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The strategy gap lavaraging thechnology to execute winning strategies - Goveney M.

Goveney M. The strategy gap lavaraging thechnology to execute winning strategies - Wiley & sons , 2003. - 242 p.
ISBN 0-471-21450-7
Download (direct link): thestrategygapleveraging2003.pdf
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30
Strategy in the Next Economy
A more formal definition describes strategy as the “direction and scope of an organisation over the long-term ... which achieves advantage for an organisation through its configuration of resources within a changing environment, to meet the needs of markets and to fulfil stakeholder expectations.”9 Based on this definition, a successful strategy delineates a consistent and simple set of long-term goals and objectives based on a thorough understanding of the environment and an objective appraisal of the resources available and needed to accomplish the goals.
A distinction usually is made among corporate, business, and functional strategies. When people speak of the strategies of an organization, they usually are talking about corporate strategies. “Corporate strategies” define the direction and scope in terms of the industries or markets in which the organization plays. Corporate strategies usually involve a top-down, big-picture view of the future. They answer questions such as: Should we diversify our product offerings?; Should we sell or acquire specific businesses?; and What new ventures should we undertake? These strategies usually impact the entire organization, focus on the survival of the organization at a minimum and the creation of substantial added value at a maximum, have a long time horizon (up to several years for strategies involving physical assets), require a substantial commitment of resources, and are not easily reversible.
“Business strategies” are based on a bottom-up, operational view of the organization. They answer questions such as: Should we be a low-cost provider?; What product innovations are needed to capture market share?; and Should we offer different levels of customer support? In essence, business strategies address the issue of how an organization should compete within a particular industry or market. In contrast to corporate strategies, business strategies are operationally specific, are smaller in scope and scale, have a shorter time horizon, and often involve more routine matters.
Finally, “functional strategies” elaborate business strategies. They do this by specifying the direction and scope of the individual functions within a business such as marketing, sales, research and development, finance and accounting, human resources, and others.
When AOL merged with Time Warner in January 2000, it was the culmination of both corporate strategies and business strategies. From a corporate perspective, the acquisition enabled AOL to convert its market capitalization into assets and a revenue stream, supposedly ensuring a cushion against a drop in high-tech valuations. What Time Warner offered was branded content that could be digitized and sold to existing
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The Strategy Gap
and new AOL subscribers. It also provided AOL access to existing Time Warner cable customers. From a business perspective, the merger solved AOL’s bandwidth problems, providing the ability to deliver its service through existing broadband cable connections.10
In a multibusiness organization, corporate, business, and functional strategies correspond to the organizational structure (see Exhibit 2.1). Corporate strategies are usually the purview of top management, business strategies are formulated by the individual businesses (divisions or business units), and functional strategies are the responsibility of the functional departments.
Chapter 1 argued that strategic execution, not strategic formulation, is at the heart of strategic failure. Collins’s study of the characteristics of “good-to-great” companies lends credence to this argument. In his words: “Strategy per se did not separate the good-to-great companies from the comparison companies. Both sets of companies had well-defined strategies, and there is no evidence that good-to-great companies spent more time on long-range planning than the comparison companies.”11
In Collins’s study, the particular industry played little role in determining success. To be successful, a company did not have to select the right industry. Some of the good-to-great companies were in depressed industries, others in industries with modest growth, and a few were in
Exhibit 2.1 Corporate, business, and functional strategies correspond to the organizational structure.
Types of Strategy by Organizational Level
Corporate i Strategy \
Business
Strategy
Functional
Strategy
Corporate Headquarters
Sales
Marketing
Development
Production
Finance
Sales
Marketing
Development
Production
Finance
SBU*1 SBU 2 ... SBU N
Sales
Marketing
Development
Production
Finance
* SBU - Strategic Business Unit
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Strategy in the Next Economy
booming industries. This is consistent with other studies that suggest there is little evidence that firms competing in attractive markets necessarily perform better than those in less attractive markets. More important to the transformation from “good-to-great” was focus on a few key drivers and goals and dogged determination (which Collins calls the “hedgehog” concept) in manipulating those drivers to achieve those goals.
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