B820 STRATEGY

COURSE SLIDES

SUP 947369

2

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

3

The Strategy Process

Unit 1 p 8

4

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

Unit 1 pp 14-16

5

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)Course Reader p 9

6

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)Unit 1 p 17

7

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)Unit 1 p 20

8

Deliberate and emergent strategies

Intended strategy Realised strategyDeliberate strategy

Unrealisedstrategy

Emergent strategy

(Mintzberg & Waters, 1985)

Course Reader p 18

9

The analytical constructs of the strategy process

Unit 1 p 31

10

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

Unit 1 p 32 (+ p 19)

11

Levels of strategy

Corporate Strategy

Business Strategy

Internal unit strategy

The hierarchy of levels of strategy in an organisation

Unit 1 p 34

12

The external environment

Strategic Groups Substitutors

Complementors

Suppliers Customers

CompetitorsIndustry Environment

Macro-Environment

Unit 2 p 50

13

A model of the macro-environment

Sociological factors Demographics Life styles Social values

Political factors Political milieu Regulatory environment

Economic factors Technologicalfactors

(Fahey and Narayanan, 1986)

Unit 2 p 52

14

Porter’s five forces modelINDUSTRY STRUCTURE

SUPPLIERS

BUYERS

POTENTIALENTRANTS SUBSTITUTES

INDUSTRYRIVALRY

Bargaining power of suppliers

Bargaining power of buyers

Threat of new

entrants

Threat of substitute productsor services

(Porter, 1980)

Rivalry among existing firms

Unit 2 p 62

15

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

Unit 2 pp 66-69

16

Industry structuresPERFECT 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)

Unit 2 p 70

17

Introduction Growth Maturity Decline

Time

Indu

stry

Sal

esThe life cycle curve

Unit 2 p 73

18

- 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

Seven key assets in a standards war

19

Strategic groupsThe 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

20

Possible sources of mobility barriers

Market-related Industry supply characteristics Characteristics of firms

Product line

User technologies

Market segmentation

Distribution channels

Brand names

Geographic coverage

Selling systems

Economies of scale:

• production

• marketing

• administration

Manufacturing process

R&D capability

Marketing and distribution systems

Ownership (e.g. public,private, state-owned)

Organisation structure

Control systems

Management skills

Boundaries of firms:

• diversification

• vertical integration

Firm size

Relationships with influence groups

Know-how, skills, expertise, routines

Unit 2 p 92

21

Competitor analysis

- Identification of competitors

- Prediction of competitor behaviour: matching intentions to capabilities

Unit 2 p 105

22

Porter’s generic strategiesN

arro

w ta

rget

Bro

ad

targ

etSource of Competitive Advantage

Com

petit

ive

Scop

e

Lower cost Differentiation

Cost leadership Broad differentiation

Cost focus Differentiation focus

Unit 2 p 106

23

Cost advantages

- Economies of scale- Accumulation of experience

(or learning curve effects)- Process technology and process design- Input costs

Unit 2 pp 106-107

24

- 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

Unit 2 pp 108-109

Differentiation of products and services

25

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

Unit 2 pp 119-120

26

The value net model

Customers

Substitutors FIRM Complementors

Suppliers

Unit 2 p 125

(Brandenburger & Nalebuff, 1995)

27

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)

Unit 2 p 129

28

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

Unit 2 pp 131-132

29

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.

Unit 3 p 153

30

INTANGIBLE ASSETS

TANGIBLE ASSETS

CAPABILITIES

HUMAN RESOURCES

Not in course text

Linking resources and capabilities

31

Valuable resources

Must be

• rare • imperfectly imitable• non-substitutable

Unit 3 p 159

32

Rate of profitin excess of competitive level

Industryattractiveness

Barriers to entry

Monopoly

Verticalbargaining power

Cost advantage

Competitiveadvantage

Differentiationadvantage

PatentsBrandsRetaliation

Market share

Firm sizeFinancial resources

Process technologySize of plantsAccess to low–cost inputs

BrandsProduct technologyMarketing, distributionand service

Resources as the basis of profitability

Unit 6 p 229(Grant, 1991)

33

4 Select a strategy that best exploits the firm’s resources and capabilities relative to external opportunities.

3 Appraise the rent-generating potential of resources and capabilities in terms of (a) their potential for sustainable competitive

advantage, and (b) the appropriability of their returns.

