Hamibrk Model: Hambrick Model

HAMBRICK MODEL
Strategy nowadays has become a blanket term which is often used everywhere and there are various frameworks also for analyzing strategic situations. But the focus on deliverables of such tools and frameworks has been missing so that what actually constitutes a strategy can be known. Also the firm’s objectives and mission stand apart and direct the strategy and not itself formulate the strategy. Similarly the internal environment fortify and support the strategy but not form strategy itself.
Thus strategy is a centrally integrated, externally oriented concept of how we will achieve our objectives. A strategy has five elements, providing answers to five questions:
* Arenas: where will we be active?
* Vehicles: how will we get

* Staging: what will be our speed and sequence of moves?
* Economic logic: how will we obtain our returns? [1] Figure 1: Hambrick Model

1) Arenas: This refers to the areas where the firm will be present and should include specific things like product categories, market segments, geographic areas, and core technologies, as well as the value-adding stages (e.g., product design, manufacturing, selling, servicing, distribution) the business intends to take on. Also a decision regarding emphasis to be placed on each of these chosen areas has to be made by the strategists.
2) Vehicles: After deciding the arenas, the strategists has to decide the means to get into specific arenas chosen like the geographic segment, product category etc. These vehicles are extremely important and should not be considered as an after decision implementation detail. The various vehicles available to a firm can be:-
• Internal Development
• Licensing/Franchising
• Joint Ventures
•

Unless there is a persuasive basis for it, the customers and competitors will not easily let the firm generate revenues above costs. So a strong foundation must be laid for achieving this objective by formulating an economic logic. For example the New York Times is able to charge readers a very high price because of its exceptional journalistic quality.
The various economic logic can be:-
* 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
From the above description of various elements of a strategy it is evident that strategic comprehensiveness is vital and the following must be kept in mind:
• All five are important elements of strategy that require to be proper and intently implemented.
• The five elements call not only for choice, but also for preparation and investment. As these require certain capabilities that cannot be generated impulsively.
• All five elements must align with and support each other.
• These elements of the strategy diamond can be considered the hub nodes for designing a complete and unified activity