Competing for the future

Gary Hamel and C.K. Prahalad

Strategic management
Dr. William Andrews
AL Housein Qureiyeh

May 19, 2010

Gary Hamel and C.K. Prahalad, in their article, are trying to answer couple of strategic
questions that would show the companys sustainability and its ability to maintain its competitive
advantages and extend its market share in the future especially that we live in a rapid evolving
era. The questions are like:
1. Are we rule-maker or rule-taker?
2. Which issue is absorbing more of senior managers attention?
3. To what extent am I, as a senior manager, a maintenance engineer working on the present
or an architect designing the future?
The answers will reveal the companys devotion in terms of whether the senior management
is trying to preserve what it has by focusing on operations, or if it is more entrepreneurial and
trying to anticipate the future and involves in creating it.
According to the researches they have conducted; they found that the answers conform the
40/30/20 rule which means that the senior management spends about 2.5% of its time in building
the corporate perspective on the future. While the major time is spent on restructuring and
reengineering the core business in order to catch up with competitors.
To differentiate its position from competitors, the companys senior management should
spend a considerable amount of time on developing a distinctive view of the future and be
willing to not just admit that management does not have a full control over the future, but also to
be able to answer:
1.
2.
3.
4.

What new core competencies will we need to build?

What new products concepts should we pioneer?
What alliance will we need to form?
What development programs should we protect?

Beyond Restructuring:
We can figure from what happened with major corporations like IBM and GM that
managers are not leaders and engineers are not architects which implies that managers and
engineers are not as creative and innovative as they should be while leaders and architects
forecast the future and set their goals based on the long run.
Although restructuring and reengineering are essential due to the gap that is created
because of the discrepancy between the changes pace in industry and the companys, it is not
always the right solution. Usually executives use restructuring, when the profit margins and
market shares start to drop, by laying off the employees to reduce the overhead cost. The layoffs
are the executives disability to immediately response to the changes in the industry or at least to
maintain the growth rates.
Restructuring and downsizing have instantaneous effects, and they dont improve or
develop the business itself.

Beyond Reengineering:
Restructuring and downsizing goal is to get smaller and correct the earlier mistakes.
Reengineering focuses on continuously improving the business process and make a better
business; however, regenerating strategies is the process of differentiating and creating core
competency.
Hence, focusing on creating and developing products does not mean lower quality.
Moreover, gaining competitive advantages by matching consumers needs and even stimulating
demand by offering new innovative products succeed the mere focus on quality.
Creating the Future:
To create the future a company must be creative in its way of approaching the industry;
furthermore, the company should redraw the boundaries between industries and try to create new
industries.
Creating the future is harder than trying to catch up with the industry changes. The main
purpose of creating future is not to be like the competitors rather than establishing the benchmark
that everyone in the industry want to follow.
For example, EDSs new strategy is based on three aspects: 1. Globalization, 2.
Informationalize, 3. Individualize. The company strategy is based on its ability to utilize the
information technology to overcome the geographical, cultural, and organizational boundaries,
and to be able to covert data into information then into knowledge to make informed decisions.
The Quest for Foresight:
The most crucial part is to understand how to formulate visions based solid foundations
by studying the technological trends, demographics and lifestyle, and regulations. In order to
create the future, the future and discover more competitive space the senior management should
expand its horizons by exploring and creating new markets.
Changes are inevitable; therefore, the challenge is in the companys ability to foresee it
and be prepared for it. In addition, the most successful companies are the ones that will be part of
and the motivators of the changes.
Due to the continuous changes, foresight is an ongoing process to have the chance to
maintain its competitive space on the industry change curve.

Stick to the Core

Thomas J. Waite
Strategic management
Dr. William Andrews
AL Housein Qureiyeh

AL Housein Qureiyeh
Strategic Management
Case: Stick to the Core or Go for More?

