...A Critical Review of ‘Strategy as Stretch and Leverage’ Academics argue a lot on strategic approaches that a company should make to gain competitiveness advantages over its competitors. Hamel and Prahalad (1993) challenge the traditional way and come up with ‘stretch’ and ‘leverage’ concepts to exhibit a whole new way to run a company. This essay aims to give a critical review of this article in the wider debate, theoretical underpinnings and main strengths and weaknesses. There are so many definitions about strategy in academics, and among them one of the fittest definition according to this article is come up by Johnson et al. (2008, p.3), ‘Strategy is the direction and scope of an organization over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations’. Hamel and Prahalad (1993) state this at the very beginning that ‘Competitiveness is born in the gap between a company’s resources and its managers’ goals’ (p.75). It is further supported that competing strategy requires operations as a key factor and operations also make a significant contribution to the competitive success of such an organization by using a resource-based framework in the development of operations strategy (Hayes and Pisano, 1994; Hayes and Upton, 1998). Also in the wider debates, Whittington’s (1993) classification of strategy describes strategies’ process can be prescriptive...
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...COMPETING FOR THE FUTURE Strategy as Stretch Strategy must be built upon the juncture of where the firm is and where it wants to be. It is not cash that fuels the journey to the future, but the emotional & intellectual energy of every employee. Imagine you were an investor who, a decade or two ago, was asked to choose between the following pairs of firms as long-term investment opportunities: Where would you have put your money? Most investors would probably have been tempted to invest in the firms in the left column. Why? These firms had strong reputations, technological riches & deep pockets. They could hire the most talented people in their industry, had sizable market shares and in most cases, had a worldwide distribution presence. In short, they had resources. Yet, they lost much of their leadership to firms with far fewer visible resources. Take the example of RCA & SONY? RCA had almost single-handedly created the color television industry in U.S., and every competitor relied on RCA patents, products of one of the world’s outstanding research laboratories. How could Sony out-innovate the U.S. consumer electronics pioneers? Conclusion: Starting resource positions are a very poor predictor of future industry leadership. A firm can sit on huge amount of cash & talented people, and still lose its preeminent position. Likewise, a firm can sometimes overcome enormous resource handicaps & successfully scale the heights of industry leadership. The...
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...“Strategy as Stretch and Leverage” G. Hamel and C.K. Prahalad (1993) A Critical Analysis Word Count: 1624 Introduction Strategy, and the form it should take when used in business processes have long been a source of debate – and with extremely varied outcomes being proposed as the ‘best approach’. This said there are some key themes and core strategic ideas that have emerged and developed across these ideas over time. In this article by Hamel and Prahalad (1993), strategy is discussed as stretch and leverage. This analysis will look at where Hamel and Prahalad’s article sits in the grand scheme of the strategy debate. It will go on to analyse the supporting theory including the reality of any assumptions made by its authors. Finally, the analysis will close with a conclusion based on the articles strengths and weaknesses, as well as a personal perspective considering the theory put forward. Placing of the article in the wider strategy debate Elements of Hamel and Prahalad’s article can be attributed to a number of recurring themes in various different strategy debates. The most appropriate position, however, could be that it lies in the resource-based and positioning spectrum. Essentially – and very broadly – these opposing views are organisation and environment-led respectively. There are elements in Hamel and Prahalad’s article that draw on ideas from both these approaches, although it could be interpreted that it largely adopts the resource-based view. The resource-based...
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...the implications, Hamel and Prahalad (1989) had written an article about their unprecedented concept “Strategic Intent”. Placing the article in a wider debate “Strategic intent” is an ambitious and compelling dream that energises, which provides the emotional and intellectual energy for the journey to the future (Hamel and Prahalad, 1994). The article discusses the term “strategic intent” in a broad range of aspects; however, the main arguments of this article can be transfer into the debate of Resource-based view vs. Positioning. Apparently, the authors in this article incline to the idea of resource-based view. The resource-based view deals with the organisation internal resources and takes advantages of those to construct firm’s strategies (Wernerfelt, 1984). Regarding resource-based view, Grant (2007) suggests that “the key to profitability is through an internal focus which seeks to utilize the unique characteristics of the company’s portfolio of resources and capabilities” (Strategic fit). In contrast, Hamel and Prahalad (1989) point out that by optimising “strategic intent” and corporate challenges, organisations can be forced to be more...
