Question 1 (20p)

1.The resource-based view has since its inception during the 80ties grown to become a
dominant analytical perspective within strategic management. Please explain the
underlying mechanisms which impacts on the distribution of profits between customer
and the firm according to this framework.
2.The original resource-based view/ framework has been criticized over the last decades
for being too inward looking and too static (as formulated in its initial conception).
The critique static resources can be related to the increased emphasis put on
capabilities rather than resources per se in more recent theorizing. Why would
organizational capabilities be a solution towards this critique?
3.Another, more recent line of critiques found around the resource-based view has been
related to the concepts of Ecosystems and Complementarities as well as an emerging
fundamental discourse within the field of strategic management research about value
creation and value capture. Explain these four concepts, relate them to the resource-
based view, and relate them to the hot concept of business model.

Answer 1

1. As the industry environment is becoming more and more unstable, the industry analysis
with the main concept of Porter's Five Forces Framework and its limitation became
more unsuitable. Therefore, more and more companies are going to focus on their
resources and capabilities to establish and sustain their competitive advantages. Unlike
the industry analysis which focuses on the industry and external impacts that affect the
businesses, the resources based-view focus on the firms, on its resources and capability
to gain a competitive advantage. In this theory, there is a close connection between the
performance and resources of the firm.

The resources are the firm's assets, meanwhile, the capability is the use of resources
and turn into actions of the firm. To start with this theory, the firm identifies its
resources (tangible/ intangible/ human) and capability (core competencies/ distinctive).
However, the most important stage that acknowledges the firm about how they will
distribute value to customers and gain profit is when and how they evaluate the
potential resources and capabilities, how they could get the competitive advantages. I
could argue that these stages have strong impacts on the decision/ strategy on
distributing the profit between customers and the firms. According to the theoretical
absolute characteristics, 4 core things help the firm's competitive advantage is
valuable, rare, inimitable, and non-tradable. These criteria must be all fulfilled to make
a competitive advantage sustainable.

Valuable make it relevant and exploitable, is a key success factor in the industry.
However, the 3 remaining: rare, inimitable, non-tradable helps the firm protect its
competitive advantage in front of its competitors.

In conclusion, the resources and capability which becomes the competitive advantages
(internal elements) of the firm are the underlying mechanisms impacting the
distribution of profits between customers and the firms.

2. As analyzed above, the resource-based view theory is based on the firm's internal
environment, it is criticized for not take into the industry/ external environment into
account. However, I could argue that the resource-based view also depends on other
 external factors when formulating implementing the strategy in the organizational
capabilities stage. Unlike the resources, the organization's capabilities are what the
firm be able to do, can take actions from resources. For example, the firm owns a
radical innovation that could help the firm become dominant in the industry, however,
if they could not turn it into capabilities by the implementation, during the
organizational process, it will not be successfully commercialized. The capabilities of
the firm could be identified through functional or value chain analytics. And I assume
that, if the firms want to operate properly, they must consider external factors. The
firm's capabilities do not stand alone, they must have relationships with partners and
think about external factors. For instances, among the core functions, marketing
departments need partners, and they need to analyze the external environment, such as
how the industry doing the market for the last 10 years, what is the trend for the next 3
years, what is the core competences of the competitors. Have fully analytical reports
(internal/ external aspects), that is how the firm turns the resources into the capability,
for these examples, to make use of human resources, financial asset, brand value,
relationship into marketing capabilities.

In conclusion, the resource-based view theory is not inward-looking, in fact, during

the process of turning the resources into organizational capabilities, it does consider
the external environment.

3. The ecosystem is a new theory that stated that the boundaries are normally open, which
means the resources are not only within the firm's borders. We should also take the
relationship or the network with others into consideration. as wen as the whole mausty
as an ecosystem.

Complementariness are related to main products, which support and strengthen the
usage of the main products. The closer relationship between complementaries and
main products is more dependent on the success of the main products on the
complementaries. In the relationship with the resource-based view theory, from the
view of ecosystem and complementaries, I could argue that when identifying the
resources and capability, the firm could also widen the view to the network, the
relationship with the ecosystem. They could also make other's resources and
capabilities, with a suitable relationship and networks. Moreover, they should put
themselves in the position of an ecosystem, which means that how their capability is
related to the whole industry. They also should analyze some potential risks they
could have: initiative risks, interdependence risk, integration risks.

Value creation is the value that an organization could create for customers.
Meanwhile, the company should gain back some value, called Value capture, which
brings back profit to the firms. In the relationship between value creation and value
capture, I would like to emphasize the importance of the right business model. In
short, the business model is how the firm creates and capture value. The use of the
right business model will have a huge influence on the process of providing value to
customers (solve customer's jobs) as well as gain profit back to the companies.
Remarkable, the business model must be considered to change or remain, depending
on the changing of value creation or business environment. The start-up is easy to
change the business model than the big firms, because the risk of failure to the big
firms is higher, as well as it could affect other businesses of the firms. Therefore,
when analyzing the resources and capability of the firms, it is important to understand
 and apply the right business model to take advantage of these capabilities to provide
value to customers (value creation), and then gaining back profit to the organization
(value capture).

