B820 STRATEGY

COURSE SLIDES

SUP 947369
 Learning outcomes of the
course
• Think strategically – have an awareness of what analysis, choice and
implementation of strategy each require – through applied work on the case
material and investigations into your own organisation’s strategic activities.

• Understand the concepts, theoretical ideas and empirical research findings

which underpin the study and management practice of strategy

• Evaluate and apply these concepts, theoretical ideas and empirical findings to
develop your own views on strategic decision making in organisations.

• Develop your strategic thinking through reflection on organisational practice

and your own experience.

Unit 1 pp 9-10 2
 The Strategy Process

3
Unit 1 p 8
 Four elements of a successful
strategy

- Simple and consistent vision and goals

- Thorough appreciation of the external environment

- Acute awareness of available resources

- Effective implementation

4
Unit 1 pp 14-16
 How to identify, build and deploy
resources
• A critical mass of knowledge concerning the
competitive process
• The ability to integrate this knowledge and understand
cause and effect
• Imagination to foresee alternative actions and logic to
analyse their consequences
• Availability of resources beyond current needs in order
to invest in future potential

(Henderson) 5
Course Reader p 9
 Definitions of strategy

• “…the determination of the basic long-term goals

and objectives of an enterprise, and the adoption of
courses of action and the allocation of resources
necessary for those goals.”
(Chandler, 1962)

• “…every business organisation, every sub-unit of

organisation, and even every individual (ought to)
have a clearly defined set of purposes or goals
which keeps it moving in a deliberately chosen
direction and prevents it drifting in undesired
directions.”
(Andrews, 1971) 6
Unit 1 p 17
Operational thinking v. strategic
thinking
• Operational thinking relates to those activities or sets
of activities that characterise the internal functioning
of an organisation on a day-to-day basis.

• Strategic thinking, by contrast, considers the

performance of such systems and activities in their
entirety. It is a way of thinking that reflects on how all
these activities connect and relate to each other in
achieving the objectives or mission of the
organisation.
(Porter, 1996)
7
Unit 1 p 20
 Deliberate and emergent
strategies

Deliberate strategy
Intended strategy Realised strategy

Unrealised Emergent
strategy strategy

(Mintzberg & Waters, 1985)

8
Course Reader p 18
 The analytical constructs of
the strategy process

9
Unit 1 p 31
 Strategic issues

Strategic issues can be characterised as

developments inside or outside an
organisation that are likely to have an
important impact on its ability to meet or
determine its purposes and objectives.
- they involve significant resource
commitments
- they are not easily reversible

10
Unit 1 p 32 (+ p 19)
 Levels of strategy

Corporate Strategy

Business Strategy

Internal unit strategy

The hierarchy of levels of strategy in an organisation

11
Unit 1 p 34
 The external environment
Macro-Environment

Suppliers Customers

Industry Competitors
Environment
Strategic
Groups Substitutors

Complementors

Unit 2 p 50 12
 A model of the
macro-environment

Sociological factors Political factors

 Demographics  Political milieu
Life styles  Regulatory
Social values environment

Technological
Economic factors
factors

(Fahey and Narayanan, 1986)

13
Unit 2 p 52
 Porter’s five forces model
INDUSTRY STRUCTURE

SUPPLIERS
Bargaining power of suppliers

INDUSTRY
POTENTIAL Threat of RIVALRY Threat of
new substitute SUBSTITUTES
ENTRANTS entrants products
or services
Rivalry among
existing firms

Bargaining power of buyers

(Porter, 1980)
Unit 2 p 62
BUYERS 14
 Barriers to entry

- Economies of scale
- Product differentiation
- Capital requirements
- Cost disadvantages independent of size
- Access to distribution channels
- Government policy/regulation
- Reactions of existing competitors

15
Unit 2 pp 66-69
 Industry structures
PERFECT COMPETITION OLIGOPOLY MONOPOLY

Concentration Many firms A few firms One firm

Entry and exit barriers No barriers Significant barriers High barriers

Product differentiation Homogeneous product Potential for product differentiation

Information Perfect information flow Imperfectly-available information

(Adapted from Grant , 2002)

