Lectures and Articles Summary - Strategic & Organizational Design (EBM636A05)
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Course
Strategic & Organizational Design (EBM636A05)
Institution
Rijksuniversiteit Groningen (RuG)
This summary contains all the key information from the lectures. Additionally, I have summarized each article and included them in this document; there are 13 in total. Furthermore, I have added examples from a past exam and included all important images to provide a more complete overview of the m...
Strategic & Organizational Design
Week 1 (Issues in Strategic Management):
Strategic management = the process by which an organization defines its strategy or direction and makes decisions
on allocating its resources to pursue this strategy.
Corporate mission & vision:
Current state = represents where the organization is at the present moment in terms of performance, processes, and
overall positioning.
Future state (target) = targets are the short-term, specific goals that the organization wants to achieve. It is often even
more precise than an objective and sets a specific level of performance or result to be achieved, usually within a year
or less. For example, “sell 50.000 units of product X in the next quarter.”
Future state (objective) = objectives represent medium-term aims that are more strategic in nature. Objectives are
usually part of the overall strategy and help move the organization toward achieving its vision, usually between 1-5
years. For example, “increase market share in the European market by 15% within three years.”
Future state (vision) = the vision reflects the long-term, ambitious future state of the organization that describes what
an organization wants to achieve in the future, typically 5-10 years down the line. For example, “to be the world’s most
innovative and customer-centric technology company.”
Mission = isn’t in the model but outside of it. This is more about how they manage the organization. A mission defines
the core purpose of an organization. The mission is the only thing which isn’t a future state, because the mission is
also happening right now. The purpose of a mission is to communicate the organization’s fundamental purpose and
guide decision-making in day-to-day operations. For example, “to deliver high-quality, affordable healthcare to
communities in need while advancing medical research.”
The difference between a mission and a vision is the following:
- The mission focuses on today (and further). The mission shapes the company’s culture. So you can ask
yourself, ‘do they want to achieve this today and in the future, or only in the future?’
- The vision focuses on the future and what the organization wants to become.
For example, the mission and vision of TOYOYA are:
- Mission: “To attract and attain customers with high-valued products and services and the most satisfying
experience in America”; they want to achieve it today and in the future.
- Vision: “To be the most successful and respected car company in America”.
You can see that the vision has some words in it which show you that it is focused on the future. In this example those
are the words “to be”.
Classical framework of strategic management (Rayport & Jaworski; 2004):
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,External analysis, internal analysis, and goals all lead to a strategy formulation. The strategy is for every business
aspect. After the strategy formulation, the strategy will be implemented and it has to be controlled and monitored.
Strategy (definition of the lecturer) = strategy means the achieving of desired ends:
- A strategy is goal-driven.
- A strategy also implies a set of actions. It involves concrete steps and decisions that are meant to lead to
the achievement of these goals.
This means that a strategy has to be intentional:
- Not necessarily formal planning. Strategic actions can be intentional, but do not always require formalized,
rigid planning processes. It can be flexible and adaptive.
- Not unconscious patterns of actions. The pattern of actions needs to be clear.
- Emergent strategies are also included in a strategy, which means that sometimes strategies emerge
unintentionally from past actions. It is important to have awareness of a pattern, so you can modify
current/future intentions.
Strategies can also be influenced by environment and resources:
- Can be aided/constrained by environment. External factors, such as market dynamics, competition,
regulations, and social contexts, can either facilitate or limit the success of a strategy.
- A strategy has to be aided/constrained by own resources. Internal resources, including skills, technology,
finances, and human capital, also play a crucial role in shaping what strategies are effective.
There should be a reciprocal influence between actor and environment. This means that the behavior of the
company and the strategy is influenced by both the actor and the environment.
Social enactment processes = the difference between actor and environment depends on the perspective. For
example, when being a strategic analyzer for BMW (actor) the environment is Mercedes. When you change your work
and go to Mercedes, Mercedes will be the actor and BMW is the environment.
Mintzberg’s five P’s:
Mintzberg’s five P’s for strategy = framework to help understand the varied nature of strategy. It highlights the fact
that strategy can serve multiple purposes within an organization. Strategy as a:
- Plan: a consciously(=bewuste) intended course of action; involves setting clear steps to achieve specific
goals or objectives. For example, a company creating a five-year expansion plan into new geographic
markets.
- Ploy: a specific tactic or maneuver designed to outsmart competitors or achieve a short-term advantage;
focuses on quick, targeted actions. For example, a company lowering prices temporarily to drive a
competitor out of a market.
- Pattern: a consistent stream of actions. This includes emergent strategies, which are not planned but
happen through a consistent pattern of actions. For example, a company consistently innovating in response
to market changes, even if it wasn’t part of an original plan.
- Position: organization’s position in its environment, often defined by its product-market mix or its use of
resources. Often focused on finding a niche or competitive advantage. For example, a luxury car
manufacturer positioning itself as the premium choice in the high-end vehicle market.
- Perspective: reflects the organization’s culture and worldview; commitments to ways of acting and
responding. For example, a company with a strong commitment to sustainability, which influences every
aspect of its operations, from sourcing materials to product development.
2
,Intended strategy = the plan that an organization initially sets out to implement. A part of the intended strategy could
not be executed, which results in an unrealized strategy.
The deliberate strategy is the part of the intended strategy that gets successfully implemented. Ploy is part of the
deliberate strategy = plan + ploy.
Emergent strategy = strategies that emerge over time, often in response to unexpected opportunities or challenges;
they are not part of the original plan.
At the end, the realized strategy is the final strategy that the organization implements, which is a combination of both
deliberate and emergent strategies.
