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Extensive Book Summary, Contemporary Strategy Analysis 10th edition

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All chapters required for reading in the course strategic management. Summary of the book Contemporary Strategy Analysis by Robert M. Grant, Tenth Edition of the book. Chapters 1-5, 7-9, 11-14.

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  • 1-5, 7-9, 11-14
  • May 6, 2022
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  • 2021/2022
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Strategic Management Chapters Summary
Contemporary Strategy Analysis Robert M. Grant
Tenth edition
Chapters: 1-5, 7-9, 11-14
Year 2021-2022

Table of Contents
CHAPTER 1 – THE CONCEPT OF STRATEGY P. 3-28.......................................................................................... 5
THE ROLE OF STRATEGY IN SUCCESS..........................................................................................................................5
THE BASIC FRAMEWORK OF STRATEGY ANALYSIS.........................................................................................................5
Strategic Fit.....................................................................................................................................................5
A BRIEF HISTORY OF BUSINESS STRATEGY....................................................................................................................6
Origins and military antecedents...................................................................................................................6
From corporate planning to strategic management......................................................................................6
STRATEGY TODAY..................................................................................................................................................7
What is strategy?...........................................................................................................................................7
Why do firms need strategy?.........................................................................................................................7
Corporate and business strategy....................................................................................................................7
Describing Strategy........................................................................................................................................8
HOW IS STRATEGY MADE? THE STRATEGY PROCESS.....................................................................................................9
Designing versus emergence..........................................................................................................................9
Applying strategy analysis..............................................................................................................................9
STRATEGIC MANAGEMENT OF NOT-FOR-PROFIT ORGANIZATIONS...................................................................................10
CHAPTER 2 – GOALS, VALUES, AND PERFORMANCE P. 33-57.......................................................................11
STRATEGY AS A QUEST FOR VALUE...........................................................................................................................11
Value creation...............................................................................................................................................11
Value for whom? Shareholders vs Stakeholders..........................................................................................11
PROFIT, CASH FLOW, AND ENTERPRISE VALUE..........................................................................................................12
Types of profit...............................................................................................................................................12
Linking profit to enterprise value.................................................................................................................13
Enterprise value and shareholder value.......................................................................................................13
PUTTING PERFORMANCE ANALYSIS INTO PRACTICE......................................................................................................13
Appraising current and past performance...................................................................................................13
Performance diagnosis.................................................................................................................................14
Using performance diagnosis to guide strategy formulation......................................................................14
Setting performance targets........................................................................................................................14
BEYOND PROFIT: VALUES AND CORPORATE SOCIAL RESPONSIBILITY................................................................................15
Values and principles....................................................................................................................................15
Corporate social responsibility.....................................................................................................................15
BEYOND PROFIT: STRATEGY AND REAL OPTIONS.........................................................................................................16
Strategy as options management................................................................................................................16
CHAPTER 3 – INDUSTRY ANALYSIS: THE FUNDAMENTALS P. 59-81...............................................................17
FROM ENVIRONMENTAL ANALYSIS TO INDUSTRY ANALYSIS...........................................................................................17
ANALYZING INDUSTRY ATTRACTIVENESS...................................................................................................................17
Porter’s Five Forces of Competition Framework..........................................................................................17
Competition from Substitutes.......................................................................................................................18
Threat of Entry..............................................................................................................................................18
Rivalry between Established Competitors....................................................................................................19
Bargaining Power of Buyers.........................................................................................................................19
Bargaining Power of Suppliers.....................................................................................................................20
APPLYING INDUSTRY ANALYSIS TO FORECASTING INDUSTRY PROFITABILITY.....................................................................20
Identifying Industry Structure.......................................................................................................................20


