5.1 Strategic planning and management of culture

5. STRATEGIES

5.1. Strategic planning and management of culture

Observatorio Cultural del Proyecto Atalaya

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5.1 Strategic planning and management of culture

by José Ruiz Navarro

The strategic planning and management of culture, as any human activity, is based on the achievement of results. This chapter introduces the basic concepts and tools of strategy, distinguishes its main elements, analyses its evolution, and presents its challenges. Also, some examples related to the cultural field are provided.

1. Importance of strategy, strategic analysis model, and evolution of strategy

Strategy is the great work of the organisation. In situations of life and death, it is the Tao of survival or extinction. Its study cannot be neglected.

Sun Tzu

Introduction and objectives

Strategy is related to the achievement of results in any field of activity: social, economic or artistic. This first

section explains what strategy is and why it is important. Strategic management is distinguished from planning.

Strategy is not a detailed action plan or an instruction manual, but a unified plan which gives coherence and

meaning to the decisions of an organisation or an individual, thus simplifying the decision-making.

In this first section, the strategic analysis model and its two basic components are presented: the analysis of

the environment of firms (especially the industry analysis) and the analysis of their internal situation (mainly

their resources and capabilities). Also, a brief story of strategy is provided to have a temporary vision of it.

Finally, both the current meaning of “strategy” and a dynamic perspective of it are provided.

After reading this section, readers will be able to:

• Assess the contribution of strategy to the achievement of results, both for organisations and

individuals, and to know the elements of an effective strategy;

• Understand the basic strategic management model; and, • Familiarise with the changes of thoughts on business strategy throughout the last seventy years.

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Strategic planning and management: elements of successful strategies

The goal of strategic management is helping to win, to obtain satisfactory results in any activity. For this

reason, studying the role of strategy in success is important.

The case of Lady Gaga is a successful example of a woman in culture in which the basic elements of a strategy

solidly formulated and efficiently developed can be identified (see “Case 1.1 - Lady Gaga and Haus of Gaga” in

section “For Reflection”).

Lady Gaga is a creative artist, although she does not stand out for having an extraordinary talent. Her success

is not just because of luck. She suffered some setbacks (for example: the cancellation of her first recording

contract), but her abilities to face the events with criterion and flexibility were essential to her successes. Her

strategy was not a plan, although its actions were coherent and always based on a clear understanding of the

desirable goals and on a profound understanding of how gaining a competitive edge over her competitors.

A celebrity status is created by combining provocation, fashion leadership, and presence in mass media, with a

unique and different image capturing the attention of young people worldwide.

Five elements are highlighted in her success:

1. Consistent and long-term goals: She is committed to her professional goals and has pursued them

firmly.

2. Profound understanding of the competitive environment: She deeply knows the economic changes

of music business, the commercialisation potential of social networks, and the needs of young people

of her generation.

3. Objective appraisal of resources: She is very good at identifying and implementing the resources

available for her, and she is also aware of her limitations and of the need to access to other resources

obtained through the network and through the variety of talents of the Haus of Gaga.

4. Effective implementation: She is an active person and puts her ideas into practice, acts and

implements them effectively, heading an organisation which gives her support and help in the

decision-making and the daily operation.

5. Observation and monitoring of results: She closely monitors her business and controls the most

important aspects, continuously learning.

These remarks on Lady Gaga and the role of strategy in success can be observed in most scopes of human

activity. In war, arts, politics, sport or business, the success of individuals and organisations is seldom the result

of a random process. An initial superiority in capabilities or resources is not always a determinant factor.

Strategies created from the four elements described above almost always play an essential role. The elements

of the case of Lady Gaga can also be observed in other musicians, like The Beatles, Madonnna, or in artists,

such as Picasso. If we focus on the most distinguished people of any competitive activity in arts, politics,

business, (see Fortune 500) or on our friends and acquaintances, those with the greatest innate capabilities

have been seldom successful in their profession.

Success goes with those who strategically drive their career in the most effective way, generally by combining

the strategic elements mentioned above: they know the environment in which they act, and they learn quickly

the keys to develop; they know themselves; they know their resources, their strengths and weaknesses; and

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they do not only analyse or plan, but take action to implement their analysis with commitment, perseverance,

and determination.

Fig. 1.1 Elements of the Successful Strategic Management.

Source: Adapted from Dirección Estratégica: conceptos, técnicas y aplicaciones: R. Grant, 2014. Ed. Thompson.

The three first elements —goals, analysis of the environment, and analysis of resources— constitute the core

of what is traditionally called strategic planning or strategy formulation. However, no matter how brilliant or

detailed the planning is: if it is not possible to be implemented, it has no value. For this reason, strategy must

take action to be useful, also meaning organisation and management capabilities for its implementation and

subsequent monitoring and control, thus leading to the concept of strategic management.

Basic strategic analysis model: simplifying SWOT

The elements of successful strategy can be divided as follows: the firm and its environment, with strategy

being the link between them.

The firm includes four of these elements: goals and values (“clear, consistent, and long-term”), resources and

capabilities (“identification and objective appraisal”), organisational structure and monitoring and control

systems (“effective implementation and monitoring”).

This idea of strategy as a link between the firm and its environment has great similarities with the traditional

model SWOT, which systematises the strategic analysis in four categories: Strengths, Weaknesses,

Opportunities, and Threats.

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Fig. 1.2 Basic model: strategy as a link between the firm and its environment.

Source: Adapted from Dirección Estratégica: conceptos, técnicas y aplicaciones. R. Grant. 2014. Ed. Thompson.

Weaknesses and Strengths correspond to the internal analysis of the firm, and Threats and Opportunities to its

environment or external scope. However, as explained in the case 1.2 (“What does not work in SWOT” in

section “For Reflection”), dividing the internal and external factors into two categories is clearer and more

useful than dividing the SWOT model into four categories. As a result, the task of business strategy is

determining how the firm will deploy its resources in its environment (it will be pointed out below) to meet its

long-term goals and how the firm will be organised to implement such strategy and to establish a control

system.

The lack of coherence between the environment and the internal aspects of the firm is among the main

reasons for the failure of some companies. For a firm of the creative world such as Nintendo, having the

financial and technological resources required to keep competing at the same level with Sony and Microsoft in

the market for game consoles and video games will be crucial.

Brief story of business strategy

Military antecedents

As armies, companies need strategies for similar reasons: to give meaning and purpose, to deploy their

resources in the most effective way, and to coordinate the decisions of different people. Many concepts and

theories on business strategy have their origins in military strategy. The term “strategy” itself comes from the

Greek word strategia, which means “the command of an army”. However, the concept was not originated by

Greeks: the classic work by Sun Tzu, The Art of War, written approximately 500 years before Christ, is

considered the first treaty of strategy. NOTE: A. GALVANY (2012). Sunzi. El arte de la guerra. Direct translation

from Old Chinese into Spanish (8nd edition). Madrid: Trotta.