How to evaluate a strategy:
Rumel’s criteria = four criteria for evaluating if a strategy is both effective and practical:
- Consistency: the elements of the strategy do not contradict each other. The goals, actions, and policies
outlined in the strategy must be aligned and support each other. For example, a company that focuses on
both low-cost leadership and high-end product differentiation may face contradictions unless those two
approaches are reconciled in the strategy.
- Consonance: the strategy should have an adaptive response to the external environment; does the strategy
fit in the environment? For example, a company in the tech industry needs to continuously adapt to new
technological advancements and market demands to remain competitive.
- Advantage: the strategy should aim to create a competitive advantage for the firm; it should make sure that
you can achieve the objectives of the firm. For example, a company focusing on its unique technology or
superior customer service to create a distinct market advantage.
- Feasibility: the strategy must be realistic and capable of being implemented without overwhelming the
organization’s resources. For example, a small business developing a strategy that requires massive capital
investments may be infeasible unless they have a clear plan for obtaining the necessary resources.
Schools of thought (Mintzberg):
Schools of thought = offers a comprehensive framework for understanding strategy from multiple angles, showing
how strategies are formulated, emerge, and are shaped by various internal and external factors. It consists of ten
schools of thought:
1. Design: strategy as fit between internal strengths and external opportunities.
2. Planning: strategy as a formal, structured process.
3. Positioning: strategy as an analytical search for market position.
4. Entrepreneurial: strategy as vision-driven by a key leader.
5. Cognitive: strategy as shaped by mental models and cognition(=kennis).
6. Learning: strategy as emergent from organizational learning.
7. Power: strategy as shaped by politics and power.
8. Cultural: strategy as shaped by shared organizational values.
9. Environmental: strategy as a reaction to external forces.
10. Configuration: strategy as transformation, integrating phases of stability and change
3
, Literature week 1:
Porter, M.E., 1996: What is Strategy?:
This article provides an in-depth analysis of what strategy truly entails and why many companies struggle to achieve
sustainable competitive advantage.
Many companies focus on operational effectiveness = trying to perform the same activities better than competitors.
While these efforts can lead to significant operational improvements, they are not enough to guarantee sustainable
profitability. Operational effectiveness can easily be copied by competitors, leading to a ‘race to the bottom’ = where
companies lower costs but fail to truly differentiate themselves. A company can outperform rivals only if it can
establish a difference that it can preserve(=bescherm). It must deliver greater value to customers or create
comparable value at lower cost, or do both.
True strategy is about strategic positioning = choosing a unique set of activities to deliver value in a way that others
cannot easily replicate. This means that companies must decide what activities they will and will not perform,
allowing them to stand out in the market. For example, Southwest Airlines and IKEA:
- Southwest Airlines offers short-haul flights, low-cost service, and point-to-point routes between smaller
airports, while traditional airlines typically use hub-and-spoke networks, larger airports, and longer routes.
By not offering meals and having quick turnaround times, Southwest can reduce costs while providing
customers with a unique value proposition.
- IKEA offers stylish, low-cost furniture to a young audience that is willing to assemble and transport the
furniture themselves. This business model is significantly different from traditional furniture stores that
focus on customization and service.
The origins of strategic positions: strategic positions emerge from three distinct sources, which are not mutually
exclusive and often overlap:
1. Variety-based positioning: this approach involves producing a specialized selection of products or services
that provide to a specific market segment or customer need. Companies that follow this strategy typically
offer a distinct range of offerings that set them apart from their competitors. For example, IKEA focuses on a
specific range of affordable, stylish furniture, emphasizing a unique product variety tailored for budget-
conscious consumers.
2. Needs-based positioning: this centers on addressing the specific needs of a particular group of customers.
Companies using this strategy design their offerings to meet the diverse demands of different customer
segments, often by providing a unique set of features or services. For example, a firm like Whole Foods
Market provides to health-conscious consumers who prioritize organic and natural products.
3. Access-based positioning: this focuses on the accessibility of products or services to certain customer
groups, often determined by geography, distribution channels, or other logistical factors. For example,
Walmart utilizes access-based positioning by ensuring its stores are located in convenient locations and
offering a wide range of products at competitive prices, making it easily accessible to a broad audience.
Fit = refers to how a company's various activities are interconnected and reinforce each other. When all activities
within a company align with the chosen strategy, it becomes difficult for competitors to imitate this. For example,
IKEA’s self-service model, low-cost structure, and modular furniture design are all interwoven to support the strategy
of low cost and simplicity.
Trade-offs = companies must make choices about what they will not do, as not all activities are compatible with each
other. Trade-offs make a strategy harder to copy because companies are forced to sacrifice certain activities to
maintain their unique position. For instance, an airline cannot offer both meals and fast turnaround times without
becoming inefficient. Trade-offs arise due to inconsistencies in image or reputation, due to activities themselves, and
due to limits on internal coordination and control.
Achieving a sustainable competitive advantage requires more than just operational effectiveness. Companies must
choose unique activities and continuously refine their strategy. Those that fail to make clear strategic choices risk
falling into competitive convergence = where they imitate their competitors and lose their distinctive value.
The desire to grow has perhaps the most perverse effect on strategy. Porter warns against the growth trap = where
companies sacrifice their strategic position in pursuit of growth. This often happens when businesses expand their
product lines, enter new markets, or add features without considering the impact on their core strategy. Many
companies, after a decade of restructuring and cost-cutting, are turning their attention to growth. Too often, efforts to
grow blur uniqueness, create compromises, reduce fit, and ultimately undermine competitive advantage.
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