Table Of ContentDardenBusinessPublishing:224226
THE
STRATEGIST’S
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JAR E D D. HAR R I S AN D M I CHAE L J . LE N OX
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This or redi By Jared D. Harris and Michael J. Lenox
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a © 2013 by the Board of Trustees of the Darden School Foundation. All rights reserved.
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No part of this brief may be reproduced or transmitted in any form or by any means, electronic or mechanical, including
photocopying and recording, or in any information storage or retrieval system without the prior written permission of
Darden Business Publishing.
Harris, Jared D. and Michael J. Lenox, authors.
The Strategist’s Toolkit / Jared D. Harris and Michael J. Lenox.
Includes bibliographical references.
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ns. To our students, who have inspired us and taught us over the years.
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er To our colleagues, who have helped us better articulate many of these ideas.
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ung.ditio And to our families, who have tirelessly supported and sustained us.
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ns. Contents
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Baor Preface vii
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nstitut Teknolom for questi Par1t. 1. Itnotroodlusc ftioonr taon Staralytezgiicn Agn tahlyesi sc o mPetitive environment 1
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Thior re 12. Real Options Analysis 75
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15. Strategic Analysis in Practice 91
Common Terminology in Strategy 97
Strategy Analytics 105
Gathering Strategic Intelligence 107
About the Authors 109
Endnotes 111
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ns. Preface
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dd The Strategist’s Toolkit is a unique resource for helping students, managers, and executives in stra-
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Baor tegic analysis and decision making. The toolkit lays out a collection of tools and frameworks to
ogi ons help you perform a strategic analysis of a business enterprise, and decide upon and justify a proper
nstitut Teknolom for questi cThpoloueyr etsodeo oilnkf aictc oitnsi ocnneor.tt aw siuthb sat itteuxtteb fooor ka oter xstebroieosk o of rc caaseses. cWollheecrteioans ,a a tlethxtobuogohk i tm cioguhltd c boen tuasienf udlelyta eilmed-
at at Ihing.c theoretical treatments of important concepts, the Strategist’s Toolkit instead strives to lay out brief,
a Safapublis ucosemfuple teixtipvlea nsiattuiaotnios no.f Thanea ltyotoiclkailt tios oalcst tiohnat- ocrainen btee dr eaanddi liys idnetseiggrnaetded t oa nmda ekme tphloe yuendd teor leyvianlgu sattrea a-
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y by denb tempted to build on those fundamental ideas in summarizing and presenting these frameworks. In
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orizper other resources. This allows you—the student, manager, or executive—to use the toolkit in a way
ment is authute. Contact tfiahnramatl y ifsza icmnegos ;sa tt o cm assueeap onpril ensmegrfeiuenls t a oanf t dce axustse oesfr; u ionlt thaoe c ryo osuouru:s retoc oe hn oe sfl tptrh ayetoeougr eiactn imcaalaly nczaoeg naet mecnoetmn; atp soe frtr istatimvraeet sewigtoiucrak ttshi otinon k eyimonugpr;l oooyrw ianns
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docstri a supplemental reference work in either your professional or academic endeavors.
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Thior re The organization of the Strategist’s Toolkit is straightforward. The first chapter provides an overview
y of conducting an integrative strategic analysis. The remaining chapters focus on specific tools that
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o n encountered in strategy discussions and a table of common strategy analytics are included at the
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debted for their help in the development of the toolkit. Indeed, the initial efforts to develop some
of the material were not originally conceived as components of an integrated reference guide but
rather as standalone, brief technical notes. Only over time did it become apparent how an integrated
collection of these frameworks would prove useful to instructors and students alike. Many conver-
sations that (in retrospect) served as important origins for chapters in the toolkit occurred during
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teaching meetings of faculty teaching the required strategy course in the first-year curriculum of
the University of Virginia’s Darden School of Business, our home institution, over the course of
the past six years. Therefore, we are especially indebted to the Darden School faculty constituting
those teaching teams over the years: Ming-Jer Chen, Ed Freeman, Sankaran Venkataraman, Greg
Fairchild, Jeanne Liedtka, Scott Snell, and Jay Bourgeois.
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mi ter 5 draws directly from the work of Ed Hess. Chapter 6 summarizes the work of Ed Freeman and
per Andy Wicks on stakeholder theory, a set of ideas that comes with breathing the air at the Darden
nal School. The ideas in Chapter 7 were largely developed and championed by Scott Snell, who helped
ung.ditio us understand firm capabilities in a new way. Chapter 10 draws heavily from the work of Jeanne
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Banor a Liedtka, who was invaluable in articulating the concepts of hypothesis testing. The Darden School’s
gi ns reference librarian, Susan Norrisey, helped write the appendix “Gathering Strategic Intelligence,”
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anss leaders.” In our teaching, we strive to help our students embrace an enterprise perspective; in our
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nlar conveyed the integrative spirit of the Darden School in the Strategist’s Toolkit.
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ns. 1. I ntroduction to
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nstitut Teknoloom for questio Evamenvandektr uteyhrs oe ee, r vaogelralr onayc i ndazotaaintyoi.pnorn oo fifn tse coeardrgsca ean riszetasrotaituoerngc,y ea.s sB, taerna itdte aghnye lsepesstt sag tbuhliieds deh ietrdhee cb tmuiosynirn oieafs dtsh ,d eae encni setiemornpesrr gitsihena, gitn aefnnot rormergpsa rpenrniizoearutirtiioieansl
at at Ihing.c But what exactly is strategy? Kenneth Andrews provides the following definition:
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orizper sets of considerations. An organization’s strategic goals or objectives refer to the organization’s
uthact mission, its unique purpose and scope. The strategic plan, sometimes called strategic intent, is how
ment is aute. Cont ttoh ea occrgoamnpizliasthio sntr taatielogrics igtos aolffs.e Sritnragtse agnicd a dcetvioenlosp asr ae ntdh olesvee traanggeisb ilnet aercntiaoln rse stoakuercne tso a onpde craaptiaobnilailtiizees
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Thior re Together, this triad of mission, intent, and actions defines an organization’s strategy. They reveal
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d Understanding and assessing an organization’s strategy is critically important to many organiza-
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must assess the strategy of firms, whether they are their own businesses, clients’, or competitors’.
Managers, consultants, and analysts are frequently asked to identify and assess the strategy of
a business or an organization. Whether it is to properly value a business or acquisition target,
undertake a new corporate initiative, or enter a new market, one needs an understanding of an
organization’s strategy to formulate an informed and robust recommendation.
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