Teaching
note
<Introduction
to
Strategy>
Definitions,
notions,
approaches.
Authors
Courses
Date
Keywords
Compiled
by
Dr.
Kai
Riemer
Interorganisational
Systems,
Managing
the
information
Age
Organisation
2002
(updated
2008)
Strategy,
Competitve
strategy,
MBV,
RBV

WI
&
IOS
–
Prof.
Dr.
Stefan
Klein:
All
rights
reserved.
Riemer
–
Teaching
note
on
Strategy
Table
of
Contents
1
WHAT
IS
STRATEGY?.........................................................................................................................................3
1.1
THE
ROOTS
OF
STRATEGIC
THINKING ............................................................................................................................... 3
1.2
DEFINITIONS
AND
NOTIONS
OF
STRATEGY ...................................................................................................................... 3
1.3
“STRATEGY
IS…” .................................................................................................................................................................. 5
1.4
STRATEGIC
SCHOOLS............................................................................................................................................................ 6
1.5
THE
DIFFERENCE
BETWEEN
INTENDED
AND
REALISED
STRATEGY ............................................................................ 8
2
LEVELS
OF
STRATEGIC
THINKING
AND
PLANNING.............................................................................. 10
2.1
ORGANISATIONAL
LEVELS ................................................................................................................................................10
2.2
STRATEGY
VERSUS
TACTICS..............................................................................................................................................10
3
COMPETITIVE
STRATEGY ............................................................................................................................. 11
3.1
OVERVIEW
–
TWO
DIVERGING
VIEWS .............................................................................................................................11
3.2
THE
MARKET‐BASED
VIEW
OF
COMPETITIVE
STRATEGY
(MICHAEL
E.
PORTER)..................................................12
3.3
THE
RESOURCE‐BASED
VIEW
OF
COMPETITIVE
STRATEGY
(PRAHALAD
&
HAMEL) .............................................13
3.4
INTEGRATION
OF
MARKET‐BASED
AND
RESOURCE‐BASE
VIEW ................................................................................13
4
FROM
SINGLE­FIRM
TO
INTER­FIRM
STRATEGY .................................................................................. 13
4.1
A
SYSTEMS
THEORY
EXPLANATION
OF
THE
EXISTENCE
OF
FIRMS
AND
NETWORKS ..............................................14
4.2
THE
SINGLE‐FIRM
VIEW
ON
STRATEGY
IN
A
NETWORK...............................................................................................14
4.2
THE
INTER‐FIRM/NETWORK
PERSPECTIVE
ON
STRATEGY ........................................................................................15
4.3
CONCLUSION .......................................................................................................................................................................16
LITERATURE............................................................................................................................................................. 18
‐
2
‐
Riemer
–
Teaching
note
on
Strategy
1
What
is
strategy?
Strategy
is
a
controversial
topic.
Hence,
in
the
literature
there
is
not
much
agreement
about
what
qualifies
as
strategy
or
how
to
approach
strategy
in
an
organisation.
Numerous
notions
and
definitions
have
emerged
over
time,
presented
by
strategists
and
practitioners
dealing
with
strategy
in
various
contexts,
emphasizing
different
views,
and
understanding
strategy
in
different
ways.
Thus,
instead
of
concentrating
on
just
one
definition
of
strategy,
it
is
more
useful
to
present
and
discuss
different
notions
and
perspectives.
In
doing
so,
I
will
first
look
at
the
history
(or
roots)
of
strategic
thinking
before
I
then
introduce
definitions
and
elaborate
on
different
perspectives
and
strategic
views.
Please
note
that
this
teaching
note
only
provides
an
introduction
to
the
topic;
it
needs
to
be
complemented
with
additional
readings
that
are
listed
towards
the
end
of
this
text.
1.1
The
roots
of
strategic
thinking
The
concept
of
strategy
stems
from
the
military
context
and
has
been
adapted
for
use
in
business
(cp.
Nickols
2000a)1.
Strategy
is
a
term
that
comes
from
the
Greek
strategia,
meaning
"generalship."
In
the
military,
strategy
often
refers
to
maneuvering
troops
into
position
before
the
enemy
is
actually
engaged.
In
this
sense,
strategy
refers
to
the
deployment
of
troops.
Once
the
enemy
has
been
engaged,
attention
shifts
to
tactics.
Here,
the
employment
of
troops
is
central.
Substitute
"resources"
for
troops
and
the
transfer
of
the
concept
to
the
business
world
begins
to
take
form.
1.2 Definitions
and
notions
of
strategy
Table
1
exemplarily
introduces
business‐related
definitions
and
meanings
of
strategy
derived
from
the
work
of
well‐known
strategists
(taken
from
Nickols
2000a).
The
various
definitions
and
notions
illustrate
the
ambiguousness
of
the
concept
and
that
strategy
can
be
approached
from
different
angles.
Consequently,
the
author
Fred
Nickols
asks:
“What,
then,
is
strategy?
Is
it
a
plan?
Does
it
refer
to
how
we
will
obtain
the
ends
we
seek?
Is
it
a
position
taken?
Just
as
military
forces
might
take
the
high
ground
prior
to
engaging
the
enemy,
might
a
business
take
the
position
of
low­cost
provider?