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...in order to achieve the future success for a company as it has described the method of reinvention to satisfy corporate needs to be achieved through experience and discovery in the critical situation where company’s were fallen flat by the lack of integration and to have a fresh change that make the employee to work. It also focuses on combining companies and corporate visions for function operations. This book was very insightful in the area of teaching senior and top management skills and qualities that need to be possessed to be a successful company. The core competencies are not product specific but some exceeding resources and patience of single business unit create more options in the market. Business needs involving continuous leverage of core competencies with major contribution at all level of management for building and nurturing sophisticated, and more positive, and strategic architecture as a high-level blueprint for the reconfiguring of the interface with customers. As strategic intent is strategic architecture’s capstone but it’s an ambitious and compelling strategic intent that provides the emotional and intellectual energy for the journey. They are trying to create ambitious aspiration for the future and all in its importance. Gary Hamel and CK Prahalad emphasize that companies are focusing now and not concerned about the future companies to come. Companies were in risky situation if they do not change their ways and adapt to popular ways of the industry. ...
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...BE440 BRAND MANAGEMENT ASSESSMENT COURSEWORK Brand extension (or stretching) is a strategic concept which relates to managing the brand portfolio. In addition, it can be understood as a process by which the practices of branding extend to social contexts beyond the traditional business domain. Critically analyse the purpose, implementation, advantages and disadvantages of brand extension. Illustrate your argument with at least two practical examples of brand extension. By Mr. Olan Kaewwichit Brand extension (or stretching) is a strategic concept which relates to managing the brand portfolio. In addition, it can be understood as a process by which the practices of branding extend to social contexts beyond the traditional business domain. Critically analyse the purpose, implementation, advantages and disadvantages of brand extension. Illustrate your argument with at least two practical examples of brand extension. Companies must carefully manage their brands. First, the brand’s positioning must be continuously communicated to consumers. Major brand marketers often spend huge amounts on advertising to create brand awareness and to build preference and loyalty. For examples, General Motors spends nearly $820 million annually to promote its Chevrolet brands. McDonald’s spends more than $660 million. (Top 100 megabrands by total measured advertising spending, 16 July 2001, p.s2.) Such advertising campaigns can help to create name recognition, brand knowledge and...
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...What's the smart grid buzz in 2011? Behind-the-scenes discussions yield fruitful harvest Kate Rowland | Feb 08, 2011 I did a lot of listening last week. One of the most-asked questions at any industry conference, participant to participant, is "what are you hearing?" DistribuTECH was no different. The answers this time, though, were far more disparate than two years ago, at the same conference, in the same venue, when the answers were clearly "stimulus funding" and "smart meters/AMI." Here's a peek at some of this year's most-discussed topics. Consumers There were definite discussions centering on consumers, selling to consumers and consumer pushback. From Craig Boice, president of Boice Dunham Group, who spoke at the pre-conference Smart Grid Consumer Collaborative Symposium, came the following opening salvo. "If we look to other industries, they are all working to create customer demand," he said. "We have to come up with compelling enough products and a compelling story to create customer demand." Terri Flora, director of corporate communications for AEP Ohio, echoed Boice, and clearly defined the challenge electric utilities are facing. "We can't think like a utility; we have to think like a Best Buy. And that's very difficult for us," she said. This is an enormous challenge utilities have identified for themselves in the coming year, according to a new Comverge survey of utilities released during DistribuTECH. While aging infrastructure and implementing variable and...