Question 2 (25p)
1.Management control systems can be used as tool for a manager to implement strategies
in a business organization. Two contributions coming out of research done in the end
of the 80ties were levers of control (described by Simons) vs the balanced score card
(as described by Kaplan and Norton). Compare and contrast these two frameworks.
Which strength and weaknesses do they have in order to help a manager to make
strategy real in an organization?
2.Recent strategic management research has emphasized emergent perspectives of
strategy (such as bottom up) rather than strategic management as strictly following a
top down perspective according to the rational planning logic of analyze - plan -
implement. Relate these discussions of emergence vs planning strategies to the
general characteristics of industrial contexts along different stages within the
industrial life cycle. Make sure to include reasoning around when and why these
different perspectives (top down vs bottom up) make more/less sense?
3.In an extreme version of the emergent approach, you can challenge if intentional
strategies really exist at all, and if the work of a manager with responsibility for
strategy actually matter. One leading strategy researcher came to the conclusion that
in high-speed environment, strategy boils down to simple rules and visions.How can
this be explained?

Answer 2

1.Strategic planning is the process of deciding on the goals and strategies to attain these
goals, meanwhile, management control is how the manager influence others to
implement the strategy (Anthony, 1965). There are 2 views, which will be analyzed,
is the levels of control and the balanced scorecard.
In the first place, the balanced scorecards are applied to translate the visions (strategy)
into the KPI (goals) that have muti-actions in ongoing and using benchmarking to
measure the success. They manage by objectives. 4 core equal aspects are taken into
consideration: financial (appear to shareholders), customers (appear to customers),
internal business process (to satisfy shareholders and customers) and learning and
growth (sustain the ability to change and improve). These 4 aspects are divided into 4
cards: objectives, measures, targets, and initiatives. This method is effective with
business linkages synergies, suitable to innovate the firm and long-term development.
I could argue that the balanced scorecard is useful to gain a connection between the
strategy formulation and strategy implementation progress, with the help of learning
and updating the scorecards, as well as assessing the process continuously. However,
the manager should take into consideration that they may gain the resistance to
abandon failed strategies, and experience loss of autonomy.
In the second place, the levels of control are focused on traditional goal achievement,
which enables the manager to measure outcomes in comparison with initial plans and
achievement goals. There are 4 levels of controls, that is Boundary systems, Belief
systems, Diagnostic control systems, and Interactive control systems.
 In comparison to the balanced score car, I argue that this control is a broader control
system towards the organization. In the interactive control system, it encourages
discussion and information exchange, thus enables innovative organization as well as
learning among employees. In the Belief system, it could help to motivate employees,
inspire them to work the goals. In the Boundary system, it formulates a code of
conduct or rules, that make the firm more systematic and centralize, besides the
autonomy that is given in other systems. And last one, the diagnostic system, they do
not forget the traditional goal and achievements, all of the rules given, the motivation
inspired, the creative environment created, they help the manager measure the
outcomes and evaluate the results. Therefore, these tools are useful for managers to
implement the strategy in broader aspects.

2.At first, I will introduce the industrial life cycle. This model helps us to understand the
forces driving the industry evolution and to analyze the impact on the industry
structure and the basis of competitive advantage (Grant, 2013). There are 2 forces in
the industry life circle, these are demand growth, and creation and diffusion of
knowledge.
The relationship between the strategic management of the firm with this life cycle is
having a tight connection. I could argue that in the first phrase (fluid phrase) the
managers often use the rational planning logic (analyze -plan - implement),
meanwhile in the transitional phase, which requires disruptive technology, innovation,
the manager is better to use the emergent perspective of strategy (such as bottom-up)
rather than the prior one

I would explain why. The life cycle is more and more compressed. The different state
of the industry requires different goals. I try to also focus on the product life cycle in
order to explain this perspective. During the first state of the industry life cycle, (and
the first 3 stages of the product life cycles - R&D, Introduction, Growth), the war of
dominant design and technical standard required the firm act fast, implement strategy
fast to gain the largest market share as soon as possible, as well as capturing more and
more profit, gaining the benefit of scale. Therefore the strategic management is
suitable during this stage. However, in contrast, during the

transitional phase (the maturity and decline of the product life cycles), it requires
more than top-down or rational planning. It is important to have an emergent
perspective, depends on the innovation requirement and situation of the industry. It is
more about trial and error, exploratory of actions. They depend on the external ideas,
the orientation of the market. It feels a little bit contrast between to phase, but I really
mean that to keep the position in the industry life cycle, and open up or extend the
product life cycle, it is more required the
emergent management in this stage rather than in the beginning

