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CORPORATE STRATEGY
Visit the Corporate Strategy, fourth editionCompanion Website at
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● Chapter overviewincluding key concepts and definitions
● Multiple choice questionsto help you test your understanding
● Case Study Guideoffering help with reading, analysing and
presenting cases
● A searchable onlineglossaryto explain key terms
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Fourth Edition
CORPORATE STRATEGY
Richard Lynch
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Pearson Education Limited
Edinburgh Gate
Harlow
Essex CM20 2JE
England
and Associated Companies throughout the world
Visit us on the World Wide Web at:
www.pearsoned.co.uk
First published 1997
Second edition 2000
Third edition 2003
Fourth edition published 2006
© Aldersgate Consultancy Limited 1997, 2000
© Richard Lynch 2003
© Richard Lynch 2006 text and all photographs, except those specifically
attributed to other copyright holders as identified in the text.
The right of Richard Lynch to be identified as author of this work has been asserted
by him in accordance with the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted in any form or by any means, electronic, mechanical,
photocopying, recording or otherwise, without either the prior written permission of
the publisher or a licence permitting restricted copying in the United Kingdom issued
by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London W1T 4LP.
All trademarks used herein are the property of their respective owners. The use of
any trademark in this text does not vest in the author or publisher any trademark
ownership rights in such trademarks, nor does the use of such trademarks imply
any affiliation with or endorsement of this book by such owners.
ISBN-13: 978-0-273-70178-1
ISBN-10: 0-273-70178-9
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Lynch, Richard L.
Corporate strategy / Richard Lynch.—4th ed.
p. cm.
Includes bibliographical references and indexes.
ISBN 0-273-70178-9
1. Business planning. 2. Strategic planning. I. Title.
HD30.28.L92 2006
658.4′012—dc22
2005042438
10 9 8 7 6 5 4 3 2 1
09 08 07 06
Typeset in 9/12 pt Stone Serif by 35
Printed and bound by Graficas Estella, Spain
The publisher’s policy is to use paper manufactured from sustainable forests.
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Ex umbris et imaginibus in veritatem.
From shadows and imagination to the truth.
JOHN HENRY NEWMAN
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Brief contents
About this book xv
How to use this book xx
Guided tour of the book xxii
Guided tour of companion website xxv
Guide to the main focus of case studies xxvi
Acknowledgements xxviii
Publisher’s acknowledgements xxxi
Part 1 INTRODUCTION 1
1 Corporate strategy 2
2 A review of theory and practice 32
Part 2 ANALYSIS OF THE ENVIRONMENT 75
3 Analysing the environment – the basics 76
4 Analysing markets, competition and co-operation 114
5 Developing customer-driven strategy 154
Part 3 ANALYSIS OF RESOURCES 189
6 Analysing resources – the basics 190
7 Analysing human resources 238
8 Analysing financial resources 272
9 Analysing operations resources 307
Part 4 THE PURPOSE OF THE ORGANISATION 339
10 Purpose shaped by vision, leadership and ethics 340
11 Purpose emerging from knowledge, technology and innovation 375
12 Purpose delivered through corporate and business objectives 410
Part 5 DEVELOPING THE STRATEGY 445
13 Developing strategic options – the prescriptive process 446
14 Strategy evaluation and development – the prescriptive process 488
15 Finding the route forward – emergent and prescriptive approaches 529
16 Organisational structure and style and people issues 573
Part 6 THE IMPLEMENTATION PROCESS 609
17 Resource allocation, strategic planning and control 610
18 Government, public sector and not-for-profit strategies 643
19 International expansion and globalisation strategy 679
20 Strategy dynamics and entrepreneurial strategy 723
21 Managing strategic change 749
22 Building a cohesive corporate strategy 787
Glossary 805
Indexes 815
vii
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Contents
About this book xv 2.4 Some prescriptive theories of corporate
How to use this book xx strategy 48
Guided tour of the book xxii Case study 2.5 55
Guided tour of companion website xxv 2.5 Some emergent theories of corporate
strategy 56
Guide to the main focus of case studies xxvi
2.6 Strategy as history – the contributions
Acknowledgements xxviii
