Diamond Strategy

Purpose:
as a framework for checking and communicating a strategy
Notes:
The diamond model does not presuppose that any particular theory should dictate the contents of each facet.
Arenas
Strategy questions about arenas tell managers and employees where the firm will be active and with how
much emphasis.
Which product categories?
Which channels?
Which market segments?
Which geographic areas?
Which core technologies?
Which value-creation strategies?
Differentiators
These are the things that are unique to the firm such that they give it a competitive advantage in
its current and future arenas. Differentiators are concerned with the question, how will the firm
win?
Image?
Customization?
Price?
Styling?
Product reliability?
Speed to market?

Economic Logic
This explains how the firm makes money above its cost of capital.
Lowest costs through scale advantages?
Lowest costs through scope and replication advantages?
Premium prices due to unmatchable service?
Premium prices due to proprietary product features?
Vehicles
You can see why the first three facets of the strategy diamond—arenas, differentiators, and
economic logic—might be considered the traditional facets of strategizing in that they
cover the basics: (1) external environment, (2) internal organizational characteristics, and
(3) some fit between them that has positive performance consequences. The fourth facet
of the strategy diamond is called vehicles. If arenas and differentiators show where you
want to go, then vehicles communicate how the strategy will get you there.
Internal development?
Joint ventures?
Licensing/franchising?
Alliances?
Acquisitions?
Staging and Pacing
Staging and pacing constitute the fifth and final facet of the strategy diamond and answer
what will be our speed and sequence of moves?
Staging and pacing reflect the sequence and speed of strategic moves. This powerful facet
of strategizing helps you think about timing and next steps, instead of creating a strategy
that is a static, monolithic plan. Remember, strategizing is about making choices, and
sequencing and speed should be key choices along with the other facets of the strategy.
The staging and pacing facet also helps to reconcile the designed and emergent portions of
your strategy.
Hambrick & Fredrickson’s Strategy Diamond Template

1 Arenas: where will we be active?

Arenas •

2 Vehicles: how will we get there?

•

Staging Economic Logic Vehicles 3 Differentiators: how will we win?

•

4 Staging: what will be speed/sequence of our moves?

•

Differentiators
5 Economic Logic: how will returns be made?
•

Want more tools and templates? Visit https://upboard.io/

Internal Environment Strategy
 PORTER’S FIVE FORCES ANALYSIS

THREAT OF NEW ENTRANTS THREAT OF SUBSTITUTES

Time and cost of entry - - Substitute Performance

Specialist knowledge - - Cost of change

Economies of scale - - Buyer propensity to substitute

Cost advantages - - Relative price performance

COMPETITIVE
RIVALRY

BARGAINING POWER OF BUYER BARGAINING POWER OF SUPPLIERS

Number of customers - - Number of suppliers

Size of each order - - Size of suppliers

Diff. between competitors - - Uniqueness of service

Price Sensitivity - - Your ability to substitute

- Number of competitors - Switching Costs

- Quality Differences - Customer Loyalty

 Political
Lorem ipsum dolor sit,
consectetur adipiscing elit,
P PESTLE
eiusmod incididunt. Economic

E Lorem ipsum dolor sit, Analysis

consectetur adipiscing elit,
Social
Lorem ipsum dolor sit,
eiusmod incididunt
Template
consectetur adipiscing elit,
S
eiusmod incididunt. Technological
Lorem ipsum dolor sit,
T consectetur adipiscing elit,
Environmental eiusmod incididunt.
Lorem ipsum dolor sit,
consectetur adipiscing elit,
E
eiusmod incididunt. Legal
Lorem ipsum dolor sit,
L consectetur adipiscing elit,
eiusmod incididunt.
External Environment Strategy
• What is VRIO Analysis?
• VRIO is an acronym for a four-question framework
of value, rarity, imitability, and organization. It is used to uncover
"sustained competitive advantage." The four components of VRIO
analysis are typically approached in the style of a decision tree:
• Value: Do you offer a resource that adds value for customers? Are you
able to exploit an opportunity or neutralize competition with an
internal capability?
• No: You are at a competitive disadvantage and need to reassess your
resources and capabilities to uncover value.
• Yes: If value is established, move on in your VRIO analysis to rarity.
• Rarity: Do you control scarce resources or capabilities? Do you own
something that’s hard to find yet in demand?
• No: You have value but lack rarity, putting your company in a position
of competitive parity. Your resources are valuable but common, which makes
competing in the marketplace more challenging (but not impossible). It’s
recommended to go back one step and reassess.
• Yes: With value and rarity identified, your next hurdle is imitability.
• Imitability: Is it expensive to duplicate your organization’s resource or
capability? Is it difficult to find an equivalent substitute to compete
with your offerings?
• No: If your resource has value and rarity, but is affordable or easy to copy, you
have a temporary competitive advantage. It will require considerable effort to
stay ahead of competitors and differentiate your services—go back one step
and reassess.
• Yes: You offer something that’s valuable, rare, and hard to imitate—now the
focus is on your organization.
• Organization: Does your company have organized management
systems, processes, structures, and culture to capitalize on resources
and capabilities?
• No: Without the internal organization and support, it will be difficult to fully
realize the potential of your valuable, rare, and costly-to-imitate resources.
Your company will have a unused competitive advantage and will need to
reassess how to attain the needed organization.
• Yes: Your company has achieved the ultimate goal of sustained competitive
advantage when it has successfully identified all four components of the VRIO
framework.
VRIO ANALYSIS
FOR BUSINESS
COMPETITIVE
VALUABLE RARITY COSTLY TO IMITATE ORGANIZATION
IMPLICATION