Or
does
strategy
refer
to
perspective,
to
the
view
one
takes
of
matters,
and
to
the
purposes,
directions,
decisions
and
actions
stemming
from
this
view?
Lastly,
does
strategy
refer
to
a
pattern
in
our
decisions
and
actions?
For
example,
does
repeatedly
copying
a
competitor's
new
product
offerings
signal
a
"me
too"
strategy?
Just
what
is
strategy?”
His
answer
to
these
questions
is
an
inclusive
one:
“Strategy
is
all
these—it
is
perspective,
position,
plan,
and
pattern.
Strategy
is
the
bridge
between
policy
or
high­order
goals
on
the
one
hand
and
tactics
or
concrete
actions
on
the
other.
Strategy
and
tactics
together
straddle
the
gap
between
ends
and
means.
In
short,
strategy
is
a
term
that
refers
to
a
complex
web
of
thoughts,
ideas,
insights,
experiences,
goals,
expertise,
memories,
1
The
German
author
von
Clausewitz
states:
„„Die
Strategie
ist
der
Gebrauch
des
Gefechts
zum
Zwecke
des
Krieges;
sie
muss
also
dem
ganzen
kriegerischen
Akt
ein
Ziel
setzen,
(...)
sie
entwirft
den
Kriegsplan,
und
an
dieses
Ziel
knüpft
sie
die
Reihe
von
Handlungen
an,
welche
zu
demselben
führen
sollen“
(von
Clausewitz,
19th
Century)
‐
3
‐
Riemer
–
Teaching
note
on
Strategy
perceptions,
and
expectations
that
provides
general
guidance
for
specific
actions
in
pursuit
of
particular
ends.
Strategy
is
at
once
the
course
we
chart,
the
journey
we
imagine
and,
at
the
same
time,
it
is
the
course
we
steer,
the
trip
we
actually
make.
Even
when
we
are
embarking
on
a
voyage
of
discovery,
with
no
particular
destination
in
mind,
the
voyage
has
a
purpose,
an
outcome,
and
an
end
to
be
kept
in
view.”
(cp.
Nickols
2000a).
The
following
paragraphs
further
indicate
the
variety
of
the
strategy
term.
Source
Strategy
definition/notion
Steiner,
George
(1979):
1.
Strategy
is
what
top
management
does
that
is
of
great
importance
to
the
Strategic
Planning.
organization.
2.
Strategy
refers
to
basic
directional
decisions,
to
purposes
and
missions.
3.
Strategy
consists
of
the
important
actions
to
realize
these
directions.
4.
Strategy
answers
the
question:
What
should
the
organization
be
doing?
5.
Strategy
answers
the
question:
What
are
the
ends
we
seek
and
how
should
we
achieve
them?
Mintzberg,
Henry
(1994):
The
Rise
and
Fall
of
Strategic
Planning
1.
Strategy
is
perspective;
that
is
vision
and
direction.
2.
Strategy
is
position;
that
is,
it
reflects
decisions
to
offer
particular
products
and
services
in
particular
markets.
3.
Strategy
is
a
plan,
a
„how“,
a
means
of
getting
from
here
to
there.
4.
Strategy
is
a
pattern
in
actions
over
time.
Ergo:
strategy
emerges
over
time
as
intentions
collide
with
and
accommodate
a
changing
reality
(„realized
strategy“).
Andrews,
Kenneth
„Corporate
strategy
is
the
pattern
of
decisions
in
a
company
that
(1980):
The
Concept
of
determines
(...)
its
objectives
(...)
and
produces
the
(...)
plans
for
achieving
Corporate
Strategy.
those
goals,
and
defines
the
range
of
business
the
company
is
to
pursue,
...“

Distinguishes
levels
of
strategic
planning:
corporate
strategy
and
(the
more
detailed)
business
strategy.
Michael
Porter
(1996):
Competitive
strategy
is
„about
being
different.“
„It
means
deliberately
What
is
Strategy?
choosing
a
different
set
of
activities
to
deliver
a
unique
mix
of
value.“
Ergo:
strategy
is
competitive
positioning
and
differentiation.
Table
1:
Different
notions
of
strategy.
‐
4
‐
Riemer
–
Teaching
note
on
Strategy
1.3 “Strategy
is…”
Strategy
is
many
things
(partly
taken,
partly
adapted
from
Nickols
2000b):
•
Strategy
is
plan,
position,
ploy
and
perspective.
As
plan,
strategy
specifies
how
we
intend
to
realize
our
goals.
As
position,
strategy
is
the
stance
we
take:
e.g.
be
the
low‐cost
provider,
compete
on
the
basis
of
value,
set
prices
according
to
what
the
market
will
bear,
or
beat
any
price
offered
by
any
competitor.
As
ploy,
strategy
relies
on
secrecy
and
deception:
"Let
not
thy
left
hand
know
what
thy
right
hand
doeth."
As
perspective,
strategy
is
part
vantage
point
and
part
the
view
from
that
vantage
point,
particularly
the
way
this
view
shapes
and
guides
decisions
and
actions.
•
Strategy
is
ubiquitous.