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, Forecasting Industry Profitability.................................................................................................................20
USING INDUSTRY ANALYSIS TO DEVELOP STRATEGY....................................................................................................21
Strategies to Alter Industry Structure...........................................................................................................21
Positioning the Company..............................................................................................................................21
DEFINING INDUSTRIES: WHERE TO DRAW THE BOUNDARIES........................................................................................21
Industries and Markets.................................................................................................................................21
Defining Industries and Markets: Substitution in Demand and Supply........................................................21
FROM INDUSTRY ATTRACTIVENESS TO COMPETITIVE ADVANTAGE: IDENTIFYING KEY SUCCESS FACTORS...............................22
CHAPTER 4 – FURTHER TOPICS IN INDUSTRY AND COMPETITIVE ANALYSIS P. 83-104...................................24
THE LIMITS OF INDUSTRY ANALYSIS.........................................................................................................................24
Does Industry Matter?..................................................................................................................................24
Hyper competition........................................................................................................................................24
Winner-Take-All Industries...........................................................................................................................24
BEYOND THE FIVE-FORCES: COMPLEMENTS, ECOSYSTEMS, AND BUSINESS MODELS.........................................................25
Complements: A Missing Force in the Porter Model?..................................................................................25
Business Ecosystems: Managing Value Migration.......................................................................................25
Using Business Models to Manage the Business Ecosystem........................................................................26
Business Ecosystems: The Value Capture Model..........................................................................................26
COMPETITIVE INTERACTION: GAME THEORY AND COMPETITOR ANALYSIS......................................................................26
Game Theory................................................................................................................................................26
Competitor Analysis......................................................................................................................................28
SEGMENTATION AND STRATEGIC GROUPS................................................................................................................29
Segmentation Analysis.................................................................................................................................29
Strategic Groups...........................................................................................................................................29
CHAPTER 5 – ANALYZING RESOURCES AND CAPABILITIES P. 107-130...........................................................31
THE ROLE OF RESOURCES AND CAPABILITIES IN STRATEGY FORMULATION......................................................................31
Basing Strategy on Resources and Capabilities............................................................................................31
Resources and Capabilities as Sources of Profit...........................................................................................31
IDENTIFYING RESOURCES AND CAPABILITIES..............................................................................................................32
Identifying Resources....................................................................................................................................32
Identifying Organizational Capabilities........................................................................................................33
APPRAISING RESOURCES AND CAPABILITIES...............................................................................................................34
Appraising the Strategic Importance of Resources and Capabilities...........................................................34
Appraising the Relative Strength of a Firm’s Resources and Capabilities....................................................35
DEVELOPING STRATEGY IMPLICATIONS.....................................................................................................................35
Exploiting Key Strengths...............................................................................................................................36
Managing Key Weaknesses..........................................................................................................................36
What about Superfluous Strengths?............................................................................................................36
The Industry Context of Resource Analysis...................................................................................................36
CHAPTER 7 – THE SOURCES AND DIMENSIONS OF COMPETITIVE ADVANTAGE P. 155-186............................37
HOW IS COMPETITIVE ADVANTAGE ESTABLISHED?....................................................................................................37
External Sources of Competitive Advantage................................................................................................37
Internal Sources of Competitive Advantage: Strategic Innovation through Business Models and Blue
Ocean Strategy.............................................................................................................................................38
HOW IS COMPETITIVE ADVANTAGE SUSTAINED?.......................................................................................................38
COST ADVANTAGE...............................................................................................................................................40
The Sources of Cost Advantage....................................................................................................................40
Using the Value Chain to Analyze Costs.......................................................................................................42
DIFFERENTIATION ADVANTAGE...............................................................................................................................42
The Nature and Significance of Differentiation............................................................................................43
Analyzing Differentiation: The Demand Side................................................................................................43
Analyzing Differentiation: The Supply Side...................................................................................................44
Bringing It All Together: The Value Chain in Differentiation Analysis..........................................................45
CAN FIRMS PURSUE BOTH COST AND DIFFERENTIATION ADVANTAGE?..........................................................................45

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,CHAPTER 8 – INDUSTRY EVOLUTION AND STRATEGIC CHANGE P. 189-216...................................................47
THE INDUSTRY LIFE CYCLE.....................................................................................................................................47
Demand Growth...........................................................................................................................................47
Creation and Diffusion of Knowledge...........................................................................................................47
How General is the Life-Cycle Pattern?........................................................................................................48
Implications of the Life Cycle for Competition and Strategy........................................................................48
THE CHALLENGE OF ORGANIZATIONAL ADAPTATION AND STRATEGIC CHANGE................................................................49
Why is Change So Difficult? The Sources of Organizational Inertia.............................................................49
Organizational Adaptation and Industry Evolution......................................................................................50
Coping with Technological Change..............................................................................................................51
MANAGING STRATEGIC CHANGE............................................................................................................................51
Dual Strategies and Organizational Ambidexterity......................................................................................51
Combatting Organizational Inertia...............................................................................................................51
Developing New Capabilities........................................................................................................................52
Dynamic Capabilities....................................................................................................................................53
Using Knowledge Management to Develop Organizational Capability.......................................................53
CHAPTER 9 – TECHNOLOGY-BASED INDUSTRIES AND THE MANAGEMENT OF INNOVATION P.219-246.........55
COMPETITIVE ADVANTAGE IN TECHNOLOGY-INTENSIVE INDUSTRIES..............................................................................55
The Innovation Process.................................................................................................................................55
Capturing Value from Innovation.................................................................................................................55
Which Mechanisms Are Effective at Protecting Innovation?.......................................................................56
STRATEGIES TO EXPLOIT INNOVATION: HOW AND WHEN TO ENTER..............................................................................56
Alternative Strategies to Exploit Innovation................................................................................................56
Timing Innovation: To Lead or to Follow?....................................................................................................57
Managing Risks............................................................................................................................................58
STANDARDS, PLATFORMS, AND NETWORK EXTERNALITIES...........................................................................................58
Types of Standards.......................................................................................................................................58
The Role of Network Externalities................................................................................................................59
Competing for Standards..............................................................................................................................59
IMPLEMENTING TECHNOLOGY STRATEGIES: INTERNAL AND EXTERNAL SOURCES OF INNOVATION........................................60
Internal Sources of Innovation: Fostering Creativity....................................................................................60
Sourcing Innovation from Customers and Partners.....................................................................................61
IMPLEMENTING TECHNOLOGY STRATEGIES: ORGANIZING FOR INNOVATION....................................................................61
Aligning Innovation with Business Strategy.................................................................................................61
Reconciling Creativity with Commercial Discipline.......................................................................................62
CHAPTER 11 – GLOBAL STRATEGY AND THE MULTINATIONAL CORPORATION P.269-295..............................64
IMPLICATIONS OF INTERNATIONAL COMPETITION FOR INDUSTRY ANALYSIS.....................................................................64
Patterns of Internationalization...................................................................................................................64
Implications for Competition........................................................................................................................64
ANALYZING COMPETITIVE ADVANTAGE IN AN INTERNATIONAL CONTEXT........................................................................65
National Influences on Competitiveness: Comparative Advantage.............................................................65
Porter’s National Diamond...........................................................................................................................65
Consistency between Strategy and National Conditions..............................................................................66
INTERNATIONALIZATION DECISIONS: LOCATING PRODUCTION.......................................................................................66
Determinants of Geographical Location......................................................................................................66
Location and the Value Chain.......................................................................................................................66
INTERNATIONALIZATION DECISIONS: ENTERING A FOREIGN MARKET..............................................................................67
MULTINATIONAL STRATEGIES: GLOBAL INTEGRATION VERSUS NATIONAL DIFFERENTIATION...............................................68
The Benefits of a Global Strategy.................................................................................................................68
The Need for National Differentiation..........................................................................................................68
Reconciling Global Integration with National Differentiation......................................................................69
IMPLEMENTING INTERNATIONAL STRATEGY: ORGANIZING THE MULTINATIONAL CORPORATION..........................................69
The Evolution of Multinational Strategies and Structures...........................................................................69
Recent Trends in Multinational Management.............................................................................................70


