BMP6002 Strategic Management: Core Competence and Innovation Report

This report critically compares and contrasts prescriptive and emergent approaches to strategy, emphasizing their role in achieving organizational goals. It examines how organizations use these strategies, supported by literature examples like Virgin Group and Honda. The report then analyzes the r...Read More

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BSc Business Management
BMP6002
Strategic Management
Semester 2 Assessment in Replacement for the Examination
Module Leader: Ian McDonald
Student number: 2008727
Module title: BMP6002 Strategic Management
World count: 2663
Due Date: 17/05/2021

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Section 1: Critically compare and contrast the application of ‘prescriptive’ and ‘emergent’
approaches to strategy and outline their role in the delivery of this aim. Where possible use examples
drawn from the literature to support points you put forward.
Organisations are guided by goals and objectives that inform their operations and strategic
decisions. Lynch (2015) pointed out that strategy within an organisation is created at the business
and corporate levels. The business-level strategies seek to widen the customer base for
sustainable competitive advantage. On the other hand, the corporate level strategies involve a
pattern of objectives and purposes that define the leadership and culture of the organisation.
Overall, businesses develop and implement strategies to get the highest value to the shareholders
through improved performance (Seifzadeh & Rowe, 2019). With a high level of commitment to
strategy, the managers seek to make a difference in their competitiveness in both the short- and
long-term periods. This is the basis of reliance on emergent and prescriptive strategic approaches
to improve performance and realise sustainable competitive advantages. Therefore, this essay
seeks to compare and contrast the emergent and prescriptive strategies in accomplishing the
corporate goals.
Emergent Strategy
According to Lynch (2015), strategy is created based on the perception of the leaders or
managers regarding the market situation. When they perceive the future to be uncertain and
characterised by constant challenges that compromise the realisation of goals, they are likely to
avoid longer-term approaches to business. Instead, the managers will develop a dynamic
approach to strategy by taking risk considerations. The emergent strategy involves a continuous
pursuit of market opportunities as they emerge through experimentation to enhance the
competitive advantage of a firm (James, 2018). Shah et al. (2015) argued that emergent strategies
involve a lack of clear objective, and the purpose of the strategy is developed as it proceeds.
Based on the definition of the emergent strategic approaches, some characteristics indicate the
use of emergent strategies, including the inability to predict the future. This is because the
proponents of emergent strategies assume that the business future is subject to changes and
dynamics that cannot be predicted in advance. Therefore, the strategy is a process that evolves
alongside implementation in pursuit of the organisational goal. Shah et al. (2015) refer to the
example of Virgin Group, which continuously scrutinises new opportunities to find out if the

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organisation can provide something more valuable and better than the existing companies. This
approach is necessitated by the chaotic nature of the business environment and the difficulty to
predict the outcomes require that the business operations and processes are constantly adjusted to
ensure a positive relationship with the external environment and optimum utilisation of internal
resources (Hosseinian-Far & Chang, 2015; Neugebauer, Figge, & Hahn, 2016). Particularly,
Virgin looks at markets where customers do not get value for their money and where existing
companies are complacent to find new market opportunities.
The second characteristic of emergent strategy is the need for the firm to adapt to the changing
environment for survival. Firms are guided by both short term and long-term objectives. The
emergent strategist depends on the learning process to overcome the challenges in the business
environment. For instance, the changes in technology threatened the survival of the European
Telecom companies, given the rising competition from mobile phones (Lynch, 2015). The
survival of the players in the industry depended on how they learn and adapt to the new changes
resulting from the external competition. It implies that an organisation can develop and
implement strategies that maximise value to shareholders through the learning process.
The third feature of the emergent strategy is the need for flexibility through trial and order.
According to Seifzadeh and Rowe (2019), the frequent changes in the market necessitate that
managers diversify their scope of operation to identify and exploit opportunities as they arise
from the market. It implies that the strategy allows for adjustments based on the market changes
and learning due to the challenges. This appears in the case of Honda, which entered the US
market but failed to secure a significant market and remained unsuccessful (Shah et al., 2015).
The continued trial and error in developing the strategy enabled Honda to focus on a niche
market that resulted in the domination of the motorcycle market. A similar approach used by
Facebook has since acquired some of the competitors, including WhatsApp, Instagram, and
oculus, to enhance its business strategy amidst stiff competition (Lynch, 2015).
Prescriptive Strategy
The prescriptive strategy involves setting objectives before implementing the strategy based on
the assumption that the future is predictable. According to Lynch (2015), the proponents of
prescriptive strategy such as Porter and Ansoff were guided by focusing on sustainable
competitive advantage and not the competitors. The strategy involves the analysis of the