Military and business strategies share a series of common concepts and principles. The distinction between

strategy and tactic is among the most basic ones. Strategy is the plan for deploying resources to obtain a

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favourable long-term position; a tactic is a set of tasks to carry out a specific short-term action. Tactics are

related to the manoeuvres required to win a battle, whereas strategy should lead to victory in a war. Strategic

decisions have three common characteristics: they are important, they are a significant commitment of

resources, and they are not easily reversible.

However, they are great differences between the competition in businesses and a military conflict. The goal of

war is (usually) defeating the enemy. The purpose of the business competition is seldom so aggressive: most

companies limit their competitive ambitions, searching the coexistence with competitors rather than their

destruction.

From strategic planning to strategic management

During the fifties and seventies, directors started to witness increasing difficulties to coordinate decisions and

to keep the control of companies more and more big and complex. New techniques to appraise investment

projects (updating of cash flows) favoured reasonable decisions. Nevertheless, companies did not have tools

for making more complex long-term decisions. Strategic planning (also known as corporate long-term

planning) was developed at the end of the fifties for such purpose. Macroeconomic forecasts were the basis

for a new planning. Their more usual format was a document of five years of advance planning which

established the goals of the firm, collected forecasts on key economic variables (including demand, the firm’s

market share, incomes, costs, and margins), established priorities for the various products and business areas

of the firm, and allocated investments. In the mid of seventies, the big American and European companies had

created departments of strategic planning. The technique was extended to other organisations, reaching

public organisations later.

In the seventies and early the eighties, confidence in the planning was very questioned. The oil crisis of 1974

and 1979 started a new era of macroeconomic instability, whereas the international competition was

intensified by the entry of companies from Japan, Korea, and South-East Asia. The new turbulences implied

that companies could not plan their investments and resources five years in advance, that is, they could not

predict a so distant future.

The result was a change of emphasis, from planning to implementing strategy. The focus was not formulating

the firm's expansion plan in detail but selecting markets and appropriately locating the firm in them with

respect to their competitors. This transition from planning to what will come to be known as strategic

management was accompanied by an increasing interest in competition as a central characteristic of the

environment and in the maximisation of results.

This emphasis on strategy as the quest of results focused the attention on resources of profitability and their

relationship with the environment. The attention was therefore focused on the environment of the firm in the

last years of the seventies and in the eighties.

Strategy based on resources

In the nineties, the research on the strategic analysis on sources of profit moved from the environment to the

interior of the firm. Progressively, the resources and capabilities of the firm were considered the main

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resource of competitive advantages and the basis to formulate strategy. This emphasis, which is called vision

of the firm based on resources, represented a substantial change of the thought of strategy. The importance

given to resources and internal capabilities has led firms to identify their differences with respect to their

competitors and to design strategies to innovate and exploit such differences, instead of focusing on market.

New trends

In the 21st century, new challenges are still constituting strategic principles and the implementation of

strategy. Digital technologies have strongly affected the competitive dynamics of many industries, thus

creating the phenomenon of markets where “the winner takes all”. Technological changes and the increase of

global competition have resulted that strategy is less and less related to plans and more to the innovation, to

the quest of “blue oceans”, that is, spaces without being opposed in the market, and to the creation of value

and enterprising opportunities. * See The complexity of these challenges has resulted in that being self-

sufficient is not a viable option any more for most companies which more and more depend on strategic

alliances with other companies and social agents.

The financial crisis of 2008 strongly affected the strategy of companies and generated a new way of conceiving

its purpose. The disillusionment with excesses and abuses of market capitalism has renovated the interest in

corporate social responsibility, ethics, sustainability, creation of shared value, and the role of legitimacy in

long-term business success. NOTE: Robert Peston, The New Capitalism (London: Hodder & Stoughton, 2010).

The following figure sums up the main contributions to strategic management from mid-20th century.

Fig. 1.3 Evolution of strategic management.

Source: Dirección Estratégica: conceptos, técnicas y aplicaciones. R. Grant. 2014. Ed. Thompson.

https://www.effectuation.org/

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Strategy currently

What is strategy?

Strategy is the means through individuals or organisations achieve their goals. Table 1.1 (“Some definitions of

strategy” in section “For Reflection”) includes a series of definitions of strategy. The common idea is that

strategy is focused on achievement, implies allocation of long-term resources, and gives consistency to

decisions and actions.

As the environment of the firm is more unstable and uncertain, strategy is less concerned on the detailed

planning and more on guidelines for success. As more turbulent the environment is, the more required are

flexibility and response capacity to be incorporated in strategy. Consequently, strategy becomes more and not

less important.

Why do firms need a strategy?

This transition of strategy as a plan (formulation) to strategy as management (implementation and control)

raises the question of why firms (or any type of organisation) need a strategy. Strategy helps in the effective

management of organisations: firstly, by improving the quality in the decision-making; secondly, by facilitating

the coordination; and thirdly, by focusing organisations on achieving long-term goals.

Strategy improves the decision-making in several ways: It simplifies the decision-making as the number of

possible alternatives is reduced; the process of strategy formulation brings together and includes

understanding of the various individuals; and it facilitates the use of analytical tools.

Strategy as a coordination mechanism: The main challenge of management is the coordination of actions of

the different members of the organisation. The process of strategic planning represents a forum where points

of view are exchanged, and agreements are reached.

Strategy as goal: Strategy consists in building a future. It deals with how the firm will compete and what it will

be in the future. It gives orientation to the development of the firm and establishes aspirations which motivate

and inspire members of the organisation. The challenge of the President Kennedy for the NASA is well known:

“[...] achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to

the earth”.

The development of strategy: stable environments and uncertain environments

The starting point of strategy is the idea of opportunity. In most small firms, strategy is generated and kept in

the mind of owners: an explicit plan of strategy is not usually required. The planning carried out by big firms

from the seventies was very formal. However, strategy also arises from adapting to circumstances. In the case

of Lady Gaga, there is a coherence and a pattern in her professional decisions which are identified as

strategies, despite not having a formal plan. Also, the most successful firms are not the result of big strategic

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plans. In August 2011, Apple surpassed Exxon Mobil as it became the most valuable company in the world. The

success of Apple is based on a strategy of the creation of consumption electronic products including hardware,

software, and aesthetics to create an experience for the user which is characterised by simplicity and intuitive

functionality. Its success is the result of perceptiveness, intuition, experimentation, and events.

