Business Strategy Summary – Articles
Lecture 1.
R1. [16 pages] Mintzberg, Henry (1978), “Patterns in Strategy Formation,”
Strategy → A pattern in a stream of decisions in some area exhibits a consistency over time.
The strategymaker could formulate a strategy through a conscious process before he makes
decisions or a strategy may form gradually, unintentionally, as he makes decisions one by one. It
could be intended or realized without intentions. Strategies are formed in organizations by: 1) the
planning mode, 2) the adaptive mode and the 3) entrepreneurial mode.
- Strategy formation can fruitfully be viewed as the interplay between a dynamic environment
and bureaucratic momentum, with leadership mediating the two.
- Strategy formation over time appears to follow some important patterns in organizations
and the life cycles and distinct change-continuity cycles within these
Life cycle of an overall strategy → Conception, elaboration, decay and death
Presence of periodic waves of change and continuity within the life cycle → Strategies don’t
commonly change in continuous incremental fashion but takes place in spurts, each followed
by a period of continuity.
- The study of interplay between intended and realized strategies may lead us to the heard of
the complex organizational process:
1. Intended strategies that get realized; these may be called deliberate strategies. (Volkswagen)
2. Intended strategies that do not get realized, perhaps because of unrealistic expectations,
misjudgments about the environment, or changes in either during implementation; these
may be called unrealized strategies.
3. Realized strategies that were never intended, perhaps because no strategy was intended at
the outset or perhaps because, as in (2), those that were got displaced along the way; these
may be called emergent strategies.
Patterns in two studies:
1. The Strategies of Volkswagenwerk.
< 1948: Flux - idea developed, people didn’t saw value → 1948: global change (design and
concept market developed: an inexpensive automobile for the common man, emphasizing
excellence, aggressive exporting and rigorous service standards → 1949-1958 - continuity
with this strategy → 1959: minor change due increasing competition and changing
consumers; design of new models → 1960-1964 - continuity: strategy remained the same
although competitive pressures and increasing costs → 1965-1970 – groping: firm reacting to
pressures by anxious search for new models → 1971-1974 - global change: new product
strategy: stylish, front-wheel drive and water cooled. Marketing strategy emphasized
performance, reliability and service
2. U.S. Strategy in Vietnam
1950 – global change: US program of direct monetary aid to French → 1950-1953 –
continuity → 1954 – flux, then global change: efforts unsuccesfull, then US began program
direct aids to South Vietnamese → 1955-1961 – continuity → 1961 – global change: US
change intended strategy from passive aid to active troop support → 1962 – 1965 -
incremental change leading to global change: due to pressures, US increases troops → 1965-
1967: continuity → 1968 – global change: US deployed more troops and announced bombing
halt → 1968-1969 – limbo, then global change: Nixon replaced strategy with a proactive,
integrated strategy (withdrawal US troops) → 1970-1973: continuity.
R2. [3 pages] Ovans, Andrea (2015). “What is strategy, Again?,”
1
, In addition to the fierceness of price competition among industry rivals, the degree of
competitiveness in an industry depends on the bargaining power of buyers and suppliers, as well as
how threatening substitute products and new entrants are. Weak (software) → Many companies are
profitable, Strong (airline) → Almost no return on investment.
Strategy (Porter) → A matter of working out company’s best position relative not just to pricing
pressures from rivals but to all forces in your competitive environment.
‘He states that strategies are fundamentally broad options: do what everyone else is doing (but
spend less money doing it: so price competition, but that shrinks the pie of the entire industry) or
do what no one else can do (get sustainable position based on unique advantage wit better set of
activities)
• Doing something new (find or create uncontested new markets)
• Building on what you already do (find your next core business or compete on resources)
• Reaching opportunistically to emerging possibilities (continuous strategic planning cycles or
approaches to running established companies if they were start-usps)
R3. [19 pages] Porter, Michael E. (1996). “What is strategy,”
Companies must be flexible to respond rapidly to competitive and market changes. Must benchmark
continuously to achieve the best practices, must outsource aggressively to gain efficiency and must
nurture a few core competencies in the race to stay ahead of arrivals.
However, some fail to execute strategy due to the failure of distinguishing operational effectiveness
and strategy.
Operational effectiveness → Performing similar activities better than rivals. (but those activities are
easy to imitate and raise the bar, but the more benchmarking companies do; the more they look
alike (due outsourcing by same parties)
Strategic positioning → Performing different activities from rivals’ or performing similar activities in
different ways.
The origins of strategic positions:
1. Variety-based positioning: producing a subset of an industry’s products or service
2. Needs-based positioning: serving most or all needs for a particular group of customers
3. Access-based positioning: Segmenting customers who are accessible in different ways.
Although their needs are similar to others. The best configuration of activities to reach them
is different.
Imitation due:
1. Competitor can reposition itself to match the superior performer
2. Straddling: straddler seeks to match benefits of a successful position while maintaining its
existing position
A sustainable strategic position requires a trade-off (essential to strategy, create the need for choice
and purposefully limit what a company offers), arise for three reasons:
1. Inconsistencies in image or reputation
2. Activities themselves (different positions require differences in skill, equipment etc)
3. Limits on internal coordination and control
Fit drives both competitive advantage and sustainability. Locks out imitators by creating a chain that
is as strong as its strongest link. Three types of fit:
1. Simple consistency between each activity (function) and overall strategy
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