3.I totally agree with that. In the emerging, fast-changing market, and less-predictable
business environment, the intended strategy is in no way really important. During the
intended strategy planning, it is more about predicting the goals, the outcomes the
base on the current industry. However, everything will change, even faster and more
complicated in the high-speed environment. Therefore, what a manager could do is
simply drawing a strategy with less-detailed and more guidelines toward the goals.
The influences of emergence strategy are bigger and bigger According to Mintzberg's
 study, only 10-30% of the intended strategy turns into the realized strategy. And I
think it is less than this number in the high-speed environment.
So the roles of the manager are less important in strategic planning? I do not think so.
I believe that the role of the manager becomes more important in a high-speed
environment. The managers need to apply suitable strategies, it could be emergence
one to fit with the reality, however, it needs to fit with the intentional strategy, the
guidelines in the beginning.

Question 3 (30 p)
The car industry, a more than 100-year-old and rather mature industry at the heart of the
industrialization age. Currently the industry is facing increased technological change and
rapid growth in global markets such as China and India. Simultaneously traditional car-
technology is making a transition; from combustion engines towards electricity, towards
autonomous driving, and towards service access rather than ownership. These changes are
changing the essence of the industry, which has been build up around detailed knowledge of
combustion engines, integrated development and design of mechanical cars and efficient
mass production.
Up until today the industry has evolved into a global industry, dominated by a handful
multinational businesses such as GM, FORD, BMW, Toyota, PSA (which is about to merge
with Fiat Chrysler Automobiles to form Stellantis). The industry is well known for its long
and extensive supply chain network of specialist suppliers (example Bosch, Lear corp. and
Vale) and sub-sub suppliers and independent car-dealers as well as service workshops. Two
previous leading suppliers; Delphi Automotive (A spinoff from GM in mid 90ties) and
Johnson controls have recently split up. Delphi into Aptive (focusing on electronic
architectures and advanced safety) and Delphi technologies (Traditional Powertrains).
Johnson Controls formed instead Adient (Seats) and Clarios (Advanced batteries). We also
see newcomers like Tesla (electrical cars) Uber (car sharing) and Northvolt (battery
manufacturer)

1.How can we explain the historically evolved/contemporary (that is around 1990-2020

before technological changed picked up speed again) industrial structure of the
automotive industry (including suppliers) with the help of transaction cost economics?
2.Assume you are a CEO of a typical Car producer (example Honda or Volvo
Cars). Create a strategy for the transition into electrical autonomous vehicles based on
the Industry analysis framework. Motivate and explain your intended strategy.
3.Which barriers might arise during this strategic renewal and transition?
4. How can a change management framework such as described by Kotter facilitate this
transition?

Answer 3

1.Shortly answer, the automotive industry has become less integrated among firms, which
means each component of the products is normally outsourced. To begin with, the
transaction cost economics states that using the market is not costless, the market
costs could include search cost, negotiation contracting cost, monitoring cost,
enforcement cost, risk and insurance cost, and so on. I assume that the automotive
industry is increasingly standardized products. Therefore, companies don't need to
produce themselves. Instead of that, they could outsource basic equipment. The
advantages could vary. First of all, they could decrease the administrative cost when
 they produce themselves. Moreover, the company could ask for incentives with a long
and huge supply contract, to reduce the cost as well as take advantage of the economic
scales of suppliers.

Furthermore, they could highly concentrate on their core competitive advantages, that
is R&D investments in the newest technology such as an electric car, autonomous
driving, service access., among others. They are the key success factors, which help
them to gain market shares, capture profits, and compete with other companies.

2.To analyze the automotive industry, I use Porter's 5 forces framework. Remarkable, I
just focus on analyzing the current evolved industry (1990-2020) with short
comparisons to the prior period.

