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Strategy & Organization > 15. Strategic Renewal > Flashcards

15. Strategic Renewal Flashcards

1
Q

Define path dependence.

A

Constraints of past organisational development on future decisions and actions.

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2
Q

What do firms become highly dependent on? What type of firm struggles more with path dependence?

A

1) Resource allocations
2) Relations with stakeholders

Older firms are more path dependent.

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3
Q

What are two conflicting forces that arise from path dependence?

A

1) Exploitation

2) Exploration

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4
Q

What does exploitation entail?

A

Efficient and stable structures for optimal exploitation of existing knowledge.

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5
Q

What does exploration entail?

A

Environmental changes force firms to increase flexibility and explore new sources of wealth through new research combinations.

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6
Q

Define strategic renewal.

A

Adaptive choices and actions a firm takes to alter its path dependency and maintain a dynamic strategic fit with changing environments.

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7
Q

What is a dynamic strategic fit?

A

Firm’s specific fit over time between environmental factors and organisational contingencies (uncertainty).

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8
Q

What are the four perspectives for viewing the interaction between firms and their environments?

A

1) Population Ecology Theory
2) Evolutionary Theory
3) Resource Based Theory
4) Institutional Theory

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9
Q

What is population ecology theory?

A

Environmental factors favour reliable and specialised organisations (firms match the environmental niche).

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10
Q

What do firms build up if they match population ecology theory?

A

Structural inertia (persistance to changes in organisational structures).

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11
Q

Define fitness.

A

Capacity to learn and change organisation structures to fit new circumstances.

Opposite of inertia.

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12
Q

Define relative inertia.

A

Firms that respond slowly to threats/opportunities. They will eventually adapt.

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13
Q

What creates hyper competition (Red Queen effect)?

A

Dynamic interactions between increasing firm adaptation and increasing competition cancel each other out.

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14
Q

Define hyper competition.

A

Environment of rapidly escalating competition.

  • high uncertainty
  • heterogeneous (diverse) players
  • constant disequilibrium and change
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15
Q

What are similarities evolutionary theory shares with population ecology theory?

A

1) Limited organisational adaptability.
2) Population analysis
3) Important environmental selection.

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16
Q

What differs evolutionary theory?

A

Routines.

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17
Q

Define routines and its role in evolutionary theory.

A

Regular and predicted behaviour patterns of firms.

Daily operations helps firm develop unique skills that create opportunity for distinct competitive advantages.

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18
Q

What are limitations of routines?

A

Search for new ideas align with current ones –> Limited innovative capability.

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19
Q

What is resource based theory?

A

Firms viewed as tangible and intangible resources; tactics must be developed for superior performance.

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20
Q

Regarding resource based theory, what is a struggle of firms?

A

Unique bundle of resources (capabilities) take time to develop and are complexly intertwined with firms, therefore they are sticky (difficult to change).

Overly relying –> competence trap.

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21
Q

What is institutional theory?

A

Isomorphism of organisations in a population.

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22
Q

Define isomorphism.

A

Similarity in strategies and behaviours between firms.

Isomorphic forces may cause firms to homogenise (make uniform) their strategies.

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23
Q

What are the three kinds of isomorphism and what do they entail?

A

1) Coercive isomorphism: political and legitimacy constraints (formal rules/regulations)
2) Normative isomorphism: professionalisation and industry values/norms (unwritten rules/ etiquette)
3) Mimetic isomorphism: bandwagon effect; tendencies of companies to follow beliefs/behaviours of others

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24
Q

What is an adaption perspective on strategic renewal? What are the four types of adaption perspectives?

A

Voluntary approach to strategic renewal.

1) Strategic choice perspective
2) Dynamic capabilities theory
3) Organisational learning theory
4) Behavioural theory

25
Q

What is strategic choice perspective?

A

Firms with the power to drive strategic renewal and reshape their environment.

Decision makers are intermediaries between firms and environments.

26
Q

What is dynamic capabilities theory? What are dynamic capabilities?

A

Dynamics of resource deployment. Firms should constantly renew themselves by looking for opportunities.

Dynamic capabilities is where firms integrate and release resources to match or create market change.

27
Q

What is organisational learning theory? What is absorptive capacity?

A

How organisation members notice and use knowledge to reconsider firms fit in environments using absorptive capacity.

Absorptive capacity: firms ability to value, assimilate and utilise new external knowledge.

28
Q

What is behavioural theory? What is a problem firms encounter?

A

Organisations are a coalition of individuals with needs that are satisfied through effective resource allocation.

Results to firms looking for exploitive rather than adaptive solutions (short-term approach).

29
Q

What are the dimensions of strategic renewal and what do they entail?

A

Content: core attributes of the strategy (exploitative or explorative) that need to be changed

Context: learning the strategic renewal internally (experimental learning) or externally (acquisitive learning)

Process: how/when effective strategies are shaped and implemented efficiently in firms

30
Q

What is the difference between incremental and discontinuous transformations?

