2023/2024
Strategic Management
Course Code: EBB649C05
Summary Contemporary Strategic Analysis:
Grant 11th edition
Chapters: 1, 2, 3, 4, 5, 7, 8, 9, 10
,Table of contents
1 THE CONCEPT OF THEORY ..........................................................................................................3
1.1 FROM STRATEGY AS PLAN TO STRATEGY AS DIRECTION. ................................................................3
1.2 AREAS OF FIRM STRATEGY ............................................................................................................3
1.3 HOW IS STRATEGY MADE? .............................................................................................................4
1.4 APPLYING STRATEGY ANALYSIS .....................................................................................................4
1.5 STRATEGIC MANAGEMENT OF NOT-FOR-PROFIT ORGANIZATIONS..................................................5
2 GOALS, VALUES AND PERFORMANCE ......................................................................................5
2.1 APPRAISING CURRENT AND PAST PERFORMANCE ...........................................................................7
2.2 PERFORMANCE DIAGNOSIS ............................................................................................................7
3 INDUSTRY ANALYSIS: THE FUNDAMENTALS .........................................................................8
3.1 FROM ENVIRONMENTAL ANALYSIS TO INDUSTRY ANALYSIS ...........................................................8
3.2 INDUSTRY ATTRACTIVENESS..........................................................................................................8
3.3 PORTER .........................................................................................................................................9
3.3.1 Substitutes ................................................................................................................................9
3.3.2 Potential entrants / threat of entry ...........................................................................................9
3.3.3 Industry competitors/rivalry .................................................................................................. 10
3.3.4 Bargain power of buyers ....................................................................................................... 10
3.3.5 Bargain power of suppliers ................................................................................................... 10
3.4 APPLYING INDUSTRY ANALYSIS TO FORECASTING INDUSTRY PROFITABILITY ............................... 10
4 FURTHER TOPICS IN INDUSTRY AND COMPETITIVE ANALYSIS .................................... 12
4.1 EXTENDING PORTERS FRAMEWORK: ............................................................................................ 12
4.2 COMPETITOR ANALYSIS ............................................................................................................... 13
4.3 SEGMENTATION OF STRATEGIC GROUPS ....................................................................................... 14
5 ANALYZING RESOURCES AND CAPABILITIES ..................................................................... 15
5.1 APPRAISING RESOURCES AND CAPABILITIES ................................................................................ 16
5.2 HOW DO WE EXPLOIT KEY STRENGTHS EFFECTIVELY? ................................................................. 17
6 - ............................................................................................................................................................ 18
7 THE SOURCES AND DIMENSIONS OF COMPETITIVE ADVANTAGE ................................ 18
7.1 INTERNAL SOURCES OF COMPETITIVE ADVANTAGE: STRATEGIC INNOVATION THROUGH BUSINESS
MODELS AND BLUE OCEAN ....................................................................................................................................... 18
7.2 SUSTAINING COMPETITIVE ADVANTAGE....................................................................................... 19
7.3 COST ADVANTAGE ....................................................................................................................... 20
7.4 DIFFERENTIATION ADVANTAGE ................................................................................................... 21
7.5 CAN FIRMS PURSUE BOTH COST AND DIFFERENTIATION ADVANTAGE? ......................................... 24
8 INDUSTRY EVOLUTION AND STRATEGIC CHANGE ............................................................ 25
8.1 INDUSTRY LIFE CYCLE PHASES: ................................................................................................... 25
8.2 KEY SUCCESS FACTORS AND INDUSTRY EVOLUTION .................................................................. 27
8.3 BARRIERS TO CHANGE:................................................................................................................ 27
8.4 ORGANIZATIONAL ADAPTION AND INDUSTRY EVOLUTION: .......................................................... 28
8.5 COPING WITH TECHNICAL CHANGE .............................................................................................. 28
8.6 COMBATTING ORGANIZATIONAL INERTIA (RESISTANCE TO CHANGE IN THE FIRM) ....................... 29
8.7 DEVELOPING NEW CAPABILITIES ................................................................................................. 29
8.8 USING KNOWLEDGE MANAGEMENT TO DEVELOP ORGANIZATIONAL CAPABILITY. ....................... 29
9 TECHNOLOGY-BASED INDUSTRIES AND THE MANAGEMENT AND INNOVATION. .. 31
9.1 THE INNOVATION PROCESS .......................................................................................................... 31
1
, 9.2 CAPTURING VALUE FROM INNOVATION ........................................................................................ 31
9.2.1 Property rights in innovation (intellectual property): ........................................................... 31
9.2.2 Tacitness and complexity of the technology ........................................................................... 32
9.2.3 Lead time ............................................................................................................................... 32
9.2.4 Complementary resources ..................................................................................................... 32
9.3 OTHER STRATEGIES TO EXPLOIT INNOVATION .............................................................................. 33
9.4 FIRST-MOVER ADVANTAGE (FOLLOWER OR LEADER?) ................................................................. 33
9.5 STANDARD, PLATFORMS, NETWORK EXTRANALITIES................................................................... 34
9.6 IMPLEMENTING TECHNOLOGY STRATEGIES ................................................................................. 35
9.7 ALIGNING INNOVATION WITH BUSINESS STRATEGY...................................................................... 35
10 VERTICAL INTEGRATION AND THE SCOPE OF THE FIRM ............................................... 36
10.1 TRANSACTION COST AND THE SCOPE OF THE FIRM ...................................................................... 36
10.2 IS IT BETTER TO BE VERTICALLY INTEGRATED OR VERTICALLY SPECIALIZED? .............................. 37
10.3 DECIDING WHETHER TO MAKE OR BUY. ....................................................................................... 38
10.4 DIFFERENT TYPES OF VERTICAL RELATIONSHIPS ........................................................................ 39
10.5 RECENT TRENDS ......................................................................................................................... 39
2
, 1 The concept of theory
Successful strategy:
1. Goals that are consistent and long-term.
2. Profound understanding of the competitive environment.
3. Objective appraisal of resources
4. Effective implementation of all 3 above
Strategy as link between environment:
The link between firm and industry environment is strategy.
The firm The industry environment
- Goals and values - Competitors
- Resources and capabilities - Customers
- Structure and system - suppliers
Strategy fit = effective strategy is when decision and action align to create consistent strategic direction.
Contingency theory:
- no best way of organizing or managing.
- the best way depends on circumstances (characteristics of organizations environment.)
Strategy = The means by which individuals or organizations achieve their objectives.
➢ Setting goals.
1.1 From strategy as plan to strategy as direction.
why do firms need Strategy?
1. strategy as decision support.
- Simplifies decision making.
- Knowledge of different individuals can be bundled and integrated.
- facilitates use of analytic tools.
2. Strategy as a coordinating device
3. Strategy as Target (direction for development)
- Strategic intent = desired strategic position
- vision & mission.
Strategy is realized as action, it is observable.
1.2 Areas of firm strategy
Corporate Strategy > defines the scope of the firm in terms of the industries and market in which it
competes.
1. Where to compete. (for profitability)
Business Strategy > How a firm competes within a particular industry OR market. (competitive Strategy
(competitive advantage))
2. How to compete. (for profitability)
3
Strategic Management
Course Code: EBB649C05
Summary Contemporary Strategic Analysis:
Grant 11th edition
Chapters: 1, 2, 3, 4, 5, 7, 8, 9, 10
,Table of contents
1 THE CONCEPT OF THEORY ..........................................................................................................3
1.1 FROM STRATEGY AS PLAN TO STRATEGY AS DIRECTION. ................................................................3
1.2 AREAS OF FIRM STRATEGY ............................................................................................................3
1.3 HOW IS STRATEGY MADE? .............................................................................................................4
1.4 APPLYING STRATEGY ANALYSIS .....................................................................................................4
1.5 STRATEGIC MANAGEMENT OF NOT-FOR-PROFIT ORGANIZATIONS..................................................5
2 GOALS, VALUES AND PERFORMANCE ......................................................................................5
2.1 APPRAISING CURRENT AND PAST PERFORMANCE ...........................................................................7
2.2 PERFORMANCE DIAGNOSIS ............................................................................................................7
3 INDUSTRY ANALYSIS: THE FUNDAMENTALS .........................................................................8
3.1 FROM ENVIRONMENTAL ANALYSIS TO INDUSTRY ANALYSIS ...........................................................8
3.2 INDUSTRY ATTRACTIVENESS..........................................................................................................8
3.3 PORTER .........................................................................................................................................9
3.3.1 Substitutes ................................................................................................................................9
3.3.2 Potential entrants / threat of entry ...........................................................................................9
3.3.3 Industry competitors/rivalry .................................................................................................. 10
3.3.4 Bargain power of buyers ....................................................................................................... 10
3.3.5 Bargain power of suppliers ................................................................................................... 10
3.4 APPLYING INDUSTRY ANALYSIS TO FORECASTING INDUSTRY PROFITABILITY ............................... 10
4 FURTHER TOPICS IN INDUSTRY AND COMPETITIVE ANALYSIS .................................... 12
4.1 EXTENDING PORTERS FRAMEWORK: ............................................................................................ 12
4.2 COMPETITOR ANALYSIS ............................................................................................................... 13
4.3 SEGMENTATION OF STRATEGIC GROUPS ....................................................................................... 14
5 ANALYZING RESOURCES AND CAPABILITIES ..................................................................... 15
5.1 APPRAISING RESOURCES AND CAPABILITIES ................................................................................ 16
5.2 HOW DO WE EXPLOIT KEY STRENGTHS EFFECTIVELY? ................................................................. 17
6 - ............................................................................................................................................................ 18
7 THE SOURCES AND DIMENSIONS OF COMPETITIVE ADVANTAGE ................................ 18
7.1 INTERNAL SOURCES OF COMPETITIVE ADVANTAGE: STRATEGIC INNOVATION THROUGH BUSINESS
MODELS AND BLUE OCEAN ....................................................................................................................................... 18