First of all, the potential entrance to the automotive industry is higher. Although they
require lots of capital: such as huge investment in R&D, as well as the factories to
produce the product. Normally, in this industry, lots of low-end market suppliers
depend on the economies of scale to have a cost advantage. Moreover, brands and
loyalty are important when customers make decisions. However, with technology
innovation, more and more big giants enter this industry with their high technology
advances toward electrical autonomous vehicles.
For example, Google takes advantage of its traffic and satellite data to apply it to
autonomous vehicles. Another example for Tesla, they jump into the industry with the
electric car as a result of their R&D innovation in technology.
Secondly, the substitutes for the automotive vehicles in general and the car, in
particular, are higher. With the newcomers like Uber with a car-sharing business model,
the customers no longer need to buy a car, they could rent instead of that, at a cheaper
price. And I could argue it is more convenient in the big city with a serious traffic jam.
Electrical and autonomous vehicles are just one of their various options.
Thirdly, the customers' power is higher. With the high competition of providers, they
now have more options to choose the products in different segments. It could be a low-
price car, or a high-end car, with a different design. They could change the brand or the
line of product casily when consider buying a car. Their price sensitivity and bargaining
powers are high
Fourthly, the supplier's power is higher. Not only the basic equipment suppliers but also
the technology supplier is having more bargaining power. To catch up with the newest
technology, to produce the electricity and autonomous vehicle, the company must
collaborate with them, besides investing in the R&D. seen that, lots of companies such
as Ford need to collaborate with big giants like Google, in their autonomous car
productions & experimentation.
Last but not least, the competition is higher. Not only the giants in the automotive
mobile, but it is also seen as the new emerging brand in India, China, Korean market.
They also jump into the automotive and electrical market.
Seeing the industry analysis, assume that I am the CEO of Ford (a long-establish typical
car producer in this industry, I have some intended strategy towards the automotive and
electrical industry.

Firstly, we should make a huge investment in the R&D department of the company
towards the electrical automotive industry. This new market segment is competitive,
but potential. With the trends of government regulation towards sustainable, and
 environmentally friendly, the future trend shall switch from the combustion engine to
the electrical one.
Secondly, we need to collaborate with big giants. Realizing that the technological
innovation of our company is not as successful as the big giants such as Microsoft,
Google, and so on. We need to sign an agreement with them to apply the newest
technology into the car, such as the car services, the autonomous car. If we do not catch
ur with the latest technology trend, we would end up losing our position in the industry
to other competitors.
Last but not least, I recognize that the automotive industry is long research of the
industry. However, due to the customer's hesitation and government regulation about
the usage of it, it is not widely-commercialize. We should have a team to work on these
issues, how to make customers realize the usefulness of the automotive industry, to
become the first-mover of these segments, as well as working with legislation
departments about
the perspective and their notions towards autonomous car

3.I assume that the barries arising during this change is within the organization. Some
barriers I could list and analyzed during this strategic renewal transitions. Firstly, the
top management and the employees do not recognize the necessity to change. They
might think we are still good, gaining profit from current business. why we need to
change. Moreover, they could assume that the changing strategic is the job of the top
management, not the middle management and employees. Furthermore, the whole
organization could be vague and lack of truct about this change due to lack of good
communiation between management board and the emplovees. They need to be
clarified why they should change, what is their vision about this change, and how we
will act. Next, the expense to change is huge, especially in the automotive industry.
They need to make huge investment in R&D, it requires times, efforts of employees,
maybe they need to employ new peoples as well as cutting down unsuitable position.
Moreover, I think the most barriers is among the employees. They may be resistance
to change, because of ambihuity about strategic plan, the risk being replaced with
others, the fear of loss of status, loss of pay, loss of comfort. They often resist the
unknown, whether they need to compete the resource with the new department
(autonomous/ electrical), whether their skills is no longer suitable or not. All of these
barriers must put into consideration when manage change towards new transition.

4.Kotter's change management framework could be a useful tool to manage this

transition. There is 3 main stage of implementing organizational change: unfreeze,
move, and freeze. Firstly, create a climate for change.
The management board should create a sense of urgency, talking to the whole
organization, if we do not invest and transit to the automotive and electrical car, we
will lose our position, and end up in bankruptcy, provide them with suitable and valid
data analysis. Then we should form a team to plan and implement this change.
They should be enthusiastic and commit to this change, as well as having excellent
teamwork skills that could guide the change process. Moreover, after working with
this team, we should have the right vision toward the transition and guide the whole
organization. Secondly, we involve and prepare the organization by communicating
about how we should do that, creating a base of acceptance and generating the short-
term result.
We must clarify to all employees the change vision, the ability to succeed with these
strategies. If any problem with resistance arises, we need to deal effectively with
 them, find the "no" person and persuade them. We should show some successful
R&D or experimentation of autonomous and electrical cars to the whole organization,
to make sure that they believe in the prospect of success. Finally, we should
implement and sustain change. The transition towards electrical autonomous cars is a
long-path, as well as they need time to be accepted in the market. Therefore, we need
to make sure the change is embedded in the organization, ensuring that the electrical
autonomous car is part of our company, not the new one.

