The Strategy Diamond

Question 1

What is a definition of strategy?

Answer 1

The central integrated, externally oriented, concept of how the business will achieve its goals

Question 2

What is not a part of strategy?

Answer 2

Choices about internal organization arrangements (compensation, training, etc) as strategy deals with intended external interactions.
-internal organization arrangements can support or stem from strategy, but are not contributing factor

Question 3

What concepts contribute towards making a strategy? (According to figure 1 in Hambrick)

Answer 3

Mission/vision/values
Objectives
Strategic analysis

Question 4

What are the five elements of strategy/ the strategy diamond?

Answer 4

-arenas
- vehicles
- differentiators
- staging
- economic logic

Question 5

What is the definition of the arena element?

Answer 5

Where will the business be active (which areas), how much emphasis will be placed on each area

Question 6

What is the definition of the vehicle element?

Answer 6

How do we get to the areas where the business intends to be active?

Question 7

What are some consequences of failing to explicitly consider vehicles in strategy?

Answer 7

Delays, high costs, or complete stall of movement to intended arena

Question 8

What is the definition of the differentiator element in strategy?

Answer 8

How will the firm win in the marketplace - how will it get customers. Differentiators are the result of conscious choice of top management

Question 9

What are the possible outcomes of top management not consciously deciding differentiators for a company?

Answer 9

1. If top management does not pick a differentiator, none will be created
2. With no well-thought out differentiator(s), management may attempt to outshine competition across the board (quality, price, everything) and this will be stretched too thin and/or be unable to deliver consistently

Question 10

Is competitive advantage achieved through one well thought out differentiator or a couple small ones?

Answer 10

Either or is possible.

Question 11

What is the definition of staging in strategy?

Answer 11

The speed and sequence of moves to achieve a successful strategy

Question 12

What are the possible factors that can drive staging?

Answer 12

-Resources - funding, staffing
-Urgency - possible brief windows of execution
-Achievement of credibility - attaining certain thresholds in other elements of strategy necessary to further expand resources and stakeholder engagement
- pursuit of early wins - deal with easily obtainable steps of the strategy first before taking on more challenging initiatives

Question 13

With is the definition of economic logic in strategy?

Answer 13

How will profits be generated - both regular profits and the firms cost of capital

Question 14

Why does strategy need to encompass all five elements of the strategy diamond?

Answer 14

• neglect of even one element can lead to critical omissions
• all elements require preparation and investment
• all elements must align with and support each other
• once each element has been outlined, strategist can consider supporting activities