These aspects raise the question of how firms and other types of organisations should develop their strategy.

An option is that directors try to formulate strategy through a rational systematic process, whereas the other

would imply that, in a turbulent world, it is preferable to respond to events by keeping sense of direction

rather than keeping general goals and orientations. Figure 1.4 describes the tension required between the

current competitive achievement and the continuing need to prepare or create the future. The degree of

attention to each alternative will depend on the stability or turbulence of the environment.

Fig. 1.4 Business strategy: balance between what we are and what we want to be.

Source: Adapted from Dirección Estratégica: conceptos, técnicas y aplicaciones. R. Grant. 2014. Ed. Thompson

The Catholic Church and the Louvre Museum are in relatively stable environments as they can plan their

activities and allocations of resources for the future precisely and in advance. For WikiLeaks or bands of Somali

pirates, to the contrary, strategic planning is limited to some guidelines; most of their strategic decisions are

responses to the surrounding circumstances.

The more turbulent and less predictable the business environment is, the less strategy is based on detailed

decisions and more on general guidelines and orientations when using “clear rules”. For example, Lego

evaluates the new proposals of products through some simple questions: Does the product look like Lego? Are

children learning while they are enjoying? Is creativity stimulated?

These rules or criteria guiding the strategy of the firm can be found in three places: in the mind of directors, in

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the strategy formulations carried out by them in their speeches and written documents, and in their decisions.

These statements related to strategy generally distinguish the following elements:

• Mission, which describes the purpose of the organisation and tries to respond to “why we exist”;

• Principles or values, which establish “in what we believe and how we will behave”;

• Vision, which reflects “what we want to be”; and,

• Specific strategy, or competitive plan of the firm, which generally proposes goals, business scope, and

advantages. D. J. Collins and M. G. Rukstad.

Summary of the first section:

• Strategy is an essential ingredient for the success of individuals and organisations. A solid strategy

does not guarantee success but increases its chances.

• Strategic management is made up of five basic elements: clear, consistent, and long-term goals;

profound understanding of the environment; smart appraisal of resources and capabilities; effective

implementation; and control of results. The phase of planning or strategy formulation corresponds to

the first three elements.

• Strategic management, in uncertain and competitive environments, is identified with the quest,

creation, and exploitation of opportunities of value creation.

• Developing a strategy of an organisation requires the dynamic balance between what we are and

what we want to be, between the plan guided by a rational purpose and the flexible and creative

response to changing circumstances.

2. Foundations of analysis of the environment: the industry analysis

I am I and my circumstance

José Ortega y Gasset


This section explores the environment of the firm. The profound understanding of the competitive

environment is an essential element of a successful strategy, including the identification of the sources of

profit in the environment. The nearest environment of the firm is its industrial environment, so the final aim of

analysing the environment is the analysis of the industry to which the firm belongs.

To decide the industry of activity in which the business activity is going to be developed, it is worth evaluating

the attractiveness of the various industries in relation to their potential profitability and understanding that

the competitive structure of the industry determines it. The most used model for this purpose is the Porter’s

Five Forces of Competition framework.

Also, strategy must establish competitive advantages related to the key success factors of the sector.

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The added value of this section is as follows:

• Understanding that the industry represents the nearest environment of the firm and that it

characteristics are essential components for the strategic analysis;

• Learning to identify the structure of an industry and how it influences the intensity of competition and

profitability;

• Identifying the opportunities to obtain a competitive advantage in an industry by using the key

success factors.

From the analysis of the environment to the industry analysis

The famous sentence by Ortega y Gasset sums up well the essence of strategy. The personal identity or the

identity of the firm coming from strategy is the result of the “I” (resources and capabilities of the firm or of the

person) and of his/her circumstances (the environment). The foundations of the business environment taking

place in the industry analysis are studied in this section. Resources and capabilities are analysed in the next

section.

The environment of the firm is made up of all external factors influencing its decisions and results. For

example: the influences of the environment can be classified according to their origin as political, economic,

social, and technological factors— which is known as PEST analysis. Nevertheless, this wide exploration implies

a high cost and may turn to complexity and excess of information.

An effective analysis of the environment should distinguish what is vital for the firm to have profits. The

analysis should create value for customers, understanding what they want. Secondly, to create value, the firm

acquires goods and services from its suppliers, so it should know them and manage its interests with them.

Thirdly, the ability to generate profits depends on the intensity of the competition between firms competing

for the same opportunities of value creation, so the firm should also know the competition. In short, the

profits of firms in an industry are determined by three factors:

• The value of the product or service offered for customers;

• The intensity of the competition;

• The bargaining power of producers against their suppliers and customers.

The industry analysis includes these three factors in a unique analytical model.

Analysis of the industry attractiveness

The premise of the industry analysis is that the level of profitability of the industry is not a consequence of

chance but is determined by the industrial structure itself (see Tables 2.1 and 2.2 in section “For Reflection”).

Table 2.2 identifies four structure variables affecting competition and profitability. Michael Porter, from

Harvard Business School, developed the model of five forces in his book “Competitive advantage” to analyse

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the profitability of an industry. The five competitive forces include: threats of firms wanting to enter the

industry, substitute products, rivalry of firms which are in the industry, the bargaining power of suppliers, and

the bargaining power of customers:

Fig. 2.1 Porter’s five forces model.

As Figure 2.2 shows, the intensity of these forces is determined by several structure variables:

Fig. 2.2 Structure determinants of the five forces of competition framework.

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The most outstanding determinants are explained below:

Threat of entry of new competitors If new competitive firms can entry an industry and there are no barriers, the profit ratio will decrease until

making it unattractive. The main sources of entry barriers are as follows:

Investment required

The capital required to be established in an industry may be so high that it deters even huge firms. In service

industries —unlike industrial industries—, initial costs are generally low. For example, the cost of opening a

franchise pizza restaurant oscillates between 150,000 dollars for Domino’s to almost 638,000 dollars for Pizza

Hut.

Economies of scale

High investments, and therefore the high capital, for new competitors are sources of economies of scale

(reduction of the unitary cost of production as the volume of production increases) which favour the firms with

those investments.

Absolute cost advantage Absolute cost advantages usually come from the acquisition of sources of low-cost raw materials.

Product differentiation

In an industry where products are differentiated, the established firms have the advantage of the recognition

of the brand and the faithfulness of consumers. This source of barrier is basic in the firms related to the

intangible resources of the cultural industry.