Question 4

Hogia is an interesting firm based in Stenungsund north of Gothenburg. The firm creates and
develops various business IT systems for various business applications covering the Nordic
countries as well as UK markets. Mostly they focus on small and medium size business as
customers (avoid completion with truly large software producers such as SAP). Among
others do approximately 2 Million Swedes get their monthly paycheck administered through
one of their systems. They have also developed most (70%) of the information systems for
public transport systems in the Scandinavian countries (busses, trams, subways.
Hogia was created in 1980 and have now grown in the fast-developing software industry to
be more than 600 employees. Basically, there are just four types of roles within Hogia; IT
developers, Salespersons, Custom Support, and managers (business administration). The firm
is still owned by its founder who have some organizational principles. These are explained in
a book written in 1996 which has become something of a Swedish management classic (Kly
Företagen!, or in English
'Cut the Firm'). Among the principles are; just organic growth and no merger and
acquisitions, as business grows -split them up! (the firm is currently organized into 30
different businesses), newer run at a loss or become dependent upon outside
ownership/financiers.

How can this organizational principle be understood? Base your reasoning out contingency
theory in general and Mintzbergs paper included in the course more specifically.

Answer 4

In contingency theory, there is no single best way of organizing a company, and the
chosen organizational design needs to fit the tasks and environments to facilitate,
strengthen the strategy (Daft, 2008). Therefore, we could be deep into their strategy,
organization operation, and structure to analyze their organizational principle.
According to Mintzberg's organizational structures, the organization has 5 parts, which
interrelate and fit together into differences in size, goals, and other characteristics of the
organization (Daft, 2008). The 5 main cores are Operating core, Top management,
Middle Management, Technical Support, and Administrative supports.
Basically, I could argue that they begin with a simple structure, a top-management led
organization with a close connection to the operating core. Their main operating core is
the IT developers and Salespersons, as their main activity is to develop IT systems and
sell them to customers (small and medium-size business).
Moreover, they have less middle management positions, as stated in the case that
principle is just organic growth, and is currently run by the founder (direct supervision).
Furthermore, the Administrative support part is Customer Support, which helps the
company running smoothly. This type of organizational structure will help the company
 gain competitive leadership in the simple and dynamic environment, when the company
is young and small, as well as the chief executive or the founder has the whole control
with centralization control.
However, as the business grows, they split the organization into different businesses. In
my opinion, I could argue that the organizational structure after the company expansion
is the Adhocrary structure. In this structure, according to Mintzberg (1981), the top
management has mutual adjustment and support the staff in the operating core (which
have different businesses). The specialization of the job is much horizontal as well as
the unit size is smaller as the company's business is divided into a smaller one. This
system is selective decentralization, which allows each business to have its operation
"newer run at a loss or become dependent upon outside ownership/financiers". The top
management has less control over each business. This structure is best adapted in a
dynamic and complex environment. I assume that in the fast-developing software
industry that Hogia is into, the business environment is complex, fast-changing, require
fast reaction to meet customer's
demand
As stated in the case, new businesses are not always successful, sometimes they run at a
loss, therefore, I want to emphasize the importance of communication among
businesses as well as the coordination of top management boards. With 30 different
businesses of Hogia, these complex interdependencies need to communicate often, with
specialized skills in each segment. Like the professional bureaucracy, this adhocracy
relies on trained and specialized experts (Mintzberg, 1981), which is an IT developer to
be specific in Hogia.
However, they need to work together to create new things together rather than working
apart, therefore, the mutual adjustment is relied intensively on upon by the coordination
of top management.

EXAM

Question 1 (25 p)
a. Change is usually hard in an established organization. Explain why this is so.
b. Compare and contrast the two sets of frameworks , the Levers of control versus the
balanced scorecard in order to facilitate strategy implementation.

Answer 1

a. Change within an organization that has been established for years could be difficult
due to many reasons, but the main thing I would argue is that people in general does
not like changes. Changes is something that requires breaking the "normal things we
do" and it creates uncertainties. People like feeling safe. It is easy to understand why
changes could be resisted, because if you have done one thing for a decade or two,
and it has worked previously, why change a winning concept. The uncertainty of "am i
keeping my job" could also arrise from changes and put ghosts in peoples minds.

Another reason is that the communication is not clear from top management about
what will follow with changes. There is a knowledge gap between the strategic apex
and the rest of the organization which makes it difficult for employees to understand
why the changes are necessery. Many middle managers could feel rather powerless as
well and feel overruned by top managers. It is rather hard to see why changes are
 necessery if the situation is not communicated well enough. People have to feel it, they
have to see it, they need to know how bad the situation really is before accepting that
changes should be implemented. And sometimes top management can adress media
and communicate that "we got the bad results under control, macro environmental
changes makes it tough for us but tides will change". The dual messages can make it
hard for employees to know what to believe. Changes, as mentioned is something
people dislike, which probably makes many employees resistance to change or
example, I play floorball so we have always have an intended strategy on how we
should win games and beat our opposition. If we have won ten straight games, and
prepare for the 11th match and our coach comes and say that we chould change the
way we play, no one will accept that becuase our previous game plan has worked.
Even if we would lose the 11th, 12th and 13th game, we would not understand why we
needed a new tactic. It is risky changing the game plan, we do not know if it will
generate results. But we know that the current strategy has, so we should stick to it. If
it would been an opposite situation, we come from 10 straight loses, everyone would
accept a change, becuase our intended strategy is not working.