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...INFOGRAPHICS INFOGRAPHICS Lean IDEATION EMAIL CONTENT TEAM MARKET NG How to Create Content on a Budget Introduction Content is king. If you’re a modern marketer, you know why— it is the fuel for your lead generation and nurturing programs, driving leads through your funnel to become customers. But getting your content machine up and running is tough, and the idea of regularly creating quality content can make marketers break into a cold sweat. Why? Because many marketers, in both large organizations and small, lack the budget, resources, and time to implement a content strategy that can truly drive leads through all stages of the funnel. Luckily, by learning to leverage the resources you already have and doing more with less, even marketers with limited resources can start to create the content needed to fuel demand. This ebook goes through tried and true strategies for lean content marketing— so you can extend the value of all your thought leadership. Lean Content Marketing 01 A Short Explanation In the interest of saving time, we’ll spare you the long and drawn out explanation of why content is so important. But, for the sake of being thorough, we do want to give you a quick breakdown. Today’s buyer is different. A pitch from the sales team is no longer the first contact a buyer has with your company. Instead, due to the abundance of information on the internet, your buyers will do their own research first. In fact, 66–90% of the buyer’s...
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...Strategy and Planning The purpose of this paper is to provide an explanation of why the three types of goals are important to the strategy of an organization. Additionally, this paper provides an explanation of why the different types of planning are important to the strategy of an organization. Finally, highlights of the elements involved in creating an effective strategy for an organization is also provided. There are three types of goals important to the strategy of an organization. These goals include strategic goals, tactical goals, and operational goals. Strategic goals are essentially goals that focus on the overall operational objective and are typical set for and by senior management (Kinicki and Williams, 2016). An example of a strategic goal from a Fortune 500 company such as Walmart, and is clear in their mission statement, “We save people money so they can live better” (Walmart, 2015). Strategic goal planning is of vital importance to an organization because it defines the objective so that tactical and operational goals can be established. From a tactical goals perspective, these goals focus on the required actions necessary to achieve the desired goal. The tactical goals are not only set by middle management, but they are also used by middle management (Kinicki and Williams, 2016). An example of a tactical goal also using the Fortune 500 Company, Walmart, would be to look at the objective, to save people money so they can live better. From a tactical...
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... ✓ Domestic violence crosses boundaries of ethnicity, educational background, income level, social class, ✓ However, domestic violence is perceived to be a “private matter for a certain population”, ✓ Academy award for best documentary given to “Defending Our Lives” gave a huge push to the issue of domestic violence making it a “national matter”, BWFB! through Stacy contributed to the making of the documentary, ✓ The murder cases of Carol Stuart and Nicole Brown Simpson have also contributed to bringing the problem of domestic violence into close public attention, ✓ Stacy Kabat wants to leverage the heightened public attention to promote BWFB! cause and expand its programs, ✓ BWFB! operates on a budget of$150,000, two-thirds of the budget come from foundations contributions, ✓ Stacy needs to develop and implement a marketing strategy to achieve BWFB! goals. SWOT ANALYSIS: |Strengths: |WEAKNESSES: | |Stacy has strong expertise in the area of human rights, both |Stacy...
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...Name : _________________________________________ NIM : _________________________________________ FINAL EXAM MM - 5009 FINANCIAL MANAGEMENT ------------------------------------------------- Date: 07 JULY 2012, Time: 13:30 – 16:30 (3 HOURS) ------------------------------------------------- OPEN BOOK ------------------------------------------------- TYPE: A ------------------------------------------------- Exam Instruction: 1. Choose the right answer and record your answer at the answer sheet; 2. The question must be returned and attached to your answer sheet; 3. ------------------------------------------------- Cheating during exam strictly prohibited and caused fail from this course; 4. ------------------------------------------------- Cheating student will not be allowed to take this course in the next semester. 1) The ________ is a weighted average of the cost of funds which reflects the interrelationship of financing decisions. A) risk premium B) nominal cost C) cost of capital D) risk-free rate Answer: C 2) The cost to a corporation of each type of capital is dependent upon A) the risk-free rate of bonds plus the business risk of the firm. B) the risk-free rate of each type of capital plus the business risk of the firm. C) the risk-free rate of each type of capital plus the financial risk of the firm. D) the risk-free rate of each type of capital plus the business risk and the financial risk of the firm. Answer: D 3) A...