Access to distribution channels

For many new suppliers of consumption goods, the main entry barrier is probably the obtaining of distribution

channels. A limited capability of distribution channels. One of the most important consequences of Internet is

that it allows new firms to neglect distribution barriers, which is basic in the cultural industry.

Administrative and legal barriers

In industries such as taxis, banks, telecommunications, and television, obtaining a licence provided by the

public authorities is usually required to enter. Industries which are intensive in knowledge, patents, copyrights,

and other ways of intellectual property legally protected are the most effective entry barriers.

Reprisals

Entry barriers also depend on the expectations of entrants on the possible reprisals taken by the firms

consolidated in the industry: drastic price decreases, increase of publicity, promotional sales or even lawsuits.

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Rivalry between competitors

It is the main determinant factor of the overall situation of competition and of profitability levels. In some

industries, firms fiercely compete even reducing prices under costs, thus leading the industry to general losses.

In other industries, there is no price competition: rivalry is focused on publicity, innovation, and different

dimensions of price. It is the result of the interactions between the six factors described below.

Concentration

Offer concentration refers to the relative number and size of competitors in a market. In markets controlled by

a unique firm (for example, Gillette, from P&G, in razor blades, or Apple in MP3 players), the dominant firm

can exercise a considerable discretion in price fixing.

Diversity of competitors

The degree in which firms of an industry can avoid the price competition depends of their similarity in terms of

origins, goals, costs, and strategies. The greater the diversity, the smaller the rivalry.

Product differentiation

The more similar the offer between competitors is, the more willing consumers are to replace some products

with others and greater the incentives of firms are to reduce prices to increase the sales. When the products

offered by rival firms are almost the same, the product is a commodity or a standardised product. Ideally is to

be so different to be unique in the market (to find or create a “blue” market, whereas the others are in “red”

markets).

Excess capability and exit barriers

Why the profitability of an industry tends to drastically fall during recession periods? The key lies in the

balance between demand and capability. The idle capability, if exit barriers exist, encourages firms to reduce

prices to attract new businesses. Exit barriers are costs associated with the possibility of leaving the industry.

Cost conditions: economies of scale and the relationship between fixed and variable costs.

When the excess of capability produces price competition, how low can prices be? The key factor is the cost

structure. When fixed costs are relatively high with respect to variable costs, firms will accept marginal

operations at any price covering their variable costs.

Bargaining power of buyers and suppliers

The firms of an industry compete in two types of markets: in those of productive factors and in those of

products. In markets for productive factors, firms buy raw materials, components, financial resources and

labour; in markets for products, firms sell customers goods and services (customers can be distributors,

consumers or another manufacturers). The way in which this value is divided, in terms of profitability, depends

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on the relative economic power of each one.

Positioning of the firm

The identification and understanding of competitive forces that a firm faces in its industry allow to be located

where the competitive forces are weaker. The record industry, which depended on CDs sales, has been

destroyed by the substitutes (digital download, piracy, and the use of shared files). However, not all segments

of the record business have been affected in the same way. Old people are not willing to use digital download,

unlike young people, so classic music, country music or the great hits have relatively become more attractive

than pop and hip-hop genres.

To have an effective positioning, the firm must anticipate the changes in the forces of the competition which

may affect the industry. Traditional bookshops have been removed by online retailers, such as Amazon and

electronic books. The survivors are the bookshops who took positions to avoid the powerful forces of the

competition, for example, by creating new sources of profit, such as coffees and the organisation of events

where they charge an entrance fee.

Identification of key success factors

The model of the five forces allows the potential of an industry to be determined to obtain profits, but it does

not indicate how the various firms competing in the industry divide such profits. This section explicitly analyses

the sources of competitive advantage within an industry.

To survive and prosper in an industry, a firm should combine two criteria: firstly, offering customers what they

want to buy; and secondly, surviving the competition. As a result, two questions need to be answered:

• What do customers want?

• What does the firm need to do to survive the competition?

To answer the former, identifying their customers is essential, as well as finding out their requirements and

how they choose between the various rival offers. After knowing the logic of the customers’ choice among the

different options, factors leading a firm to success can be identified.

The second question requires that the firm examines the foundations of the competition in the industry to

determine the degree of intensity of the competition and their key dimensions.

Figure 2.3 shows a basic model to identify the key success factors:

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Fig. 2.3 Identification of key success factors

Source: Dirección, Estratégica: conceptos, técnicas y aplicaciones. R. Grant. 2014. Ed. Thompson.

The following table shows the successful factors affecting the fashion industry:

However, common successful factors do not imply that firms in a same industry should adopt similar

strategies. The main firms of the industry —Inditex (Zara), H&M, Diesel, and Mango— have adopted unique

strategies to exploit such successful factors.

Nevertheless, the industry analysis has limitations which are more evident in dynamic and quickly changing

environments. The influence of new technologies, particularly information and communication technologies

(ICTs) have collapsed such limits. This is evident in the cultural industry, or more specifically, in sectors of

cultural industries (see “Case 2.1 - Diffuse limits of the cultural industry” in section “For Reflection,).

Summary of the second section:

• Despite the huge number of external influences affecting each firm, the attention to the analysis of

the environment is focused on the industry. The goal is estimating the potential of profits of the

industry and identifying the sources of competitive advantages that the firm may have.

• The key piece of this analysis is the Porter’s five forces of competition framework, which associates

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the structure of an industry with the intensity of the competition and the profitability it can offer.

• The main use of the five forces model is anticipating the way in which the changes in the structure of

an industry could affect its profitability.

• The industry analysis makes a first approach to identify the sources of competitive advantage through

the recognition of the key success factors of the industry.

3. Internal analysis: resources and capabilities

It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.

Charles Darwin


Among the five successful elements of a good strategic management listed in the first section, the internal

aspects of the firm, its resources and capabilities have become very important in recent years. The resources

or capabilities of a firm —or those available for the firm— allow more competitive and solid strategies to be

formulated. Resources and capabilities, organised in routines, are considered the basis of strategy. Their

organisation and development determine the success of implementing the strategy and its results. The

capacity to renovate them depends on the change management, that is, on the overcoming of inertia and on

the enterprising spirit.

After reading this section, readers will be able to:

• Identify and appraise the resources and capabilities of a firm;

• Assess the potential of resources and capabilities of a firm to provide a sustainable competitive

advantage;

• Contemplate the importance of generating dynamic capabilities and of the change management.

Importance of resources and capabilities

The strategic plan of the firm has answered the following question: Which is our business? Traditionally and

from a market’s point of view, this question leads to other questions: Who are our customers? Which

requirements do we intend to meet?

