RICHARD WHITTINGTON

Richard Whittington



Richard Whittington

Intended strategy is an expression of desired strategic direction deliberately planned by managers (Johnson, Scholes & Whittington 2008, p.565). Strategic planning is formally/intentionally developed in HG by first carrying out an SWOT analysis. SWOT is an acronym for the internal resource strengths and weaknesses of an organisation and the external opportunities and threats to the organisation (Stapleton & Thomas 1998, p.332). A SWOT analysis summarises the key issues from the business environment and the strategic capability of an organisation that are most likely to impact on strategy development (Johnson, Scholes & Whittington 2008, p.148).Although this model is used, but HG starts strategic planning by first scanning its internal environment to identify internal resource strengths and weaknesses by examining factors such as top management, finance, R&D, purchasing, manufacturing and accounting. (Moore 1995) This is because HG management believes that internal strengths are the key to ensure long-term success. According to the prescriptive strategic process model that include the four broad areas set out by Lynch (2003, p. 53), HG's way is consistent with the resource-based theories (See Figure 1) which focus on the internal aspects of the organization as the starting point of strategy development and emphasizes on the strengths of the organization because they are fundamental to any long-term success. Hamel & Prahalad (1998) argued that resources were far more important in delivering competitive advantage, suggesting that the traditional competitive strategy model devised by Porter (1985) with the focus on the product-market positioning underestimates the importance of capability building in the strategy development process. (Hamel 2002)

However, difficulties related with resource-based view can arise from the never-ending capacity to absorb more information, knowledge, capabilities and other resources, but the window of opportunity may close before knowledge and capabilities are built up, and therefore there is a need to balance the conflicting demands of exploration for more knowledge and capabilities and the exploitation of existing knowledge and capabilities (Penrose 1995). Another potential problem is that its devotees emphasize too much on internal learning issues, and therefore neglect changing customer needs externally (Levinthal & March 1993).

Figure 1- The prescriptive strategic process

(Source: Lynch: 2003, p.2)

Due to the problems of just focusing on resource-based view, following internal environment scanning, HG usually scans the external environment, too. External environment scanning in HG focuses on external micro-environment of the entire industry (i.e. suppliers, marketing intermediaries, customers, (Reichheld 1996)competitors and publics) and external macro-environment (i.e. demographic, economic, natural, technological, political and cultural factors) (Porter, 1985). This means although HG emphasizes primarily on the importance of internal resource strengths as the basis of developing strategy, external environment is also examined in order to compete against competitors more effectively by identifying opportunities and threats.

But it cannot be said that HG's way is using profit-maximization/competition-based theories because external environment is still not the first focus (Lynch 2003). The internal aspects of the organisation are the first focus in HG. Or it can be said that HG's way is based on the games-based theories since both analysis of ...