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organisation's internal resources and the level of competition to inform the formulation of the
objectives. Research further shows that the process is structured and directive and rational,
whereby the planners assume to have an understanding of the business environment through
analysis (Shah et al., 2015; Pisano, 2017). The plan involves identifying the best option that
enables the organisation to realise sustainable competitive advantage since it is the resources that
define the organisational capabilities. Lynch (2015) presented the case of Cereal Partners-a joint
venture between General Mills and Nestle that was planned before being rolled out in the
international market. Based on the approach, prescriptive strategy is guided by various
assumptions, including top management’s ability to choose the best options, accurate prediction
of the future, lack of concern for the short-term success, and distinct implementation process that
is separate from the planning process.
Both strategies have been applied in the business in pursuit of the corporate objectives; they have
differences and similarities. In both emergent and prescriptive strategies, the top managers play a
crucial role in approaching the desired direction. For instance, emergent strategies require that
the managers identify and exploit opportunities to pursue business environment changes.
Similarly, the top managers are obliged to select the best options in planning when relying on
prescriptive strategies. Despite the similarities, research shows that the weaknesses in the
assumptions guiding the prescriptive strategies underpinned the development of emergent
strategies (Lynch, 2015).
Therefore, both strategies differ on the approach, implementation, and assumptions that inform
their usage in the business environment. while planned strategy is based on a formal process that
leads to the setting of corporate objectives and the development of a clear organisational strategy
designed to achieve the objectives using the available resources, the environment for an
emergent strategy will always take place in reality. The market environment is constantly
changing and competitors are evolving, emerging, and merging necessitating the application of
the emergent strategy.

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Section 2
Comment critically on the role of ‘Core Competence’ in developing Sustainable
Competitive Advantage (SCA) for an organisation. Use examples from the literature to
support your arguments.
Organisations strive to ensure their businesses and corporate strategies are aligned to the
prevailing marketing situations. According to Popula and Volna (2013), the success of an
organisational strategy largely depends on its ability to identify, accumulate, and exploit the core
competencies. It implies that the success of an organisation depends on the impacts of
capabilities and resources on the competitiveness of the business. Based on the VRIO
framework, the key competencies the lead to the development of competitive advantage are
valuable, rare, imitable, and organised (Popula, 2013; Kabue &Kilika, 2016). On the other hand,
the researchers acknowledged that sustainable competitive advantage involves a genuine value
creation process to customers through internal capabilities and resources (Agha, Alrubaiee,
&Jamhour, 2012). Notably, constant technology changes render product-price performance less
competitive in the long term. The aspects that are not linked to internal capabilities and resources
compromise the organisation’s competitiveness.
Therefore, core competencies play important roles in the efforts of an organisation to develop a
sustainable competitive advantage. Firstly, core competency will prevent the effect of time from
rendering current business advantages obsolete, especially when there are changes in technology
(Kak &Sushil, 2002). Core competence is also defined as the combination of skills that provide
particular benefits to the customers (Glasser & Hirsh, 2016). Therefore, a focus on the core
competence implies that an organisation will embrace learning to ensure that the skill base and
technological changes are aligned to the needs of the business customers. The flexibility in
operations and ability of the management to rely on the internal capability is important in
developing resilience due to external challenges such as competition in the business sector. For
example, Philips relies on its technology edge as its core competency to stay ahead of