7.2 SUSTAINING COMPETITIVE ADVANTAGE....................................................................................... 19
7.3 COST ADVANTAGE ....................................................................................................................... 20
7.4 DIFFERENTIATION ADVANTAGE ................................................................................................... 21
7.5 CAN FIRMS PURSUE BOTH COST AND DIFFERENTIATION ADVANTAGE? ......................................... 24
8 INDUSTRY EVOLUTION AND STRATEGIC CHANGE ............................................................ 25
8.1 INDUSTRY LIFE CYCLE PHASES: ................................................................................................... 25
8.2 KEY SUCCESS FACTORS AND INDUSTRY EVOLUTION .................................................................. 27
8.3 BARRIERS TO CHANGE:................................................................................................................ 27
8.4 ORGANIZATIONAL ADAPTION AND INDUSTRY EVOLUTION: .......................................................... 28
8.5 COPING WITH TECHNICAL CHANGE .............................................................................................. 28
8.6 COMBATTING ORGANIZATIONAL INERTIA (RESISTANCE TO CHANGE IN THE FIRM) ....................... 29
8.7 DEVELOPING NEW CAPABILITIES ................................................................................................. 29
8.8 USING KNOWLEDGE MANAGEMENT TO DEVELOP ORGANIZATIONAL CAPABILITY. ....................... 29
9 TECHNOLOGY-BASED INDUSTRIES AND THE MANAGEMENT AND INNOVATION. .. 31
9.1 THE INNOVATION PROCESS .......................................................................................................... 31
1
, 9.2 CAPTURING VALUE FROM INNOVATION ........................................................................................ 31
9.2.1 Property rights in innovation (intellectual property): ........................................................... 31
9.2.2 Tacitness and complexity of the technology ........................................................................... 32
9.2.3 Lead time ............................................................................................................................... 32
9.2.4 Complementary resources ..................................................................................................... 32
9.3 OTHER STRATEGIES TO EXPLOIT INNOVATION .............................................................................. 33
9.4 FIRST-MOVER ADVANTAGE (FOLLOWER OR LEADER?) ................................................................. 33
9.5 STANDARD, PLATFORMS, NETWORK EXTRANALITIES................................................................... 34
9.6 IMPLEMENTING TECHNOLOGY STRATEGIES ................................................................................. 35
9.7 ALIGNING INNOVATION WITH BUSINESS STRATEGY...................................................................... 35
10 VERTICAL INTEGRATION AND THE SCOPE OF THE FIRM ............................................... 36
10.1 TRANSACTION COST AND THE SCOPE OF THE FIRM ...................................................................... 36
10.2 IS IT BETTER TO BE VERTICALLY INTEGRATED OR VERTICALLY SPECIALIZED? .............................. 37
10.3 DECIDING WHETHER TO MAKE OR BUY. ....................................................................................... 38
10.4 DIFFERENT TYPES OF VERTICAL RELATIONSHIPS ........................................................................ 39
10.5 RECENT TRENDS ......................................................................................................................... 39
2
, 1 The concept of theory
Successful strategy:
1. Goals that are consistent and long-term.
2. Profound understanding of the competitive environment.
3. Objective appraisal of resources
4. Effective implementation of all 3 above
Strategy as link between environment:
The link between firm and industry environment is strategy.
The firm The industry environment
- Goals and values - Competitors
- Resources and capabilities - Customers
- Structure and system - suppliers
Strategy fit = effective strategy is when decision and action align to create consistent strategic direction.
Contingency theory:
- no best way of organizing or managing.
- the best way depends on circumstances (characteristics of organizations environment.)
Strategy = The means by which individuals or organizations achieve their objectives.
➢ Setting goals.
1.1 From strategy as plan to strategy as direction.
why do firms need Strategy?
1. strategy as decision support.
- Simplifies decision making.
- Knowledge of different individuals can be bundled and integrated.
- facilitates use of analytic tools.
2. Strategy as a coordinating device
3. Strategy as Target (direction for development)
- Strategic intent = desired strategic position
- vision & mission.
Strategy is realized as action, it is observable.
1.2 Areas of firm strategy
Corporate Strategy > defines the scope of the firm in terms of the industries and market in which it
competes.
1. Where to compete. (for profitability)
Business Strategy > How a firm competes within a particular industry OR market. (competitive Strategy
(competitive advantage))
2. How to compete. (for profitability)
3