Q1. Who is more important in the organization - Rafferty or Caldwell? Why

They are both so important to the organization. We cannot say that Rafferty is more important
than Caldwell just because he is trying to expand the business and generate more revenues. In addition,
we cannot say that Caldwell is more important to the organization as he is trying his best to maintain
and continue their success by focusing on what they are good at which is the creativity ads.
Each of them has his own perspective and therefore each one of them represents a different
strategic management style.
Rafferty is concerned about the future and the organization ability to maintain its market share
and continue to grow by creating new competitive advantages over their rivals. Furthermore, Rafferty is
not just trying to follow and forecast the changes in the industry but also to be a leader and a rule maker
in the market. Caldwell: Thats not the business we are in. Rafferty: Would you still say that if one of
our competitors began offering it (Stick to the Core P85). Also, he is trying to be customer oriented by
satisfying customers needs. We know we want to grow, and here we have a client begging us to
provide it with a new service (Stick to the Core P87).
On the other hand, Caldwell has concerns about expanding business for couple of reasons. First,
the organization has no experience in market strategy and product development. He knows that the
more the firm gets distracted by new initiatives, the more likely it will lose its touch (Stick to the Core
P92). Second, this expansion will shift the core competency of the company and will exhaust the
organizations human and capital resources. Finally, the expansion will disturb the organizations culture
and any failure will deeply affect the long term relationship with the clients. There is no question it
would create a real cultural rift (Stick to the Core P88).
Therefore, they are both important for the company and they create a balance between the
importance of improving and reengineering the business process and the efficiency and the importance
of regenerating the strategic plan and creating the future.

Q2. From the commentaries, identify all of the reasons they SHOULD go into the new business. Use
bullet points. Which seems most compelling to you? Why?

The leap from creative advertising to marketing services is not huge especially when it focuses
on aspects related to branding.
The plan for expansion requires limited resources and will have limited impact if it fails.

To meet clients needs one-stop shop.

It is important for customer equity by creating:
o Value equity: organization will provide more value to its clients.
o Brand equity: stretching the brand image.
o Relationship equity: it will increase the switching cost.
Taking advantage of the balance between Caldwell who can make the operation succeed based
on his experience and Rafferty external and creative vision.
Risk of growth can be calculated objectively; thus, the growth plan can be successful by
assessing the associated risk and taking hedging against it.
The most successful growth strategies are derived from the customers new needs.

Q3. From the commentaries, identify all of the reasons they shouldnt go into the new business. Use
bullet points. Which seems most compelling to you? Why?

They do not have a full mastery over all the aspects of the new service they want to provide.
Although Rafferty has the will to grow; it seems that he has no solid ground about how he will
provide the new service.
The organization lacks the human resources, in addition to the knowledge to succeed in this
area of business.
It will shift the concentration of the management and talents from the successfully established
business to the unpredictable new business.
It will affect the organizational culture and the relationship between the partners.
The corporate junk pile is littered with companies that overlooked risks to their core business
while pursuing new opportunities (Stick to the Core P96).

Q4: Which commentator has the weakest argument? Why do you think it is weak?

John O. Whitney is the weakest as he based his whole argument on the organization disability to
meet the new venture requirements. These requirements, mainly to him, are the aspects knowledge,
experience, and skillful human resources. Moreover, he claims that Advaark can take nothing for
granted about it competitive advantage because the world has abruptly changed since September 11.
No longer are people talking at the water cooler about clever advertising.
This can be true; however, the job market is filled with many skillful people that advaark can
employ to succeed in its new venture. Furthermore, there is a contradiction in Whitney second
argument about the rapid change. This rapid change requires strategic planning for future expansion to
maintain the success of the organization by responding to the changes in the customers needs and
forecasting the future trend in order to be at least, if not rule maker, a rule taker.

Q5: If you HAD TO go into the new business, HOW would you do it so as to mitigate the concerns
expressed by some of the commentators.

First we should analysis the market regarding its size and growth potentials which has been
already done. Second, we consider the regulations, entry barriers, and competitors. Then, we try to
identify or strengths in the new business and how can we benefit from our success in the creative
advertising and the network that we already have. Identify the required resources and there availability
and cost. And finally how would the failure affect our successful business and our relation with our
clients.
I would agree on trying to separate the new service virtually form the creative advertising so
that the new service has its own management and team. That will reduce any potential effects on the
organization culture. Furthermore, it will not shift or distract the creative advertising management from
its business core. This separation would also help to maintain healthy relationship with the clients to a
certain degree and reduce and effects in case of failure.

Q6: What would you do? Why?

I would go into the new business taking into consideration all the aspects mentioned above. This
expansion will make Advaark a rule maker in the industry and will help it to maintain its competitive
advantages over its rivals. Moreover, it will help Advaark to react to its clients needs and create more
value. This added value will increase switching cost and help Advaark to retain their market share and
long term relationship.

Growing for Broke

Thomas J. Waite
Strategic management
Dr. William Andrews
AL Housein Qureiyeh

Bullet point the reasons given by the CEO and by the commentators for making the acquisition.

