Hybrid Strategies

Alex Janes
Senior Lecturer in Strategy

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Are Hybrid Strategies possible?
 Stuck in the middle

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 Industry sector data (Canada)

Cost Uniqueness
Cost Uniqueness
Margin

Margin

Margin
Cost

Hybrid Uniqueness
Hybrid Hybrid

Purity Ratio Purity Ratio Purity Ratio

Business Services Secondary Primary

Trade Contracting manufacturing manufacturing
Prime contracting

Source: Thornhill and White, 2007

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 Strategic Purity
Cost Leadership
Organisational Structure •Few layers
•Simple reporting
relationships
•Small corporate staff
•Focus on narrow range of
business functions
Management Control •Tight cost control systems
Systems •Quantitative cost goals
•Close supervision of key
costs
Compensation Policies •Rewards for cost
reduction
•Incentives to all
employees to reduce costs
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Source: Barney and Hesterly, 2011
Differentiation
•Cross-functional product
development teams
•Complex matrix structures
•Intense pockets of
innovation (Skunk works)
•Broad decision making
guidelines
•Freedom within guidelines
•Policy of experimentation
•Rewards for risk-taking
and creative flair
•Not punished for failure
•Multi-dimensional
performance measurement
 Illustration 1: Les Nouveaux Ateliers
• Men’s clothing store, based in Paris
• The first firm to use 3D imaging techniques to create bespoke suits
at mass market prices.
• Set up in February 2011 by Francois Chambaud & Nicholas Wolfovski
• Uses a 3D body scanner to take up to 200 measurements in a
fraction of the time it takes in a traditional, bespoke tailors.
• Clients are able to choose the pattern, fabric, style of cut, buttons
and all other details.
• Sent electronically to Shanghai for manufacture
• The whole process takes 3 weeks as opposed to the 3 months it
normally takes for a made-to-measure suit.
 Best Cost Strategies
Environmental pressures
Emerging Downward Global
markets pressure retailers Cost innovation
Traditional strategies driving on global delivering strategies
global labour everyday
Restrict new technology to demand rates low prices
Offer high technology at
premium customers and low cost
early adopters
Charge high premiums for Variety/customisation
variety and customisation offered as standard

Restrict specialist products Make niche products

to niche markets available to mass markets

Source: Williamson, 2010

Haier – the power of one advert!
 Illustration 2: Haier
• Haier, a Chinese domestic appliance manufacturer has
gained a 60% share of the US market for wine storage
refrigerators by focusing their channel activities through
Sam’s Club, a subsidiary of Wal-Mart.
• Wine fridges had been a niche market aimed at wine
buffs with units costing several thousand dollars.
• Haier’s entry has shaken up the established players, with
SubZero/Wolf one of those that has recently reduced
their output and workforce, closing their plant in
Madison, Wisconsin, in 2012, with the loss of 100 jobs.
 References
• Barney, J.B. and Hesterly, W.S. (2011) Strategic management
and competitive advantage, Harlow: Pearson Higher
Education.
• Thompson, A. Strickland, L., Janes, A., Sutton, C., Peteraf, M.,
and Gamble, J. (2017) Crafting and Executing Strategy: The
quest for Competitive Advantage, 2nd International edition,
McGraw-Hill, London.
• Thornhill, S. and White, R. (2007) “Strategic Purity: A multi-
industry evaluation of pure vs. hybrid business strategies”,
Strategic Management Journal, vol. 28, pp.553-561.
• Treacy, M. and Wiersema, F. (1995) The Discipline of Market
Leaders. Addison-Wesley: Reading, MA.Williamson, Peter, J.
(2010) “Cost Innovation: Preparing for a ‘value-for-money’
revolution” Long Range Planning, Vol.43 pp.343-353.