Strategic Intent (Placing Within Wide Strategic Theory)
Strategic Intent. – Hamel & Pradhalad (1989)
Article Positioning
The main argument of this article refers to the effectiveness of ‘leveraging resources’ (Hamel and Pradhalad, 1989) compared to that of ‘maintaining strategic fit’ in achieving competitive advantage. Competitive advantage is generally conceptualised as the implementation of a strategy not currently being implemented by other firms that facilitates the reduction of costs, the exploitation of market opportunities, and/or the neutralisation of competitive threats. Barney, (1991). It argues that basic concepts of strategy such as ‘strategic fit’ and ‘generic strategy’ (Porter, 1979) used by western companies have resulted in their ‘competitive decline’. Hamel and Pradhalad’s (1989). In relation to wider strategic literature there are many elements of the article that draw highlight to its position within the organisation vs. environment debate or more specifically the debate between a ‘resourced based view’ and a ‘positioning approach’ to strategy.
The debate
The ‘Resource Based View’ (RBV) emerged as one of the substantial theories of organisational based strategy during the 1980’s. Barney, (1986); Rumelt, (1984). The RBV takes an ‘inside-out’ approach to strategy formulation and suggests that the internal resources possessed by a firm are the primary determinants of its performance not the external market. It sees that organisational long-term strategy should be created around these internal capabilities as they contribute to a sustainable competitive advantage. Hoffer & Schendel, (1978); Wernerfelt, (1984). It extends to both an organisations assets as well as it’s capabilities (Henderson and Cockburn, 1994), such examples include knowledge, skills and culture. Afiouni, (2007).
In contrast to this the environment based view centers on an ‘outside-in’ view of strategy. It stipulates that organisational success is driven by external factors such as industry position. kim et al., (2008).
Article Positioning
The main argument of this article refers to the effectiveness of ‘leveraging resources’ (Hamel and Pradhalad, 1989) compared to that of ‘maintaining strategic fit’ in achieving competitive advantage. Competitive advantage is generally conceptualised as the implementation of a strategy not currently being implemented by other firms that facilitates the reduction of costs, the exploitation of market opportunities, and/or the neutralisation of competitive threats. Barney, (1991). It argues that basic concepts of strategy such as ‘strategic fit’ and ‘generic strategy’ (Porter, 1979) used by western companies have resulted in their ‘competitive decline’. Hamel and Pradhalad’s (1989). In relation to wider strategic literature there are many elements of the article that draw highlight to its position within the organisation vs. environment debate or more specifically the debate between a ‘resourced based view’ and a ‘positioning approach’ to strategy.
The debate
The ‘Resource Based View’ (RBV) emerged as one of the substantial theories of organisational based strategy during the 1980’s. Barney, (1986); Rumelt, (1984). The RBV takes an ‘inside-out’ approach to strategy formulation and suggests that the internal resources possessed by a firm are the primary determinants of its performance not the external market. It sees that organisational long-term strategy should be created around these internal capabilities as they contribute to a sustainable competitive advantage. Hoffer & Schendel, (1978); Wernerfelt, (1984). It extends to both an organisations assets as well as it’s capabilities (Henderson and Cockburn, 1994), such examples include knowledge, skills and culture. Afiouni, (2007).
In contrast to this the environment based view centers on an ‘outside-in’ view of strategy. It stipulates that organisational success is driven by external factors such as industry position. kim et al., (2008).
References: Afiouni, F. (2007) ‘Human resource management and knowledge management: A road map toward improving organizational performance’, Journal of American Academy of Business, 11(2), pp. 124-125. Barney, J. B. (1986) ‘Strategic factor markets: Expectations, luck, and business strategy’, Management Science, 32(10), pp.1231-41. Barney, J. B. (1991) ‘Firm resources and sustained competitive advantage’, Journal of Management, 17(1), pp. 99-120. Connor, T. (2002). ‘The resource-based view of strategy and its value to practising managers’. Strategic Change, 11, pp. 307-316. Hamel, R., Pradhalad, C. (1989) ‘Strategic intent’, Harvard Business Review. 67(3), pp. 63-78. Henderson, R., Cockburn, I. (1994) ‘Measuring competence: exploring firm effects in pharmaceutical research’, Strategic Management Journal, 15, pp. 63–84. Hoffer, C., Schendel, D. (1978) Strategy Formation: Analytical Concepts. St.Paul, MN: West). Kim, W. C., Mauborgne, R. (2004) ‘Blue ocean strategy’, Harvard Business Review, 82(10), pp. 70–79. Kim, Y. J., Song, J., Koo, C. (2008) ‘Exploring the effect of strategic positioning on firm performance in the e-business context’, International Journal of Information Management, 28(3), pp. 203-214. Porter, M, E. (1979) ‘How Competitive Forces Shape Strategy’, Harvard Business Review, 57(2), pp. 37-145. Porter, M, E. (1980) ‘Competitive Strategy: Techniques for Analyzing Industries and Competitors, Free Press, New York, NY. Porter, M, E. (1996) ‘What is strategy?. Harvard Business Review’, 74(6), pp. 61-78. Priem, R., Butler, J. (2001) ‘Is the resource-based "view" a useful perspective for strategic management research?’, Academy of Management Review, 26(1), pp. 22-40. Rumelt, R. P. (1984) ‘Towards a strategic theory of the firm’. Competitive Strategic Management (ed., by R. B. Lamb, Englewood Cliffs, NJ: Prentice-Hall), pp. 556-70. Wernerfelt, B. (1984) ‘A resource-based view of the firm’. Strategic Management Journal, 5(2), pp. 171-80.