ECB1SO - Strategy and Organisation - Full Summary - Topic 1 till 13

Strategy and Organization

Universiteit Utrecht – ECB1SO

Written by Lisanne Louwerse


Book summary of literature:
Rigtering, J.P.C. (2016). Strategy and Organization (2nd ed.). Pearson.

,Table of content
WEEK 1 – INTRODUCTION ................................................................................................ 3
TOPIC 1 - CHAPTER 1: INTRODUCING STRATEGY ..................................................................... 3
WEEK 2 – STRATEGIC POSITION: ENVIRONMENT & CAPABILITIES ................. 8
TOPIC 2 - CHAPTER 2: THE ENVIRONMENT .............................................................................. 8
TOPIC 3 - CHAPTER 3: STRATEGIC CAPABILITIES ................................................................... 19
WEEK 3 – STRATEGIC PURPOSE & BUSINESS STRATEGY.................................... 28
TOPIC 4 - CHAPTER 4: STRATEGIC PURPOSE .......................................................................... 28
TOPIC 5 - CHAPTER 6: BUSINESS STRATEGY.......................................................................... 37
WEEK 4 – CORPORATE STRATEGY .............................................................................. 44
TOPIC 6 - CHAPTER 7: CORPORATE STRATEGY AND DIVERSIFICATION .................................. 44
TOPIC 7 - CHAPTER 10: MERGERS AND ACQUISITIONS........................................................... 55
WEEK 6 – BEHAVIORAL THEORY AND AGENCY THEORY .................................. 64
TOPIC 8 - CHAPTER 6: BEHAVIORAL THEORY OF THE FIRM .................................................... 64
TOPIC 9 - CHAPTER 7: AGENCY THEORY ............................................................................... 69
WEEK 7 – TRANSACTION COSTS AND MOTIVATION ............................................. 77
TOPIC 10 - CHAPTER 8: TRANSACTION COST ECONOMICS ...................................................... 77
TOPIC 11 - CHAPTER 7: MOTIVATION CONCEPTS ................................................................... 86
WEEK 8 – ORGANIZATIONAL STRUCTURE AND CULTURE ................................. 96
TOPIC 12 - CHAPTER 15: FOUNDATIONS OF ORGANIZATIONAL STRUCTURE ........................... 96
TOPIC 13 - CHAPTER 16: ORGANIZATIONAL CULTURE......................................................... 102




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,Week 1 – Introduction
Topic 1 - Chapter 1: Introducing strategy
Key terms
▪ Strategy
▪ Three-horizons framework
▪ Corporate-level strategy
▪ Business-level strategy
▪ Operational strategies
▪ Strategy statements
▪ Exploring Strategy Model
▪ Strategic choices
▪ Strategic position
▪ Strategy in action
▪ Strategy lenses

Learning outcomes:
→ Summarize the strategy of an organization in a strategy statement.
→ Distinguish between corporate, business and operational strategies.
→ Identify key issues for an organization’s strategy according to the Exploring Strategy
model.
→ Understand different people’s role in strategy work.
→ Appreciate the importance of different organizational contexts, academic disciplines
and theoretical lenses to practical strategy analysis.


1.2 What is strategy?
1.2.1 Defining strategy
In this book, the following definition is used:
Strategy = the long-term direction of an organization.

This definition consists of three elements: the long term, direction and organization.
• The long term. Strategies are usually measured over years. The importance of a long-
term perspective is emphasized by the three-horizons framework (short-, medium-
and long-run):
▪ Horizon 1: The current core activities.
▪ Horizon 2: Emerging activities that should provide new sources of
profit.
▪ Horizon 3: Typically risky research and development projects, test-
market pilots, etc.
o Strategy involves pushing out Horizon 1 as far as possible, at the same time as
looking to Horizons 2 and 3.



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, • Strategy direction. Managers and entrepreneurs try to set the direction of their strategy
according to long-term objectives.
• Organization. Organizations involve complex relationships, both internally and
externally. Internally, organizations are filled with people with different interests and
views. Externally, organizations are surrounded by important relationships, like
suppliers, customers, investors, etc.

1.2.2 Levels of strategy
Inside an organization, strategies can exist at three main levels.
• Corporate-level strategy is concerned with the overall scope of an organization and
how value is added to the business of the organizational whole.
→ Geographical scope, diversity of products, acquisition of new business, etc.
• Business-level strategy is about how the individual business should compete in their
particular market.
→ Innovation, appropriate scale and response to competitors’ moves.
• Operational strategies are concerned with how corporate- and business-level
strategies are actually delivered.
→ in terms of resources, processes and people.

1.2.3 Strategy statements
An organization’s strategy can be summarized in a strategy statement. A strategy statement
consists of the following elements:
• Mission. The goals and overriding purpose of the organization. “What
business are we in?”
• Vision. The desired future state of the organization. “What do we want to
achieve?”
• Objectives. More precise and quantifiable statements of the organization’s
goals. Profitability, market share, examination results, etc. “What do we want
to achieve in the coming period?”
• Scope. Three dimensions: customers or clients; geographical location; and
extent of internal activities (‘vertical integration’).
• Advantage. How will the organization achieve the objectives it has set for
itself in its chosen domain (in face of competition).

Strategy statements should be brief and focused on the essentials. Examples:
▪ “To build the world’s largest online media group, focused on youth and with
competitive advantages in terms of the diversity and international range of our
business and the strength of our relationship with key partners.” – Vice Media
▪ “To grow to 17,000 financial advisors by 2012 by offering trusted and convenient
face-to-face financial advice to conservative individual investors through a national
network of one-financial adviser offices.” – Edward Jones


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