3

, CHAPTER 12 – DIVERSIFICATION STRATEGY P. 297-312................................................................................72
MOTIVES FOR DIVERSIFICATION..............................................................................................................................72
Growth..........................................................................................................................................................72
Risk Reduction..............................................................................................................................................72
Value Creation: Porter’s “Essential Tests”....................................................................................................72
COMPETITIVE ADVANTAGE FROM DIVERSIFICATION....................................................................................................73
Economies of Scope......................................................................................................................................73
Economies from Internalizing Transactions.................................................................................................74
Parenting Advantage....................................................................................................................................74
The Diversified Firm as an Internal Market..................................................................................................74
DIVERSIFICATION AND PERFORMANCE.....................................................................................................................75
The Findings of Empirical Research..............................................................................................................75
THE MEANING OF RELATEDNESS IN DIVERSIFICATION.................................................................................................76
CHAPTER 13 – IMPLEMENTING CORPORATE STRATEGY: MANAGING THE MULTI-BUSINESS FIRM P.315-338 77
THE ROLE OF CORPORATE MANAGEMENT................................................................................................................77
MANAGING THE CORPORATE PORTFOLIO.................................................................................................................77
MANAGING LINKAGES ACROSS BUSINESSES..............................................................................................................77
Common Corporate Services........................................................................................................................77
Transferring and Sharing Resources and Capability among Businesses......................................................78
Implications for the Corporate Headquarters..............................................................................................78
MANAGING INDIVIDUAL BUSINESSES.......................................................................................................................78
Direct Corporate Involvement in Business-level Management....................................................................79
The Strategic Planning System.....................................................................................................................79
Performance Management and Financial Control.......................................................................................80
Strategic Planning and Performance Control: Alternative Approaches to Corporate Management...........81
MANAGING CHANGE IN THE MULTI-BUSINESS CORPORATION......................................................................................81
GOVERNANCE OF MULTI-BUSINESS CORPORATIONS...................................................................................................83
The Rights of Shareholders...........................................................................................................................83
The Responsibilities of Boards of Directors..................................................................................................83
Governance Implications of Multi-business Structures................................................................................84
CHAPTER 14 – EXTERNAL GROWTH STRATEGIES: MERGERS, ACQUISITIONS & ALLIANCES P.340-358............86
MERGERS AND ACQUISITIONS................................................................................................................................86
The Pattern of M&A Activity.........................................................................................................................86
Are Mergers Successful?...............................................................................................................................87
Motives for Mergers and Acquisitions..........................................................................................................87
Managing Mergers and Acquisitions: Pre-merger Planning........................................................................89
Managing Mergers and Acquisitions: Post-merger Integration..................................................................90
STRATEGIC ALLIANCES..........................................................................................................................................90
Motives for Alliances....................................................................................................................................91
Managing Strategic Alliances.......................................................................................................................91




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