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...Published March 20, 2013 This Q-and-A with Andrew Savitz explores how the human resources department can be a powerful tool for corporate sustainablity programs. Savitz is the author of a new book called "Talent, Transformation and the Triple Bottom Line: How Companies Can Leverage Human Resources to Achieve Sustainable Growth" (Wiley 2013). As you can guess from the title, Savitz argues that employees are the key to creating sustainable companies, but that they -- and their colleagues in human resources -- are often overlooked when companies embark on environmental programs. I think he's on to something. I've long thought that the single biggest business driver of corporate sustainability initiatives is the way they help better companies attract better people and motivate the ones they have. Savitz has spent his career working with companies on social and environmental issues. A lawyer by training (and before that a Rhodes scholar at Oxford), Savitz has been a congressional staffer, the general counsel for the Massachusetts Office of Environmental Affairs and head of the environmental advisory practice at PriceWaterhouseCoopers (PwC). Since 2005, he has led a consultancy called Sustainable Business Strategies. Here's our online conversation: Marc Gunther: You say that you've written the book "in large measure to bridge the gap between sustainability and HR." HR? Really? Why do we need human resources people to get involved with sustainability? They don't know anything about...
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...The Execution Premium: Linking Strategy to Operations for Competitive Advantage Q&A with HBS professor Robert S. Kaplan by Martha Lagace Companies often manage strategy in fits and starts. Though executives may formulate an excellent strategy, it easily fades from memory as the organization tackles day-to-day operations issues, doing what HBS professor Robert S. Kaplan calls "fighting fires." A new book due in August by Kaplan and David P. Norton aims to make strategy a continual process. The Execution Premium: Linking Strategy to Operations for Competitive Advantage (HBS Press) shows managers how to weave organizational principles into a more effective management system that respects the differences between strategy and operations yet integrates them in a powerful way. Kaplan and Norton introduced the Balanced Scorecard, a performance measurement system, in 1992. The Execution Premium is their fifth book as coauthors. Kaplan recently explained the ideas behind The Execution Premium and how they bridge the common divide between strategy and operations. Q: What particular issues around execution need to be better addressed in business? A: There are two key issues. First is leadership. Without strong visionary leadership, strategy will not be executed effectively. The second key issue is to recognize that strategy and operations (or tactics) are both important but different. The normal course of events is for companies to focus on day-to-day operations and short-term problem solving...
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...alternatives: a. Further vertical integration into materials b. Growth by acquisition c. Growth by product extension In the future, Crocs could grow, both by acquisition and by product extension. For product extension, they should use the Japanese product development map what it is called don’t remember any more (this development tree map can be seen below). Focus on the IP (formula) and reuse it on other products [This is a fragment connect it to previous senetence or make it a sentence. I don't understand what do you want to say by it]. This should give them a good map and guidance what product markets they can enter and extend the markets that they can work on. Product extension could create a confusion for the brand if they let it stretch on all product groups but it could be a strength also as its different products could be easily differentiated from others and recognized for comfort. If the product start to be [Fragment. What do you want to say?]. As long the brand is not used on products that are far away from what could the original or in totally different product areas, e.g. crocs shoes and playground flooring, because these products are in two different areas as playground flooring is not associated with comfort [Please rewrite the...
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...lateral relationships between businesses are often net negative rather than positive. It is also argued that most of these lateral synergies are present between independent businesses like GE. Values creations, Diversity, Leveraging resources across SBUs – Resource Stretching, are the strategic propositions that corporate parent boasts of bringing in to the overall organization. However, like in the case of Sears, Burns Philp, and most of the multi-business, there lie implicit and pervasive tendencies that contribute to unavoidable drag to the overall profitability and efficiency of the business by inherent excess diversification of the corporate parent. This leads to the widely accepted common belief of adding value not only through resource stretch but with ‘Resource Fit’ also, maintaining the idiosyncrasies of the individual SBUs in multi-business organization. Introduction: “Corporate Parenting is a philosophy that views a...
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