The acquisition will support the service department at the company and will improve its
return as they will be able to respond to the clients on spot and improve maintenance
process.
The service sector in manufacturing is the new trend in business and has great growth
potentials.
The advantage of the ability to apply the acquired companys patent on the
manufactured machines, and acquiring the company before the hostile takeover by one
of the competitors.
it would give us powerful presence in fast-growing business while preempting
competitors from staking a claim there (Growing for Broke, P114).
Acquisition will empower the companys competitive advantage.
The acquisition seems to have such focus and could thus strengthen companys
competitive position in a market with lots of growth potential (Growing for Broke,
P120).
The acquisition will offer the company new knowledge and allow it to enter new
markets. this doesnt seem to be a case about growth but rather about
repositioningit will allow pargon to build a new skill base and enter new markets
(Growing for Broke, P125).

Bullet point the reasons given by the CEO and commentators for not making the acquisition.

The decreasing profit margins due to the earlier growth initiatives.

The unknown funds requirement for the acquisition. How much should Paragon pay
for MonitoRobotics? (Growing for Broke, P120)
Technological compatibility and the required time to utilize the new software for the
machines.
The company should not acquire the company only as a mere reaction to the
competitors hostile bid. acquiring MonitoRobotics is primarily reactive (Growing for
Broke, P128)
The company should downsize to improve its financials rather than spending the money
on unpredictable acquisition.
The company did not study all its growth opportunities and alternatives. stop viewing
the potential acquisition in isolation and ask himself, what are our growth potentials?
(Growing for Broke, P122).
The acquisition will not just impose business problem but also political problems. if the
acquisition represents a sensible repositioning of the company, he needs to build
consensus among his executive, his board, and his shareholders (Growing for Broke,
P125).

The new machines are built with new self-maintenance assessment. But as fail-safe
mechanisms increasingly are designed into complicated machinery, many servicing
capabilities become redundant (Growing for Broke, P126).

Identify advice offered by the commentators (bullet points).

Rand Araskog: as Paragon provides complicated equipment, they should be the one who
service it. Therefore, they should go with the acquisition. However, they should have in
mind the price they will pay for the acquisition. If the price is fair then they should go for
it, but if not, then they should continue the development of their internal service
department.
Ken Favaro: the main advice is to make sure that Paragon considers all the growth
opportunities they have other than acquiring MonitoRobotics. This would show if
Paragon did overlook one of the potential solutions. Furthermore, they should assess if
the acquisition is a good fit, has right price, and excellent execution.
W. Brain Arthur: the company should continue to grow and to renew itself. Acquisition
is the answer; however, the CEO should consider that this acquisition will reposition the
company and he should involve his board and shareholders in this process. Moreover,
he should know that acquiring the new technology is just the first step in the process of
establishing servicing business.
Jay Gellert: the crucial question that the management should be able to answer is if they
have a clear reason for the acquisition to make sure that it is not just to react to
competitors actions which can be devastating. The benefits of this acquisition will be
realized only in the far future and it is unpredictable. Also, this acquisition is a defensive
against rivals rather than a strategic decision. The management has no idea about how
it will go about the repositioning and the organizational culture and structure changes.

What would you do and why? Be sure to justify your answer. Make sure you address commentator
concerns or points in a way that shows your ability to prioritize.

Paragon should take its time to consider this acquisition on different levels:
1. Why do we need to grow in this stage, already established couple of growth
initiatives, and what are the possible growth alternatives that are available?
2. The financial requirements and the effect on its debt and financial health.
3. The integration process and an estimation of the time and resources required to
apply MonitoRobotics technology on Paragon machines.
4. What will happen to the invested resources in the internal service department? Is it
possible to acquire the knowledge and the alerting system in shorter time and lower
cost?
5. How it will affect our organizational culture and structure? And how will our
shareholders interpret this acquisition?
Once these questions are answered in order, Paragon will be able to make an informed
decision. One of the arguments against this will be that Paragon doesnt have that much

time! Then is Paragon management willing to take such a major strategic decision in
rush? I would absolutely disagree to make such a decision in a very short limited time
just to take the initiative from one of the competitors as it might not, and most probably
it will not, achieve the desired results because none of the implication of this decision
been taken into consideration. I would not recommend acquiring MonitoRobotics, at
least for now within given information, limited time, and financial status.
I suggest we continue on developing our internal service department as they are
the best people who know everything about our machines and clients needs.
Moreover, we do not have to put up with all the uncertainty that is surrounding this
acquisition. Furthermore, it will give us the time to focus on the growth initiatives we
already have and probably find better ones for future growth. Finally this will allow us to
sustain our financial status in a good shape.