16
Unit 2 p 70
 The life cycle curve

Introduction Growth Maturity Decline

Industry Sales

Time
17
Unit 2 p 73
 Seven key assets in a
standards war

- Control over an installed base of users

- Intellectual property rights
- Ability to innovate
- First-mover advantages
- Manufacturing capabilities
- Presence in complementary products
- Brand name and reputation

Course Reader pp 147-148 18

 Strategic groups
The term ‘strategic group’ has been defined as a
cluster of firms within an industry following the
same or a similar strategy
(McGee, 1985)
The strategic parameters employed in defining
strategic groups must reflect:
– the scope of the firm’s activity (i.e. the
product/service markets served)
– the resources committed in pursuit of this
scope.
(Cool and Schendel, 1987)
Unit 2 pp 91-92 19
 Possible sources of mobility
barriers
Market-related Industry supply characteristics Characteristics of firms
Product line Economies of scale: Ownership (e.g. public,
private, state-owned)
User technologies • production
Organisation structure
Market segmentation • marketing
Control systems
Distribution channels • administration
Management skills
Brand names Manufacturing process
Boundaries of firms:
Geographic coverage R&D capability
• diversification
Selling systems Marketing and distribution systems
• vertical integration

Firm size

Relationships with influence groups

Know-how, skills, expertise, routines

20
Unit 2 p 92
 Competitor analysis

- Identification of competitors

- Prediction of competitor behaviour: matching

intentions to capabilities

21
Unit 2 p 105
 Porter’s generic strategies

Source of Competitive Advantage

Lower cost Differentiation
Competitive Scope

Cost leadership Broad differentiation

Narrow target Broad
target

Cost focus Differentiation focus

22
Unit 2 p 106
 Cost advantages

- Economies of scale
- Accumulation of experience
(or learning curve effects)
- Process technology and process design
- Input costs

23
Unit 2 pp 106-107
 Differentiation of products and
services
- Pursue strong branding
- Employ a highly specialised or skilled sales
force
- Dominate niche markets
- Cultivate specialist knowledge or skills
- Invest in intellectual property
- Pursue exclusivity in links to the distribution
network
24
Unit 2 pp 108-109
 Main reasons for coalitions

- No single organisation possesses, or

has access to, all the requisite
resources (human, technical, financial,
etc.) to bring a new product or service to
fruition.

- Political concerns can be alleviated

- Coalitions may help partners share risks

25
Unit 2 pp 119-120
 The value net model

Customers

Substitutors FIRM Complementors

Suppliers

(Brandenburger & Nalebuff, 1995)

26
Unit 2 p 125
 Scenario planning

• “Scenario planning is that part of strategic

planning which relates to the tools and
technologies for managing the uncertainties of
the future”.
(Ringland, 1998)
• “Scenarios are an internally consistent view of
what the future might turn out to be – not a
forecast, but one possible future outcome”.
(Porter, 1985)

27
Unit 2 p 129
 An approach to scenario
planning

- Define the scope

- Identify key external drivers
- Construct initial scenarios
- Identify and develop scenario themes
- Undertake further research
- Develop and evaluate strategies

28
Unit 2 pp 131-132
 Resources and capabilities

A firm’s resources and capabilities are

often more generally referred to as its’
assets, since they are considered to
underlie its competitive advantage according
to the RBV.

29
Unit 3 p 153
 Linking resources and
capabilities
CAPABILITIES

INTANGIBLE
ASSETS

TANGIBLE
ASSETS

HUMAN RESOURCES

30
Not in course text
 Valuable resources

Must be

• rare
• imperfectly imitable
• non-substitutable

31
Unit 3 p 159
 Resources as the basis of
profitability
Barriers to entry Patents
Brands
Retaliation
Industry
attractiveness
Monopoly Market share

Rate of profit Vertical Firm size

in excess of bargaining power Financial resources
competitive level

Process technology
Cost advantage Size of plants
Access to low–cost inputs
Competitive
advantage
Brands
Differentiation Product technology
advantage Marketing, distribution
and service
(Grant, 1991)
32
Unit 6 p 229
 A resource based approach to
strategy analysis
4 Select a strategy that best exploits
the firm’s resources and capabilities Strategy
relative to external opportunities.