However, in a world where customers’ preferences are volatile and their identity and technologies are

changing, a strategy focused on market may not to provide the stability and consistency needed to guide a

long-term strategy. For this reason, when the environment is very uncertain, the internal analysis of the firm,

the analysis of its resources and capabilities is a more solid starting point to establish the strategy.

A resource can be defined as an asset or stock, for example, a machine, a patent, a brand, or a building.

Resources are usually included in the balance of assets of the firm. Unlike resources, capabilities are sets or

flows of resources working together: they produce economic performance in the firm. The more flows are

repeated, the more effective they are, so organising them in organisational routines is fundamental. Some

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examples of capabilities are: the process of buying raw materials, the ability to create new 3M products, and

the various sets of tasks to put on a theatre play (rehearsals, costume designs, sceneries, etc.).

A solid strategy is that recognising its internal strengths and weaknesses, exploiting strengths and minimising

weaknesses, as in the case of Lady Gaga (Case 1.1 in section “For Reflection”). People and organisations have a

good strategy of identifying and developing their resources and capabilities as a starting point.

There are other examples reflecting this statement. Apple expanded beyond its initial specialisation in

computers (iPod, iPhone, iPad) because of its capacity to combine resources and capabilities (technology,

aesthetics, and ease of use). Thanks to its resources and capabilities, Apple influenced markets and was the

first firm in the world by market value in 2013. To the contrary, firms trying to maintain a market approach

have witnessed great difficulties, as the case of Eastman Kodak. A more recent example of how the origin and

development of a firm in culture are based on resources and capabilities is the firm ERA (Case 3.1 - ERA in

section “For Reflection”). It is clear that, without the resources and capabilities of its founders (knowledge of

archaeology, relationships, reproductions, etc.), the firm would not have been able to compete.

To sum up:

• The resources and capabilities of a firm are a more secure basis to create a strategy than the exclusive

attention to market, particularly in uncertain environments under rapid changes;

• They constitute the main source of profitability; as a last resort, what a company knows to do (its

capabilities) is what makes it valuable; and,

• Identifying and developing resources and capabilities show the way to achieve the unique personality

and character given by the strategy.

Identifying resources

The resources of a firm can be divided into three categories: tangible, intangible, and human resources. A first

partial vision of them can be obtained from the firm’s balance sheet.

Tangible resources. These resources are the easiest to be identified and appraised because of their material

nature (equipment, machines, grounds, buildings, liquid assets, etc.). They are generally valued in the balance

sheet of the firm, but such balance sheet gives little information concerning their potential.

Intangible resources. Intangible or immaterial resources are generally more valuable than tangible resources,

particularly in certain industries such as culture, where creating meanings is usually linked to the symbolic

character of the resources and capabilities of the firm. Most of them are not included in the financial

statements of companies. Assets related to reputation (brands, whose value lies on the confidence given to

customers, suppliers, and partners), technology, intellectual property in the form of patents, copyrights, and

commercial secrets whose property and use are regulated by law are among the intangible resources.

The importance of managing intangible resources is increasing and shows the junction of industries. An

example is the recent recruitment of Ángela Ahrendts in Apple (see “Case 3.2 - Apple and Ángela Ahrendts" in

section “For Reflection”), which highlights how the first technological firm of the world pays a special attention

to the management of its intangible resources by recruiting a person from the fashion world.

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Human resources. These resources are the abilities and productive effort offered by the employees of an

organisation. They are not included in the firm’s balance sheet because the firm acquires the services of

people under employment contracts. They are part of the resources of the firm because of their stability.

Organisations make a considerable effort to appraise their human resources, both at the hiring stage and in

the appraisals of performance and career planning.

Identifying organisational capabilities

Resources are not productive by themselves. Daniel Barenboim would not been able to conduct an orchestra

without all people, resources and technical equipment accompanying him in concerts. An organisational

capability is the ability of the firm to work its resources to obtain the desirable result (see “Case 3.3 - Football

and capabilities” in section “For Reflection”).

Firms need to have a general vision of their organisational capabilities. To achieve this, organisational

capabilities can be divided into functional areas. For example: managerial capabilities under financial control,

international management, and acquisitions; operational capabilities in continuous improvement or

production flexibility; and capabilities of research, development of new products, etc.

Making an inventory of organisational capabilities is more difficult than of resources. Each firm has unique

capabilities difficult to be identified with simple functional classifications. Apple is a good example: it has a

notable capacity to combine hardware, software engineering, aesthetics, ergonomics, and cognitive

knowledge.

Appraisal of resources and capabilities

After identifying the resources and capabilities of a firm, the next step is appraising its strategic importance.

Having a guideline or criterion which identifies the strategic resources and capabilities simplifies the work of

the entrepreneur or director to pay a priority attention to the most relevant.

A practical and simple method is observing whether the four requirements VRIO are fulfilled, that is, Valuable,

Rare, Costly to Imitate and Organised to Capture Value, thereby answering the following questions:

• Are they Valuable and generate opportunities in market?

• Are they limited or Rare and they are not available for all competitors?

• Are they difficult to Imitate and are not easily reproducible by other firms?

• Do they work together with other resources of the Organisation and increase their performance

when they complement each other?

The Value of the resource or capability should be related to key success factors in the market and generate

opportunities. These factors will depend on the characteristics of industries and of the dominant technology.

The Shortage is another parameter to consider. If a resource or capability is plentiful in the industry —for

example, water for agriculture—, it can be fundamental to compete, but it does not give an enough basis to

obtain a competitive advantage if it is available for a huge number of firms.

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Thirdly, a resource or capability can be valuable and limited, but not strategic. An additional condition is not to

be easily reproducible or imitated by the competition.

Finally, even fulfilling all these conditions, there is an additional requirement to consider the strategic

importance of the resource or capability: to be able to generate synergies with other resources and capabilities

by working immersed in the Organisation, thus complementing and improving the abilities of other resources,

as well as providing value. The case of sport teams is paradigmatic. It is not enough with having Messi (a

valuable, limited, and inimitable resource as footballer) to manage Barcelona C.F. strategically: it is necessary

to be integrated in the team and to produce a synergy effect with his workmates and the technical team.

A dynamic vision of resources and capabilities: implementing and monitoring strategy

Strategy as the result of the mixture between the industrial environment (“my circumstances”) and resources

and capabilities (“I” in the sentence by Ortega y Gasset) cannot be limited to a static idea. Its Implementation

and control (the other two requirements mentioned in section Strategic planning and management: elements

of successful strategies (see figure 1.1) require a dynamic vision of strategy. Such idea has the answer in the

creation of dynamic capabilities by the organisation: capabilities developing over time and allowing the firm to

be changed and adapted to the evolution of the environment and to cause changes in it.