So to put this in a more "relevent" perspective, if individuals that should implement the
the new strategy in for example Volvo, they need to have made maybe ten bad bad
quartles and discussions of laying of employees is erupting to the surface, an emergent
strategy is needed and people would more easily understand it.

b. Management control systems is how managers should make employees work towards
the organizational goals and follow the implemented strategy. Levers of control
consists of the diagnostic systems, interactive systems, belief systems and boundary
systems. The diagnostic systems focus is on the financial measures and how to work
with financial goals, achieve shareholder value etc. Interactive systems focuses on
how people within the organization is cooperating and interact with eachother. Focus
on learning.

Belief systems is about the company vision and mission. Boundaries is more about the
framework and how employees should work within the company, responsibilities.
Balanced score cards - Mix between financial measures, customers (KPI (key
performance indicators), Internal business environment and a fourth that I cannot
remember at the moment. Balanced score cards focus more on, according to me, how
to generate value and includes the customer perspective than Simons levers of control.
Better focus on how to generate value from your own products in a balanced score
card.

Question 2 (25 p)
Please explain five reasons why the well-established framework of industrial analysis
(Porters five forces) increasingly is seen as an outdated theoretical tool losing its practical
relevance for guiding strategy.

Answer 2

1. Narrow view of how and why to compete in within the industry. I think that Porters
five forces generally has a very much "this product only" focus view of the industry. It
misses out on key questions like why should we even compete in this industry, and
 how should our product be more attractive than our rivals. What is the key success
factors in this industry can be rather hard to understand with only using Porters five
forces when analysing the industry.
2. I think the industry analysis that Porters five forces gives lacks information
regarding the micro-environment of the company. What capabilities do we possess
and what is our competensis. The resource based view better capture what
capabilties is posessed and how to use them to gain a competitive advantage against
rivalries. Does one company have a patent that gives them an advantage over all
others or a brand reputation that excels all others.
3. Does not give information how the company should make profit. What is the main
vision of the company? Should we be first movers or copy-cats? I think that crafting a
strategy is missed when only focus on the five forces becuase a strategy involves so
much more. Like which markets should we attack, where to position ourselves etc.
4. I think that one of the things that is very complicated when using Porter´s is to
measure what actually is a substitute and who is really our competitor in some
industries. I think that for many products, it is hard to know what is actually a
relevent substitute, and does the company of an unclear substitute make them a rival.
In some way yes, but it is far from obvious. I have really hard time seeing Volvo and
Västtrafik see themselves as rivals, even if both companies offers transportation
solutions to custumers.
5. Is it profitable to be in this environment, should we leave? An inudstry can only
consisit of Xnumber of companies and when there is to many companies (where
companies no longer can make profit, what micro economic theory says). I think
Porter´s industry analysis misses out on this perspective. In order to survive, you
need the possibility to make profit otherwise the company cannot pay for its costs.
You can only see indications of how dense the competition is, but not if the industry is
overcrowded.

Question 3 (25 p)
Strategic management used to be a discipline focusing on strategy as occurring in two
stages; a stage of strategic analysis and planning as well as a stage of strategic
implementation. However, during the last 30 years this paradigm has been criticised and
almost declared obsolete. Instead, emphasis has been put on processes of strategic
management, including the emergent characteristics of strategies in organizations.
1. Explain: Why these changes have occurred in the contemporary competitive
landscape.
2. Explain: How the role of senior management has change due to this development.
3. Still, you could defend the old logic of strategic management as consisting of analysis
and
implementation: Provide your own argumentation for why these should still be
relevant.

Answer 3
1. Markets more insecure/instable in many industries. Implementing strategies takes
time, and in some industries time is not something that organizations do not have. So
when the new strategy is implemented, the industry requires a new change of strategy
and an organizations cannot switch strategy all the time because the for example
employees might not understand what is demanded from them. If senior management
is planning for implementation of a new strategy, is in some cases, senior
management does not always have suffient knowledge about the whole organization
 and therefore not understand why some changes does not work in practice. The R&D
team might posess more information about what features should be included in a
product than the CEO, so they should know what products should consist of and
maybe even how to generate value from the product. the top senior management of
the organization used to set goals for the whole organization (top-down), now they
have realized that they can take advantage of tacit knowledge that cannot be
communicated to the top to better strategies emerging from the middle and core of the
organization. It could also be intreseting to discus how the societal changes has
affected the way of allowing top-down management. Especially in a country like
Sweden, where authority is not very welcomed and appriciated, the need of having a
say in what strategy to implement is important for motivation. So the respect for
senior management might have decreased a little in countries like Sweden which has
forced a more bottom-up management and including more employees to have say.