2 Identify the firm’s capabilities. What can the firm do more effectively than its rivals? Identify the resource 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. Identify opportunities for better

utilisation of resources.

Strategy

Competitive Advantage

Capabilities

Resources

5 Identify resource gaps which need to be filled. Invest in replenishing, augmenting and upgrading the firm’s resource base.

A resource based approach to strategy analysis

Course Reader p 178

34

Evaluating rent earning potential

Sustainability - durability- transparency- transferability- replicability

Appropriability

Course Reader pp 184-188

35

Classifying resources

TANGIBLE INTANGIBLE HUMAN

Financial Technology Skills/know-how

Physical Brand / Capacity for communication and

Reputation collaboration

Culture Motivation(Grant, 2002)

Unit 3 p 168

36

Porter’s value chain

TECHNOLOGY DEVELOPMENT

INBOUNDLOGISTICS

OPERATIONS OUTBOUND LOGISTICS

MARKETING &

SALES

SERVICE

(Porter, 1985)

HUMAN RESOURCE MANAGEMENT

FIRM INFRASTRUCTURE

PROCUREMENT

SUPPORT ACTIVITES

PRIMARY ACTIVITIESUnit 3 p 171

37

The hierarchical structure of capabilities

Cross-functional

Capabilities

Functional Capabilities

Single-Task Capabilities

Individuals’ Specialised Knowledge

Customer Support

Sales and Marketing

Customer Complaints

Handling

Specialist Capabilities

Customer Service (Sales)

Unit 3 p 174

38

Value chain analysis

- Examination of costs associated with each activity

- Examination of customers’ willingness to pay

- Exploring different strategic options and making choices

Unit 3 pp 175-177

39

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)

Unit 3 p 191

40

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

41

Dynamic capabilities

Unit 3 p 203

“…….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)

42

For hierarchies if:

economies of scale, scope or learningfewer opportunistic actionsthin market (with few choices)complex, uncertain asset-specificsituationwhere information is unevenrisk of information leakage ofstrategic capabilities

For markets if:

commodity productsmarket mechanism neededprofit maximisation importantentrepreneurship necessarybureaucratic difficulties high governance costsroutine situation

Hierarchies or markets:

Unit 3 p 208

43

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

Unit 4 pp 16-17

44

• 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)

Unit 4 p 27

Components of a mission statement

45

Why the company exists

The policies and behaviour patterns that underpin the distinctive competence and the value system

The competitivepositionand distinctivecompetence

What thecompanybelieves in

Purpose

Strategy

Behaviourstandards

Values

Course Reader p 272

Building a mission statement

46

Stakeholders and their demandsSTAKEHOLDER GROUP DEMANDSStockholders/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

(Adapted from Pearce and Robinson, 2003)Unit 4 p 34

47

Organisational stakeholders

(Adapted from Argenti , 2003)Unit 4 p 37

Primary Secondary

Managers Media

Employees Suppliers

Customers Government (local, regional, national)

Shareholders Creditors

Communities NGOs

48

Stakeholder power

AArm’s-length power

BComprehensive power

DDisempowered

COperational power

Operational powerLow HighLow

HighC

riter

ia P

ower

(Winstanley et al., 1995)Unit 4 p 40

49

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)Unit 4 p 41

50

Building trust, commitment and effort

Recognition of moral problems

• what is “duty”?

Application of moral reasoning

• what is “right”?

Possession of moral courage

• what is “integrity”?

Corporate Mgt in Extended

Organizations

Trust Commitment

Effort

Course Reader p 101

51

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”.

Unit 4 p 55

52

Strategic planning process

Unit 5 p 83

Background assumptions and projections

Long-tem vision and strategic directions

Medium-term plan, e.g. two to three years

Short-term plans, e.g. one year (to include budgets,

capital allocations, cash flow, etc.)