It
can
be
found
at
the
highest
levels
of
corporate,
governmental,
military
and
organizational
endeavor
and
in
small,
medium
and
large
units.
It
is
used
to
define
the
basis
for
competition
and
it
can
give
rise
to
collaboration
and
cooperation.
It
can
even
be
found
guiding
and
explaining
individual
initiative.
It
is
everywhere.
•
Strategy
is
an
abstraction,
a
construct.
It
has
no
concrete
form
or
substance.
At
best
it
can
be
communicated
in
words
and
diagrams.
But,
just
as
"the
map
is
not
the
territory,"
the
words
and
diagrams
used
to
communicate
strategy
are
not
the
strategy
they
convey.
•
Strategy
is
the
art
of
the
general.
It
is
broad,
long
range
and
far
reaching.
In
part,
it
is
about
the
preparations
made
before
battle,
before
the
enemy
is
engaged.
But
it
is
also
about
avoiding
battle
and
making
combat
unnecessary.
It
is
as
much
about
destroying
the
enemy’s
will
to
fight
as
it
is
about
destroying
the
enemy
in
a
fight.
If
that
sounds
too
militaristic
for
you,
consider
the
business
parallel:
a
firm
that
raises
such
formidable
barriers
to
entry
that
would‐be
competitors
throw
up
their
hands
and
walk
away.
In
short,
destroying
the
will
to
compete
differs
little
from
destroying
the
will
to
fight.
•
Strategy
is
a
general
plan
of
attack,
an
approach
to
a
problem,
the
first
step
in
linking
the
means
or
resources
at
our
disposal
with
the
ends
or
results
we
hold
in
view.
Tactics,
of
course,
is
the
second
step.
Strategy
is
concerned
with
deploying
resources
and
tactics
is
concerned
with
employing
them.
Without
some
goal
there
can
be
no
strategy
and
tactics
will
consist
of
aimless
flailing
about.
Strategy,
then,
is
relative,
which
is
to
say
that
it
exists
only
in
relation
to
some
goal,
end
or
objective.
If
someone
asks
you,
"What
is
your
strategy?"
be
sure
to
reply,
"In
relation
to
what?"
•
Strategy
is
direction
and
destination.
At
one
and
the
same
time
strategy
says,
"We
are
headed
there
—
by
this
path."
Strategy
defines
the
destination
(e.g.
the
goals)
and
the
direction,
i.e.
guidance
as
to
how
we
get
there.
•
Strategy
is
a
set
of
decisions
made.
What
business
are
we
in?
What
products
and
services
will
we
offer?
To
whom?
At
what
prices?
On
what
terms?
Against
which
competitors?
On
what
basis
will
we
compete?
•
Strategy
is
getting
it
right
and
doing
it
right.
On
the
one
hand,
we
have
to
pick
the
right
course
of
action.
On
the
other
hand,
once
chosen,
we
have
to
carry
it
out
properly.
‐
5
‐
Riemer
–
Teaching
note
on
Strategy
Strategy
thus
is
manifold;
it
refers
to
the
plan,
as
well
as
to
the
process
of
implementing
the
plan.
At
the
same
moment
there
are
different
views
of
how
strategy
takes
place:
Is
it
really
about
planning?
Or
is
strategy
an
emerging
issue?
Are
we
able
to
plan
everything
and
then
implement
the
pan?
Or
do
we
have
to
accept
that
in
a
complex
world
strategy
emerges
in
the
process
of
action?
To
elaborate
on
these
questions,
we
have
to
take
a
look
at
the
history
of
strategic
thinking
and
strategy
theory.
1.4
Strategic
schools
The
history
of
strategy
theories
is
to
some
extent
similar
to
that
of
organization
theory:
Starting
from
a
mechanistic
idea
of
strategic
planning
and
design,
newer
approaches
deal
with
strategy
in
a
more
holistic
manner,
accepting,
that
strategy
can
only
be
planned
to
a
certain
extent,
while
a
significant
part
results
from
other
effects
during
the
implementation
process
within
the
organisation
(so‐called
“emergent
strategies”
[Mintzberg,
et.
al.
2001]).
Mintzberg
introduces
10,
more
or
less
distinctive,
theory
schools,
each
representing
a
special
perspective
on
strategy
or
emphasising
certain
issues
within
the
field
[Mintzberg,
et.
al.
2001].
Although
emerging
in
a
historically
order,
each
school
remains
important,
retaining
their
group
of
supporters
(view
figure
1
for
a
brief
overview
of
the
10
strategy
schools).
‐
6
‐
Riemer
–
Teaching
note
on
Strategy
Figure
1:
Strategy
schools
(Mintzberg
et
al.
1999
and
2001).
‐
7
‐
Riemer
–
Teaching
note
on
Strategy
For
our
purposes
a
threefold
‐
complexity
reducing
‐
classification
might
be
sufficient,
distinguishing
strategy
in
(neo‐)
classical,
modernist
and
cultural
(symbolic)
perspectives:
1.
The
design
model
(classical):
Under
this
model,
strategy
is
the
object
of
a
planning
and
design
process,
where
top
managers
define
the
organisation’s
goals
and
the
processes
for
their
implementation
(machine
metaphor).
