Theories of Strategy
Inhoudsopgave
Literature week 1.1........................................................................................1
Thinking about strategy, Stoelhorst 2008.......................................................................1
Lecture slides 1.1.........................................................................................23
Lecture slides week 1.2................................................................................23
Literature week 2.1......................................................................................23
Lecture slides week 2.1 resource-based view, I the high church......................23
Literature week 2.2......................................................................................29
Lecture slides week 2.2 cooperative game theory and the added value...........36
Literature week 5.1......................................................................................44
Lecture slides week 5.1................................................................................51
Literature week 5.2.....................................................................................56
Lecture slides week 5.2................................................................................64
Literature week 6.1......................................................................................71
Lecture slides week 6.1................................................................................79
Week 6.1 Building a Schumpeterian view III...................................................84
Literature week 6.1......................................................................................84
Lecture slides week 6.1................................................................................94
Week 6.2 the Schumpeterian view IV.............................................................99
Literature week 6.2......................................................................................99
Lecture slides week 6.2..............................................................................108
Literature week 1.1
Thinking about strategy, Stoelhorst 2008.
purpose of the article: give an overview of the field of strategic
management as it has developed since the inception in the 1960’s. Most
textbooks regarding strategic management used in business schools have
a tendency to present the theories and concepts of the field as if there
were one best way to develop strategy.
this approach suppresses both the complexity and the fact that strategy
can be approached in many different ways.
,Thinking about strategic management is still developing.
In other words, many textbooks give the misleading impression that their
approach is the only way to practice strategic management.
the ideas of strategy scholars
3 aspects of strategic management can be distinguished
1. The process where do the strategies come from?
2. The content what are good strategies?
3. The context how specific organization of environmental context
affect the process or content of strategy.
The standard model of strategy
The standard model
The typical conception of strategic management = a three-step process in
which strategic analysis is followed by strategic choice and strategy
implementation. This model is referred to as the standard model.
How to develop a strategy on the basis of the standard model:
1. Start with formulating organizational objectives.
2. The objectives direct the analytical phase, which consists of an
internal and external analysis.
External analysis identifies industry success factors, opportunities,
and threats. Internal analysis reveals a firm’s strengths, weaknesses,
and core competences.
3. The resulting strengths, weaknesses, opportunities and threats are
confronted in a SWOT analysis that leads to the identification of the
strategic issues that the firm faces.
4. The formulation of these strategic issues is in the conclusion of the
analysis phase.
5. The last stage considers the implementation of the strategy. Chosen
strategy is broken down into detailed plans, the responsibilities and
budget are assigned, and finally performance measures to control
the implementation of te strategy are chosen
The standard model of strategy stems from four prescriptive schools of
thought:
- Design school
- Planning school
- Positioning school
- Resource based school
Together these four perspective schools of thought have inspired the
approach to strategy that is typical for most textbooks.
This approach has strong normative overtones: the implicit message is
that the standard model is the right way to develop a strategy.
The fifth school of thought, the process school challenges this view,
emphasizing how strategy actually emerges in practice rather than
through purely rational, top down analysis.
,The design school: strategy as a conceptual process.
Developed by the Harvard business school.
Built on Philip Selznick’s ideas: firms should align internal distinctive
competence with their external expectations so specific characteristics
of the firm should be confronted with the external situation it faces.
Central tool for this school: SWOT analysis (strengths, weakness,
opportunities, threats).
Seven core assumptions about strategy through the eye of this
school (Mintzberg et al.)
1. Strategy is a deliberate, conscious process, learned formally
2. The CEO is the main strategist
3. The process must be simple and informal
4. Strategies should be unique, based on distinctive competences.
5. Strategies appear fully formulated before implementation
6. Strategies should be explicit and simple, so the organization
understands them/
7. Formulation and implementation are strictly separated.
Criticism on the design school (Mintzberg, 1990)
Criticism is largely focused on:
- The fact that this school underplays the importance of hands-on
learning.
- Top managers may lack detailed knowledge of strengths and
weaknesses, while lower managers may disagree on what the
distinctive competence of their firm is.
- Strengths and weaknesses are context dependent and can change
with the environment or situation.
- The strict separation between formulation (top) and implementation
(lower levels) hinders organizational learning, leading to blame-
shifting when strategies fail.