2. I think the role has shifted more towards coaching employees now. Responsibilites
has been decentralized to middle managers and different functions. Could ofcourse
depend on company structure, but in general it feels as if more focus for top-
management is to set a marketing strategy, make sure that goals are followed up and
"demand" responsibility from lower divisions/functions. Shareholder and stakeholder
value need to be met and make sure that the organization is meeting the wishes. Then
also setting the right values within the company, make sure that people enjoy their
time at work and feel included in the organization. Talked to one manager once
(formal coach) and he said that employees should never have the "oh no it is work
tomorrow" feeling. And also more man-management, not every employee can be
treated the same way. So for top managers in smaller organizations need to be more
allowing that some employees have more freedom to for them to produce better
results, while stil managing them to work with company´s interests.

Good to argue that depending on company structure, the role of senior management
could
differ. In a professional bureacrucy it is more about guiding within a framework, but
in a smale scale company where the CEO is a visionary and have responsible for
fewer employees, it can still be very top-down management. So the role of senior
management depends upon the context, but in major organizations it feels as the role
more is about the general coaching.

3. I think the goals would be clearer in the old role of senior management. Where they
could
control more of the work down in the organizations. With a more decentralized power
structure, it could be more focus on "my division" and not care so much about the
whole
organization as it was with the old logic of senior management. Collisions of interest
might be less in organizations with more top-down. Epmloyees know that they should
follow order from the top sometimes as well.
I also think that it is good that they are setting strategies and planning since there is
always a
knowledge gap between hierarchy, so it still gives good signs on what the company
main goal is. Then lower down the lines, they could make smaller changes so it still
goes along with the core goal and core business, but add there tacit knowledge in
how to applicate it in reality.
Question 4 (25 p)

Ericsson is a major Swedish product and technology provider to the global

telecommunication industry. The firm was founded in 1876, and became a global firm due to
the highly successful AXE switches. A technology originally started to be developed in 1970.
Based on the international success of these technologies Ericsson was transformed during the
1980s from a traditional electro-mechanical manufacturer to a high-tech electronics producer
no least in mobile telecommunication systems. During the 90ties Ericsson became a world
leading producer of both mobile handsets (Ericsson mobile telecommunications) and the
mobile and fixed communication network infrastructure technology (Networks). During this
time the profitability was very good and by 2000 Ericsson alone stands for almost 40% of the
entire value ate the major Swedish stock market, stockholmsbörsen. Then everuthing crashes
in the burst of the dot.com bubble, and substantially reduced capital expenditures by
telecommunication providers.
Ericsson made a major reorganization in 2001 in the dot.com/telecom crisis. In particular this
affected the division of Ericsson mobile telecommunications. As a consequence of this
reorganization the mobile telecommunications division was split up in two major parts; one
to form a joint venture with Sony, called Sonny-Ericsson, to develop and supply handsets
(largely relying on outsourced production). The other part became a division called Ericsson
mobile platforms, developing and producing components to handsets (microelectronics and
semiconductors). In addition, during the reorganization of 2001 all major manufacturing was
outsourced in a cost cutting effort.

Then Ericsson reorganized again in 2007. Then again in 2010. This time to focus the
corporation on 5 major growth areas besides the two major divisions forming the legacy
businesses. These were the well-established and mature areas of Network products and
Network services, internally seen as Ericsson core areas (relating to the AXE switches).
These 5 new organizational units were named; Cloud, IP Networks, TV & Media (such as
image compression and broadcasting technologies and systems), OSS/BSS (operations
support systems and business support systems to telecommunications operators) and Industry
& Society (A range of innovative ideas in new segments such as smart cities, utilities,
transport and public safety.). In addition, there where 10 geographical market sales areas in
the sales support organization. The idea with the formed structure was to create better
accountability internally, while giving investors clearer transparency about how business
units are performing, argued the CEO. In this reorganization the Ericsson mobile platforms
became a part of a Joint-venture (50% owned) between Ericsson and STMicroelectronics
called ST-Ericsson. ST-Microelectronics itself was in turn the result of a merger between
SGS Microelettronica of Italy and Thomson Semiconductors of France in 1987, and had just
acquired NXP wireless (parts of the semiconductor business of Philips) and Freescale
(Motorola semiconductors, another US handset manufacturer). ST Microelectronics then
became one of the largest microelectronic/semiconductor producers in the world and could be
seen as a result out of consolidation of the industry producing the components such as
semiconductors not least towards the mobile phone industry

In 2012 Ericsson divested its 50% stake in Sony-Ericsson, a joint venture between Sony and
Ericsson formed in 2001 to develop and produce mobile phone handsets. The joint venture
had shipped more than 100 million phones in 2007, the year in which iPhone was launched
and fundamentally change the handset industry. For the revenues other firms active in
network and communication system infrastructure was acquired, this include GDNT,
Telcordia, Ericsson L-G, BelAir Networks, Technicolor and Concept Wave. In 2013 the ST
Ericsson Joint ventu8re was shut down. Part of the business was sold to Intel (Mobile
connectivity to Global satellites), Ericsson took back technologies belonging to old mobile
telecommunications standards such as wireless modem communication technologies, 2G, 3G
and 4G interoperability, while ST Microelectronics took over the remaining component
development and production.

