Fundamentals of Strategy, Fifth Edition
Richard Whittington, Patrick Regnér, Duncan Angwin, Gerry Johnson and Kevan Scholes
Contents
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Fundamentals of Strategy Online xiv
1 Introducing strategy 1
1.1 Introduction 2
1.2 What is strategy? 2
1.2.1 Defining strategy 2
1.2.2 The purpose of strategy: mission, vision,
values and objectives 6
1.2.3 Strategy statements 7
1.2.4 Levels of strategy 9
1.3 The Exploring Strategy Framework 10
1.3.1 Strategic position 11
1.3.2 Strategic choices 12
1.3.3 Strategy in action 13
1.4 Strategy development process 14
Summary 15
Recommended key readings 15
References 15
Case example: The rise of a unicorn: Airbnb 17
2 Macro-environment analysis 21
2.1 Introduction 22
2.2 PESTEL analysis 23
2.2.1 Politics 23
2.2.2 Economics 25
2.2.3 Social 26
2.2.4 Technology 27
2.2.5 Ecological 29
2.2.6 Legal 30
2.3 Forecasting 32
2.3.1 Forecast approaches 32
2.3.2 Directions of change 33
2.4 Scenario analysis 33
Summary 36
Recommended key readings 36
References 37
Case example: Alibaba: the Yangtze River Crocodile 38
3 Industry and sector analysis 41
3.1 Introduction 42
3.2 Industry analysis 42
3.2.1 Defining the industry 44
3.2.2 The competitive forces 44
3.2.3 Complementors and network effects 49
3.2.4 Implications of the competitive five forces 49
3.3 Industry dynamics 53
3.3.1 The industry life cycle 53
3.3.2 Comparative industry structure analyses 54
3.4 Competitors and markets 55
3.4.1 Strategic groups 56
3.4.2 Market segments 57
3.5 Opportunities and threats 58
Summary 59
Recommended key readings 59
References 59
Case example: Game-changing forces and the global advertising industry 60
4 Resources and capabilities analysis 64
4.1 Introduction 65
4.2 Foundations of resources and capabilities 65
4.2.1 Resources and capabilities 66
4.2.2 Threshold and distinctive resources and capabilities 66
4.3 Distinctive resources and capabilities as a basis of competitive
advantage 68
4.3.1 V – value of resources and capabilities 68
4.3.2 R – rarity 69
4.3.3 I – inimitability 70
4.3.4 O – organisational support 73
4.4 Analysing resources and capabilities 73
4.4.1 VRIO analysis 73
4.4.2 The value chain 74
4.4.3 SWOT 76
4.5 Dynamic capabalities 80
Summary 81
Recommended key readings 81
References 81
Case example: Rocket Internet – will the copycat be imitated? 83
5 Stakeholders and culture 86
5.1 Introduction 87
5.2 Stakeholders 87
5.2.1 Stakeholder groups 88
5.2.2 Stakeholder mapping 89
5.2.3 Owners 91
5.3 Corporate governance 93
5.4 Corporate social responsibility 96
5.5 Culture and strategy 98
5.5.1 Organisational culture 98
5.5.2 Analysing culture: the cultural web 99
Summary 102
Recommended key reading 103
References 103
Case example: Uber and the ubermensch 105
6 Business strategy and models 108
6.1 Introduction 109
6.2 Generic competitive strategies 110
6.2.1 Cost-leadership strategy 111
6.2.2 Differentiation strategy 114
6.2.3 Focus strategy 115
6.2.4 Hybrid strategy 117
6.3 Game theory 118
6.4 Business models 120
6.4.1 Value creation, configuration and capture 120
6.4.2 Business model patterns 123
Summary 124
Recommended key readings 124
References 125
Case example: The IKEA approach 126
7 Corporate strategy 131
7.1 Introduction 132
7.2 Strategy directions 133
7.2.1 Market penetration 134
7.2.2 Product and service development 134
7.2.3 Market development 136
7.2.4 Unrelated diversification 136
7.3 Diversification drivers 138
7.4 Vertical integration 139
7.4.1 Forward and backward integration 139
7.4.2 To integrate or to outsource? 140
7.5 Value creation and the corporate parent 141
7.5.1 Value-adding activities 142
7.6 The BCG (or growth/share) matrix 144
7.7 International diversification strategy 146
7.8 Growth methods: organic, acquisitions and alliances 148
Summary 148
Recommended key readings 149
References 149
Case example: Grand strategies in vision 150
8 Entrepreneurship and innovation 154
8.1 Introduction 155
8.2 Entrepreneurship 155
8.2.1 Opportunity recognition 157
8.2.2 Steps in the entrepreneurial process 158
8.2.3 Stages of entrepreneurial growth 160
8.3 Innovation dilemmas 161
8.3.1 Technology push or market pull 161
8.3.2 Product or process innovation 162
8.3.3 Open or closed innovation 163
8.4 Innovation diffusion 164
8.4.1 The pace of diffusion 165
8.4.2 The diffusion S-curve 166
8.5 Innovators and imitators 167
8.5.1 First-mover advantages and disadvantages 167
8.5.2 The incumbent’s response 169
Summary 170
Recommended key reading 171
References 171
Case example: Rovio’s Angry Birds: The evolution of a global
entertainment empire 173
9 Strategy in action 177
9.1 Introduction 178
9.2 Structural types 178
9.2.1 The functional structure 179
9.2.2 The divisional structure 181
9.2.3 The matrix structure 182
9.2.4 Multinational/transnational structure 183
9.2.5 Project-based structures 184
9.3 Systems 184
9.3.1 Planning systems 185
9.3.2 Cultural systems 186
9.3.3 Performance targeting systems 187
9.3.4 Market systems 187
9.4 Strategic leadership 189
9.5 Types of strategic change 191
9.5.1 Adaptation 191
9.5.2 Reconstruction 193
9.5.3 Revolution 193
9.5.4 Evolution 193
9.6 Steps for strategic change: Kotter’s Change Model 194
Summary 195
Recommended key reading 195
References 195
Case example: Tencent: Third Time Lucky? 197
Glossary 200
Name index 203
General index 207
Publisher’s acknowledgements 212