A A GDE SATIA

Surabaya-2019

UTAMA
CORPORATE STRATEGY: A RESOURCE
BASED APPROACH
PROGRAM DOKTOR ILMU
(Summary Chapter 1-5)
AKUNTANSI UNIVERSITAS
AIRLANGGA
 BAB 1. AN INTRODUCTION TO CORPORATE STRATEGY
Sub Topics:
1. The need for corporate strategy
2. What is corporate strategy
3. A Framework for corporate strategy
The Need for Corporate Strategy

Michael Porter defines Corporate Strategy as the way a company creates value through the configuration
and coordination of its multi-market activities.

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What is Corporate Strategy:
a. Addressed any and every strategic issue facing a company
b. The way company create value through the configuration and coordination
c. The pattern of decision that determined a company's goals, produced the principal policies for achieving
these goals, and defined the range of businesses the company wants to pursue
d. Business-level strategy  the issue of how to build a sustainable competitive advantage in a discrete and
identifiable market.
Corporate-level strategy  the overall plan for a diversified company
e. Regardless of the type of strategy a firm is pursuing, most of its value will ultimately be realized in
the business units, through their enhanced ability to produce and deliver goods and services to
customers.
This definition has three key attributes to it:
– Value creation: the generation of superior financial performance (rents) from multi-market activities that
create corporate advantages
– Configuration: the multi-market scope of the corporation (product/market diversification, geographic
focus, and vertical boundaries)
– Coordination: the management of activities and businesses that lie within the corporate hierarchy
Elements of corporate strategy-Corporate Strategy Triangle

Five elements define a corporate strategy:

– Vision
– Goals and objectives
– Resources
– Structures, systems and processes
– Corporate Advantage

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Vision

Definition: overall concept of what the company is aspiring to become Intended to motivate and provide
meaning for employees in terms of the direction of the company
Usually contains two key elements – Definition of the corporate domain (“What are we going to do?”) –
Statement of value of ethics (“In what manner are we going to do it?”)
Should be simple
 If you don't know where you are going, any road can take you there.
 Successful corporations were those that had a vision and were committed to fulfill it over an
extended period of time.
 In the 1920s, Ford wanted to put "a car in every home“
 In the 1980s, Apple looked toward the future and saw "a computer in every home.“
 By the 1990s, Bill Gates had gone further yet: "a computer on every desk, and in every home,
running on Microsoft software."
Goals and objectives
Definition: targets that representation the short-term milestones which the company seeks to achieve the
implementation of its strategy
Puts the vision into more immediate and concrete terms
Goals: (unquantifiable) desirable ends which the company wishes to reach – Examples: providing customer
satisfaction and quality throughout the organization
Objectives: measurable, closed-end targets that the corporation sets itself (could be general or specific) –
Earn a 20% ROE over a business cycle – Acquire a company that is a leader in a particular technology
within the next 5 years

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Resources
Definition: tangible and intangible assets that make the company unique
Resources are those assets accumulated over time that cannot be readily imitated or acquired – Resources
are the foundation of the corporate advantage that the company will build upon and exploit
What are the “resources” for each of the following companies? – McKinsey (global management
consultancy) – Pfizer (global pharmaceutical) – Walmart (you know who Walmart is)
Business
 Industry choice is critical to the long-term success of a corporate strategy
 Only effective strategies that create competitive advantages produce superior returns in the long
run.
 Refers to the industries in which a firm operates, as well as to the competitive strategy it adopts in
each.
 The particular competitive strategy a firm pursues within each industry also affects corporate
performance
 An analysis of a firm's businesses should include the attractiveness of their industries, the
competitive strategy the firm will adopt in each, as well as the constraints on, and opportunities that
exist for, crossfertilization
Structures, systems, and processes
Definition: organized deployment of corporate resources to those functions required to operate the
businesses
Examples of areas include – Investor relations – Finance and accounting – Legal – Supply chain
Often involves distinctions between activities that take place in a centralized corporate office versus a
decentralized function
Corporate Advantage
• Does ownership of the business create benefit somewhere in the corporation?
• Are those benefits greater than the cost of corporate overhead?
• Does the corporation create more value with the business than any other possible corporate parent
or alternative governance structure?
Harmonious combination
Work together as a system to create value through multimarket activity

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 BAB 2. RESOURCES AND RENTS
Questions of business-unit strategy
- Why is one firm different from another?
- Why is one firm more profitable than another?
- What makes a competitive advantage sustainable?
- Provides a powerful explanation of firm scope,
- Diversified expansion in particular
Resource Based View (RBV)
It explains why a firm possesses both a competitive advantage in a single business and a corporate
advantage that extends across many businesses.
The approach unifies the treatment of corporate- and business-level strategy, and facilitates strategic
analysis at both levels
Business-Unit Strategy
 The external positioning of a firm relative to its competitors in a given industry.
 The internal alignment of all a firm's activities and investments
Industry and Competitive Positioning-5 Forces Porter
1. The threat of new entrants
2. The power of buyers
3. The power of suppliers
4. The intensity of rivalry within the industry
5. The threat of substitute products or services.