According
to
Mintzberg’s
design,
planning
and
positioning
school,
organisational
strategy
can
be
planned
and
panned
out
in
detail.
Important
to
this
perspective
is
the
concept
of
aligning
(“fit”)
the
internal
competencies
and
resources
of
the
organisation
with
the
external
(market
or
environmental)
situation,
by
making
decisions
concerning
the
development
of
resources
and
the
positioning
in
the
market
(cp.
also
Contingency
theory).
Porter’s
market‐based
view
(MBV)
and
the
resource‐based
view
(RBV)
[acc.
to
Prahalad,
Hamel
1996],
representing
the
two
main
strands
in
strategic
planning,
are
part
of
this
strategy
perspective
(see
later).
2.
The
emergent
model
(modernist):
In
the
emergent
model,
strategy
is
seen
as
emerging
in
the
process
of
action.
Strategy
cannot
(or
only
to
some
extent)
be
planned
and
is
the
outcome
of
the
organisation’s
struggle
to
survive
(cp.
Darwinist
ideas
in
Population
Ecology)
and
the
adaptation
to
certain
internal
and
external
influences.
Strategy
formulation
and
implementation
are
interdependent,
strategy
development
happens
on
every
level
within
the
organisation.
Moreover,
the
realised
strategy,
the
one
observable
in
the
marketplace,
may
differ
considerably
from
the
intended
strategy
(“it
emerges”).
The
organisation
is
viewed
from
a
modernist
perspective,
interpreted
as
some
form
of
organism
(“living
system”).
The
perspective
corresponds
to
Mintzberg’s
learning
school
and
the
power
school,
where
strategy
is
the
outcome
of
intensive
discussions
and
the
balancing
of
power
relationships.
3.
The
culture
model
(cultural/symbolic):
In
this
view,
strategy
formation
is
a
social
process,
grounded
in
the
specific
culture
(of
the
organization
and
the
environment).
In
the
culture
model
the
organisation
develops
and
uses
powerful
symbols
of
business
culture
to
mobilise
support
for
strategy
formation
and
implementation.
Strategy
formation
is
based
on
a
social
framing
and
defining
the
right
organisational
context,
more
than
on
planning
and
designing
strategy
in
a
rational
way.
This
view
corresponds
to
Mintzberg’s
cultural
school.
Regarding
the
different
schools,
Mintzberg
argues
that
overemphasising
one
school
may
cause
failures
due
to
a
restricted,
unilateral
view:
“The
greatest
failings
of
strategic
management
have
occurred
when
managers
took
one
point
of
view
too
seriously.”
1.5
The
difference
between
intended
and
realised
strategy
It
is
beyond
doubt
that
the
strategy,
which
will
be
realised
in
the
end,
differs
from
the
intended
one
at
the
beginning
of
the
process.
Parts
of
the
intended
strategy
will
not
be
realised,
whereas
emerging
aspects
and
changes
in
the
process
(slightly
or
more
dramatically)
adjust
the
strategy,
so
that
the
realised
strategy
is
different
from
the
intended
one
(see
figure
2).
‐
8
‐
Riemer
–
Teaching
note
on
Strategy
Figure
2:
From
intended
to
realised
strategy
(Mintzberg
1999,
p.
30).
It
becomes
obvious
that
one
cannot
persist
exactly
on
what
was
planned.
There
are
to
many
internal
and
external
influences
in
the
process
that
render
it
necessary
to
adjust
the
intended
strategy.
On
the
other
hand
this
does
not
necessarily
mean
that
planning
is
useless
at
all.
Planning
is
not
necessarily
about
formalised
analysis,
but
about
“thinking
before
doing.”
Thus,
we
can
state
as
follows:
•
The
different
strategy
school
are
on
the
one
hand
paradigms,
as
well
as
simply
different
views
in
the
process
of
strategy
development
and
formation.
•
It
is
important
to
view
the
company’s
situation
in
a
holist
multi‐perspective
manner
and
to
ask
the
right
questions
to
uncover
the
main
problems.
•
Think
in
problems/issues
not
in
concepts.
Try
to
use
concepts.
•
Plan,
but
not
in
a
way
that
is
too
bureaucratic/formalised.
•
Think,
instead
of
blindly
following
one
school,
or
the
latest
consultancy
fad
for
that
matter.
•
Accept
dynamics,
change
and
emerging
strategies,
but
do
not
forget
to
plan
(note:
“If
you
plan,
you
may
fail.
But
without
planning,
you
will
not
know
whether
you
failed
or
not
in
the
end.
And
therefore
you
may
be
unable
to
learn
from
failure
and
to
improve!”)
‐
9
‐
Riemer
–
Teaching
note
on
Strategy
2
Levels
of
strategic
thinking
and
planning
Strategic
decisions
in
companies
take
place
on
different
organisational
levels.
In
the
most
simple
terms,
one
can
distinguish
three
organisational
levels
of
strategic
thinking:
(1)
the
corporate
level,
(2)
the
business
unit
(or
divisional)
level
and
the
(3)
functional
level
(see
figure
3).