Revised possibly several times

Reconsidered after discussion and debate

Input new ideas and data collected on new growth areas, trends etc.

53

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

54

Four types of scope or boundary

Segment

Vertical

Geographic

Industry

Unit 5 p 87

55

Six types of differentiation strategyand four characteristic markets

Unit 5 pp 115-116

• Price• Image• Support• Design• Quality• Undifferentiated

• Unsegmented• Segmented• Niche• Customised

56

Porter’s generic strategies

Cost leadership Differentiation

Focused cost leadership Focused differentiation

Integrated cost leadership/differentiation

Competitive advantageLower cost Uniqueness

Nar

row

targ

etB

road

targ

et

Com

petit

ive

scop

e

Unit 5 p 89

57

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

58

Generic Testing Criteria

Unit 5 pp 126-129

Suitability

Feasibility

Acceptability

(Johnson and Scholes 2003)

Consistency

Consonance

Advantage

Feasibility

(Rumelt 1995)

59

Types of financial risk analysis

Cash flow analysis

Break-even analysis

Company borrowing requirements

Financial ratio analysis

Currency analysis

Unit 5 pp 131-132

60

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.

Unit 5 p 139

61

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

Unit 5 pp 139-140

62

Ansoff’s growth vectors

Market Penetration

Product Development

Market Development

Related

Diversification

Unrelated

(Ansoff, 1965)Unit 5 p 142

Mar

ket

Product/Service

63

Core competencies and the ‘production function’ for assets

SBU Asset Accumulation Process

•Time compression diseconomies

•Asset inter-relatedness

•Asset mass efficiencies

•Causal ambiguity

Non-Tradeable,SBU Assets

TradeableAssets/Inputs

CoreCompetencies

(Catalysts)

SBU’s existingNon-Tradeable

Assets

Time/Experience

Cash

Course Reader p 340

64

Value creating strategies of diversification

Related ConstrainedDiversification

Vertical Integration(Market Power)

Both Operational and Corporate Relatedness

(rare capability and can create

diseconomies of scope)

UnrelatedDiversification

(financial economies)

Related LinkedDiversification(economies of

scope)

Low High

High

Low

Sharing:OperationalRelatedness

betweenBusinesses

Corporate Relatedness: Transferring Skillsinto Business through Corporate HeadquartersUnit 5 p 156

65

Reasons for acquisitions and problems in achieving success

Unit 5 p 164

Reasons for acquisitions Problems in achieving success

Increased market power

Overcome entry barriers

Cost of new product development and increased speed to market

Lower risk compared with developing new products

Increased diversification

Avoid excessive competition

Learning and developing new capabilities

Integration difficulties

Inadequate evaluation of target

Inability to achieve synergy

Too much diversification

Managers too focused on acquisitions

Too large

AcquisitionsLower risk compared withdeveloping new products

Large or extraordinary debt

66

Alliance development and management, social capital and value creation

ALLIANCE DEVELOPMENT AND MANAGEMENT

• Alliance scope• Partner selection• Resource configuration, optimization and exploitation

SOCIAL CAPITAL

• Information sharing• Trust• Norms of reciprocity

VALUE CREATION

• Improve firm performance• Build and enhance resources and capabilities• Facilitate learning• Enlarge the strategic network

Course Reader p 357

Feedback

67

Successful alliance management

(Faulkner, 1994)

Unit 5 pp 167-168

• Positive partner attitudes

• Clear organisational arrangements

• A learning philosophy

• Congruent long-term goals

68

The strategy implementation process

Unit 6 p 188

69

The six basic parts of the organisation

(Mintzberg, 1979)

