SAMENVATTING
STRATEGIC MANAGEMENT
3705
Fien Peerenbooms
3de Bachelor Handelswetenschappen
,HC 1: WHAT IS STRATEGY? ................................................................................................. 3
1. MINTZBERG: Strategy as an emergent process ................................................................ 3
2. Strategy as simple rules (EISENHARDT) à Article 1 ......................................................... 3
3. What is strategy? (PORTER - positioning school) à Article 2: ............................................. 6
4. Design school ............................................................................................................. 10
5. Strategy School of thought .......................................................................................... 10
6. Intended, emergent, and realized strategies ................................................................... 11
7. Categorizing strategy .................................................................................................. 11
HC 2: THE INVIRONMENT OF THE FIRM................................................................................ 13
1. The environment of the firm ......................................................................................... 13
2. How is the environment relevant to strategy .................................................................. 13
3. Studying the environment ............................................................................................ 14
4. Effects of environmental characteristics on firm performance ............................................ 17
5. Effects on firm performance ......................................................................................... 17
6. Definitions of article 2 - Organizational environments and cultures .................................... 18
7. PORTER: Industry structure and competitive strategy: keys to profitability à Article 1 ......... 20
7. Value creation and value capture .................................................................................. 21
HC 3: INTERNAL ANALYSIS ................................................................................................ 26
1. Recap Porter (5 forces)................................................................................................ 26
ARTICLE 1 ..................................................................................................................... 27
2. The internal organization ............................................................................................. 27
2.1 Analyzing the internal organization .............................................................................. 27
2.2 Recourses, capabilities, and core competencies ............................................................. 28
2.3 Value chain analysis .................................................................................................. 31
IN SUMMARY ................................................................................................................. 32
HC 4: BUSINESS-LEVEL STRATEGY...................................................................................... 33
P&G’s Strategic Position Weakens à Article ........................................................................ 33
1. Business-level strategy: How to compete for advantage ................................................... 33
2. Differentiation strategy: understanding value drivers ....................................................... 35
3. Cost-leadership: understanding cost drivers ................................................................... 37
4. Business-level strategy and the Five forces: benefits and risks .......................................... 40
5. Integration strategy: combing cost leadership and differentiation ...................................... 41
6. Red and Blue Oceans .................................................................................................. 42
HC 5: CORPORATE-LEVEL STRATEGY ................................................................................... 43
Corporate strategy: Vertical Integration and Diversification à Article..................................... 43
1. What is corporate strategy? ......................................................................................... 43
INTEGRATION (Vertical) .................................................................................................. 43
2. Scope of activities ....................................................................................................... 43
3. What is integration? .................................................................................................... 43
4. Integration: Make or Buy? ........................................................................................... 44
5. Transaction cost economies (Why integrate?) ................................................................. 45
DIVERSIFICATION (horizontal) ......................................................................................... 46
6. Corporate Diversification: expanding beyond a single market............................................ 46
7. Types of diversification ................................................................................................ 46
,8. When does diversification create value? ......................................................................... 47
9. Problems of diversification (it may backfire) ................................................................... 47
10. Corporate diversification and firm performance ............................................................. 48
11. Vertical integration and diversification: sources of value creation and costs....................... 48
, HC 1: WHAT IS STRATEGY?
1. MINTZBERG: Strategy as an emergent process
The emergent way: How to achieve meaningful growth in an era of flat growth
Emergent strategy is the view that strategy emerges over time as intentions collide with, and
accommodate, a changing reality.
According to Henry Mintzberg, emergent strategy is a set of actions, or behavior, consistent over
time, “a realized pattern [that] was not expressly intended” in the original planning of strategy.
The term “emergent strategy” implies that an organization is learning what works in practice.
Mintzberg’s Critique of Formal Strategic Planning:
§ The fallacy of prediction
o The future is unknown
o Accidental discoveries and happenstances can have dramatic effects on strategic
direction
§ The fallacy of detachment
o impossible to divorce formulation from implementation
§ The fallacy of formalization
o inhibits flexibility, spontaneity, intuition and learning
o Strategy evolves through autonomous action
§ Strategy evolves through autonomous action, a Pattern in a Stream of Decisions.
o Honda entering U.S. motorcycle market in 1960s and 70s: “…had no strategy other
than the idea of seeing if we could sell something in the United States.”
2. Strategy as simple rules (EISENHARDT) à Article 1
In strategy as simple rules, advantage comes from successfully seizing fleeting
opportunities. Key strategic processes, such as product innovation, partnering, or spinout
creation, place the company where the flow of opportunities is greatest.
Criticism of design and positioning schools, using the internet space as example:
§ Intense rivalry
§ Instant imitation
§ WTP (willingness to pay) is extremely low
§ Few barriers to entry
How did companies like Yahoo! succeed? Zie dia 11 HC1
§ The secret if companies like Yahoo! = strategy as simple rules
Strategy:
§ One interviewed manager defined strategy as: “I have one thousand opportunities a day;
strategy is deciding which 50 to do.” (Eisenhardt and Sull, 2001: 108)
§ Strategy is then the craft of knowing which fleeting opportunities to seize.
How?
§ By identifying a small number of strategically significant processes and crafting a few
simple rules to guide them.
Number of rules: it’s important to have the optimal number of rules = between 2 and 7
§ Young companies: usually have too few rules, which prevents them from executing
innovative ideas effectively.
§ Older companies: usually have to many rules, which keep them from competing
effectively in turbulent markets.