Figure
3:
Levels
of
strategic
planning
2.1
Organisational
levels
Corporate
strategy
defines
the
markets
and
the
businesses
in
which
a
company
will
operate.
Competitive
or
business
(unit)
strategy
defines
for
a
given
business
the
basis
on
which
it
will
compete
with
other
companies.
And
a
functional
strategy
elaborates
on
goals,
aims
and
actions
to
be
undertaken
in
single
functional
areas
of
the
firm.
Often,
this
is
also
referred
to
as
tactics:
specific
decisions
following
the
broad
strategic
ones
(see
later
for
a
distinction
between
strategy
and
tactics).
Corporate
strategy
is
typically
dealt
with
in
the
context
of
defining
the
company’s
mission
and
vision,
that
is,
deciding
on
what
the
company
does,
why
it
exists,
and
what
it
is
intended
to
become
some
day.
Competitive
strategy
hinges
on
a
company’s
capabilities,
strengths,
and
weaknesses
in
relation
to
market
characteristics
and
the
corresponding
capabilities,
strengths,
and
weaknesses
of
its
competitors
(positioning
and
resources).
Here,
it
is
possible
to
argue
in
a
more
market‐based
or
more
resource‐based
manner
(see
later).
2.2 Strategy
versus
tactics
As
mentioned
above,
tactics
is
the
specification,
concretisation
and
operationalisation
of
strategic
aims.
Whereas
strategy
draws
the
grand,
long‐term
picture
and
gives
ideas
for
the
process
of
implementation,
tactics
brings
these
general
ideas
“down
to
earth”.
Tactics
describes
a
more
short‐
term
thinking
and
takes
place
during
the
process
of
strategy
implementation.
One
might
argue
that
‐
10
‐
Riemer
–
Teaching
note
on
Strategy
good
tactics
is
necessary
to
react
to
environmental
or
organisational
changes.
Thus,
tactical
action
is
a
reason
for
what
was
called
“emerging
strategies”
in
the
section
above.
While
top
managers
might
be
concerned
with
strategy
formulation,
managers
on
the
lower
organisational
levels
are
usually
responsible
for
tactical
decisions
within
functional
areas
of
the
firm.
Aspects
Scale
of
the
Objective
Scope
of
the
Action
Guidance
provided
Degree
of
flexibility
Strategy
Grand
Broad
and
general
General
and
ongoing
Adaptable,
but
not
hastily
changed
Long‐term
Before
action
Temporal
scope
Timing
in
Relation
to
Action
Focus
of
resource
Deployment
utilisation
Table
2:
Comparison
of
strategy
and
tactics
3
Tactics
Limited
Narrowly
focused
Specific
and
situational
Fluid,
quick
to
adjust
and
adapt
in
minor
or
major
ways
Mid‐term
or
Short‐term
During
action
Employment
Competitive
strategy
In
the
following
paragraphs
I
will
briefly
introduce
the
most
well‐known
approaches
to
competitive
strategy
–
the
market‐based
view
and
the
resource‐based
view.
In
doing
so,
I
will
provide
brief
accounts
of
both
approaches
and
then
refer
to
further
readings
on
the
subject
matters.
3.1
Overview
–
two
diverging
views
So
far,
we
have
recognised
that
there
are
several
different
strategiy
views.
In
elaborating
on
competitive
strategy,
I
will
now
concentrate
on
the
most
popular
ones:
the
market‐based
and
the
resource‐based
approach.
Following
theses
two
approaches,
I
will
describe
strategic
planning
as
identifying
and
developing
competitive
advantages,
in
which
the
two
approaches
simply
apply
different
perspectives
and
techniques.
Under
the
two
notions,
any
competitive
advantage
may
either
derive
from
a
superior
market
positioning
or
from
a
valuable
and
defendable
resource
base
(figure
4).
Figure
4:
Sources
of
competitive
advantage
‐
11
‐
Riemer
–
Teaching
note
on
Strategy
The
market‐based
view
of
strategy
evolved
largely
from
the
positioning
school
coined
by
American
economist
Michael
E.
Porter.
Many
authors
have
contributed
to
forming
what
is
known
as
the
resource‐based
view
of
strategy,
one
influential
contribution
was
made
by
Prahalad
and
Hamel.
In
short,
the
two
approached
can
be
characterised
as
follows:
•
Market­based
view
(MBV):
Following
this
view
economic
success
is
determined
by
the
structure
of
the
market
in
which
a
firm
operates
and
by
the
firm’s
behaviour
in
relation
to
the
forces
prevalent
in
this
market.
These
forces
are
described
by
the
well‐known
five
forces
model;
the
five
forces
are
1)
the
rivalry
among
competitors,
2)
the
power
of
customers,
3)
the
power
exerted
by
suppliers,
4)
the
threat
of
new
entrants
to
the
market
and
5)
arising
substitutes
to
the
firm’s
products.
Competitive
advantage
now
derives
from
a
strategic
fit
of
the
firm’s
behaviour
with
the
firm’s
environment
in
terms
of
a
unique
market
positioning
that
is
able
to
deal
with
these
forces.
Thus,
the
MBV
follows
an
outside‐in
perspective
of
strategic
planning
by
positioning
the
firm
in
the
market
and
then
adjusting
the
firm’s
value
chain
according
to
these
external
requirements.