3 Appraise the rent-generating

potential of resources and
capabilities in terms of (a) their Competitive Advantage 5 Identify resource
potential for sustainable competitive gaps which need to
advantage, and (b) the be filled. Invest in
appropriability of their returns. replenishing,
augmenting and
upgrading the firm’s
2 Identify the firm’s capabilities. What resource base.
can the firm do more effectively than
its rivals? Identify the resource Capabilities
inputs to each capability, and the
complexity of each capability.

1 Identify and classify the firm’s

resources. Appraise strengths and
weaknesses relative to competitors. Resources
Identify opportunities for better
utilisation of resources.
33
Course Reader p 178
Evaluating rent earning potential

Sustainability - durability
- transparency
- transferability
- replicability
Appropriability

34
Course Reader pp 184-188
 Classifying resources
TANGIBLE INTANGIBLE HUMAN

Financial Technology Skills/know-how

Physical Brand / Capacity for

communication and
Reputation collaboration

Culture Motivation
(Grant, 2002)
35
Unit 3 p 168
 Porter’s value chain

FIRM INFRASTRUCTURE SUPPORT

ACTIVITES
HUMAN RESOURCE MANAGEMENT

TECHNOLOGY DEVELOPMENT

PROCUREMENT

INBOUND OPERATIONS OUTBOUND MARKETING SERVICE

LOGISTICS LOGISTICS &
SALES

PRIMARY ACTIVITIES (Porter, 1985)

36
Unit 3 p 171
 The hierarchical structure of
capabilities
Cross- Customer
functional Support
Capabilities

Functional Sales and

Capabilities Marketing

Specialist Customer
Capabilities Service
(Sales)

Single-Task Customer
Capabilities Complaints
Handling

Individuals’
Specialised
Knowledge
37
Unit 3 p 174
 Value chain analysis

- Examination of costs associated with each

activity
- Examination of customers’ willingness to
pay
- Exploring different strategic options and
making choices

38
Unit 3 pp 175-177
 Knowledge based view

“Since the origin of all tangible resources lies

outside the firm, it follows that competitive
advantage is more likely to arise from the
intangible firm-specific knowledge which enables
it to add value to the incoming factors of
production in a relatively unique manner”.
(Spender,1996)

39
Unit 3 p 191
Key assumptions of the KBV

- Individuals are the source of knowledge

creation
- Efficiency in knowledge production requires
that individuals specialise in a particular area
of knowledge
- The essential task of the organisation is
knowledge integration i.e. to co-ordinate the
efforts of specialists
(Grant, 1996)

Unit 3 p 192 40
 Dynamic capabilities
“…….the firm’s ability to integrate, build and
reconfigure internal and external
competences to address rapidly changing
environments. Dynamic capabilities thus
reflect an organisation’s ability to achieve
new and innovative forms of competitive
advantage given path dependencies and
market positions”.

(Teece, Pisano, and Shuen, 1997)

Unit 3 p 203 41
 Hierarchies or markets:
For hierarchies if:
 economies of scale, scope or
learning
 fewer opportunistic actions
 thin market (with few choices)
 complex, uncertain asset-specific
situation
 where information is uneven
 risk of information leakage of
strategic capabilities
Unit 3 p 208
For markets if:
 commodity products
 market mechanism needed
 profit maximisation important
 entrepreneurship necessary
 bureaucratic difficulties
 high governance costs
 routine situation
42
Measures of the economic benefit
of a for-profit organisation
- Economic profit
- Accounting profit
- Return on capital employed
- Return on shareholder’s equity
- Residual income
- Economic value added
- Net present value

43
Unit 4 pp 16-17
 Components of a mission
statement
• Product or service, market, and production and delivery technology

• Company goals: survival through sustained growth and profitability

• Company philosophy, or statement of basic beliefs, values,

ambitions and priorities

• Company self-concept, or understanding of its place in its

environment and its position relative to competitors

• Present and future public image of the company

• Attitude to insider and outsider ‘claimants’, interest groups, or

stakeholders.
(Pearce,1992)

44
Unit 4 p 27
 Building a mission statement

Why the company exists

Purpose

The competitive What the

position Strategy Values company
and distinctive believes in
competence
Behaviour
standards