STRATEGIC MANAGEMENT
3705
Fien Peerenbooms
3de Bachelor Handelswetenschappen
,HC 1: WHAT IS STRATEGY? ................................................................................................. 3
1. MINTZBERG: Strategy as an emergent process ................................................................ 3
2. Strategy as simple rules (EISENHARDT) à Article 1 ......................................................... 3
3. What is strategy? (PORTER - positioning school) à Article 2: ............................................. 6
4. Design school ............................................................................................................. 10
5. Strategy School of thought .......................................................................................... 10
6. Intended, emergent, and realized strategies ................................................................... 11
7. Categorizing strategy .................................................................................................. 11
HC 2: THE INVIRONMENT OF THE FIRM................................................................................ 13
1. The environment of the firm ......................................................................................... 13
2. How is the environment relevant to strategy .................................................................. 13
3. Studying the environment ............................................................................................ 14
4. Effects of environmental characteristics on firm performance ............................................ 17
5. Effects on firm performance ......................................................................................... 17
6. Definitions of article 2 - Organizational environments and cultures .................................... 18
7. PORTER: Industry structure and competitive strategy: keys to profitability à Article 1 ......... 20
7. Value creation and value capture .................................................................................. 21
HC 3: INTERNAL ANALYSIS ................................................................................................ 26
1. Recap Porter (5 forces)................................................................................................ 26
ARTICLE 1 ..................................................................................................................... 27
2. The internal organization ............................................................................................. 27
2.1 Analyzing the internal organization .............................................................................. 27
2.2 Recourses, capabilities, and core competencies ............................................................. 28
2.3 Value chain analysis .................................................................................................. 31
IN SUMMARY ................................................................................................................. 32
HC 4: BUSINESS-LEVEL STRATEGY...................................................................................... 33
P&G’s Strategic Position Weakens à Article ........................................................................ 33
1. Business-level strategy: How to compete for advantage ................................................... 33
2. Differentiation strategy: understanding value drivers ....................................................... 35
3. Cost-leadership: understanding cost drivers ................................................................... 37
4. Business-level strategy and the Five forces: benefits and risks .......................................... 40
5. Integration strategy: combing cost leadership and differentiation ...................................... 41
6. Red and Blue Oceans .................................................................................................. 42
HC 5: CORPORATE-LEVEL STRATEGY ................................................................................... 43
Corporate strategy: Vertical Integration and Diversification à Article..................................... 43
1. What is corporate strategy? ......................................................................................... 43
INTEGRATION (Vertical) .................................................................................................. 43
2. Scope of activities ....................................................................................................... 43
3. What is integration? .................................................................................................... 43
4. Integration: Make or Buy? ........................................................................................... 44
5. Transaction cost economies (Why integrate?) ................................................................. 45
DIVERSIFICATION (horizontal) ......................................................................................... 46
6. Corporate Diversification: expanding beyond a single market............................................ 46
7. Types of diversification ................................................................................................ 46
,8. When does diversification create value? ......................................................................... 47
9. Problems of diversification (it may backfire) ................................................................... 47
10. Corporate diversification and firm performance ............................................................. 48
11. Vertical integration and diversification: sources of value creation and costs....................... 48
, HC 1: WHAT IS STRATEGY?
1. MINTZBERG: Strategy as an emergent process
The emergent way: How to achieve meaningful growth in an era of flat growth
Emergent strategy is the view that strategy emerges over time as intentions collide with, and
accommodate, a changing reality.
According to Henry Mintzberg, emergent strategy is a set of actions, or behavior, consistent over
time, “a realized pattern [that] was not expressly intended” in the original planning of strategy.
The term “emergent strategy” implies that an organization is learning what works in practice.
Mintzberg’s Critique of Formal Strategic Planning:
§ The fallacy of prediction
o The future is unknown
o Accidental discoveries and happenstances can have dramatic effects on strategic
direction
§ The fallacy of detachment
o impossible to divorce formulation from implementation
§ The fallacy of formalization
o inhibits flexibility, spontaneity, intuition and learning
o Strategy evolves through autonomous action
§ Strategy evolves through autonomous action, a Pattern in a Stream of Decisions.
o Honda entering U.S. motorcycle market in 1960s and 70s: “…had no strategy other
than the idea of seeing if we could sell something in the United States.”
2. Strategy as simple rules (EISENHARDT) à Article 1
In strategy as simple rules, advantage comes from successfully seizing fleeting
opportunities. Key strategic processes, such as product innovation, partnering, or spinout
creation, place the company where the flow of opportunities is greatest.
Criticism of design and positioning schools, using the internet space as example:
§ Intense rivalry
§ Instant imitation
§ WTP (willingness to pay) is extremely low
§ Few barriers to entry
How did companies like Yahoo! succeed? Zie dia 11 HC1
§ The secret if companies like Yahoo! = strategy as simple rules
Strategy:
§ One interviewed manager defined strategy as: “I have one thousand opportunities a day;
strategy is deciding which 50 to do.” (Eisenhardt and Sull, 2001: 108)
§ Strategy is then the craft of knowing which fleeting opportunities to seize.
How?
§ By identifying a small number of strategically significant processes and crafting a few
simple rules to guide them.
Number of rules: it’s important to have the optimal number of rules = between 2 and 7
§ Young companies: usually have too few rules, which prevents them from executing
innovative ideas effectively.
§ Older companies: usually have to many rules, which keep them from competing
effectively in turbulent markets.