With the divestments of both Sony-Ericsson and ST Ericsson, the firm had largely exited the
handset
industry, both in actual handsets and components. In 2017 it was time for another major
reorganization. This time the company was in crisis once again. Customers had already
managed their major investments in the 4G (fourth generation of mobile telecommunication
systems) but not yet entered major investments in the fifth generations (5G). This time the
reorganization had a substantial cost cutting focus and involved significant redundancies. The
reorganization resulted in 4 major divisions plus 3 smaller ones. Networks products, and
Network services from the previous organization was untouched as major divisions. Instead,
it was the prior five units created in the 2010 reorganization that was reorganized again into
two new major divisions; It& cloud products, and IT & cloud services (these were hence
formed out of the three prior units (Cloud, IP Networks, OSS/BSS plus and additional
integration of firms acquired during the previous time period), and three smaller. The tree
smaller was for Media, Industry & Society and IPR & Licensing. A decision was also made
to sell of Media which was done under 2018 to an independent equity firm. Media had in
2007 strategy been seen as a promising growth area but failed to deliver. IPR & Licensing
was largely relating to the previous but now dissolved joint ventures. Stock market analyst
had also been skeptical, and thought Ericsson should focus their efforts one fever areas to
obtain growth and competitiveness.

Then in 2022 yet another new reorganization was launched. This time without cost cutting or
any major restructuring costs. The strategy was instead for growth and development.
Furthermore, the profitability and sales had improved given that major customers now were
investing in the 5G mobile network infrastructure technology.

1. The story of reorganizations at Ericsson during the last two decades can be seen as a
story of Theory E and Theory O. Explain and elaborate on this.

The story can also be an illustration of resources and core capabilities, given the
longevity (since the 80ties) of the importance and stability of network -infrastructure
technologies as a reliable source of competitiveness for Ericsson. Compare that those
the apparent much more volatile development on mobile phones (mobile phone
handsets and components thereof), not least connected to frequent and substantial
reorganizations, as well as the substantial growth and profitability during the 90ties
and the following challenges during the next decade.

2. What might some challenges be combining relative more stable (Network

infrastructure) and relatively more dynamic businesses (Mobile handsets, but also
exemplified with Media or Industry & Society units) in the same corporation?

1. Theory E focuses on changes that affect the economic value. Theory E could be
linked to the cost-cutting efforts that are being made in 2001 and 2017. Outsourcing
activities in the vertical scope to gain cost advantages. Theory could also be applied to
 how they generetad revenues due to selling their parts in ST-Ericsson and Sony-
Ericsson, and how to use the revenues to aquire new organizations. Selling of media
in 2018 to cash in on a bad investment. Theory O is how the organization through
reorganize generetated value for Ericsson. In 2001 the joint venture with Sony and the
split into two major parts of the organization (focus on creating value through the
telecommunication market and mobile handset). In 2007 and 2010 new
reorganization, to focus on five major areas besides the already two major parts within
the company. During this time, they also formed a joint venture with ST
microelectronics. In 2012 Sony-Ericsson is divested and instead investing in network
and communication areas. It& cloud products, and IT & cloud services is formed in
2017 to scale down number of organizations. My feeling is that Ericsson has worked
as a divided organization with juggling too many balls during a long time. As the
analyst points out, they need to focus on one major area to build competitivness. The
feeling is that they realized this in 2022 when the last re-organization was made and
only focus on telecommunications.

2. Contingency theory suggest that the best way to organize depends upon context. In
stable environments, a more static organization might be more benefical, focus on
scale economies for example, while in highly dynamic environments a more flexible
organization is important. In an organization, top management might not see that two
different ways to structre two different organizations is neccessery and therefore use
one for both instead. Comming from the telecommunication industry, the need of a
more flexible organization strucutre has not been tested and therefore it is likely that
the organization structure was not appropriate for the dynamic business industry.

I think another is the missalignment with company goals. Feeling that the
organization in one way could be viewed as a matrix structre and a possibility is that
the divisions had difficulties in understanding what the overall compnay goals where.
Maybe created some competition between each others aswell. could be difficult for
employees to understand who was the real boss. Division manager or the leader group
of Ericsson. Also, joint ventures which main focus was to gain capabilities from Sony
and ST microelectronics, but in joint ventures interest