This dynamic vision of strategy is supported by the change management and is closely linked to innovation

processes. However, the implementation of strategy and its subsequent control require to overcome the

resistances to the change existing in all organisations. To overcome the organisational routines created, which

generated efficiency and to which resources have been adapted. It requires to be continuously on the alert to

reformulate strategy and to start reinventing the organisation. For this reason, managing an organisation

strategically consists in combining the exploitation of what we know to do and the continuous search of new

opportunities.

Figure 3.1 sums up a practical guideline for a well management. Fig. 3.1 Exploiting resources and capabilities: a practical guideline for strategy

Sources: Prof José Ruiz Navarro.

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From this perspective of continuous change —of exploitation and search—, strategic management should be

continuously ready for five tasks:

1. It should be able to identify the resources of the firm;

2. It organises them by capabilities responding to what the firm better knows to do.

3. It focuses the attention on strategic capabilities (those built under VRIO criteria) to be unique, thus

giving competitive advantages and achieving more results than the competition.

4. It continuously controls the results related to both goals and the changes produced in the

environment and suggests the changes to be included in the strategy.

5. The goal of changing keeps a dynamics which alerts the organisation and encourages it to develop

new resources and capabilities to start a new cycle.

Inertia to change and enterprising spirit

This managerial task of formulating the strategy and putting it into practice faces the challenge of overcoming

inertia to the change existing in all organisations and those faced by the management every time a project is

undertaken to exploit a new opportunity. Inertia can be grouped in five main categories related to the

distortion of vision, interest, the capacity to find creative responses, political pressures, and the coordination

capability.

1. The distortion of vision responds to perception problems. It is the first barrier to change as people reject its need, they do not see it.

The distortion can be originated from short-sightedness or inability to perceive opportunities or

threats, to see reality and tendencies clearly. Short-term attention of some entrepreneurs makes

them not to circulate with “high beams” and not to perceive signs of change in the variables

conditioning the future.

Very detailed plans of some organisations and their rigid observation also contribute to the inability of

observing what is going on around. They usually generate an everyday thought producing an excess of

orthodoxy and conformism (in some mature industries, for example, shipyards, the sentence “the

naval industry will be always the same” is usually listened; the same happens in some traditional

culture industries which reject innovation systematically).

A third reason for the everyday thought which prevents to see the need of change is the excess of

confidence (“to die from success” is possible). History, past successes refuse current risks. General

Motors did not accept that Japanese cars manufacturers were more productive. The captain of Titanic

even affirmed that the ship was unbeatable.

2. The lack of interest is usually the second barrier for change. After overcoming the previous barrier, the second barrier takes place when, being aware of the need to change, psychological or agency problems arise, thus preventing the change.

These agency problems —problems of interests found in the organisation— are originated from the

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direct cost of change: for example, when a new technology renders obsolete the previous one so that

the existing machines or equipment are not valuable any more (“sunk costs” or irrecoverable

expenses are produced).

Also, new opportunities generating change produce losses of current markets. This is what happens

with “cannibalism”: a new brand of the firm takes the place of or “eats” the previous brand.

The existence of grants or incomes from other activities do not foster the change, especially when the

process of change implies that the performance is not the same, particularly in the beginning (for

example, the launching of a new product does not cover all the investments required, which will be

recovered in a longer period).

3. The lack of creative response is a barrier which prevents to change even when the two previous barriers are overcome. It is a barrier related to problems of capability of analysis or of decision-making.

The speed and complexity of change sometimes hinder the capability of analysis. The crisis and its

intensity are beyond some entrepreneurs and directors.

Fatalism and passivity are other reasons of the lack of active response to the changes of the

environment. Expressions such as “problems are inevitable” or “nothing can be done” are the origins

of passive behaviours.

The lack of an enterprising spirit able to assume challenges to look for and to create opportunities, as

well as to assume risks is also among the main ingredients of the lack of responses to change. This

lack of culture focused on undertaking is generally linked to the belief that others will solve problems.

But paralysis and not generating proposals can also be based on distrusting the vision proposed from

the orientation of change. A horizon of future stability is not created, promises of participation are

not believed, and a long-term commitment is not generated.

4. The political conflict generates a gridlock in decisions, thus preventing to implement strategies although the three previous barriers are overcome.

Policies of groups belonging to departments with different interests (change produces winners and

losers among groups or departments). Irreconcilable beliefs on the nature of the problem of its

solutions stop the change. Participatory decisions and the impossibility of reaching consensus

sometimes require decisions linked to leadership: “If the ship sinks, managing by consensus is worth

nothing”.

In other cases, values generate value curves which turn into obstacles: the more a task is repeated,

the more valuable it is thought to be (when everything changes, experience can be an obsolete

resource).

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5. After overcoming the previous barriers, the lack of coordination in action can lead to the failure of implicit change that implementing the strategy implies.

The most common reasons are a leadership committed to previous commitments and fears to break

links with former workmates (the external or internal origin of management teams is aware of these

aspects).

The capacity to establish new incentives to acquire new routines (such as encouraging a framework

for innovation) is another reason. Problems of “first moving” common expectations are also another

reason to stop the action (to wait what another person does).

Finally, the lack of management and leadership capabilities undoubtedly compromises the processes

of change. An instructive case of how managing a difficult process of change, of how undertaking a

project and implementing a strategy is the case of Nelson Mandela (see “Case 3.4 - Nelson Mandela’s

lessons” in section “For Reflection”).

Final summary

Strategy is based on the achievement of results. For this purpose, the resources and capabilities available for

the organisation constitute a solid basis to formulate strategies (planning) which can be put into practice

(implementation), especially in uncertain environments where markets and technologies rapidly change. Apart

from the analysis of the environment —the industry analysis— of the firm, the management of resources is

another pillar of strategic management.

The management of resources requires a correct identification and appraisal of the strategic potential of the

resources of firms. The strategic character of resources and capabilities comes from their potential to isolate

the organisation from the competitive pressure of the environment, that is, from their property to give a

unique character against competition.

However, the existence of resources and strategic capabilities as a required condition for the organisation or

firm to reach the achievement is not enough. Strategic management should be able to implement the strategy,

to control its results and to renovate it. Implementing, controlling, and supervising the strategy means to

overcome inertia to the change, to identify new challenges, and to undertake new projects. This capacity to

explore new horizons, to identify or create opportunities, to organise resources to exploit them, and to

appraise the results continuously are the essence of strategic management.