Go Global or No
Walter Kuemmerle
Strategic management
Dr. William Andrews
AL Housein Qureiyeh

1) There is a lot of urgency in the case for the company to globalize quickly. In a short paragraph,
tell me why they think the consequences are so great if they don't. The purpose of this question
is to get you to explore the strategic thinking that they are using.
The case does not give enough details about the associated cost and the expected growth;
however, most of the time top management is forced to make such strategic decisions with such
uncertainty. The case shows the general consequences of whether going global or no. The first issue
facing DataClear is the need for growth as they almost have a saturated market regarding financial
and telecommunication. In addition, DataClear potentials to grow horizontally, by accessing the
chemical, petrochemical, and pharmaceutical industries require a new infrastructure setup and
major modification in the software to match these industries needs. Moreover, DataClear may lose
its competitive advantage to the new rivals VisitData who made a significant deal with Shell
(international company). Furthermore, the fear of the potentials the huge companies, such as SAS,
have if they enter this market. Also, DataClear already has global services through its U.S clients who
have subsidiaries in Europe and Asia which makes their global expansion easier, keeping in mind
that DataClear is still servicing the financial and telecommunication industries and there are no
major changes are required.
Therefore, the urgency to grow, the urgency to respond to the new rivals and most important
the strong potential rivals who might even threaten DataClears U.S market, and the urgency of
growing globally not just because of the simplicity of growing within the same industries compared
to growing into new industries in the current situation, but also because of the importance of the
potential growth through the established global network DataClear has.

2) The commentators both support and discredit aspects of the inferred strategy described in Q1.
What aspects of the strategy do they support? Discredit?
Heather Killen: supports the importance of going global to continue its growth. Also moving
abroad fits DataClears directions to grow into new industries and to increase its market share in the
current industries. Beside, growing global is necessary as most of the competitors in this industry are
based outside the U.S.
remaining a domestic U.S. player is not an option. DataClear needs to take its business global
(Go Global P67).
Alison Sander: Discredit DataClear expansion for couple of reasons. First DataClear is making a
strategic mistake by merely expanding globally in response to its competitors. Also DataClear clearly
has no arbitrage, strategic positioning, or replicability advantages by growing globally. This
expansion will only defer DataClears management focus. Furthermore, DataClear underestimate
the cost and obstacles of building successful global strategy.
Establishing overseas subsidiary is expensivethe poor track record of most joint ventures suggest
that DataClear needs to evaluate its potential partnersan ill-conceived alliance with Benro could
prove as risky as competing against VisitData (Go Global P70).

Barry Schiffman: discredit going globally as DataClear face three issues:

Lack of managerial skills to move abroad.
Capital requirements and how it will affect its position financial stability, shareholders.
Lack of thorough competitive analysis.
for these reasons, I do not recommend that Greg go along with Susans evident determination
to head up an immediate international initiative (Go Global P73).

Scott Schnell: at a certain point DataClear will need to expand globally and the best way to do that is
through joint venture or an added value reseller rather than establishing its own. However, for now
DataClear should focus on the potential growth within the U.S. market. DataClear has no expansion
detailed plan including overcoming any challenges, timelines and milestones, and required
resources.
And no company should guide its actions solely on the press releases, rumors, and sales triumphs
of competitors, especially when selling a sophisticated product Establishing overseas subsidiary
is expensivethe poor track record of most joint ventures suggest that DataClear needs to evaluate
its potential partnersan ill-conceived alliance with Benro could prove as risky as competing against
VisitData (Go Global P70).

3) Explain the commentators concerns about DataClear's ability to execute on a globalized strategy
in terms of resources and present competitive position.

Human resources, experienced skillful international expansion manager, developers who are
able to modify the software to be used with different languages.
Financial Resources to fund this expansion especially after the last partnership with David
Lester.
Did DataClear really will lose its competitive advantages to VisitData? VisitData is in
petrochemical industry while DataClear is still in financials and telecommunications. Beside
is DataClear big enough to preempt any other competitors and for how long can then do
that?

4) Compare the difficulties of starting their own overseas subsidiary with that of partnering or joint
venturing.

International expansion is expensive, and for DataClear to expand globally on its own it has to
establish global offices and recruit experienced managers to run these offices in addition to the sales
and technical support officers. Moreover, they have to find the best operation places for the offices.
For example how many offices DataClear need to establish in Europe that has different cultures,
languages, and different managerial requirements?
Partnership and joint venture is less expensive for DataClear because it will allow DataClear to
penetrate these new markets though its partners rather than establish everything from the scratch.
Moreover, it will benefit from the acquired skills of its partners. However, establishing a partnership
should consider the shareholders and how it will affect the companies decision makers. On the
other hand the joint venture would considered risky if the joined company found that it will be able
to have its own product and start to compete against DataClear knowing that they are also
DataClear distribution channel in that specific area and DataClear has no experience or connection
there.
5) What strategic "axioms" (2-4) can you come away from this case with that would give you
guidance about global expansion initiatives?