of Penrose and Chandler 62
Publisher’s acknowledgements xxxi
Case study 2.6 63
Critical reflection 68
Part 1 Summary 68
INTRODUCTION Questions 70
Further reading 70
Notes and references 71
Chapter 1
Corporate strategy 2
Part 2
Introduction 2
ANALYSIS OF THE ENVIRONMENT
Case study 1.1 3
1.1 What is corporate strategy? 5
Case study 1.2 10 Chapter 3
1.2 Core areas of corporate strategy 13 Analysing the environment – basics 76
1.3 Process, content and context 15
Introduction 76
1.4 Process: linking the three core areas 16
Case study 3.1 77
1.5 What makes ‘good’ strategy? 20
3.1 Exploring the competitive environment 78
1.6 Strategy development in public and
3.2 Strategic environment – the basics 81
non-profit organisations 21
3.3 Degree of turbulence in the environment 82
1.7 International dimensions in corporate
3.4 Analysing the general environment 83
strategy 23
Case study 3.2 86
Case study 1.3 23
3.5 Analysing the stages of market growth 87
Critical reflection 28
Case study 3.3 90
Summary 29
3.6 Key factors for success in an industry 92
Questions 29
3.7 Analysing the competitive industry
Further reading 30
environment – the contribution of Porter 93
Notes and references 30
3.8 Analysing the co-operative environment 99
3.9 Analysing one or more immediate
Chapter 2
competitors in depth 103
A review of theory and practice 32
3.10 Analysing the customer and market
Introduction 32 segmentation 104
Case study 2.1 33 3.11 Conclusions 106
2.1 Historical context of strategy 34 Case study 3.4 107
Case study 2.2 37 Critical reflection 111
2.2 Prescriptive corporate strategy in practice 38 Summary 111
Case study 2.3 42 Questions 112
2.3 Emergent corporate strategy in practice 43 Further reading 112
Case study 2.4 47 Notes and references 113
ix
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Contents
Chapter 4
Part 3
Analysing markets, competition
ANALYSIS OF RESOURCES
and co-operation 114
Introduction 114
Chapter 6
Case study 4.1 115
Analysing resources – basics 190
4.1 Sustainable competitive advantage 117
4.2 Dynamics of competitive advantage 121 Introduction 190
Case study 4.2 122 Case study 6.1 191
4.3 The nature and intensity of competition 6.1 Prescriptive and emergent approaches to
in an industry 123 resource issues 193
4.4 Aggressive competitive strategies 125 6.2 Key factors for success in an industry 194
4.5 Analysing an organisation’s portfolio of 6.3 Analysing the resources of an individual
competing products and services 130 organisation 197
Case study 4.3 134 Case study 6.2 199
4.6 Developing co-operation strategies 136 6.4 Resource analysis and adding value 201
4.7 Distributor analysis 139 6.5 Adding competitive value: the value chain
4.8 Analysing the role of government 140 and the value system – the contribution
4.9 Analysing international competitors of Porter 202
and co-operators 143 6.6 Resource analysis and economic rent – the
Case study 4.4 144 contribution of David Ricardo 208
Critical reflection 149 Case study 6.3 212
Summary 149 6.7 Resource analysis and competitive
Questions 150 advantage – the resource-based view 215
Further reading 151 6.8 Identifying which resources deliver
Notes and references 151 sustainable competitive advantage 222
6.9 Resource analysis – improving competitive
Chapter 5 advantage 228
Developing customer-driven Case study 6.4 231
strategy 154 Critical reflection 233
Summary 233
Introduction 154
Questions 234
Case study 5.1 155
Further reading 235
5.1 Customers and customer-driven strategy –
Notes and references 235
the contribution of Theodore Levitt 158
5.2 Customer profiling and sustainable
Chapter 7
competitive advantage 161
Analysing human resources 238
5.3 Market segmentation 165
Case study 5.2 167 Introduction 238
5.4 Competitive positioning 169 Case study 7.1 239
5.5 Strategy implications: analysing branding 7.1 Human resource analysis and corporate
and reputation 170 strategy 242
5.6 Strategy implications: communicating with 7.2 Human resource audit 243
customers and stakeholders 172 7.3 Analysis of organisational culture 245
5.7 Strategy implications: strategic pricing Case study 7.2 252
and value for money 174 7.4 Analysis of strategic change in
5.8 International customer considerations 179 organisations 255
Case study 5.3 180 7.5 Analysis of politics, power and strategic
Critical reflection 183 change 260
Summary 184 7.6 International cultural perspectives 262
Questions 185 Case study 7.3 264
Further reading 186 Case study 7.4 265
Notes and references 186 Critical reflection 268
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