For Reflection

Section 1. Importance of strategy, strategic analysis model, and evolution of strategy

Case 1.1 Lady Gaga and the Haus of Gaga

Stefani Joanne Angelina Germanotta, known as Lady Gaga, is the most popular and successful artist from the

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21st century. After launching her first album, The Fame, in 2008, she obtained a sales record with 42 million of

discs and was a great success in the main musical awards, including The Grammys, the MTV awards, and the

Billboard Music Awards. In 2011 she ended a worldwide tour of 201 concerts raising 227.4 million of dollars

(the highest figure for a new artist) and headed the list of celebrities of Forbes Celebrity 100.

Gaga’s music is a mix of catchy pop music and dance, but it is unlikely to be outstanding or innovative. The

critic Simon Reynolds described her as “ruthlessly catchy, naughties pop glazed”. Her successes have been

notably promoted by their dazzling videos. Paparazzi and Bad Romance won the award for best video in the

Grammys 2009 and 2010: the latter is the second most downloaded video of all times in YouTube. The most

surprising aspect has been the clothing and general appearance of Lady Gaga, she met with the president

Obama wearing a shoe with 16 inch-heel, so known as her successful songs.

She has developed a business model which recognises the reality of the post-digital entertainment world. Her

records go with, or sometimes are preceded by musical videos in YouTube. Famecount has crowned her as

“the most popular living musician online”. Her interaction with her fans includes Gagaville, an interactive game

developed by Zynga and The Backplane, a social network based on music.

Her emphasis on the visual image reflects the way in which her fame has turned into money. A distinctive

characteristic of developing Gaga’s market is the emphasis given to the creation of relations with her fans and

her social and non-conformist statements. The meaning of community is enhanced by mechanisms, such as

the greeting “Monster Claw” and the “Manifesto of Little Monsters". As "Mother Monster”, Gaga is the

spokesperson and guru of such community.

Following the model of the Factory by Andy Warhol, the Haus of Gaga is her creative workshop and develops

her own capabilities. The Haus of Gaga includes the director Troy Carter, the creative director and

choreographer Laurieann Gibson, and a huge professional team that Gaga uses in her public appearances.

Sources of the case of Lady Gaga:

en.wikipedia.org en.wikipedia.org, consulted 7 January 2014 See the case in detail in the book: Dirección estratégica: conceptos, técnicas y aplicaciones. R. Grant, 2014. Ed.

Thompson.

Case 1.2 - What does not work in SWOT Distinguishing between the environment and the internal characteristics of the firm is a common premise in

most approaches to the strategic analysis. The most known and widely used is the SWOT model, which

classifies the factors influencing a business strategy in four categories: strengths, weaknesses, opportunities,

and threats. The two first categories (strengths and weaknesses) refer to the internal aspects of the firm, and

the other two (opportunities and threats) refer to the environment.

The question is whether a distinction between external and internal factors or the SWOT taxonomy with four

http://en.wikipedia.org/wiki/List_of_best-selling_music_artists,%20consulted%207%20January%202014

http://en.wikipedia.org/wiki/List_of_best-selling_music_artists,%20consulted%207%20January%202014

http://en.wikipedia.org/wiki/Lady_gaga

http://en.wikipedia.org/wiki/Lady_gaga

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components is the most appropriate. The key question is knowing whether classifying the internal factors as

strengths and weaknesses and the external factors as opportunities and threats is reasonable and useful. In

practice, such distinctions are difficult.

Michael Eisner came to Walt Disney Productions in 1984 as president, the firm was in its fourth consecutive

year of decline in net incomes, and the price of its stocks had fallen in a very attractive way for predators.

Between 1984 and 1988, the sales of Disney increased from 1.660 to 3.750 million of dollars, net profits

increased from 98 million to 570 million, and the market value of the firm increased from 1.800 to 10.300

million of dollars. But, over time, Eisner’s strength, because of his age, turned into a weakness and excessive

dependence for the firm.

Global warming is at the same time a threat and an opportunity for car manufacturers of the world: it is a

threat by increasing the taxes on fuel and limiting the use of cars, and it is an opportunity for new sales by

encouraging consumers to change their cars and to buy fuel-efficient and electric cars.

The lesson is that classifying external factors in opportunities and threats and internal factors in strengths and

weaknesses is arbitrary. The external and internal forces affecting the firm should be carefully identified, and

then their consequences should be analysed.

Source: Dirección estratégica: conceptos, técnicas y aplicaciones. R. Grant, 2014. Ed. Thompson

Table 1.1 - Some definitions of strategy “Strategy: a plan, method or series of actions designed to achieve a specific goal or effect”. Wordsmyth Dictionary (www.wordsmyth.net) “The determination of the long-run goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals”. Alfred Chandler, Strategy and Structure (Cambridge, MA: MIT Press, 1962)

“Strategy is the pattern of objectives, purposes or goals and the major policies and plans for achieving these

goals, stated in such a way as to define what business the company is in or is to be and the kind of company it

is or is to be”.

Kenneth Andrews, The Concept of Corporate Strategy (Homewood, IL: Irwin,1971) Lost child: “Come on! We’ll get ‘em”. John Darling: “First, we must plan our strategy”. Lost child: “Uh, What’ strategy?” John Darling: “A plan of attack”.

http://www.wordsmyth.net/




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Walt Disney, Peter Pan Source: Dirección estratégica: conceptos, técnicas y aplicaciones. R. Grant, 2014. Ed. Thompson.

Self-assessment questions

1. Regarding the five elements of a successful strategy which are included in Figure 1.1, appraise the

strategy of the Cirque du Soleil (es.wikipedia.org) and check whether the elements are included.

2. The evolution of business strategy shows that the characteristics of the strategic process of a firm are

very conditioned by the degree of uncertainty of its environment. “What differences can be expected

from the strategic processes of firms belonging to various cultural sub-sectors (music, design,

heritage...)?

3. As most firms of the cultural field have traditionally been in high uncertainty environments, do you

think that this can be an advantage at a time of crisis with respect to other types of firms used to

stable environments?

Section 2. Industry analysis

Table 2.1 - Industry profitability Pharmaceutical and car industries not only provide very different products, but also have very different

structures which make the former very profitable and the latter a real nightmare due to the competition of

prices and weak profit margins.