•
Resource­based
view
(RBV):
Following
the
RBV
notion
strategic
planning
concentrates
on
the
development,
maintenance
and
–
very
important
–
the
exploitation
of
(core)
resources.
Competitive
advantage
therefore
derives
from
developing
and/or
owning
a
unique
set
of
(core)
resources
and
the
ability
(capabilities)
to
develop
products
that
capitalise
on
these
resources,
which
provide
a
unique
selling
proposition
in
the
marketplace.
Ergo,
an
inside‐out
approach
to
strategic
planning
is
taken,
by
concentrating
on
(internal)
resources
and
their
exploitation
by
turning
them
into
unique
products
in
the
marketplace.
In
the
following
sections,
the
core
concepts
of
the
two
approaches
will
be
listed
briefly
and
references
will
be
provided
to
further
readings
for
self‐study.
3.2 The
market­based
view
of
competitive
strategy
(Michael
E.
Porter)
Three
major
concepts
constitute
the
positioning
school
by
economist
Michael
E.
Porter,
which
has
significantly
shaped
the
market‐based
approach:
•
The
Five
Forces
model
for
analysing
the
structure
of
the
Industry
and
for
positioning
the
firm.
•
The
model
of
the
Value
Chain
of
the
firm
for
designing
a
firm’s
value
creation
processes.
•
The
three
generic
strategies
that
a
firm
can
take
in
positioning
itself
in
the
marketplace
(cost
leadership,
differentiation
and
focus)
Instead
of
describing
the
concepts
here,
please
read
the
following
article
as
well
as
the
Internet
resources
following
the
hyperlinks
below.
Please
read:
Porter,
Michael
E.
(1997):
How
Competitive
Forces
Shape
Strategy
(HBS
Reprint),
in:
Harvard
Business
School
(Eds.),
Competitive
Strategy,
S.
1­10:
HBS
Publishing,
1997
(originally
published
in
1979).
Please
read:
Five
Forces
Model:
http://www.themanager.org/Models/p5f.htm
Value
Chain
Concept:
http://www.themanager.org/Models/ValueChain.htm
3
Generic
Strategies:
http://home.att.net/~nickols/competitive_strategy_basics.htm
‐
12
‐
Riemer
–
Teaching
note
on
Strategy
3.3 The
resource­based
view
of
competitive
strategy
(Prahalad
&
Hamel)
The
resource‐based
view
has
been
shaped
by
the
work
and
articles
of
strategists
Prahalad
and
Hamel
and
their
book
“Competing
for
the
Future”.
The
main
concept
is
the
core
competence/core
product
typology.
The
following
article
elaborates
on
core
competencies
using
several
illustrative
examples.
Please
use
this
article
to
inform
yourself.
Please
read:
Prahalad,
C.
L.,
Hamel,
G.
(1990).
The
core
competence
of
the
corporation.
In:
Harvard
Business
Review,
Vol.
90
No.
3,
pp.
79­91.
3.4
Integration
of
market­based
and
resource­base
view
While
the
two
approaches
have
been
discusses
controversial
in
the
literature
and
where
seen
by
many
to
be
conflicting
or
even
incommensurable,
some
more
recent
publications
[Börner
2000a
and
Börner
2000b]
have
tried
to
integrate
them
into
a
comprehensive
strategy
approach.
This
is
exemplarily
shown
in
figure
5.
Figure
5:
Integration
of
market‐based
and
resource‐based
approach
4
From
single­firm
to
inter­firm
strategy
The
goal
of
this
paragraph
is
to
illustrate
what
happens
to
the
idea
of
strategy
and
strategic
planning
when
moving
from
the
firm
level
to
an
inter‐organisational
network
context.
Therefore,
I
will
elaborate
on
the
above‐introduced
market‐based
and
resource‐based
view.
Moreover,
I
will
use
functionalistic
systems
theory
to
outline
the
formation
of
a
network
as
a
sub‐system
of
the
market,
which
is
integrating
all
participating
single
enterprises
as
its
own
sub‐systems.
This
will
be
useful
in
pointing
out
the
changing
role
of
strategy
approaches
in
an
inter‐firm
(network)
context
in
comparison
to
the
single‐firm
context.
‐
13
‐
Riemer
–
Teaching
note
on
Strategy
4.1
A
systems
theory
explanation
of
the
existence
of
firms
and
networks
Following
the
social
(action)
systems
theory
by
sociologist
Parsons
and
especially
the
theoretical
explanation
of
systems
formation
(evolution
theory),
the
formation
of
a
system
is
a
process
of
differentiation
and
integration:
By
differentiation,
the
system
is
divided
from
its
environment.
Integration
means
both,
the
integration
of
the
single
elements
forming
the
(social)
system
that
is
based
on
shared
integrative
patterns
like
values,
culture,
etc.,
and
the
integration
of
the
system
into
its
environment.
Applying
this
model
to
the
economic
context
of
enterprises
within
a
marketplace,
the
existence
of
an
enterprise
can
then
be
explained
using
the
concepts
of
differentiation
and
integration:
the
enterprise
has
to
differentiate
itself
from
other
systems
(enterprises)
in
order
to
establish
a
unique
and
legitimate
position
within
the
market.
