Strategy and The

General Business
Environment
Competitive Strategy – Individual Assignment
Strategy and The General Business
Environment : Contents
1. “Changes in the competitive battlefield” – C.K. Prahalad

2. “New dynamics of strategy in the knowledge economy” – W.

Chan Kim, Renee Mauborgne

3. “Five ways to grow the market and create value” – Aneel G.

Karnani

4. “A call for sustainable development” – Thomas N. Gladwin

5. “The euro and market convergence” – Paul Verdin

1. “Changes in the competitive
battlefield” – C.K. Prahalad
• During the late 1970s and 1980s, the competitive conditions
evolved but within a well-defined paradigm. A major competitive
disruption for US and European markets was the success of
Japanese manufacturing firms, which was a result of the
significant operating efficiencies.

• Later, during the 1990s, large and key industries were being de-
regularized and privatized. With the spread of the internet,
businesses were starting to feel the impact of digitization.
Since the business landscape had started to become discontinuous and
disruptive, the business models had to change from implicit to explicit.
Four transformations influencing the business models are as follows:

1. Expansion in strategic space available to companies :

diversification, geographical expansion, changing business
portfolio
2. Globalization of businesses, for eg, Coca-cola n McDonalds
3. Speed – a critical element
4. Innovation would be important for competitive advantage

Lastly, the article concludes by saying that with the drastic changes
taking place in the competitive environment, the process of strategy
making will also undergo significant changes. Managers should focus
on strategic intent, creating an industry space by understanding global
forces and reacting quickly.
2. “New dynamics of strategy in the
knowledge economy”
Economies are moving from production-based models to
knowledge-based models, thereby opening up new opportunities
and threats. First is the potential for earning increased returns, and
second is the new potential for free riding as new ideas come up.

The authors say that in order to maximize returns, the value

innovators must follow a market approach by:
➢Strategic pricing for demand creation and,
➢Target costing for profit creation.
The combination of these is a high profit, high growth engine to
achieve economies of scale and economies of learning, thereby
increasing the returns.
3. “Five ways to grow the market and
create value”
The article gives five growth directions that are possible for any
company, and the advantages and disadvantages of each.
The growth strategies are:
1. Unrelated diversification – TATA group in India, Philips
exiting from various businesses
2. Related diversification – Disney (cruise ships)
3. Vertical integration – strategic alliance between Acer and
Texas instruments
4. Globalization – M&A between Daimler and Chrysler,
McDonalds which has balanced global leverage with local
adaptation.
5. Market penetration – The Body Shop ( in cosmetics
segment), Amazon.in (in internet commerce), Kellogg (in
India)
• The author says that some of the most promising routes for growth
are vertical integration, diversification, and globalization.

• Even successful companies need to change in order to be

sustainable.
4. “A call for sustainable development”
• This article implies the need for acknowledging the relation
between the vital-life support services and existence of the
global operating space for businesses. Signals of human-
caused unsustainability include, altered biogeochemistry,
threatened biology, increasing population, persistent
deprivation, social disintegration, and reduction in renewable
resources.

• All business is - directly or indirectly – affected by these

causes, as the business eventually is operating within the life
support services provided by the biosphere. The corporate
welfare is equally dependent on healthy social systems.

• Hence, it is necessary for businesses to protect, maintain and

restore the integrity, resilience, and productivity of such
systems.
The article also gives a “strong” model for sustainable development,
a two-by-two grid, with ecological and material capital on X axis
and human and social capital on Y axis.

1. S-E (4th) quadrant – zone of naturalizing; operations of

economy in conformity with nature, at the cost of human
capital.
2. S-W (3rd) quadrant – impoverishing zone; society lives off a
vanishing capital base.
3. N-W (2nd) quadrant - zone of humanizing; operations of
economy endowed with human character, at the cost of
diminishing natural capital.
4. N-E (1st) quadrant – Genuine sustaining zone; economic and
technical developments are simultaneously people and nature
based.
Lastly, the article says that moving towards sustainability is a long-
term and multi-level challenge, entailing a range of reinforcing roles
and tasks. This requires a large scale organizational transformation
which is possible with transformational leadership.
5. “The euro and market convergence”
• The introduction of the single currency has been widely spread
out.
The article says that the effects of euro on market convergence
are neither overwhelming nor obvious, as predicted. It also says
that there are many economic and strategic reasons why prices
for same goods will remain different from one place to another
in the euro zone.

• It also says that for most non-financial industries, the euro

itself is likely to have only a small impact on market
convergence not competitive advantage. It suggests that if euro
is taken up as a strategic project, it should be taken up at the
appropriate level in the company organization.
 Conclusion
The chapter begins with an article which talks about the changes
in the competitive industry. It contrasts the traditional view of
strategy and the emerging view of strategy. The next article
explains the shift from production-based economy to knowledge-
based economy. The third article discusses the five possible
growth strategies along with their advantages and disadvantages.
Lastly, there is a plea to integrate business strategy with vital life
support systems.

This chapter gives explains how to survive in a changing business

environment with changes in the economies, by adopting one or
more of the possible growth strategies, while simultaneously
being a ecologically and socially responsible organization.