See the list of firms and industries annually published by Fortune 500: money.cnn.com

Table 2.2 - Possible industrial structures

2.1 Case for the analysis and discussion: limits of the cultural industry Many people think that culture and its artistic and creative productions are only for entertaining and enjoying,

http://es.wikipedia.org/wiki/Cirque_du_Soleil

http://es.wikipedia.org/wiki/Cirque_du_Soleil

http://money.cnn.com/magazines/fortune/fortune500

http://money.cnn.com/magazines/fortune/fortune500

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a perspective which considers its economic contribution as marginal, and it is therefore relegated to the area

of the public intervention. However, for others, culture is closely linked to creativity. For the latter, culture is a

strategic resource improving and influencing innovation processes, society, and the creation of economic

value, thus accepting that culture provides new sources of competitive advantages to create value through the

creation and development of firms. By developing and hybridising culture with other manifestations of

knowledge, culture is mixed with other activities and technologies of other industries, particularly the

information and communication industries. Delimiting culture scope, that is, determining the industry, is

therefore a difficult and hazardous task, as in many other industries in an economy where the processes of

interaction among value chains are generally complex.

However, with the goal of delimiting its scope, the European Union states four circles or levels of the activities

related to culture.

European Commission

As a summary, Table 1 describes these four levels of the industry: the artistic core would be in the centre;

around it, cultural industries would be in a second circle; then, another external layer includes creative

industries; and the related services industries and activities would close the industry and link it to many other

industries with wider and more diffuse borders. From this determination proposed by the European

Commission, the cultural industry would involve those industries and activities based on the creation of ideas,

as well as those which produce products combining such ideas with other inputs. This determination implies

distinguishing different categories of activities of the cultural industry. The first would be therefore made up of

the generation of cultural non-industrial products, that is, products of unique production, for example, visual

arts. The second category would include those activities generating only cultural outputs, but they come from

activities with the possibility of using the massive reproduction under property rights. In this category, the

influence of new information and communication technologies (ICTs) is evident and, as in the following

categories, the paradigm of Baumol on the influence of costs in culture dissemination is broken. The third

category includes activities not necessarily industrial whose goal may be offering unique products combined

with property rights, the creativity is here stimulated by culture, it is not an ultimate result but an intermediate

good of the production process of a functional good or service. In the fourth level or concentric circle would be

the related industries and activities which are difficult to delimit and, in some way, are mixed with cultural

activities through the offer of complementary contents.

These categories proposed by the European Commission, particularly the first three categories, have the three

main characteristics of the cultural offer which are useful to delimit the scope of culture: creativity in its

production, symbolic meaning, and capacity to be protected by mechanisms of intellectual property. THROSBY,

D. (2001).

Other studies emphasise these considerations to specify the scope of the industry, particularly the aspect that

cultural activities produce a social meaning and contents interpreting the world and affecting the social

identity and cohesion. HESMONDHALGH, D. (2002).

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Table 1 - Determining the industry: four levels of cultural and creative activities

Source: Comisión Europea (2006).

Source: La creación de empresas en el ámbito cultural. J. Ruiz Navarro (director), 2009. Fundación Autor.

Self-assessment questions of section 2

1. Do culture industries have very marked limits (video games/software)? Are they useful as contents or

resources complementing activities of other industries (tourism, the restaurant industry, etc.)?

2. Choose a high-profitability industry in the creative scope (for example, video games), and another

low-profitability industry (record companies). From what you know about the structure of the

industries selected, use the Porter’s five forces model to explain why the profitability has been high in

an industry and low in the another.

3. Which key success factors are in the industry of Flamenco shows?

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Section 3. Internal analysis: resources and capabilities

Case 3.1 ‐ ERA experimental archaeology laboratory See the full case in the website of the Cátedra de Emprendedores: www.uca.es. Last consulted: 14 January

2014.

Case 3.2 - Apple and Ángela Ahrendts See online: tecnologia.elpais.com. Last consulted: 14 January 2014. What do firms from other industries learn from cultural firms? Can cultural firms teach non-cultural firms to

manage uncertainty? Can they teach to better manage the intangible (emotions) and to develope innovations

in more traditional industries?

Case 3.3 - Football and capabilities: integrating resources to build an organisational capability Resources are combined to create organisational capabilities. However, the capabilities of an organisation are

not a simple result of the resources on which they are based.

In sports, teams with many resources are generally surpassed by teams which create strong capabilities by

using modest resources. In the European football, teams made up of many good footballers (for example,

Chelsea, Real Madrid, and Manchester United) are usually humiliated by other teams created with limited

means (for example, Borussia Dortmund, Arsenal, and Oporto).

In business, firms with modest resources also surpass the consolidated giants. In the vacuum cleaner industry,

Dyson Ltd., a small and recently created British company, became the leader in the market surpassing the giant

of electrical household appliances, Electrolux, both in United Kingdom and USA. Hyundai Motor created its first

car, a Ford Cortina, in 1968; in 2012, it was the fourth car manufacturer in the world.

Several factors determine the effectiveness of the combination of resources to create capabilities:

Processes: The role of routines as the basis of capabilities which are easier to be seen from processes, that is,

sequences of coordinated actions which are useful to carry out specific productive tasks.

Organisational structure: For an effective coordination, people intervening in an organisational capability need

to be in the same organisational unit.

Motivation: The effectiveness of people to combine efforts to achieve organisational capabilities depends on

how their personal interests are aligned with those of their team and on their motivation to use their abilities

fully.

Organisational alignment: The coherence between the environment and strategic and organisational factors.

http://www.uca.es/

http://www.uca.es/

https://elpais.com/tecnologia/2013/10/15/actualidad/1381824095_174229.html

https://elpais.com/tecnologia/2013/10/15/actualidad/1381824095_174229.html

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Source: Summed from Chapter 5 of the book Dirección estratégica: conceptos, técnicas y aplicaciones by

Robert Grant, 4th Edition (2014).

Case 3.4 - Nelson Mandela’s lessons Reading the information of the link. Searching information on Nelson Mandela’s life, watching the film Invictus

or reading the novel by John Carlin on which the film is based.

Thinking about how Nelson Mandela developed strategy. If he used similar guidelines of the cases previously

mentioned. If he faced reality (environment) with his resources, capabilities, and aspirations. Checking if he

implemented the strategy —if he was committed to a profound process of change— by overcoming the inertia

to the change described. To sum up, analysing how he undertook and added value to society.

See: www.equiposytalento.com, consulted 12 January 2014.

References

Creación de empresas en el ámbito cultural. José Ruiz Navarro (dir.). Madrid: Fundación Autor, 2008. 245

pages. ISBN 978-84-8048-789‐4.

GRANT, Robert M. Dirección estratégica: conceptos, técnicas y aplicaciones. Zulima Fernández; José Daniel

Lorenzo Gómez; José Ruiz Navarro (trads.). 5th ed. Madrid: Thomson-Civitas, 2006. 641 pages. ISBN 84-470-

2658-2.

http://www.equiposytalento.com/

http://www.equiposytalento.com/

Documents

5.1 Strategic planning and management of culture