegd door Jurriaan Nijholt in Video 1.3, minuut 03:40:

Scope komt dus vaak neer op beslissingen over investeringen, over eigenaarschap.

Where does strategy come from

Gezegd door Jurriaan Nijholt in College 1 (04-09-2026), minuut 21:00:

Natuurlijk is het zo dat voor een groot deel, dat mag je hopen in ieder geval, de strategische beslissingen van bedrijven behoren tot intended strategy.

The plan is not nonsense, but it does not become everything.

Gezegd door Jurriaan Nijholt in College 1 (04-09-2026), minuut 22:40:

Mensen leren dus terwijl ze doen.

This is the heart of emergent strategy: bottom-up, through learning and mistakes. Realized strategy is not equal to the plan of top management.

Gezegd door Jurriaan Nijholt in College 1 (04-09-2026), minuut 33:41:

Het is net als dat je zegt van ik ga in mijn bedrijf de theorie van de zwaartekracht toepassen.

Mintzberg does not give a theory to apply; he describes how reality is put together.

Gezegd door Jurriaan Nijholt in College 1 (04-09-2026), minuut 34:42:

Het is gewoon het verhaal over hoe het zou moeten gaan.

He says this about the conventional account: the rational-analytic story is prescriptive. The emergent view describes how it really goes.

Gezegd door Henry Mintzberg in YouTube Mintzberg on strategy, minuut 02:26:

Well, I’ve always argued that strategic planning is an oxymoron

Mintzberg does not see strategy as a plan coming down from the mountain, but as something that arises while people solve small problems.

PESTEL

Gezegd door Jurriaan Nijholt in Video 1.4, minuut 01:01:

Op de eerste plaats de PESTEL-analyse. En dat acroniem ken je misschien ook als STEEP of SEPTEMBER.

Gezegd door Jurriaan Nijholt in Video 1.4, minuut 02:05:

En er is dus ook geen recept voor het herkennen van die echt fundamentele key drivers die het belangrijkst gaan zijn.

You as the strategist choose. PESTEL gives no ready-made answers.

Gezegd door Jurriaan Nijholt in College 1 (04-09-2026), minuut 107:23:

En die is veel meer economisch in zijn markt gelegd.

He says this about next week’s Five Forces, compared with PESTEL and its non-market environment. This is exactly the difference the sample exam asks for.

Forecasting and scenario analysis

Gezegd door Jurriaan Nijholt in Video 1.5, minuut 01:04:

Het is nu belangrijk om even in te zien dat forecasting letterlijk gaat over voorspellen.

Gezegd door Jurriaan Nijholt in Video 1.6, minuut 00:05:

dan is een scenario een compleet verhaal over een mogelijke toekomst

A scenario is a story in which PESTEL factors interact, not a prediction.

Gezegd door Jurriaan Nijholt in Video 1.6, minuut 03:51:

Met allemaal volgens de tips uit het boek een eigen pakkende naam

Gezegd door Jurriaan Nijholt in College 1 (04-09-2026), minuut 141:09:

die key drivers wederzijds onafhankelijk zijn

His second takeaway: good scenarios only arise if the key drivers are mutually independent. Otherwise you invent stories that cannot exist.

In short

• Know what a strategic objective is and recognise it in a text.
• Use English technical terms in full sentences.
• Be able to keep PESTEL, Five Forces and scenario analysis apart: non-market versus market, and a story versus a prediction.