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Competitive Strategies
Porter set generic strategies
Low cost
Differentiation
Tangible assets
Are the easiest to value and often are the only resources that appear on a firm's balance sheet.
They include real estate, production facilities, and raw materials, among others.
Intangible assets
Include such things as company reputations, brand names, cultures, technological knowledge,
patents and trademarks, and accumulated learning and experience.
Organizational capabilities
Are not factor inputs like tangible and intangible assets
They are complex combinations of assets, people, and processes that organizations use to
transform inputs into outputs.
Resource Stocks and Flow

Resources can be:

– Physical ie the wiring into your home
– Human ie. skilled and creative employees
– Intangible ie. brand names and technological know-how
– Organizational Capabilities embedded in the business’ routines, processes, culture

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Economic Rent
Ricardian or scarcity rents
Are due to valuable factors that are inherently in limited supply.
Ricardian rents are due to scarcity.
Schumpeterlan or entrepreneurial rents
Are earned by innovators and occur during the period of time between the introduction of an innovation and
its successful diffusion.
It is expected that innovations, in time, will be imitated, but until that occurs, the innovator will earn Schum -
peterian rents.
Strategic Implications of Competing on Resources (Resource Based Strategy)
 Identification of valuable resources
 Investing in resources, continually
 Upgrading resources, creating or acquiring new resources, finding alternatives resources
 Leveraging resources
 Rapid redeployment of resources
COMPETITIVELY VALUABLE RESOURCES
There are 5 tests (questions) to determine whether a resource is valuable with respect to the industry
dynamics
1. The test of inimitability: Is the resource hard to copy?
2. The test of durability: How quickly does this resource depreciate?
3. The test of appropriability: Who captures the value that the resource creates?
4. The test of substitutability: Can a unique resource be trumped by a different resource?
5. The test of competitive superiority: Whose resource is really better?
INVESTING IN RESOURCES
• Corporate strategy: Continual investment in building & maintaining valuable resources
• Theory of core competence identifies that often the resources take a back seat to optimizing current
divisional profitability
• So, the corporate office has to act as a guardian of the “crown jewels‟ of the company
• However, caution must be taken as core competencies may not be what the industry requires and
investing thus may become redundant
6l6

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UPGRADING RESOURCES
• Companies may find themselves in a situation where they don’t possess valuable resources or they have
been imitated by competitors
• Hence companies must constantly upgrade the number and quality of their resources • Approaches to
upgrading
• Adding new resources
• Upgrading to alternative resources that are threatening company’s current capabilities • Upgrading its
resources in order to move into a structurally more attractive industry
LEVERAGING RESOURCES
• Question a strategist must ask: “how far can the company’s valuable resources be extended across
markets?”
• However, corporate diversification often falls prey to 3 common & costly strategic errors
• Managers overestimate the transferability of resources; they themselves can’t imitate their resources
across different markets
• Managers overestimate their ability to compete in highly profitable industries; entry barriers are usually
resource barriers as well
• Managers assume that leveraging generic resources, like lean manufacturing, will fetch them competitive
advantage in the new market without even studying industry dynamics
• Despite pitfalls, rewards for leveraging resources are high

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 BAB 3. SCALE AND SCOPE WITHIN AN INDUSTRY
Sub Topics:
1. Introduction
2. Dimension of Scope
3. Expansion Within an Industry
4. Economies of Scale
5. Economies of Scope
6. Network Externalities
7. Obstacles to exploiting Scale and Scope
8. Practice
Introduction

Competitive
advantage,
Identified the
valuable
strategy resources
within an
The Firm industry

to implementing
that strategy:

Deploying them
investing in or
appropriately in that
internally
product market.