Furthermore
it
has
to
integrate
its
sub‐systems
(e.g.
its
personnel
and
resources)
based
on
a
common
understanding
of
the
organisation’s
mission
and
shared
values,
culture
and
rules.
Last
but
not
least,
the
enterprise
itself
has
to
become
integrated
in
the
marketplace
(and
the
overall
society),
which
is
achieved
by
providing
a
suitable
contribution
for
other
market
participants
in
the
form
of
products
and
services.
In
the
same
way,
this
model
can
also
be
used
to
explain
the
formation
of
a
network
as
part
of
the
market:
The
network
has
to
differentiate
from
the
overall
market
and
to
integrate
the
single
enterprises
as
the
elements
forming
the
network,
while
at
the
same
time
each
enterprise
has
to
differentiate
within
and
to
integrate
itself
into
the
network.
From
a
strategy
perspective,
these
processes
of
differentiation
and
integration
can
be
described
as
to
be
shaped
and
actively
formed
using
a
positioning
(MBV)
and
resource
development
(RBV)
rationale.
In
the
following
I
will
show
how
MBV
and
RBV
–
in
combination
with
the
differentiation
and
integration
logic
–
can
be
used
to
describe
single
firm
and
network‐level
approaches
to
strategic
thinking.
4.2
The
single­firm
view
on
strategy
in
a
network
Entering
a
business
network
poses
new
strategic
questions
for
the
single
firm.
The
enterprise
faces
not
only
the
positioning
within
the
market,
but
also
within
the
network.
Using
the
market‐based
and
resource‐based
approaches
in
combination
with
the
systems
theory
concepts,
this
can
be
explained
as
in
terms
of
the
single
firm
having
to
differentiate
from
and
to
integrate
itself
into
the
network:
•
Market­based
approach:
o
Differentiation
is
about
being
different
in
terms
of
a
competitive
position
within
the
network.
Each
company
strives
for
a
superior
or
at
least
equal
position
in
the
network
in
order
to
assure
that
it
can
draw
economic
rents
from
the
network,
e.g.
that
it
can
participate
to
an
acceptable
extent
in
the
distribution
of
the
positive
effects
derived
from
cooperating.
Such
effects
might
be
revenue
streams,
collaborative
knowledge,
patents
or
other.
Moreover,
a
good
and
powerful
position
in
the
network
allows
the
company
to
influence
network
strategy
in
order
to
assure
achieving
its
own
goals,
which
may
differ
from
the
other
participants’
goals.
Especially
in
networks
where
companies
cooperate
with
their
competitors
(“coopetition”),
internal
strategic
positioning
remains
very
important.
‐
14
‐
Riemer
–
Teaching
note
on
Strategy
o
•
Integration:
To
be
part
of
the
overall
network,
at
the
same
time
the
enterprise
has
to
integrate
into
the
overall
value
creation
process
of
the
network.
Drawing
from
the
outside‐
in
perspective
of
the
market‐based
approach,
the
internal
enterprise’s
value
chain
has
to
be
aligned
with
the
external
market
position
of
the
network
and
the
networks
processes.
This
means,
that
in
the
network
context
the
internal
value
chain
has
to
be
part
of
and
aligned
with
the
overall
network
value
chain.
Integration
then
means
the
careful
design
of
process
interfaces
(as
well
as
Information
Systems
interfaces).
Resource­based
approach:
o
Differentiation:
From
a
resource‐based
view
differentiation
means
to
contribute
to
the
network
in
terms
of
unique
core
resources.
This
is
a
well‐known
concept
in
virtual
organisations,
where
a
network
of
enterprises
is
built
up
with
each
enterprise
concentrating
on
its
core
competencies
contributing
to
the
network
by
fulfilling
a
specific
role.
The
enterprises
cooperate,
e.g.
to
achieve
virtual
size,
by
establishing
a
network‐wide
resource
pool,
where
each
company
brings
in
its
core
competencies.
To
achieve
best
network‐wide
quality,
for
each
type
of
resource
only
the
best
company
in
terms
of
quality
and
efficiency
may
contribute.
Therefore,
companies
have
to
differentiate
and
to
concentrate
on
core
resources.
A
classification
of
resources
is
needed
to
identify
critical
resources
constituent
for
the
enterprise,
which
have
to
be
built
up
internally
and
to
be
able
to
identify
resources,
which
could
be
internalised
from
external
partners
(cp.
Klein
1996,
215).
o
Integration:
The
single
enterprise
has
to
integrate
itself
into
the
super‐ordinate
network.
This
means,
that
on
the
one
hand
the
own
resources
(e.g.
production
process,
knowledge,
services)
have
to
be
adjusted
and
documented,
so
that
it
becomes
transparent
for
the
other
network
partners,
which
resources
are
available
and
furthermore
that
the
resources
may
be
easily
used
by
the
other
partners.
On
the
other
hand,
the
company
has
to
assure
the
integration
of
the
external
resources
offered
by
other
partners
into
the
internal
operations.
Therefore
the
above
mentioned
differentiation
of
resources
may
be
helpful.