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competitors and develop worldwide profitability. In a highly dynamic business environment, the
success of an organisation largely depends on its ability to respond to the changes relative to its
competitors (Glasser & Hirsch, 2016). Core competencies will ensure that as time changes and
new customer demands emerge, the organisation is positioned to effectively respond in ways that
add value to the customers.
Additionally, key competence ensures that the organisation’s strategy is valid in the long term.
Whether an organisation relies on emergent or prescriptive strategic approaches, value creation is
the ultimate measure of sustainable competitive advantage (Popula & Volna, 2013). The
business opportunities are available equally for all players in any given business sector. When
two rival businesses identify an opportunity, the success will depend on how they utilise their
internal capabilities and skills in creating value for the customers. The key competencies in such
a scenario define both the short term and long-term success of the business. According to Popula
and Volna (2013), when a company sets its internal capabilities to address the emerging business
opportunities, it builds sustainability in the long term. The traditional approaches such as cost-
cutting have been applied in exploiting business opportunities but only remain relevant in the
short term. The changing external environment necessitates that business organisations rely on
internal resources and capabilities to ensure a sustainable competitive advantage. The business
boundaries are on a continuous stretch due to advancement in technologies which necessitate
constant changes in the approaches to business. The management can only rely on the internal
capabilities and resources to meet the dynamic needs.
Popula and Vola (2013) argued that the two main roles of core competencies that make it
valuable for sustainable competitive advantage include organisational learning and technologies
management. As pointed out in the case of Honda, organisational learning guided by the core
competencies provides a basis for identifying new markets and leveraging the business
competitiveness in the long term. Similarly, technology is a key determinant of business
competitiveness that must be utilised to ensure that the organisation responds effectively to
external threats from rivals (Honda Strategy in Appendix 1).
As Kak and Sushil (2002) argued, technology affects the organisation's competitiveness since it
affects the value chain. It implies that there is an aspect of technology in every aspect of the
business that contributes to its success or failure. The sustainable competitive advantage that

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results from core competencies depends on innovation and the creation of technology and the
absorption of the new technology to add value to customers. Therefore, an organisation's internal
capabilities and resource capacity are part of the inimitable assets that result in the absorption of
technology in ways that lead to sustainable competitive advantage. Lastly, core competency
informs the strategy formulation within an organisation, which determines the sustainability of
its competitive advantage (Agha, Alrubaiee, & Jamhour, 2012). The strategy formulation process
requires that managers consider the available resources and capabilities to develop approaches to
respond to external challenges on a short- and long-term basis.

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Evaluate the benefits, costs, and risks of using ‘innovation’ to drive long-term organisation
development, illustrating your answer with examples of how this approach to formulating
and deploying strategy works in practice.
Extant research acknowledges that innovation is an improvement in business that involves
various components such as the market, processes, products, organisation, and products (Teneja,
Pryor, &Hayek, 2016). It has several benefits to the long-term development of the business,
which included adaptability to changes in the external market environment. Innovation creates
business efficiency by enabling a strategic combination of internal capabilities and resources to
improve performance (Teneja, Pryor, & Hayes, 2016). It implies that without innovation, the
organisation will face difficulties to learn and change in response to external pressure. Teece,
Peteraf, Leih (2016) reported the inflexibility that trapped Ford Company too long when the
customer demand for model A was on the rise. The report indicated that Ford Company’s
survival in the face of a new demand necessitated a complete shutdown of the plan and a process
redesign to meet the prevailing customer demand for Model A, which competed effectively in
the motor industry. It implies that innovation is an important aspect when the organisation needs
to be flexible to meet customer expectation. As pointed out, the sustainability and effectiveness
of the organisation depend on how the management applies innovation and absorbs technology
to improve its competitiveness on both the short term and long-term basis.
On the other hand, reliance on innovation for long term business innovation comes with
considerably large costs for the organisation (Boukis, 2016). In the example of Ford Company,
the change from Model T to Model A necessitated a complete shutdown of the plant and a
redesign of the process (Teece, Peteraf, &Leih (2016). In the process, the company loses
finances and employees are laid off or subjected to training, which has financial implications.
The business environment is highly dynamic, and innovation is part of the routine process to
ensure that the internal resources and capabilities of the business are employed to solve emerging
challenges and create value for the customers (Ortiz-Villajos &Sotoca, 2016). Meanwhile, when
the intended innovation results in incomplete changes in the process and culture of the
organisation, there are financial costs and competitive implications. For instance, Ford lost the