E-commerce Competitive parity

Quality of service Competitive parity

Brand & reputation Sustainable

Distribution stability Competitive

Financial stability Sustainable

Innovation Competitive

Customer service Competitive

• Core Competencies and Strategy
• The term core competency was coined by the leading management experts, CK
Prahalad and Gary Hamel in an article in the famous Harvard Business Review. By
providing a basis for firms to compete and achieve sustainable competitive
advantage, Prahalad and Hamel pioneered the concept and laid the foundation
for companies to follow in practice.
• Some core competencies that firms might have include technical superiority, its
customer relationship management, and processes that are vastly efficient. In
other words, each firm has a specific area in which it does well relative to its
competitors, this area of excellence can be reused by the firm in other markets
and products, and finally, the area of strength adds value to the consumer. The
implications for real world practice are that core competencies must be nurtured
and the business model built around them instead of focusing too much on areas
where the firm does not have competency. This is not to say that other
competencies must be neglected or ignored. Rather, the idea behind the concept
is that firms must leverage upon their core strengths and play to their advantages.
Eliminate
• Enological Terminology
and Distinctions
• Aging Quality
• Above-the-line Marketing
Raise
• Price versus Budget
Wines
• Retail Store Involvement
Reduce
• Wine Complexity
• Wine Range
• Vineyard Prestige
Create
• Easy Drinking
• Ease of Selection
• Fun and Adventure
Business Model Canvas
Deliberate Vs Emergent

WHAT IS A DELIBERATE STRATEGY?

According to the online course Disruptive Strategy, a deliberate strategy is one that arises from conscious, thoughtful, and
organized action on the part of a business and its leadership. It’s typically generated from a rigorous analysis of data,
including metrics such as:
• Market growth
• Segment size
• Customer needs
• Competitor strengths and weaknesses
• Technological trajectories

A deliberate strategy is often employed by large businesses or corporations that are firmly established within their
markets. History and stability provide them with enough data and experience to plot out a long-term strategy (sometimes
called a five- or ten-year strategic plan) and confidence in their ability to project that far out into the future. While useful,
deliberate strategy comes with challenges.

WHAT IS AN EMERGENT STRATEGY?

An emergent strategy is one that arises from unplanned actions and initiatives from within an organization. It’s typically
viewed as the product of spontaneous innovation, and often a direct result of the daily prioritization and investment
decisions made by individual contributors, such as middle managers, engineers, financial staff, and salespeople.
Agency Theory

Agency theory focuses upon relationships between parties where one delegates some decision making authority to the
other. In these situations, one party (the ‘principal’), delegates responsibility to another party (the ‘agent’) to take
decisions on their behalf.
In the modern corporation for instance the ‘principal’ would be a shareholder, whilst the ‘agent’ would be the manager.
The principal would delegate some decision making authority to the agent who, in turn, would be responsible for
maximising the principal’s investment in exchange for an incentive, such as a fee.
Agency relationships are designed to increase value to the parties involved. However there are costs involved including
engaging in the relationship, monitoring its progress and enforcing it. These costs are influenced by the different attitudes
of principals and agents to risk and their different access to information (‘information asymmetries’). The agent for
instance has private information to which the principal does not have access and cannot observe accurately. This can allow
the agent to increase their bargaining power in the relationship.
 CAGE Distance Framework Template
Country A Country B
List the cultural norms, values and social beliefs, also known as the
unwritten rules, that shape the behavior of individuals and •   •
organizations. Various societies also differ in their attitudes toward
globalization and market power that have important consequences
in terms of both formalized trade regulations and general attitudes •   •

C Cultural
Distance
toward how businesses are run.

•   •

List the differences in history and politics among countries,

especially those which do not share colonial ties. Also, a lack of •   •
shared currency, political hostilities, and government corruption

A Administrative
Distance
contribute to Administrative distance.
•   •

•   •

Geographic distance refers not only to the physical distance

between two countries, but also a country’s physical size, whether it •   •
shares borders with hostile or non-hostile neighbors, and access to

G Geographic
Distance
trade routes such as the ocean and other topographical features.
List these attributes. •   •

•   •

Two of the biggest determinants of economic distance are the Cost

of Labor and level of Consumer wealth between countries. It is •   •
more difficult for a company from a wealthy country to enter a

E Economic
Distance
poorer country and be successful there, but not impossible. List
these determinants. •   •

•   •

Want more tools and templates? Visit https://upboard.io/

 The Strategy Map
Financial perspective

Improve Shareholder value

Revenue growth strategy Productivity Strategy

Product Leadership
perspective
Customer

Customer Intimacy
Operational Excellence
Internal process
perspective

Improve operations & Regulatory and

Build through Innovations Increase customer value environmental processes
logistics processes
Learning & growth
perspective

Employee competencies Technology Corporate culture

McKinsey 7S Framework or the Seven Interdependent Elements.
The basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if
it is to be successful
Hard Elements can be described as followed.
Strategy – Purpose of the business and the way the organization seeks to enhance its competitive advantage.
Structure – Division of activities; integration and coordination mechanisms.
Systems – Formal procedures for measurement, reward and resource allocation.

Soft Elements can be described as followed.

Shared Values
Skills – The organization’s core competencies and distinctive capabilities.
Staff – Organization’s human resources, demographic, educational and attitudinal characteristics.
Style – Typical behavior patterns of key groups, such as managers, and other professionals.
 ST
Y RU
What should we do to solve the specific T EG CT What structure do we need to
business problem? T RA U RE execute the strategy?
S

SHARED VALUE

SYSTEMS
SKILLS
What are the specific skills that What business system do we
SHARED VALUE
Which of our principles help us?
will help us? What skills do we need to use or invent to
Why do we do what we do in the
need to develop? execute the strategy?
way we do it?

What leadership style and cultural

How should we help our managers in
STA YLE qualities will help us to achieve a
their growth? FF S T strategic objective?