Expansion, or contraction, begins from this core and proceeds along three dimensions: geography, product
market, and vertical Integjation along the value chain. The scope of any firm, at any time, can be
represented in these three dimensions, whether or not the firm explicitly selected that configuration
3 Dimensi Corporate Scope

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 - Value chain
- Geography
- Product Market
Economies of scale: biaya rata-rata produksi setiap unit menurun karena banyak unit atau jasa yang
dihasilkan.
a. Single-site: often occur in physical production processes and are related to the size of the
manufacturing unit. When technological scale economies exist, for example, capacity can be
increased at a greater rate than the associated cost of plant and equipment.
b. In most industries, dominant firms operate more than one plant or establishment, suggesting there
may also be important multiple-site economies. These are more likely to be found in R&D and
marketing than in the physical production process
c. Skala efisiensi minimum
Economies of scope: penghematan biaya diseluruh fungsi atau unit

Ruang lingkup ekonomi menjelaskan nilai kompetensi perusahaan yang benar-benar khas.
 The size and scope of a firm is influenced not only by the scale economies of various activities, but
also by the presence of cost savings across functions or units, Economies of scope exist when "it is
less costly to combine two or more product lines in one firm than to produce them separately.
 Even though technical economies of scope are not plentiful, scope economies may be occurring in
activities that are not directly related to the physical production process, including research and
development, sales and marketing, distribution, transportation, and overhead.“
Obstacles to exploiting scale and scope
 Although the benefits of scale and scope economies can be impressive, they can also be elusive.
 Exploiting scale economies can substantially increase the size of an organization, complicating
administrative functions and producing bureaucratic inefficiencies. Scope economies often require
profound changes in organizational structure and systems because they depend on sharing of
resources and some level of coordination across previously separate units.

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  This may place intensive demands on people and their time and introduce inevitable trade-offs and
compromises. If the process is mismanaged, net costs may increase rather than decline, and the
firm's competitive advantage in each of the products may suffer.
 Network externalities are the effects a product or service has on a user while others are using the
same or compatible products or services. Positive network externalities exist if the benefits (or,
more technically, marginal utility) are an increasing function of the number of other users.  Negative
network externalities exist if the benefits are a decreasing function of the number of other users.
The Search for Scale and Scope Effects
 The fact that scale and scope effects are often difficult to estimate cannot be taken as a license for
shoddy analysis.
 To evaluate the potential for scope economies between two or more business segments,
managers also need a systematic process.
 This analysis should avoid broad generalities and focus on the specific resources and activities
that, through combination, may lead to advantage
 The potential for scale and scope economies will differ among the various activities. Therefore,
identifying and isolating those activities where their effect is greatest is an important step.

Value chain of household and industrial thermostats

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 Design and Manufacture (D&M) was a focused private-label producer of dishwashers. It offered no
other product and had no downstream capabilities in distribution, sales, or service.
 Sears, which commanded the largest market share in the industry, did no manufacturing, but sold
and serviced a wide line of products under the Kenmore brand

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 BAB 4. DIVERSIFIED EXPANSION
GUIDING GROWTH
Richard Normann (1978) growth idea merupakan kondisi perusahaan mampu memahami lingkungan
persaingan bisnis atau melihat masa depan perusahaan dengan mempertimbangkan unsur teknologi,
customer, dan pesaing dalam menciptakan suatu ide untuk menjadi sesuatu yang berbeda.
CHOICE of BUSINESSE
Hubungan kedua unsur ini dijelaskan dengan resource product matrix yaitu hubungan antara resource dan
bisnis secara spesifik harus sesuai agar dapat memberikan kontribusi dalam mendapatkan competitive
advantage suatu pasar produk
A Sequence of Steps
Japan Electronic Industry in 1950’s

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RESOURCES as a SPRINGBOARD
Sumber daya merupakan jantung dari diversified expansion dimana kuantitas dan kualitas dari sumber
daya akan memberikan dampak yang berarti ketika perusahaan melakukan diversified expansion agar
memperoleh outcome yang di harapkan.

The Extent of Diversification

Dalam pelaksanaannya, perusahaan terbagi atas beberapa kelompok dalam melakukan diversification
expansion. Pertama, melakukan pergantian jenis bisnis dan meninggalkan bisnis utama; kedua,
menciptakan set bisnis yang dapat menjangkau banyak industri; ketiga, dan yang terpenting adalah
melakukan restrukturisasi dan divestasi. Dalam penelitian Gollop dan Monahan (1991) menyimpulkan
bahwa strategi diversifikasi merupakan fenomena struktural yang paling penting.

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Performance Implication
Kesimpulan dari penelitian tekait strategi dan kinerja sangat bervariasi tergantung pada siapa yang
melakukan analisis, dan isu apa yang tujukan. Sayangnya penelitian hingga saat ini hanya menilai strategi
diversifikasi terbatas pada profitabilitas, sehingga perlu lebih memperhatikan konteks sumber daya dan
bagaimana mengoptimalkan pemanfaatan sumber dayas tersebut.

