Are You Sure You Have Strategy Essay
MgtS 4481 Sec. 5 Geoffry Bell, Ph. D. February 6, 2012 Hand-In Summary 1 Hambrick and Fredrickson’s literature review, Are you sure you have strategy? focuses on the key components of a strategy. Its purpose is to expand on the past 30 years of strategic frameworks and help us identify what actually constitutes a strategy. When executive call everything strategy, they create confusion, so this article works to dispel the misconception many executives and scholars hold that a strategy is a catchall term used to describe whatever they wish.
Instead, Hambrick and Fredrickson persuade us that a sound strategy, or as they define – an integrated set of choices, incorporates five separate elements that must work together to create one unified strategy. These five key elements, which are guided by the company’s mission, objectives and strategic analysis form the strategy – consisting of these domains of choice: arenas, vehicles, differentiators, staging, and economic logic. Consideration should be placed on all five elements, and not just a few components of a strategy.
These elements call not only for choice, but also preparation and investment. It is important that they align and support one another. Finally, only after the design of all five elements can the strategist plan other supporting activities that are needed to reinforce the strategy such as functional policies, organizational arrangements, and operating programs. The arenas element is the most fundamental choice a strategist makes. It answers the questions, where will the company be active? It includes what product categories, market segments, geographic area, and core technologies to include.
The challenge in this step is to be as specific as possible – the strategist needs to include not only where the business will be active, but also how much emphasis will be placed on each. Vehicles, the second element of a strategy, is a choice about how the company will get there – or in related back the arenas element, how the company will attain the needed presence in the particular product category, market segment, or geographic area. This includes decisions about internal development, joint ventures, and acquisitions. Failure to clearly consider the expansion vehicles can result in entry to the arenas being delayed or costly.
The third decision; differentiators helps answer the question how the firm will win in the marketplace. These are advantages that don’t just happen; rather they require executives to make mindful choices about which tactics to use. Some choices in this element include: image, customization, price, and after-sale services. If the strategist does not make these thoughtful, up-front decisions, an advantage will never occur and management may try to offer customers with overall superiority in all areas, which are doomed for failure because of inconsistencies and extraordinary resource demands.
Instead, strategists should give clear preference to those few forms of advantage that are consistent with the competences of the company, and the values of the targeted arenas. Having a convincing advantage does not necessarily mean that the company has to be at the extreme on one differentiating dimension; rather it is sometimes better to have a combination of moderate differentiators. Staging, the fourth element, is choices about the speed and sequence of past decisions regarding arenas, vehicles, and differentiators.
Decisions about staging can be driven by a number of factors including resources, urgency, achievement of credibility, and pursuit of early wins. The final element and heart of a strategy is economic logic. This element helps answer the question, how will the company obtain its returns – not just simple profits, but profits above the costs of capital. These decisions are rooted in the fundamental capabilities of the organization and include the price charged for the product/service itself, as well as the cost of inputs used to create the product/service. This article propelled me forward in my understanding of a strategy.
It gave me an actual framework to use for identifying what tactics companies are using in their strategy. Looking forward to the beer industry analysis, I can foresee myself using Hambrick and Fredrickson’s views frequently. However, because I have a firm understanding of other’s viewpoints regarding the creation and implementation of strategy and envision myself using them as well, I wish Hambrick and Fredrickson related and compared their beliefs to the beliefs of others. Andrew J. Maki MgtS 4481 Sec. 5 Geoffry Bell, Ph. D. February 6, 2011 Hand-In Summary 1