Summary of the course Foundations of Strategic Management given at the Vrije Universiteit Amsterdam as a specialization course in the 3rd year. Since this will be the first exam given in this course, this summary will be very helpful in preparing you for it. Everything that we need to know for the ...
Week 1 – Foundational view
Lecture 1 – Foundations
Strategy: the determination of the basic long-term goals of an enterprise, and the adoption of
courses of action and the allocation of resources necessary for carrying out these goals (Chandler).
Strategy management then encompasses the processes by which: strategists give direction to an
organization, sort out future possibilities, cope with ambiguity, both internal and externally, and
formulate a path towards goal attainment.
- Strategic management practice articulates what business an organization is in, where the
business should go, and how to get there.
- Strategic management science exists to advance knowledge about performance differences
among organizations, institutions, and markets. Strategy scholars seek to explain and predict
the factors that enable or inhibit firm performance.
Strategic management is a
dynamic field, over time the focus
of researchers shifted.
Early development: internal
perspective, organizational
structure and strategies were
determinants of performance.
IO economics: external
perspective, market structure and
impact of firm performance.
- 1960: Chandler = serving the professional community. Focus on economic performance by
strategic planning, organizational structure, internal analysis.
- 1970: Friedman = serving the professional community. Focus on economic performance by
forecasting, scenario planning, portfolio management.
- 1980: Porter = serving the academic community notably imprint on professional community.
Focus on economic performance and competitive advantage by industry analysis, market
analysis and competition.
- 1990: Welch = serving the academic community moderate imprint on professional
community. Focus on economic performance and competitive advantage through internal
resources, competitive dynamics, external organization.
- 1990-2020: D’aveni = serving the academic niche communities notable imprint on
professional niche communities. Focus on economic performance and competitive advantage
through strategy as practice, strategic innovation, corporate social responsibility.
- Today: Jobs = serving earth and all her inhabitants. Focus on economic, technological,
ecological and societal outcomes by strategic paradoxes, collaborative engagement,
humanized strategic leadership.
,External world can be seen as…
- Deliberate strategy (Porter): competitive strategy is about
being different: deliberately choosing a different set of
activities to deliver a unique mix of value. This means
carefully planning and deciding on a course of action in
advance.
- Emergent strategy (Mintzberg): strategies are emergent
(opposes Porter’s deliberate strategy). Emergent strategy is a
set of actions, or behavior, consistent over time, “a realized
pattern [that] was not expressly intended” in the original
planning of strategy. It is a pattern of actions or behaviors that develop over time, often in
response to unforeseen circumstances or opportunities. It’s not something that was explicitly
planned from the beginning.
Internal world can be seen as …
- Rational: the external world is predictable.
- Natural: there is biases, opportunities, people, natural processes
The science of strategic management is progressing, such that it seeks to remain relevant (i.e.
external environment) while being academically rigorous (i.e. internal environment).
Strategy is not limited to one perspective, it is about ‘perspective flexibility’; both in theory and
practice.
Instruction lecture 1 – Strategic Analysis
The purpose of a strategic analysis is to:
- Identify opportunities: pinpoint potential avenues for growth or
improvements.
- Assess risks: examination of potential threats and vulnerabilities.
- Inform decision-making: ais in making informed decisions that align with
organizational goals.
A strategic analysis is thus looking forward (into the unknown).
Case familiarization > Examine the information > Define the problem(s) >
Determine the causes > Generate solutions > evaluate solutions > make
recommendations.
Explain why Bayer acquired Monsanto (example in instruction lecture), consider the opportunities
(positive) and risks (negative) implications. How to build an analytical framework?
- Industrial organization (IO); 5 forces framework; the question would be how the acquisition
alters competitive intensity. What is the blind spot?
, - Resource-based view; the question would be how the acquisition would create a unique
resource endowment? What is the blind spot?
- Expansion framework
- Acquisition framework; the question would be how the acquisition would generate more
synergies and less costs compared to other ways of governing economic activities? What is
the blind spot?
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