Readings week 1
Paper 1: Thinking about Strategy, Teaching note - Stoelhorst, J.W. (2008)
Paper 2: How competitive forces shape strategy - Porter, M. (1979)
Paper 3: Firm resources and sustained competitive advantage - Barney, J. (1991)
Paper 4: The firm matters, not the industry - Baden-Fuller, C. and J. Stopford (1992)
Videos and other notes week 1
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,Readings week 1
Paper 1 - Thinking about Strategy, Teaching note
Stoelhorst, J.W. (2008)
There is no one best way to develop strategy, as strategic management is a complex activity
and strategy can be approached in many different ways.
There are three aspects of strategic management that can be distinguished:
● Process: where do strategies come from, how do companies develop strategies and
how could they do so more effectively?
● Content: what good strategies are, which types of strategies are there and which
strategies can give firms a competitive advantage?
● Context: how specific organisational and environmental contexts affect the process
or content of strategy? Do different types of organisations and different types of
industries require different strategies and/or different ways of developing these
strategies?
The standard model of strategy is the joint product of two prescriptive schools of thought
within the field of strategic management:
● The design school
● The planning school
In addition, two other prescriptive schools of thought further expanded on the way in which
internal and external analysis should be executed.
The ‘Standard Model’ of Strategy
A three-step process:
1. Strategic analysis: start by formulating organisational objectives, by taking into
account the expectations of the firm’s stakeholders. These direct the analytical phase,
which consists of:
● Internal analysis: understand the firm’s distinctive competence and identify the
strengths and weaknesses that may affect the firm’s ability to meet its
objectives
● External analysis: understand the critical success factors in the firm’s industry
and identify the opportunities and threats that may affect the firm’s ability to
meet its objectives
The SWOT -> identification and formulation of the strategic issues that the firm faces. This
highlights the main questions that a firm needs to answer to meet its objectives.
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,Readings week 1
2. Strategic choice: generate strategic options or possible strategies to deal with the
strategic issues, based on their suitability (does the strategy deal with the strategic
issues?), acceptability (is the strategy acceptable to the firm’s stakeholders?) and
feasibility (will the firm be able to execute the strategy?).
3. Strategy implementation: first, the chosen strategy is broken down into detailed
plans, then responsibilities and budgets are assigned, and finally performance
measures to control the implementation of the strategy are agreed upon.
The standard model assumption:
● There is one right way to develop strategy, an idea that is dismissed by the fifth
school of thought, the process school.
Proponents of the process school do not agree that strategy is (or should be) only (or even
mostly) about rational analysis and top-down implementation. The process school is primarily
descriptive in nature:
● Rather than telling managers what to do, authors in the process school tend to
observe how strategy actually takes shape in the everyday practice of firms.
● What they find is typically quite different from the approach to strategy that the
standard model prescribes.
The prescriptive schools of thought:
● The 1960s – The design school
● The 1970s – The planning school
● The 1980s – The positioning school
● The 1990s – The resource-based school
The descriptive school of thought:
● The 1980s and onwards – The process school
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, Readings week 1
The design school
Where and when: Harvard Business School, 1960s
Associated with: Kenneth Andrews
Book: Business Policy by Learned et al., 1965
Core: specific characteristics of the firm should be confronted with the external situation it
faces - this idea has been made instrumental in the SWOT analysis.
Assumptions (seven of them):
1. Strategy formation should be a deliberate process of conscious thought
Developing strategies is not an intuitive or natural skill, but must be learned formally.
Effective strategies are the result of a tightly controlled process of human thinking.
2. Responsibility for that control and consciousness must rest with the chief executive
officer
The manager at the apex of the organizational hierarchy is the architect of organizational
purpose: that person is the strategist.
3. The model of strategy formation must be kept simple and informal
The main goal of a model for developing strategy is to support ‘acts of judgment’. Elaboration
and formalization of the process of strategy formation will sap the design approach of its
essence.
4. Strategies should be one of a kind
The best strategies are the result of a creative design process that builds on the firm’s
distinctive competence. Strategies do not result from a system of general variables but are
tailored to the specific situation of the firm.
5. The design process is complete when strategies appear fully formulated as
perspective
Strategies are the result of an explicit choice for an overall concept for the business. These
choices appear at a specific point in time, fully formulated, and ready to be implemented.
6. These strategies should be explicit and simple
Strategies must be clearly articulated so that other members of the organization can
understand them. This means that strategies are best kept simple.
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