Managing Businesses Strategically
What is a business model and what is strategy?
Arenas: Identifies where the company will compete, including market segments, geographic regions,
core technologies and product/service categories.
Vehicles: Describes how the company will go about competing in the chosen arenas. This includes
the channels, distribution networks, and M&A (franchising, licensing, alliances, joint ventures) and
other partnerships it will utilize.
Differentiators: Specifies the unique features or capabilities that set the company apart from
competitors. It clarifies what customers find valuable. This includes brand image, customization,
pricing, styling of the product, reliability, speed to market.
Staging (it’s steps): Outlines the sequence and timing of strategic moves. It details the phases or
steps the company will take to implement its strategy.
Economic Logic: Addresses how the company will create value and how to generate a profit. It
involves understanding the cost structure, revenue model, and overall economic viability.
,In the broader question of "What is strategy?" the paper emphasizes the need for a clear and well-
defined strategy that goes beyond generic statements. Hambrick and Fredrickson argue that a
strategy should be specific and address critical aspects, including where a company competes, how
it competes, what sets it apart, the sequence and timing of strategic moves, and the economic logic
underlying its approach.
Their work suggests that a strategy should not be a vague or high-level statement but a carefully
thought-out plan that considers various dimensions of the business environment. By introducing
the Strategy Diamond, Hambrick and Fredrickson aimed to provide executives with a practical tool to
structure and communicate their strategy effectively.
, Sensitivity analysis to changes
A sensitivity analysis is a strategic management tool used to assess how variations or changes in
certain key factors (variables) can impact the outcomes of a business strategy. It helps organizations
understand the robustness and vulnerability of their strategic plans to different scenarios and
external influences. The goal is to identify the sensitivity of strategic decisions to changes in specific
variables and evaluate the potential risks and opportunities associated with those changes.
1. Does your strategy fit with what’s going on in the environment?
Assess how changes in the external environment, such as market trends, regulatory shifts, or
technological advancements, might impact the viability and effectiveness of your strategy.
2. Does your strategy exploit your key resources?
Evaluate how variations in resource availability, including financial, human, and technological
resources, could affect the execution and success of your strategy.
3. Will your envisioned differentiators be sustainable?
Explore scenarios in which your identified differentiators face challenges, such as increased
competition or changes in customer preferences. Assess the sustainability of your competitive
advantages.
4. Are the elements of your strategy internally consistent?
Analyze the interdependence of different elements within your strategy. Check for coherence and
consistency to ensure that various components align and support each other rather than creating
conflicts.
5. Do you have enough resources to pursue this strategy?
Investigate how changes in resource availability, budget constraints, or unexpected resource
demands may impact your ability to implement and sustain the strategy.
6. Is your strategy implementable?
Consider potential obstacles and challenges in the implementation process. Evaluate how variations
in factors like organizational capabilities, employee skills, and management support might influence
the successful execution of your strategy.
What is a business model and what is strategy?
Arenas: Identifies where the company will compete, including market segments, geographic regions,
core technologies and product/service categories.
Vehicles: Describes how the company will go about competing in the chosen arenas. This includes
the channels, distribution networks, and M&A (franchising, licensing, alliances, joint ventures) and
other partnerships it will utilize.
Differentiators: Specifies the unique features or capabilities that set the company apart from
competitors. It clarifies what customers find valuable. This includes brand image, customization,
pricing, styling of the product, reliability, speed to market.
Staging (it’s steps): Outlines the sequence and timing of strategic moves. It details the phases or
steps the company will take to implement its strategy.
Economic Logic: Addresses how the company will create value and how to generate a profit. It
involves understanding the cost structure, revenue model, and overall economic viability.
,In the broader question of "What is strategy?" the paper emphasizes the need for a clear and well-
defined strategy that goes beyond generic statements. Hambrick and Fredrickson argue that a
strategy should be specific and address critical aspects, including where a company competes, how
it competes, what sets it apart, the sequence and timing of strategic moves, and the economic logic
underlying its approach.
Their work suggests that a strategy should not be a vague or high-level statement but a carefully
thought-out plan that considers various dimensions of the business environment. By introducing
the Strategy Diamond, Hambrick and Fredrickson aimed to provide executives with a practical tool to
structure and communicate their strategy effectively.
, Sensitivity analysis to changes
A sensitivity analysis is a strategic management tool used to assess how variations or changes in
certain key factors (variables) can impact the outcomes of a business strategy. It helps organizations
understand the robustness and vulnerability of their strategic plans to different scenarios and
external influences. The goal is to identify the sensitivity of strategic decisions to changes in specific
variables and evaluate the potential risks and opportunities associated with those changes.
1. Does your strategy fit with what’s going on in the environment?
Assess how changes in the external environment, such as market trends, regulatory shifts, or
technological advancements, might impact the viability and effectiveness of your strategy.
2. Does your strategy exploit your key resources?
Evaluate how variations in resource availability, including financial, human, and technological
resources, could affect the execution and success of your strategy.
3. Will your envisioned differentiators be sustainable?
Explore scenarios in which your identified differentiators face challenges, such as increased
competition or changes in customer preferences. Assess the sustainability of your competitive
advantages.
4. Are the elements of your strategy internally consistent?
Analyze the interdependence of different elements within your strategy. Check for coherence and
consistency to ensure that various components align and support each other rather than creating
conflicts.
5. Do you have enough resources to pursue this strategy?
Investigate how changes in resource availability, budget constraints, or unexpected resource
demands may impact your ability to implement and sustain the strategy.
6. Is your strategy implementable?
Consider potential obstacles and challenges in the implementation process. Evaluate how variations
in factors like organizational capabilities, employee skills, and management support might influence
the successful execution of your strategy.