The policies and behaviour patterns that underpin the

distinctive competence and the value system
45
Course Reader p 272
Stakeholders and their demands
STAKEHOLDER GROUP DEMANDS
Stockholders/Shareholders Appropriate returns on their investment

Employees Job satisfaction

Customers What they pay for

Suppliers Dependable buyers

Governments Adherence to legislation, regulation and taxation

Unions Benefits for their members

Competitors Fair competition

Local Communities The organisation to be a responsible citizen

The General Public The firm’s existence to improve the quality of life

46
Unit 4 p 34 (Adapted from Pearce and Robinson, 2003)
 Organisational stakeholders
Primary Secondary

Managers Media

Employees Suppliers

Customers Government (local, regional,

national)
Shareholders Creditors

Communities NGOs

Unit 4 p 37
(Adapted from Argenti , 2003) 47
 Stakeholder power

High
A B
Criteria Power

Arm’s-length power Comprehensive power

D C
Disempowered Operational power
Low
Low Operational power High
(Winstanley et al., 1995)
Unit 4 p 40 48
Salience of stakeholder claim
• The power the stakeholder has over the actions of the
organisation, broadly defined as their ability to
influence a decision

• The legitimacy of their claim over the organisation,

which can be based on either legal (e.g. contracts,
licences etc.) or moral grounds

• The urgency with which an organisation feels it needs

to satisfy stakeholder claims or respond to their
demands.

(Agle et al, 1999)

49
Unit 4 p 41
 Building trust, commitment and
effort

Recognition of moral problems

• what is “duty”?

Corporate Mgt Application of moral reasoning Trust

in Extended Commitment
Organizations • what is “right”? Effort

Possession of moral courage

• what is “integrity”?

50
Course Reader p 101
 Corporate governance

“….systems by which business corporations are

directed and controlled. The governance
structure specifies the distribution of rights and
responsibilities in the organisation and spells out
the rules and procedures for making decisions on
corporate affairs”.

51
Unit 4 p 55
 Strategic planning process

Background assumptions
and projections

Long-tem vision and

strategic directions
Input new ideas Revised possibly
and data collected several times
on new growth Medium-term plan, e.g. two
areas, trends etc. to three years
Reconsidered
Short-term plans, e.g. one after discussion
year (to include budgets, and debate
capital allocations, cash flow,
etc.)
52
Unit 5 p 83
 Competitive v. Corporate
Strategy

Competitive strategy is concerned with establishing

how the firm competes within a particular industry or
market.
Corporate strategy’s role is to define the scope of
the firm in terms of the industries and markets in
which it competes.

(Grant, 2002)

Unit 5 p 86 53
Four types of scope or boundary

Segment

Vertical

Geographic

Industry

54
Unit 5 p 87
Six types of differentiation strategy
and four characteristic markets

• Price • Unsegmented
• Image • Segmented
• Support • Niche
• Design • Customised
• Quality
• Undifferentiated

55
Unit 5 pp 115-116
 Porter’s generic strategies

Competitive advantage
Lower cost Uniqueness
Broad target

Cost leadership Differentiation

Competitive scope

Integrated cost
leadership/differentiation
Narrow target

Focused cost leadership Focused differentiation

Unit 5 p 89 56
 Sharpbenders

Companies achieving a sharp and sustained improvement in performance

by means of:

• Major changes in management

• Stronger financial controls

• New product-market focus

• Improved marketing

• Significant reductions in production costs

• Improved quality and service

(Grinyer, Mayes and McKiernan, 1988)

Unit 5 p 119 57
 Generic Testing Criteria

Suitability Consistency

Feasibility Consonance

Acceptability Advantage

(Johnson and Scholes 2003) Feasibility

(Rumelt 1995)
Unit 5 pp 126-129 58
 Types of financial risk analysis

Cash flow analysis

Break-even analysis

Company borrowing requirements

Financial ratio analysis

Currency analysis

59
Unit 5 pp 131-132
 Corporate parent’s four
functional roles
(1) Providing corporate functions and services, such as
international treasury management and central human
resource management

(2) Undertaking corporate development initiatives, such as

pursuing a central R&D role or negotiating new acquisitions

(3) Providing additional finance for growth or problem areas

(4) Developing formal links between businesses, and facilitating

such developments as the transfer of technology or core
competencies between SBUs.

