SUMMARY
FUNDAMENTALS OF
STRATEGY
Authors: Gerry Johnson, Richard
Whittington, Kevan Scholes
This summary is written for the exam of strategic marketing of the study
International Business and Languages. It summarizes the main points which are
important for the exam. Therefore, the summary only contains the chapters 1
to 4 and chapter 10 – 10.4.
Martje Logemann
,Inhoud
1. Introducing strategy ............................................................................................................ 3
1.1 What is strategy ......................................................................................................... 3
1.1.1 Defining strategy ................................................................................................ 3
1.1.2 Levels of strategy ............................................................................................... 3
1.1.3 Strategy statements........................................................................................... 4
1.2 The exploring strategy model .................................................................................. 4
1.2.1 Strategic position ............................................................................................... 5
1.2.2 Strategic choices ............................................................................................... 5
1.2.3 Strategy in action ............................................................................................... 5
1.3 Strategy development processes ........................................................................... 5
1.4 Summary ..................................................................................................................... 5
2. The environment ............................................................................................................... 6
2.1 The macro-environment........................................................................................... 6
2.1.1 The PESTEL framework........................................................................................ 6
2.1.2 Building scenarios............................................................................................... 7
2.2 Industries and Sectors ............................................................................................... 7
2.2.1 Competitive forces – the five forces framework ........................................... 7
2.2.2 The dynamics of industry structure .................................................................. 9
2.3 Competitors and markets ........................................................................................ 9
2.3.1 Strategic groups ................................................................................................. 9
2.3.2 Market segments ............................................................................................. 10
2.3.3 Blue Ocean thinking ........................................................................................ 10
2.4 Summary ................................................................................................................... 11
3. Strategic capabilities ..................................................................................................... 11
3.1 Foundations of strategic capability ...................................................................... 11
3.1.1 Resources and competences........................................................................ 11
3.1.2 Dynamic capabilities....................................................................................... 12
3.1.3 Threshold and distinctive capabilities ........................................................... 12
3.2 ‘VRIN’: Strategic capabilities as a basis for competitive advantage ............. 12
3.2.1 V- Value of strategic capabilities .................................................................. 12
3.2.2 R – Rarity ............................................................................................................ 13
3.2.3 I – Inimitability.................................................................................................... 13
3.2.4 N- Non-substitutability ...................................................................................... 13
3.3 Diagnosing strategic capabilities ......................................................................... 14
, 3.3.1 The value chain and value network ............................................................. 14
3.4 Summary ................................................................................................................... 15
4. Strategic Purpose ........................................................................................................... 16
4.1 Organisational purpose: Values, mission, vision and objectives ...................... 16
4.1.1 Statements of mission, vision and value ....................................................... 16
4.1.2 Objectives ......................................................................................................... 17
4.2 Corporate governance ......................................................................................... 17
4.3 Corporate social responsibility .............................................................................. 17
4.4 Stakeholder expectations ...................................................................................... 17
4.4.1 Stakeholder groups.......................................................................................... 17
4.4.2 Stakeholder mapping ..................................................................................... 18
4.5 Cultural influences................................................................................................... 18
4.5.1 Analysing culture: the cultural web............................................................... 18
4.6 Summary ................................................................................................................... 18
10. Strategy in action............................................................................................................. 19
10.1 Structural types ........................................................................................................... 19
10.1.1 The functional structure ...................................................................................... 19
10.1.2 The multidivisional structure ............................................................................... 19
10.2 Organisational systems .............................................................................................. 20
10.2.1 Planning systems .................................................................................................. 20
10.2.2 Performance targeting systems ........................................................................ 20
10.3 Organisational configuration: The McKinsey 7-S Framework ............................... 21
10.4 Summary...................................................................................................................... 21
, FUNDAMENTALS OF STRATEGY
1. Introducing strategy
1.1 What is strategy
1.1.1 Defining strategy
Strategy is the long-term direction of an organisation.
It has two advantages:
- Long-term direction includes deliberate, logical strategy and emergent
patterns of strategy
- Long-term can include both strategies that emphasise difference and
coopetition, strategies that recognise roles of cooperation and imitation.
The three elements of this strategy definition:
1. The long term: measured over years, emphasised by the ‘three horizons’
framework
a. The three horizons framework suggests that every organisation should
think of itself as compromising three types of business or activity, defines
by their ‘horizons’ in terms of years:
i. Horizon 1: current core activities, need defending and extending
ii. Horizon 2: emerging activities, provide new sources of profit
iii. Horizon 3: possibilities, nothing is sure, R&D
2. Strategic directions: The objectives behind strategic direction always need
close scrutiny
3. Organisation: important to look inside organisations, who is involved?;
concerned with an organisation’s external boundaries: how to manage
important relationships with what is kept outside
1.1.2 Levels of strategy
Strategies can exist at three main levels, which need to be aligned with the others:
1. Corporate-level strategy is concerned with the overall scope of
an organisation and how value is added to the constituent
businesses of the organisational whole.
Being clear about corporate-level strategy is important: determining the
range of businesses to include is the basis of other strategic decisions.
