STRATEGIC MANAGEMENT READING SUMMARY 2023
Week 1:.......................................................................................................................................................... 1
Chapter 1: Strategic management & strategic competitiveness.............................................................. 4
Chapter 2: The external environment.................................................................................................... 10
Porter: “What is Strategy?”................................................................................................................... 14
Week 2:........................................................................................................................................................ 18
Chapter 3: “The Internal Organization: Resources, capabilities, core competencies and competitive
advantages”............................................................................................................................................18
Chapter 4: “Integrating internal and external resources: Open innovation, Absorptive capacity and
Integration Approaches”........................................................................................................................24
Barney: “Firm resources and sustained competitive advantage”.......................................................... 29
Week 3:........................................................................................................................................................ 34
Chapter 5: Business-level strategy........................................................................................................ 34
Chapter 7: “Corporate-level strategy”................................................................................................... 40
Prahalad & Hamel: “The Core Competence of the Corporation”......................................................... 45
Week 5......................................................................................................................................................... 49
Chapter 11: “Strategic leadership”........................................................................................................ 49
Chapter 12 - Corporate Governance...................................................................................................... 54
Chapter 13: “Organizational structure and controls”.............................................................................60
Hambrick & Mason: “Upper Echelons: The organization as a reflection of its top managers”............69
Week 6:........................................................................................................................................................ 71
Chapter 14 - Strategic entrepreneurship................................................................................................ 71
Chapter 15: “Strategic renewal”............................................................................................................ 78
O’Reilly and Tushman: “The Ambidextrous Organization”................................................................. 96
,Week 1:
Porter’s five forces model:
Competition is any force that can influence your profit margin
- The five competitive forces that shape strategy
- Notion that competition is looked too narrowly
- Five forces: you are competing with your competitors but also a broader set of competitors
(customers, suppliers, new entrants, substitute products/ services)
→ a holistic way of looking at an industry and understanding the structural underlying factors of
profitability
→ help hone into what the trends most likely to be significant and changing, where the
constraints are, what affects profitability
- Underlying drivers of each forces which can apply to the industry
- Sometimes the five forces can all be powerful to impact the industry and zero-star industries
where the five forces are unfavorable
- These forces can be applied to all industries
- Tools for understanding the dynamics & what implications these have on your strategy
1. Nature of rivalry/ direct competitors: price competition, price elasticity, companies in the same
industry as you
2. Barriers to entry: how many new entrants can enter the market, the attractiveness of the industry
3. Customers’ bargaining power: are customers fickle
4. Suppliers: powerful suppliers, whether they can constrain the price with the price of the supplies
5. Substitute to the product/ service
How do you relax the constraint which is constraining the industry?
Nintendo’s disruptive strategy: implications for the video game industry
- Widespread belief that to expand the audience, the game industry needs to be ready for disruption
- Sony, Microsoft and Nintendo as the big three of the video game console manufacturers
History of Nintendo:
- 1889: manufacturing playing cards
- 1907: western playing cards
- 1951: Nintendo Playing Card Company
- 1959: theme cards under a licensing agreement with Disney
- 1963: company goes public
- 1970-1985: manufacture of electronic toys & video games
- 1991: Sony vs. Nintendo
- 1995 onwards: Nintendo became a dominant player in the video industry (Super Mario Bros, The
Legend of Zelda)
, → appeal to all age groups
→ across different cultures
- 2001: Sony & Microsoft take over
The Video Game Industry
- Born in the 1970s
- 1980s-1990s: PCs are introduced, players no longer limited on playing on consoles
- Target customer group: teenagers
- Sony introduced the PS in the mid-1990s (new players, industry grows substantially)
→ video gaming as the new hype entertainment
→ young adults (20s-30s)
- Early 2000s: the convergence of IT, telecommunications, media and entertainment → social and
technological changes
- Sony’s PS2 emerged as the clear winner
Trends in the industry
- Game consoles are not for gaming only (all-encompassing home entertainment centers)
- Console producers developed and offered online libraries as a new service enabling users to
download and stream movies, music and TV shows through consoles
- Blue-ray & HD-DVD
- Technological advancement of the console hardware (faster processing speed, higher definition of
video quality, increasing complexity of games)
- Relentless pursuit of superior technologies drives the industry’s dynamics
- 2006: Iwata says that the video game market in Japan was shrinking
→ the increased complexity of video games (players need to invest a significant amount of their
time to learn and play these games using increasingly complicated controllers with combinations
of buttons and joysticks)
→ busy lives of players
→ time required to learn and play the games was a deterrent for potential newcomers to join the
game industry
Nintendo – Innovation and the Launch of the Wii
- Objective: reach out to non-gamers in order to create a bigger market
- Develop simpler games
- Target all customers, no matter the age, gender or experience in gaming
- New games should not take more than a few minutes to set up and play
- Easy-to-use controller
- Game scenarios should be largely based on real-life situations
- 2004: DS gaming device
→ the machine that enriches the owner’s daily life
→ touch-screen
, - Nintendo Wi-Fi Connection: allowed the DS system players to play with other users through a
wireless network
- 2008: Nintendo had sold more than 70m units worldwide
- 2006: DS Lite
- The declining factor for Nintendo’s success was the video game console segment
- 2000 onwards: Nintendo had lost control of the fixed console market to Sony’s PS
→ 2006: new console: Wii
The Wii:
- Wireless
- Without a joypad
- Motion detectors
- Games were sold on discs similar to DVDs
- Nintendo encouraged communication among family members as each of them found something
personally relevant
- Promotion: word-of-mouth strategy that was successful in promoted the DS
→ featuring Wii in the gamers’ self-made videos on YouTube and social media
→ experimental approach was more effective than the traditional advertising or mass-media
campaigns used by Sony and mICROSOFT
- EXERGAMING: combo of on-screen action with physical exercise
- By 2007: nintendo became Japan’s most valuable listed company after Toyota
The Battle Had Begun
- Until the launch of Wii in 2006, competition in the video game market had been straightforward:
the leader was the company that introduced a wider array of games with high-quality graphics and
increasing complex gameplay
- Microsoft introduces Xbox 306, then Nintendo and Sony follow with Wii and PS3 ⇒ CHANGES
THE RULES OF THE GAMES
- The Wii became the fastest selling among the competitors in the industry
- Nintendo was making a profit on each Wii console sold on the first day
- Sony had to slash the price of PS3 to boost the sales and it was still the most expensive
- Microsoft’s Xbox 360 was still losing to Wii
Nintendo’s disruptive strategy
- Nintendo loosened its traditional tight control over content and WiiWare
→ users could download new games by independent developers
- Disruptive technology: an innovation that used a disruptive rather than sustaining strategy.
- leading companies, despite having followed all the right practices, still lost their top positions
when confronted with disruptive changes in technology and market structure. While keeping
close to customers was critical to current success, it was also paradoxically the cause for
companies’ failure to meet future customers’ technological demands.