Diversification Strategy

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Strategi diversifikasi terbagi atas 2 kelompok yaitu, constrain dan linked diversification. Contrain
diversification lebih berfokus pada satu kemampuan sumber daya yang dimanfaatkan secara optimal untuk
menghasilkan banyak output produk bisnis, sedangkan linked diversification berfokus pada strukur
organisasi perusahaan.
The Importance of The Industry Effect
Rumelt (1974) menjelaskan bahwa diversifikasi perusahaan tidak hanya berfokus pada sumber daya, tapi
juga pentingnya melihat tipe persaingan industri yang akan di ikuti.
Ketika perusahaan mampu memanfaatkan sumber daya (spesifik) secara optimal dan menangkap peluang
dengan cepat, maka peusahaan akan memperoleh profit yang maksimal hanya pada 2 atau 3 strategi
diversifikasi tanpa harus mengunakan banyak strategi untuk menjangkau semua pasar produk.

BAB 5. ORGANIZATIONAL LIMITS TO FIRM SCOPE

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Scope of The Firm : Resources and Competitive Advantage
Salah satu prinsip yang menentukan apakah perusahaan akan melakukan aktivitas atau berkompetisi
dalam bisnis adalah apakah perusahaan memiliki resource yang bisa memberikan competitive advantage
atau tidak.
Jika resource perusahaan tidak bisa menciptakan keunikan atau competitive advantage, sebaiknya
perusahaan tidak usah memasuki bisnis tersebut 
Jika scope perusahaan sangat luas, maka sebaiknya perusahaan fokus pada core competencenya yang
valuable, sedangkan untuk aktivitas yang lain bisa di outsource
Choosing the Scope of the Firm -Scope of The Firm : Market or Hierarchy
Cara terbaik bagi perusahaan untuk menyadari value dari resource-nya adalah dengan cara melakukan
diversifikasi ke dalam bisnis baru daripada menjual atau menyewakan resource tersebut kepada pihak lain
Ada dua bentuk dasar dari organisasi ekonomi, yaitu :
1. Pasar 
2. Hierarchy
Ekonomi organisasional berpendapat bahwa aktivitas-aktivitas sebaiknya dilakukan di dalam organisasi
daripada dilakukan dari luar, dimana administrasi aktivitas melalui corporate hierarchy lebih efisien
daripada melalui market exchange

Hierarki corporate akan efisien jika bisa meminimalkan jumlah biaya produksi dan governance cost
Biaya produksi adalah biaya langsung yang muncul dari produksi fisik dan pertukaran barang melalui
transaksi 
Governance cost adalah biaya-biaya yang meliputi biaya negosiasi, menulis, monitoring, enforcing, dan
biaya yang timbul dari perjanjian yang dibuat oleh perusahaan 

Cost and benefit dari pasar dan hierarki bisa dianalisis melalui konteks integrasi vertikal 
Perusahaan hanya bisa menjadi multinasional jika perusahaan tersebut bisa melakukan sendiri aktivitas-
aktivitas di luar negeri secara efisien daripada menyewakan resorce-nya (misalnya menyewakan merek
kepada perusahaan lokal)

The Market
Adam Smith berpendapat bahwa pasar adalah mekanisme yang ideal untuk mengorganisasikan produksi 
Ada dua keuntungan pasar, yaitu :
1. Pasar lebih efisien dalam memproses informasi daripada hierarki yang administratif. Desentralisasi dan
penggunaan informasi yang tidak langsung melalui mekanisme harga akan lebih efisien daripada hierarki
yang administratif (dalam arti transfer informasi yang dibutuhkan untuk membuat keputusan produksi dan
mengalokasikan resource secara ekonomis).
2. Ketika produk dijual ke pasar, maka semua pihak yang berhubungan dengan produksi akan
mendapatkan insentif dari laba yang dihasilkan. Oleh karena itu, semua pihak akan bekerja sekeras

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mungkin dan seefisien mungkin. Sebaliknya, inefisiensi muncul dari corporate hierarchy karena tidak
semua pihak menerima laba yang mereka hasilkan. Mereka lebih mementingkan kesejahteraan dirinya
daripada keuntungan perusahaan, akibatnya level of ability, effort, dan investment menjadi lebih rendah. 

Perspektif ruang lingkup perusahaan (firm scope) yang dikenalkan oleh Coase yang disebut transaction
cost theory bekerja untuk mengidentifikasikan benefit dan cost dari market exchange
Teori tersebut berkonsentrasi pada pengidentifikasian kondisi dimana pasar menjadi cara yang sangat
mahal bagi perusahaan untuk mengorganisasikan transaksi atau bahkan gagal karena biaya yang terlalu
tinggi (misalnya GM dengan Fisher Body)
Hubungan pasar bisa gagal jika :
1. Opportunism
2. Asset specificity (small number)
3. Uncertainty
4. High frequency

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