FUNDAMENTALS OF
STRATEGY
Authors: Gerry Johnson, Richard
Whittington, Kevan Scholes
This summary is written for the exam of strategic marketing of the study
International Business and Languages. It summarizes the main points which are
important for the exam. Therefore, the summary only contains the chapters 1
to 4 and chapter 10 – 10.4.
Martje Logemann
,Inhoud
1. Introducing strategy ............................................................................................................ 3
1.1 What is strategy ......................................................................................................... 3
1.1.1 Defining strategy ................................................................................................ 3
1.1.2 Levels of strategy ............................................................................................... 3
1.1.3 Strategy statements........................................................................................... 4
1.2 The exploring strategy model .................................................................................. 4
1.2.1 Strategic position ............................................................................................... 5
1.2.2 Strategic choices ............................................................................................... 5
1.2.3 Strategy in action ............................................................................................... 5
1.3 Strategy development processes ........................................................................... 5
1.4 Summary ..................................................................................................................... 5
2. The environment ............................................................................................................... 6
2.1 The macro-environment........................................................................................... 6
2.1.1 The PESTEL framework........................................................................................ 6
2.1.2 Building scenarios............................................................................................... 7
2.2 Industries and Sectors ............................................................................................... 7
2.2.1 Competitive forces – the five forces framework ........................................... 7
2.2.2 The dynamics of industry structure .................................................................. 9
2.3 Competitors and markets ........................................................................................ 9
2.3.1 Strategic groups ................................................................................................. 9
2.3.2 Market segments ............................................................................................. 10
2.3.3 Blue Ocean thinking ........................................................................................ 10
2.4 Summary ................................................................................................................... 11
3. Strategic capabilities ..................................................................................................... 11
3.1 Foundations of strategic capability ...................................................................... 11
3.1.1 Resources and competences........................................................................ 11
3.1.2 Dynamic capabilities....................................................................................... 12
3.1.3 Threshold and distinctive capabilities ........................................................... 12
3.2 ‘VRIN’: Strategic capabilities as a basis for competitive advantage ............. 12
3.2.1 V- Value of strategic capabilities .................................................................. 12
3.2.2 R – Rarity ............................................................................................................ 13
3.2.3 I – Inimitability.................................................................................................... 13
3.2.4 N- Non-substitutability ...................................................................................... 13
3.3 Diagnosing strategic capabilities ......................................................................... 14
, 3.3.1 The value chain and value network ............................................................. 14
3.4 Summary ................................................................................................................... 15
4. Strategic Purpose ........................................................................................................... 16
4.1 Organisational purpose: Values, mission, vision and objectives ...................... 16
4.1.1 Statements of mission, vision and value ....................................................... 16
4.1.2 Objectives ......................................................................................................... 17
4.2 Corporate governance ......................................................................................... 17
4.3 Corporate social responsibility .............................................................................. 17
4.4 Stakeholder expectations ...................................................................................... 17
4.4.1 Stakeholder groups.......................................................................................... 17
4.4.2 Stakeholder mapping ..................................................................................... 18
4.5 Cultural influences................................................................................................... 18
4.5.1 Analysing culture: the cultural web............................................................... 18
4.6 Summary ................................................................................................................... 18
10. Strategy in action............................................................................................................. 19
10.1 Structural types ........................................................................................................... 19
10.1.1 The functional structure ...................................................................................... 19
10.1.2 The multidivisional structure ............................................................................... 19
10.2 Organisational systems .............................................................................................. 20
10.2.1 Planning systems .................................................................................................. 20
10.2.2 Performance targeting systems ........................................................................ 20
10.3 Organisational configuration: The McKinsey 7-S Framework ............................... 21
10.4 Summary...................................................................................................................... 21
, FUNDAMENTALS OF STRATEGY
1. Introducing strategy
1.1 What is strategy
1.1.1 Defining strategy
Strategy is the long-term direction of an organisation.
It has two advantages:
- Long-term direction includes deliberate, logical strategy and emergent
patterns of strategy
- Long-term can include both strategies that emphasise difference and
coopetition, strategies that recognise roles of cooperation and imitation.
The three elements of this strategy definition:
1. The long term: measured over years, emphasised by the ‘three horizons’
framework
a. The three horizons framework suggests that every organisation should
think of itself as compromising three types of business or activity, defines
by their ‘horizons’ in terms of years:
i. Horizon 1: current core activities, need defending and extending
ii. Horizon 2: emerging activities, provide new sources of profit
iii. Horizon 3: possibilities, nothing is sure, R&D
2. Strategic directions: The objectives behind strategic direction always need
close scrutiny
3. Organisation: important to look inside organisations, who is involved?;
concerned with an organisation’s external boundaries: how to manage
important relationships with what is kept outside
1.1.2 Levels of strategy
Strategies can exist at three main levels, which need to be aligned with the others:
1. Corporate-level strategy is concerned with the overall scope of
an organisation and how value is added to the constituent
businesses of the organisational whole.
Being clear about corporate-level strategy is important: determining the
range of businesses to include is the basis of other strategic decisions.