Underlying problematic assumptions:
The limitations of the approach favored by the design school are best seen
then considering the assumptions about strategy:
1. One brain can in principle, handle all the information relevant for
strategy formation
2. That brain can have full, detailed and intimate knowledge of the
situation in question
3. The relevant knowledge must be established before a new intended
strategy had to be implemented – in other words, the situation had
to remain relatively stable or at least predictable
4. The organization in question must be prepared to cope with a
centrally articulated strategy
Contributions of the approach favored by the design school
- Introduced concepts like environmental fit and distinctive
competence
- Laid the foundation for the standard model of strategy
, Limitations
- Too simplistic, centralized, and rigid for complex and dynamic
environments
Environmental fit = the alignment or fit between a firm’s internal
characteristics (resources skills and structures) and its external
environment (industry, competitors, customers, technology and
regulation).
A company succeeds when its internal strengths are matches to external
opportunities while avoiding threats and minimizing weaknesses (SWOT
analysis)
Distinctive competence = the unique capabilities or skills that a firm
possesses, which make it different from competitors and allow it to
perform better in some areas.
the planning school: strategy as a formal process
origin: founded with Igor Ansoff’s Corporate strategy (1965)
similar to the design school but more formalized and elaborate
key differences
- Strategy should follow a formal, step by step system (versus the
design school’s simple, informal model)
- In practice, part of the responsibility shifts from the CEO to
strategic planning staff.
Core features:
- The use of flowcharts, checklists, analytical tools for a rational
and systematic process
- Strategies broken into multiple specific strategic plans, controlled
via budgets and performance measures.
- Creates a hierarchy of plans and controls to ensure the
objectives are met.
Assumptions of the planning approach to strategy (Mintzberg et
al., 1998)
1. Strategies result from a formal, controlled planning process,
broken into distinct steps supported by techniques
2. Responsibility lies with the CEO in principle, but with planning
staff in practice.
3. Strategies emerge fully formed, made explicit and implemented
trough detailed objectives, budgets and programs
The rise and decline of the ideas of the planning school
- Very influential in the 1970’s many firms set up large planning
departments with yearly planning cycles.
- By the 1980’s, widespread disappointment:
o Too rigid and detached from reality
Inhoudsopgave
Literature week 1.1........................................................................................1
Thinking about strategy, Stoelhorst 2008.......................................................................1
Lecture slides 1.1.........................................................................................23
Lecture slides week 1.2................................................................................23
Literature week 2.1......................................................................................23
Lecture slides week 2.1 resource-based view, I the high church......................23
Literature week 2.2......................................................................................29
Lecture slides week 2.2 cooperative game theory and the added value...........36
Literature week 5.1......................................................................................44
Lecture slides week 5.1................................................................................51
Literature week 5.2.....................................................................................56
Lecture slides week 5.2................................................................................64
Literature week 6.1......................................................................................71
Lecture slides week 6.1................................................................................79
Week 6.1 Building a Schumpeterian view III...................................................84
Literature week 6.1......................................................................................84
Lecture slides week 6.1................................................................................94
Week 6.2 the Schumpeterian view IV.............................................................99
Literature week 6.2......................................................................................99
Lecture slides week 6.2..............................................................................108
Literature week 1.1
Thinking about strategy, Stoelhorst 2008.
purpose of the article: give an overview of the field of strategic
management as it has developed since the inception in the 1960’s. Most
textbooks regarding strategic management used in business schools have
a tendency to present the theories and concepts of the field as if there
were one best way to develop strategy.
this approach suppresses both the complexity and the fact that strategy
can be approached in many different ways.
,Thinking about strategic management is still developing.
In other words, many textbooks give the misleading impression that their
approach is the only way to practice strategic management.
the ideas of strategy scholars
3 aspects of strategic management can be distinguished
1. The process where do the strategies come from?
2. The content what are good strategies?
3. The context how specific organization of environmental context
affect the process or content of strategy.
The standard model of strategy
The standard model
The typical conception of strategic management = a three-step process in
which strategic analysis is followed by strategic choice and strategy
implementation. This model is referred to as the standard model.
How to develop a strategy on the basis of the standard model:
1. Start with formulating organizational objectives.
2. The objectives direct the analytical phase, which consists of an
internal and external analysis.
External analysis identifies industry success factors, opportunities,
and threats. Internal analysis reveals a firm’s strengths, weaknesses,
and core competences.
