A report submitted to:
Dr. Conor Vibert
Rhodes Hall - 314
As part of the BUSI 4953
Business Strategy Course
November 17, 2006
The article, Are You Sure You Have a Strategy? By Hambrick and Fredrickson explains that many "strategies" these days are no more than statements that involve a part of strategy but are no more a strategy than is a vague statement like, "We're pursuing a global strategy." According to the article, a strategy is a central, integrated, externally oriented concept of how the business will achieve its objectives. When upper levels of management have a faulty, incomplete, or poorly articulated strategy, the result is commonly a huge waste of time and resources on activities that are not unified, going in slightly opposing directions. Also, having a proper strategy does not mean that any company is all set to go. Properly articulated objectives and a company mission are involved with the strategy but are also completely removed from it in that they are a guide to the strategy. There are five key elements to a good strategy: arenas, vehicles, differentiators, staging, and economic logic. The first three of these essential elements of strategy might be considered the overall plan of a strategy, whereas the last two are more factors that are just as important, but really stem from the first three (Hambrick & Fredrickson, 2001).
The arenas have a different meaning for different types of businesses which I will illustrate shortly, however, the basic question to answer for this element of strategy is, where will we (the company) be active? / What business will we be in? When answering the questions in each of these stages, the answers should be as specific as possible in terms of whatever it is that the arena encompasses for a particular business, product category, geographic areas, or even value-adding strategies (Hambrick & Fredrickson, 2001).
The vehicles again have slightly different meanings depending on the context and the type of business involved. The question to be answered, in general, is how will we get there? Some things to consider are the following: does the company have what it needs internally? If not, how will it reach out to achieve the presence it desires in the market segment? Possibly through a joint venture with another company, maybe by acquiring another company, or maybe through some form of licensing (Hambrick & Fredrickson, 2001).
Differentiators are basically the ways in which a firm can make itself different enough from the competition that it can win in the marketplace. It does not necessarily mean that a firm has to max out on any one category of differentiation. Often times, it is the proper mix of mid range differentiators that can make a company successful. Also, something strategists should keep in mind when deciding how exactly to differentiate their firm is that certain differentiators support each other and if they want to take advantage of these possible synergies, they should focus as much as possible on those differentiators. Finally, the differentiators must also be chosen with the firms' competencies and abilities in mind as well as the important selling points that are likely to catch the most consumers in the chosen arena (Hambrick & Fredrickson, 2001).
Staging is a part of strategy that is often neglected, but has the power to make or break a strategy. Staging is basically deciding on the order of moves as well as the timing and speed of these moves to make reaching the main goal of the strategy as realistic as possible. Factors to keep in mind when planning this important part of the strategy would be the limitations on resources of the firm, the urgency of each separate element in the strategy, and if certain elements need to be completed (or partially completed) to facilitate / allow other elements of the strategy to come together (Hambrick &...