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Notes Strategic Diamond

The strategy diamond model provides a concise framework for analyzing, summarizing, and communicating a company's product, business, and corporate strategies. It examines strategies across five elements: arenas, differentiators, vehicles, staging and pacing, and economic logic. The model helps executives consider all aspects of strategy together to ensure they work in combination to lower costs, increase prices, or create synergies. The strategy diamond is a checklist that prompts companies to develop answers to a series of questions within each element to form a comprehensive strategic plan.

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548 views2 pages

Notes Strategic Diamond

The strategy diamond model provides a concise framework for analyzing, summarizing, and communicating a company's product, business, and corporate strategies. It examines strategies across five elements: arenas, differentiators, vehicles, staging and pacing, and economic logic. The model helps executives consider all aspects of strategy together to ensure they work in combination to lower costs, increase prices, or create synergies. The strategy diamond is a checklist that prompts companies to develop answers to a series of questions within each element to form a comprehensive strategic plan.

Uploaded by

milan_patel
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© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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The Strategy Diamond -Don Hambrick and Jim Fredrickson, 2001 The strategy diamond provides executives and

consultants a concise, coherent way to analyse, integrate, summarise, and communicate product, business, and corporate level strategies. The model covers strategy formulation -- that is, it helps answer questions about what the strategy is and what it will be in the future. If strategy is conceptualized as being about choice -- managerial choices about what the organisation does and does not do -- then the strategy diamond highlights the choices and choice-gaps in the current and proposed strategy. Based on decades of teaching and consulting in the strategy area, professors Don Hambrick and Jim Fredrickson introduced the strategy diamond in 2001. Their aim was to introduce a model that allowed executives to accumulate and consider all the pieces of a strategy in combination instead of in isolation (i.e., pricing decisions vs. R&D decisions vs. capacity decisions and so on). The strategy diamond is more a checklist than a model. It suggests that good strategies include answers to a series of related questions spanning target markets, growth vehicles, speed and path of strategic change, and financial deliverables.

INTERNATIONAL STRATEGY AND THE STRATEGY DIAMOND


Staging When will we go international? Arenas Which geographic areas will we enter?

How quickly will we expand


into international markets?

Which channels will we use in those areas?


Arenas

In what sequence will we


implement our entry tactics?
Staging

Economic logic

Vehicles

Vehicles Which international market-entry strategies will we use? Alliances? Acquisitions? Greenfield investments?

Differentiators

Economic logic How does our international strategy lower our costs, raise the prices we can charge, or create synergies between our business?

Differentiators How does being international make our products more attractive to our customers? * Adapted from Don Hambrick and Jim Fredrickson (2001)

For Classroom Discussions & Academic Purpose Only Business Policy and Competitive Strategy

1. ARENAS Arenas encompass choices made about where to compete: the external environment such as product or service markets, geographic markets or channels. Arenas also identify value chain activities or value creation stages that are insourced or outsourced. For instance, a pharmaceutical firm may outsource new drug development to smaller biotech firms. 2. DIFFERENTIATORS Differentiators are those factors that are believed to allow the firm to "win" in its targeted arenas, particularly external arenas. Differentiators can include image, price, distribution channels, reliablity, and other key inputs. 3. VEHICLES Vehicles identify the degree to which the strategy relies on internal development efforts relative to partnering with or acquisition of external parties. 4. STAGING & PACING Staging and pacing refer to the sequence and speed of strategic moves. This element helps identify decision points since strategic moves don't have a single possible pathway. For instance, a pharmaceutical firm might grow its global footprint by first broadening its product arenas then using this foundation to broaden its geographic market arenas. 5. ECONOMIC LOGIC The economic logic element reflects how all the pieces tie together in a way that satisfies key stakeholders. Economic logic for profit-oriented firms can take the form of scale economies, scope economies, premium pricing or some combination of these. For non-profit organisations, economic logic reflects how well the organization is achieving its mission and vision and serving its focal stakeholders.

For Classroom Discussions & Academic Purpose Only Business Policy and Competitive Strategy

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