Foundations of Corporate Success: How Business Strategies Add Value

By John A. Kay | Go to book overview

VI THE STRATEGIC AUDIT

Successful strategy requires the firm to choose the markets in which its distinctive capabilities yield competitive advantage. But the adaptive, incremental nature of strategy means that the starting-point is where the firm is now. Every firm is part of an industry, a member of a strategic group, and serves a variety of product and geographic markets. The strategic audit of the firm begins (in Chapter 18) with the analysis of that industry, that strategic group, these markets. Chapter 19 goes on to consider the firm's own distinctive capabilities and strategic assets, the markets in which they are, and might be, deployed, and the extent to which they yield appropriable and sustainable competitive advantages. The strategic audit of the firm determines the extent to which these competitive advantages are maximized, and realized.

In this way, Chapters 18 and 19 bring together the analysis contained in earlier chapters of the book and display their practical application. There are dangers in describing a process of strategy formation. The determination of strategy is not a checklist which can be handed over to the planning department, or to a firm of consultants. It emerges from the firm's analysis of its own capabilities, and is part of its everyday decision- making. Nor are there recipes for strategy, or a menu of generic strategies. Effective strategy, based on distinctive capabilities, is unique to the firm that pursues it.

Chapter 20 asks what light the structure of strategy throws on the competitive advantage, not of firms, but of nations. This issue falls into two distinct, though related, parts. To what extent does the competitive advantage of individual firms represent the creation of wealth for the national, or international, economy? And when is it simply an appropriation of wealth to the stakeholders of the firm? I go on to consider more directly how the competitive advantage of nations, or groups of nations, rests on their own distinctive capabilities.

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Foundations of Corporate Success: How Business Strategies Add Value
Table of contents

Table of contents

  • Title Page i
  • Foreword iii
  • Preface vi
  • Contents xi
  • List of Figures xiii
  • List of Tables xiv
  • List of Tables xv
  • I - Corporate Success 1
  • Chapter 1 - The Structure of Strategy 3
  • Chapter 2 - Adding Value 19
  • II - Business Relationships 31
  • Chapter 3 - Co-Operation and Co-Ordination 33
  • Chapter 4 - Relationships and Contracts 50
  • III - Distinctive Capabilities 63
  • Chapter 5 - Architecture 66
  • Chapter 6 - Reputation 87
  • Chapter 7 - Innovation 101
  • Chapter 8 - Strategic Assets 113
  • IV - From Distinctive Capabilities to Competitive Advantage 125
  • Chapter 9 - Markets 127
  • Chapter 10 - Mergers 144
  • Chapter 11 - Sustainability 160
  • Chapter 12 - Appropriability 181
  • Chapter 13 - The Value of Competitive Advantage 192
  • Added Value Statements 211
  • V - Competitive Strategies 219
  • Chapter 14 - Pricing and Positioning, 1 221
  • Chapter 15 - Pricing and Positioning, 2 235
  • Chapter 16 - Advertising and Branding 251
  • Chapter 17 - Vertical Relationships 267
  • VI - The Strategic Audit 283
  • Chapter 18 - The Industry 285
  • Chapter 19 - The Firm 302
  • Chapter 20 - The Nation 320
  • VII - The Future of Strategy 335
  • Chapter 21 - A Brief History of Business Strategy 337
  • Chapter 22 - Conclusion 364
  • Value of the Ecu 369
  • Glossary 371
  • Bibliography 377
  • Index of Companies 395
  • General Index 399
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