60
Unit 5 p 139
 Avoiding value destruction
- avoid unnecessary intervention in businesses, unless
they are certain their intervention will be positive

- restrain their involvement in businesses that will not add

value

- de-merge businesses which are not adding value

- recognise the potential for destroying value which lies in

the corporate parent, and be prepared to reduce their
own activities and functions if no valid reason exists for
their continuation
61
Unit 5 pp 139-140
 Ansoff’s growth vectors
Product/Service

Market Product
Penetration Development
Market

Related

Market
Diversification
Development
Unrelated

(Ansoff, 1965) 62
Unit 5 p 142
 Core competencies and the
‘production function’ for assets
Non-Tradeable,
SBU Assets

SBU’s existing
SBU Asset
Non-Tradeable
Accumulation Process
Assets
Core •Time compression diseconomies
Competencies •Asset inter-relatedness
(Catalysts)
•Asset mass efficiencies
•Causal ambiguity Time/
Experience
Tradeable
Cash Assets/Inputs

63
Course Reader p 340
 Value creating strategies of
diversification
Related Constrained Both Operational and
Diversification Corporate Relatedness
(rare capability
High Vertical Integration and can create
(Market Power) diseconomies of scope)
Sharing:
Operational
Relatedness
between
Businesses Related Linked
Unrelated
Diversification Diversification
Low (financial economies) (economies of
scope)

Low High
Corporate Relatedness: Transferring Skills
Unit 5 p 156 into Business through Corporate Headquarters 64
 Reasons for acquisitions and
problems in achieving success
Reasons for acquisitions Problems in achieving success

Increased market power Integration difficulties

Overcome entry barriers Inadequate evaluation of target

Cost of new product development

and increased speed to market Large or extraordinary debt

Lowerrisk
Lower riskcompared
comparedwith
with Acquisitions Inability to achieve synergy
developingnew
developing newproducts
products

Increased diversification Too much diversification

Avoid excessive competition Managers too focused on

acquisitions
Learning and developing
new capabilities Too large

65
Unit 5 p 164
Alliance development and management,
social capital and value creation

ALLIANCE DEVELOPMENT SOCIAL CAPITAL VALUE CREATION

AND MANAGEMENT
• Improve firm
• Information sharing performance
• Alliance scope • Trust • Build and enhance
• Partner selection • Norms of reciprocity resources and
• Resource configuration, capabilities
optimization and exploitation • Facilitate learning
• Enlarge the strategic
network

Feedback

66
Course Reader p 357
Successful alliance management
• Positive partner attitudes

• Clear organisational arrangements

• A learning philosophy

• Congruent long-term goals

(Faulkner, 1994)

67
Unit 5 pp 167-168
 The strategy implementation
process

68
Unit 6 p 188
 The structuring of organisations
The six basic parts of the organisation

Strategic apex

Id
eo
lo
(Mintzberg, 1979)

gy
Techno- Support staff
structure Middle
line

Operating core

69
Course Reader p 247
Mintzberg’s six ‘ideal’ structural
types
Simple Machine Professional Divisionalised Adhocracy Missionary
Structure Bureaucracy Bureaucracy Form

Key part Strategic apex Technostructure Operating core Middle line Support staff Ideology

Coordinating Direct Standardisation of Standardisation Standardisation of Mutual Standardisation

mechanism supervision work processes of skills outputs adjustment of norms

Dominant pull centralise standardise professionalise balkanise collaborate evangelise

to:

70
Unit 6 p 199
 More complex organisational
structures

Multi-divisional

Holding

Matrix

Network

71
Unit 6 pp 201-208
 Dynamic organisational forms

• They enable the flow of knowledge internal

and external to the organisation

• They enhance the strategic flexibility of the organisation

to effectively respond to change

72
Unit 6 p 213
 Organisational systems

Organisational systems provide the link between

strategy and operational effectiveness

• Operational systems – those mechanisms that

underlie the efficient use and deployment of
resources and capabilities

• Control systems – those mechanisms that monitor

the achievement of strategic goals

73
Unit 6 p 219
 Strategic Control levers
Beliefs Boundary
Systems Systems

Risks to be
Core values avoided

BUSINESS
STRATEGY

Strategic Critical performance

uncertainties variables

Interactive Control Diagnostic Control

Systems (Simons, 1995) Systems

Unit 6 p 229 74
 Control systems as simple
rules

• ‘How to’ rules

• Boundary rules
• Priority rules
• Timing rules
• Exit rules

75
Unit 6 pp 235-236
 Changing culture

• Evaluate what a particular change means

• Assess if a change in culture is needed at all
• Decide if an attempt to change the culture is worth
the likely costs to the whole strategy process

(Wheelen and Hunger ,2002)

76
Unit 6 p 250
 Resistance to change
EXTERNAL RESISTANCE
INTERNAL RESISTANCE

Individual level Organisational level

Fear of failure Board members Investors

Ignorance Culture Suppliers

Loss of jobs or career status Structure Collaborators

Inertia Sunk costs Regulators

Uncertain consequences Limited resources Media

Reduction in personal role and Contractual agreements Politics

influence
Beliefs and recipes

77
Unit 6 p 259
 The risk of strategic drift

Environmental change

Strategic
AMOUNT OF CHANGE

3 change

2 4
1

Phase 1 incremental change Phase 2 flux Phase 3/4

transformational
change or demise
78
Unit 6 p 261 TIME (Johnson, 1988)
 The cultural web

Stories and
Symbols
myths

THE Power
Rituals and
PARADIGM structures
routines

Control Organisational
systems structures

(Johnson, 1988)

Course Reader p 283 79

 The ‘diamond’ of national
advantage
Factor
Conditions

Demand Related &

Conditions Supporting Industries

Firm Strategy,
Structure & Rivalry
(Porter, 1990)

80
Unit 7 p 25
 Drivers of globalisation

- cultural homogenisation
- economies of scale and scope
- technological developments
- deregulation and lowering of trade barriers
- strong international competitors

81
Unit 7 p 31
Globalisation or regionalisation
d le
d Afri
Mi ast ca
E
EUROPE
(European
Union)

ASIA AMERICAS
(APEC (NAFTA)
ASEAN)

China a Lat
I nd i in A
(Me meri
rc o c
sur a 82
Unit 7 p 41 )
 Political risks
LOSS FROM
Government action Events outside government control
Loss of control

Expropriation  War
 Forced divestiture  Revolution
over assets
CONTINGENCIES

Confiscation  Terrorism
 Cancellation or calling of  Strikes
performance bonds  Extortion
Reduction in benefits

Withdrawal of ‘national’ status Nationalistic buyers or suppliers

Restricted access to resources
 Disruption by hostile groups
 Prices, output or activity controls  External financial constraints
Currency/ remittance restrictions
from assets

 External limits on imports or exports

Local value-added, or export-level

requirements

83
Unit 7 p 51
Potential international advantages
of large organisations
• Production shifting
• Tax minimisation
• Financial markets
• Information arbitrage
• Global co-ordination
• Reducing political risk
(Kogut, 1985)

84
Unit 7 p 62
 Strategies for international trade

Barriers to No Expor
free trade? t

Yes
Yes
FDI
Risk of dissipation
of knowledge

No License
Containable

Resources Yes Strategic alliance

limitation

85
Unit 7 p 65
 Pathways for international
development
Diversity
of Worldwide Global
foreign Product Matrix
products DivisIon
(Pathway A)

A
Pathways of
Development
B

International Area Division

Division (Pathway B)

Foreign sales as % of total sales

Adapted from Stopford & Wells, 1972)

Unit 7 p 67 86
 Configuration & co-ordination
matrix
CONFIGURATION OF ACTIVITIES
CO-ORDINATION OF ACTIVITIES

Geographically dispersed Geographically concentrated

High

Concentration less
necessary or possible

Co-ordination more
important and feasible
Low
87
Unit 7 p 73 (Porter, 1986)
Four approaches to international
competition
Multinational Global International Transnational