Strategic apex

Techno-structure

Support staffMiddle

line

Operating core

Ideology

Course Reader p 247

The structuring of organisations

70

Mintzberg’s six ‘ideal’ structural types

Simple Structure

MachineBureaucracy

Professional Bureaucracy

Divisionalised Form

Adhocracy Missionary

Key part Strategic apex

Technostructure Operating core

Middle line Support staff Ideology

Coordinating mechanism

Direct supervision

Standardisation of work processes

Standardisation of skills

Standardisation of outputs

Mutual adjustment

Standardisation of norms

Dominant pull to:

centralise standardise professionalise

balkanise collaborate evangelise

Unit 6 p 199

71

More complex organisational structures

Multi-divisional

Holding

Matrix

Network

Unit 6 pp 201-208

72

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

Unit 6 p 213

73

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

Unit 6 p 219

74

BeliefsSystems

Core values

BUSINESSSTRATEGY

Risks to beavoided

BoundarySystems

Strategicuncertainties

Critical performancevariables

Interactive ControlSystems

Diagnostic ControlSystems(Simons, 1995)

Unit 6 p 229

Strategic Control levers

75

Control systems as simple rules

• ‘How to’ rules• Boundary rules• Priority rules• Timing rules• Exit rules

Unit 6 pp 235-236

76

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)

Unit 6 p 250

77Unit 6 p 259

Resistance to change

Investors

Suppliers

Collaborators

Regulators

Media

Politics

Board membersCulture

Structure

Sunk costs

Limited resources

Contractual agreements

Beliefs and recipes

Fear of failure

Ignorance

Loss of jobs or career status

Inertia

Uncertain consequences

Reduction in personal role and influence

Organisational levelIndividual level

EXTERNAL RESISTANCEINTERNAL RESISTANCE

78

The risk of strategic drift

(Johnson, 1988)

AM

OU

NT

OF

CH

AN

GE

Phase 1 incremental change

12

Phase 2 flux Phase 3/4transformational

change or demise

TIME

4

3Strategicchange

Environmental change

Unit 6 p 261

79Course Reader p 283

(Johnson, 1988)

Stories and myths Symbols

Rituals androutines

Power structures

Control systems

Organisational structures

THE PARADIGM

The cultural web

80

The ‘diamond’ of national advantage

Demand Conditions

Factor Conditions

Firm Strategy, Structure & Rivalry

Related &Supporting Industries

(Porter, 1990)

Unit 7 p 25

81

Drivers of globalisation

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

Unit 7 p 31

82

Middle

East

India Latin America(Mercosur)

EUROPE(European

Union)

ASIA(APEC

ASEAN)

Africa

AMERICAS(NAFTA)

China

Unit 7 p 41

Globalisation or regionalisation

83

Political risksLOSS FROM

Government action Events outside government control

CO

NT

ING

EN

CIE

SL

oss o

f con

trol

ov

er a

sset

s

Expropriation Forced divestitureConfiscation Cancellation or calling of performance bonds

Withdrawal of ‘national’ status Restricted access to resources Prices, output or activity controlsCurrency/ remittance restrictionsLocal value-added, or export-level requirements

War Revolution Terrorism Strikes Extortion

Nationalistic buyers or suppliers Disruption by hostile groups External financial constraints External limits on imports or exports

Red

uctio

n in

ben

efits

fr

om a

sset

s

Unit 7 p 51

84

Potential international advantages of large organisations

• Production shifting• Tax minimisation• Financial markets• Information arbitrage• Global co-ordination• Reducing political risk

(Kogut, 1985)

Unit 7 p 62

85

Strategies for international trade

Export

Barriers to free trade?

Risk of dissipationof knowledge

Resources limitation

FDI

License

Strategic alliance

No

Yes

No

Yes

Yes

Containable

Unit 7 p 65

86

Pathways for international development

Diversity of foreign products

Foreign sales as % of total sales

Area Division(Pathway B)

InternationalDivision

Pathways of Development

A

B

Adapted from Stopford & Wells, 1972)

Unit 7 p 67

Worldwide Product DivisIon(Pathway A)

Global Matrix

87

Configuration & co-ordination matrix

CONFIGURATION OF ACTIVITIESGeographically dispersed Geographically concentrated

High

LowCO-O

RDIN

ATIO

N OF

ACT

IVIT

IES

Co-ordination moreimportant and feasible

Concentration lessnecessary or possible

Unit 7 p 73 (Porter, 1986)