3. The resulting strengths, weaknesses, opportunities and threats are
confronted in a SWOT analysis that leads to the identification of the
strategic issues that the firm faces.
4. The formulation of these strategic issues is in the conclusion of the
analysis phase.
5. The last stage considers the implementation of the strategy. Chosen
strategy is broken down into detailed plans, the responsibilities and
budget are assigned, and finally performance measures to control
the implementation of te strategy are chosen
The standard model of strategy stems from four prescriptive schools of
thought:
- Design school
- Planning school
- Positioning school
- Resource based school
Together these four perspective schools of thought have inspired the
approach to strategy that is typical for most textbooks.
This approach has strong normative overtones: the implicit message is
that the standard model is the right way to develop a strategy.
The fifth school of thought, the process school challenges this view,
emphasizing how strategy actually emerges in practice rather than
through purely rational, top down analysis.
,The design school: strategy as a conceptual process.
Developed by the Harvard business school.
Built on Philip Selznick’s ideas: firms should align internal distinctive
competence with their external expectations so specific characteristics
of the firm should be confronted with the external situation it faces.
Central tool for this school: SWOT analysis (strengths, weakness,
opportunities, threats).
Seven core assumptions about strategy through the eye of this
school (Mintzberg et al.)
1. Strategy is a deliberate, conscious process, learned formally
2. The CEO is the main strategist
3. The process must be simple and informal
4. Strategies should be unique, based on distinctive competences.
5. Strategies appear fully formulated before implementation
6. Strategies should be explicit and simple, so the organization
understands them/
7. Formulation and implementation are strictly separated.
Criticism on the design school (Mintzberg, 1990)
Criticism is largely focused on:
- The fact that this school underplays the importance of hands-on
learning.
- Top managers may lack detailed knowledge of strengths and
weaknesses, while lower managers may disagree on what the
distinctive competence of their firm is.
- Strengths and weaknesses are context dependent and can change
with the environment or situation.
- The strict separation between formulation (top) and implementation
(lower levels) hinders organizational learning, leading to blame-
shifting when strategies fail.
Underlying problematic assumptions:
The limitations of the approach favored by the design school are best seen
then considering the assumptions about strategy:
1. One brain can in principle, handle all the information relevant for
strategy formation
2. That brain can have full, detailed and intimate knowledge of the
situation in question
3. The relevant knowledge must be established before a new intended
strategy had to be implemented – in other words, the situation had
to remain relatively stable or at least predictable
4. The organization in question must be prepared to cope with a
centrally articulated strategy
Contributions of the approach favored by the design school
- Introduced concepts like environmental fit and distinctive
competence
- Laid the foundation for the standard model of strategy
, Limitations
- Too simplistic, centralized, and rigid for complex and dynamic
environments
Environmental fit = the alignment or fit between a firm’s internal
characteristics (resources skills and structures) and its external
environment (industry, competitors, customers, technology and
regulation).
A company succeeds when its internal strengths are matches to external
opportunities while avoiding threats and minimizing weaknesses (SWOT
analysis)
Distinctive competence = the unique capabilities or skills that a firm
possesses, which make it different from competitors and allow it to
perform better in some areas.
the planning school: strategy as a formal process
origin: founded with Igor Ansoff’s Corporate strategy (1965)
similar to the design school but more formalized and elaborate
key differences
- Strategy should follow a formal, step by step system (versus the
design school’s simple, informal model)
- In practice, part of the responsibility shifts from the CEO to
strategic planning staff.
Core features:
- The use of flowcharts, checklists, analytical tools for a rational
and systematic process
- Strategies broken into multiple specific strategic plans, controlled
via budgets and performance measures.
- Creates a hierarchy of plans and controls to ensure the
objectives are met.
Assumptions of the planning approach to strategy (Mintzberg et
al., 1998)
1. Strategies result from a formal, controlled planning process,
broken into distinct steps supported by techniques
2. Responsibility lies with the CEO in principle, but with planning
staff in practice.
3. Strategies emerge fully formed, made explicit and implemented
trough detailed objectives, budgets and programs
The rise and decline of the ideas of the planning school
- Very influential in the 1970’s many firms set up large planning
departments with yearly planning cycles.
- By the 1980’s, widespread disappointment:
o Too rigid and detached from reality