Configuration Decentralised Centralised Core abilities Dispersed,

of assets and and nationally and scaled centralised; others interdependent, and
capabilities self-sufficient globally decentralised specialised

Sensing and Implementing Adapting and Differentiated

Role of foreign exploiting local parent-company exploiting parents contributions by
operations opportunities strategy abilities national units to
integrated worldwide
operations

Knowledge Knowledge Knowledge Knowledge developed

Development developed and developed and developed by jointly and shared
and diffusion of retained within retained by parent and worldwide
knowledge national unit parent transferred to
national units

(Bartlett and Ghoshal, 1989)

Unit 7 p 82
88
Ghoshal’s ‘organising framework’
Sources of competitive advantage
Strategic objectives NATIONAL SCALE ECONOMIES SCOPE ECONOMIES
DIFFERENCES

Achieving efficiency in Benefiting from differences in Expanding and exploiting Sharing of investments and costs
current operations factor costs (e.g. wages and
cost of capital)
potential scale economies in
each activity
across products, markets and
businesses

Managing different kinds of risk Balancing scale with strategic Portfolio diversification of risks
arising from market or policy- and operational flexibility and creation of options and side-
Managing induced changes in comparative bets
advantages of different countries
risks

Innovation, learning Learning from societal Benefiting from experience (cost Shared learning across
differences in organisational and reduction and innovation) organisational components in
and adaptation managerial processes and different products, markets or
systems businesses

89
Unit 7 p 85
 Emergence of the integrated
network

(Bartlett & Ghoshal, 1989)

Unit 7 p 90 90
 Standardisation of services
BALANCE OF RESOURCES
Back-office Front-office

STANDARDISATION Retail Contract cleaning

Banking

Reinsurance Professional
CUSTOMISATION service
firms
Courier services (PSFs)

(Segal-Horn, 1993)
91
Unit 7 p 95
An integration-responsiveness grid

High r
zo s Telecommunications
a
R de
er ies
bla tt
Ba n ics Const
o ructio
le ct r n
e re
m
n su
Co
NEED FOR
GLOBAL
INTEGRATION

r ance
I ns u
i es
Ut i l i t
k
Dr i n
Corrugated cardboard Food
Low
Low High
NEED FOR NATIONAL (Segal-Horn & Faulkner, 1999)
RESPONSIVENESS

Unit 7 p 103 92
 Management roles and tasks

• Sustaining bottom-up The Renewal Process

energy and commitment
• Building and maintaining • Managing the tension
organizational flexibility between short-term
performance and long-term
ambition
• Managing operational
interdependencies

The Integration Process

• Linking skills, knowledge
and resources
• Developing and embedding
• Creating and pursuing organizational values
opportunities and purpose
The Entrepreneurial Process
• Reviewing, developing and
supporting initiatives • Establishing strategic
mission and priorities

Course Reader p 407 93

New roles and tasks of management:
the transnational

Top Middle Front-line

management management management
Then Then Then
Resource allocator Administrative controller Operational implementor
Now Now Now
Creator of purpose & Horizontal information Entrepreneur & performance
challenger of status quo broker & capability integrator driver

(Source: Segal-Horn & Faulkner, 1999: 171.)

Unit 7 p 109 94
 Conceptual model of the national
subsidiary and three types of initiative

Course Reader p 435

95
 Four core cultural dimensions

Power Distance

Uncertainty Avoidance

Individualism versus collectivism

Masculinity or Femininity

Unit 7 p 123 96
“The Icarus Paradox” – pathways/trajectories
from success to failure
Very Very
Little Change Much
Very
Broad DRIFTERS IMPERIALISTS

Decoupling Venturing

SALESMEN BUILDERS
Scope
CRAFTSMEN PIONEERS

Focusing Inventing

Very TINKERERS
Narrow ESCAPISTS
97
Course Reader Chapter p 467
 Strategic paradoxes

- Globalisation and localisation

- Competition and co-operation

- Control and chaos

- Stability and innovation

- Profitability and responsibility

Unit 8 p 161 98
The strategic flexibility paradox

Exploitation Exploration

 Routines  Dynamic capabilities

 Fit  Stretch
 Learning  Unlearning
 Incremental change  Radical change

Unit 8 p 168 99