88

Four approaches to international competition

Adapting and exploiting parentsabilities

Multinational Global International

Configuration of assets andcapabilities

Role of foreignoperations

Developmentand diffusion of knowledge

Decentralisedand nationallyself-sufficient

Sensing andexploiting localopportunities

Knowledge developed and retained withinnational unit

Centralised and scaled globally

Implementing parent-companystrategy

Knowledge developed andretained byparent

Core abilities centralised; othersdecentralised

Knowledgedeveloped byparent and transferred tonational units

Unit 7 p 82

(Bartlett and Ghoshal, 1989)

Dispersed,interdependent, andspecialised

Differentiatedcontributions bynational units tointegrated worldwideoperations

Knowledge developedjointly and sharedworldwide

Transnational

89

Ghoshal’s ‘organising framework’

Unit 7 p 85

Strategic objectives

NATIONAL DIFFERENCES

SCALE ECONOMIES SCOPE ECONOMIES

Achieving efficiency in current operations

Benefiting from differences in factor costs (e.g. wages and cost of capital)

Expanding and exploiting potential scale economies in each activity

Sharing of investments and costs across products, markets and businesses

Managing risks

Managing different kinds of risk arising from market or policy-induced changes in comparative advantages of different countries

Balancing scale with strategic and operational flexibility

Portfolio diversification of risks and creation of options and side-bets

Innovation, learning and adaptation

Learning from societal differences in organisational and managerial processes and systems

Benefiting from experience (cost reduction and innovation)

Shared learning across organisational components in different products, markets or businesses

Sources of competitive advantage

90

Emergence of the integrated network

Unit 7 p 90

(Bartlett & Ghoshal, 1989)

91

Standardisation of servicesBALANCE OF RESOURCES

Back-office Front-office

RetailBanking

Contract cleaning

Reinsurance

Courier services

Professionalservicefirms

(PSFs)

STANDARDISATION

CUSTOMISATION

(Segal-Horn, 1993)

Unit 7 p 95

92

Construction

High

NEED FOR GLOBALINTEGRATION

LowLow High

Razor

blades

Batteries

Consumer electronics

Telecommunications

Corrugated cardboard Food DrinkUtilities

Insurance

(Segal-Horn & Faulkner, 1999)

Unit 7 p 103

NEED FOR NATIONALRESPONSIVENESS

An integration-responsiveness grid

93

• Sustaining bottom-up energy and commitment

The Renewal Process• Building and maintaining organizational flexibility

• Managing the tension between short-term performance and long-term ambition

• Managing operational interdependencies

The Entrepreneurial Process• Reviewing, developing and

supporting initiatives

• Developing and embeddingorganizational values and purpose

• Establishing strategic mission and priorities

• Creating and pursuing opportunities

The Integration Process• Linking skills, knowledge

and resources

Course Reader p 407

Management roles and tasks

94

New roles and tasks of management: the transnational

Top management

Middlemanagement

Front-linemanagement

ThenResource allocator

ThenAdministrative controller

ThenOperational implementor

NowCreator of purpose &

challenger of status quo

NowHorizontal information

broker & capability integrator

NowEntrepreneur &

performance driver

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

Unit 7 p 109

95

Conceptual model of the national subsidiary and three types of initiative

Course Reader p 435

96

Four core cultural dimensions

Power Distance

Uncertainty Avoidance

Individualism versus collectivism

Masculinity or Femininity

Unit 7 p 123

97

“The Icarus Paradox” – pathways/trajectories from success to failure

SALESMEN

DRIFTERS

Decoupling

IMPERIALISTS

BUILDERS

Venturing

CRAFTSMEN

TINKERERS

Focusing

PIONEERS

ESCAPISTS

Inventing

VeryLittle Change

VeryMuch

VeryBroad

Scope

VeryNarrow

Course Reader Chapter p 467

98

Strategic paradoxes

- Globalisation and localisation

- Competition and co-operation

- Control and chaos

- Stability and innovation

- Profitability and responsibilityUnit 8 p 161

99

The strategic flexibility paradox

Unit 8 p 168

Exploitation Exploration

Routines Fit Learning Incremental change

Dynamic capabilities Stretch Unlearning Radical change