A

Incremental: adaption through small interactions b/w path dependent choices and environmental feedback over time

Discontinuous: adaption through drastic revitalisation of firms operations (business scope, competitive approach)

31
Q

What are the two types of learning?

A

Explorative and exploitative learning.

32
Q

What is explorative learning and what does it entail?

A

Adds new attributes to organisations current portfolios and competences.

  • highly variable gains, distant in time
  • overexploitation: over relying on core competences and specialised resources –> competence trap and core rigidity
33
Q

What is exploitative learning and what does it entail?

A

Learning existing/similar knowledge to organisations current competencies.

  • gains are predictable and proximate (immediate)
  • renewal trap: over-exploration of resources and excessive searching –> destroyed value (too focused on future)
34
Q

What are the two main tasks associated to strategic flexibility?

A

1) Managerial tasks

2) Organisational design tasks

35
Q

What are the two components of managerial tasks and what do they entail?

A

1) Variety of capabilities: ability to respond to all disturbances (in form of quantity or quality of capabilities)
2) Speed

36
Q

What are four types of flexibility?

A

1) Steady state flexibility
2) Operational flexibility
3) Structural flexibility
4) Strategic flexibility

37
Q

Define steady state flexibility.

A

Static procedures for optimal performance (during stable times).

38
Q

Define operational flexibility.

A

Routine capabilities (for responding to environments) based on present structure and goals of organisation.

39
Q

Define structural flexibility.

A

Managerial capabilities for adaption in response to complex changes in environments.

40
Q

Define strategic flexibility.

A

Dynamic capabilities for adapting the goals of the organisation.

41
Q

What are organisational design tasks for?

A

To gain flexibility.

42
Q

Define organisational technology.

A

Hardware and software that transforms inputs into outputs.

43
Q

Define organisational structure.

A

Distribution of responsibility and authority among personnel, control systems, and the coordination process.

Restructuring helps improve responsiveness.

44
Q

Define organisational culture. What can it change to? What are the constrains?

A

Beliefs and assumptions held by all members.

  • can change from conservative to innovative
  • may constrain managerial capabilities because of shared rules for reactions to unexpected contingencies (events).
45
Q

What are the four organisation forms for coping with competitive environments? (To be more flexible)

A

1) Rigid form (strategic programming)
2) Planning form (strategic planning)
3) Flexible form (adaptive strategies)
4) Chaotic form (spontaneous strategy)

46
Q

What is rigid form and what does it entail?

A

Strategic programs based on extrapolation (extend) of existing trends.

  • little innovation/change
  • static/narrow minded perspective
  • established firms in predictable environments
47
Q

What is planning form and what does it entail?

A

Firms coping with moderate competition.

  • flexibility constrained to specific rules
  • strategic drift where incremental (additional internal) changes don’t keep up with radical environmental changes
48
Q

What is flexible form and what does it entail?

A

Dominated by strategic and structural flexibility; in hyper-competition.

  • innovate and implement quickly
  • balance between exploration/exploitation
  • intelligence gathering and information gathering for receptiveness to new feedback for increasing learning capacity of management
49
Q

What is chaotic form and what does it entail?

A

Very extensive flexibility dominated by strategic flexibility (however uncontrollable).

  • unlimited variations
  • no distinctive technology or stable administrative structure (shared values)
  • strategic neglect (managers don’t pay attention)
50
Q

Are the (strategic) organisation forms permanent? What should firms do, then?

A

Not permanent; needs renewal.

51
Q

What are the two trajectories for renewal?

A

1) Natural trajectory of routinisation: decreasing competition
2) Reversed trajectory of revitalisation: escalating competition

52
Q

What does natural trajectory of routinisation entail?

A

New entrepreneurial firms must go from chaotic to flexible, and rigid to survive. Requires strategic focus.

Increase knowledge processing capacities through routines.

53
Q

What does reversed trajectory of routinisation entail?

A

Transition from flexible to chaotic to cope with increasing competition (hypercompetition).

54
Q

Define ambidexterity (using both).

A

Abilities to develop high levels of exploration and exploitation.

55
Q

Corporate transformations consist of dual renewal trajectories. What are the four types of ambidexterity that exist?

A

1) Contextual ambidexterity
2) Structural ambidexterity
3) Cyclical ambidexterity
4) Reciprocal ambidexterity

56
Q

What is contextual ambidexterity?

A

Simultaneous exploration and exploitation by organisational context that cause individuals to do both.

57
Q

What is structural ambidexterity?

A

Simultaneous exploration and exploitation across organisation units that specialise in either exploration or exploitation.

58
Q

What is cyclical ambidexterity?

A

Sequential pursuit of exploration and exploitation in an organisation unit across time.

59
Q

What is reciprocal ambidexterity?

A

Subsequent (following) pursuit of exploration and exploitation across domains, functions and hierarchical levels.

Strategy & Organization (14 decks)

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