Another
key
concept
in
this
context
is
called
networkability,
which
names
a
pool
of
competencies
necessary
to
ensure
the
ability
of
the
single
company
to
cooperate
in
terms
of
processes,
technology,
personnel,
knowledge
etc.
(For
the
concept
of
“networkability”
please
have
a
look
at
[Alt,
et.
al.
2000]
and
[Fleisch
2000]).
4.2
The
inter­firm/network
perspective
on
strategy
After
elaborating
on
the
single‐firm
view
on
strategic
planning
in
a
network
context,
I
will
now
sketch
out
key
questions
of
strategic
planning
on
the
network
level.
Therefore
we
follow
the
above‐
introduced
structuring:
•
Market­based
approach:
o
Differentiation:
Comparable
to
the
positioning
of
a
single
enterprise,
the
entire
network
has
also
to
be
positioned
within
the
market.
In
case
of
a
direct
value
contribution
to
the
marketplace
(like
for
example
in
strategic
airline
alliances),
the
network
as
a
whole
tries
to
‐
15
‐
Riemer
–
Teaching
note
on
Strategy
act
and
strives
to
be
perceived
like
a
singular
actor
in
the
marketplace.
The
positioning
of
the
network
in
the
market
moves
competition
from
a
single‐firm
level
to
a
network
level,
which
may
ultimately
lead
to
what
has
been
termed
a
“group‐vs‐group”
competition,
with
joint
brand
and
strategy
development
[Gomes‐Casseres
1994].
o
•
Integration:
One
of
the
biggest
challenges
in
network
formation
is
the
integration
of
all
partners’
contributions
to
a
functioning
whole.
Drawing
from
the
market‐based
approach,
all
partners’
value
chains
(or
more
precisely
the
parts
contributing
to
the
network)
have
to
be
integrated
to
form
an
overall
network
value
chain.
Therefore,
a
network‐wide
planning
and
a
common
understanding
of
value
creation
processes
and
a
certain
degree
of
standardisation
are
required.
Resource­based
approach:
o
Differentiation:
Similar
to
the
differentiation
on
the
single‐firm
level,
the
network
has
to
work
out
its
core
competencies
and
resources
in
order
to
ensure
the
delivery
of
a
unique
value
proposition
to
the
market
in
terms
of
products
and
services.
This
requires
an
explicit
planning
of
the
network
resource
pool
and
the
development
of
products
and
services
based
on
these
resources.
o
Integration:
All
resources
contributed
by
the
partners
have
to
be
(virtually)
aggregated
to
form
a
network
resource
pool.
Therefore,
compatibility
has
to
be
ensured,
e.g.
by
standardisation
activities
and
documentation
of
partner
competencies,
processes
and
interfaces,
products,
services,
etc.
4.3
Conclusion
The
discussion
of
strategic
shift
from
single‐firm
to
a
network
perspective
shows
that
new
challenging
questions
arise
and
that
companies
have
to
differentiate
and
integrate
themselves
within
the
network
and
that
a
new
level
of
strategic
planning
is
concerned
with
the
positioning
and
resource
development
of
the
entire
network.
This
requires
differentiation
and
integration
of
the
entire
network
within
the
marketplace.
Recapitulating,
some
important
questions
arise
that
enterprises
have
to
face
when
entering
a
network
context:
o
Positioning
within
the
network
in
terms
of
power/influence
to
achieve
the
own
goals.
o
Ensure
integration
into
the
network
by
taking
care
of
interfaces
regarding
processes
and
resources.
o
Classification
of
resources
with
respect
to
importance
and
role
to
ensure
full
control
over
critical
resources
to
minimise
external
dependencies.
o
Taking
care
of
networkability,
internal
capabilities
necessary
to
ensure
the
ability
to
collaborate
with
others.
o
Challenges
of
collaboration
with
and
learning
from
competitors
(“coopetition”).
o
Changing
scope
in
strategic
planning:
each
single
firm
has
to
face
the
formation
of
the
overall
network
strategy:
“group‐vs‐group”.
‐
16
‐
Riemer
–
Teaching
note
on
Strategy
In
order
to
study
in
more
detail
the
role
of
alliances,
networks
and
strategic
thinking
in
an
inter‐firm
context,
please
read
the
following
articles
from
the
Harvard
Business
Review.
Again,
one
article
argues
more
from
a
market‐based
perspective,
whereas
the
other
is
more
influenced
by
the
resource‐based
view:
Please
read:
1. Gomes­Casseres,
Benjamin
(1994).
Group
versus
Group:
How
Alliance
Networks
Compete.
In:
Harvard
Business
Review,
4,
pp.
62­74.
o
MBV­related:
Positioning
of
strategic
groups
in
the
market.
2. Hamel,
Gary;
Doz,
Yves
L.;
Prahalad,
C.
K.
(1989):
Collaborate
with
your
Competitors
­
and
win,
in:
Harvard
Business
Review,
1
(1989),
S.
133­139.
o
RBV­related:
Learning
from
competitors
(internalise
external
and
protect
internal
resources)

the
coopetition
concept.
‐
17
‐
Riemer
–
Teaching
note
on
Strategy
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‐
18
‐