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market in the process of shifting from one model to another. Another cost associated with
innovation involves its management in the long term (Boukis, 2016).
Every change in the business require adjustments in both skill and resource use. For instance,
changes in the business process can be accomplished through professional training. Meanwhile,
the dynamic nature of the current business environment exposes the organisations to the
necessity of regular changes, which can compromise their position in terms of regulations,
market demands, and customer value (Sanchez et al, 2011). The associated cost implication,
especially the financial burden that results from a constant pursuit of innovation in the long term,
may compromise both performance and overall business development. Besides the benefits and
costs involved in the application of innovation strategy for long term business development,
there are likely risks. Jonoskova and Kral (2016) pointed out that innovation involves several
risks, including the possibility of failure, lack of sustainability, poor timing, and decreased
demand. For example, despite its record of innovations, observers still feel that Philips has failed,
especially in the fields of home video recording, medical equipment, and disc-drive technology.
Given the high levels of uncertainty that characterise innovation, they expose the organisation to
gambling, whereby the management is not sure of the market outcomes or the regulatory impacts
associated with the innovation. Further, long term business development requires sustainability
of the changes that businesses make in improving their performances. In the case of innovation,
especially radical approaches have limited potential to last in the market.
Additionally, innovation does not consider the dynamic nature of the market environment
exposing the business to the risk of spending more towards changes and losing its financial
strength. As pointed out, the cost of innovating as well as absorbing the business is relatively
higher (Visnjic, Wiengarten, & Neely, 2016). It implies that attempts to innovate for the
organisation's long-term development involve taking risks that make the business vulnerable.
Managers and corporate leaders are obliged to limit risks and ensure performance on a short- and
long-term basis. Therefore, they would rather use reverse innovation, such as the case of Nestle
and Pepsi in India and Africa, than engage in the creation of innovation for long term innovation
(Teece, Peteraf, & Leih, 2016).
Further, innovation is a dynamic and unpredictable aspect that subject employees to the
necessary change process. As a result, innovation as a long-term development initiative attracts

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increased resistance to change within the organisation leading to performance inefficiencies. This
results in reduced productivity and an overall lack of sustainable competitive advantage in the
industry. Despite the benefits, costs, and risks associated with innovation as a long-term initiative
for business development, it remains a foundation for success in the contemporary market
environment.

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Reference
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Boukis, A. (2016). Managing innovation within organisations. In Product innovation through
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Glasser, H., & Hirsh, J. (2016). Toward the development of robust learning for sustainability
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Hosseinian-Far, A., & Chang, V. (2015). Sustainability of strategic information systems in
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Ortiz-Villajos, J. M., & Sotoca, S. (2018). Innovation and business survival: A long-term
approach. Research Policy, 47(8), 1418-1436.

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Popula, J., & Volná, J. (2013). Core competence for sustainable competitive
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Appendix 1: Sustainable Strategic Approaches: The Case of Honda
Source. Honda https://global.honda/content/dam/site/global/about/cq_img/sustainability/report/
pdf/2018/Honda-SR-2018-en-012-022.pdf

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Appendix 2: Comparing Emergent and Prescriptive (Deliberate Strategies)
Source: Dili (2017). https://www.differencebetween.com/difference-between-deliberate-and-vs-
emergent-strategy/

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Appendix 3: Strategic Model: Lynch Diagram
Source: Lynch, (2015).