A Critical Review of ‘Strategy as Stretch and Leverage’

1390 Words Jun 27th, 2013 6 Pages
A Critical Review of ‘Strategy as Stretch and Leverage’

Academics argue a lot on strategic approaches that a company should make to gain competitiveness advantages over its competitors. Hamel and Prahalad (1993) challenge the traditional way and come up with ‘stretch’ and ‘leverage’ concepts to exhibit a whole new way to run a company. This essay aims to give a critical review of this article in the wider debate, theoretical underpinnings and main strengths and weaknesses. There are so many definitions about strategy in academics, and among them one of the fittest definition according to this article is come up by Johnson et al. (2008, p.3), ‘Strategy is the direction and scope of an organization over the long term, which
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On the other hand, pluralist analysis leans heavily on the theory of multiple interest groups (Schmidt, 1996). Within the article, there are concerned with employees, environment and competitors. However, those elements do not share the revenue. All in all, compared the two approaches the strategy is pursuing profit maximization and that may be almost all companies’ final goal. Meanwhile, Hamel and Prahalad (1993) make several assumptions in this article. One of the assumptions made in this article is ‘from fit to stretch’ (p.77). More specifically, it changes from unbalanced strategy frame to one more ‘effect fit between its resources and the opportunities it pursues, that resources allocation is a strategic task’ (p.77). According to the statement, the notion implies that the basis of the Resource-Based View (RBV) which a company can acquire competitive advantages by owning precious resources (Barney, 1991). In a broader way, Acur and Bititci (2004) own the opinion about resource-based view that those strategies might help to concentrate on developing, protecting, and leveraging a company’s operational resources. Consequently, one company should create stretch, ‘a misfit between resources and aspirations’ (Hamel and Prahalad, 1993, p.78) to make the best use of resources to achieve competitive advantages over competitors. Another assumption in this article is ‘extracting

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