Essay on A Review of ‘Strategy as Stretch and Leverage

2227 Words Nov 28th, 2012 9 Pages
A Review of ‘Strategy as Stretch and Leverage’ – By Gary Hamel and C.K. Prahalad

URN: 6029471 Word Count: 1647

A Review of ‘Strategy as Stretch and Leverage’ – By Gary Hamel and C.K. Prahalad
This review will focus on the article ‘Strategy as Stretch and Leverage’ by Gary Hamel and C.K. Prahalad (1993). This review will identify the arguments made in the article and then place it within the context of one of the key debates in strategy academia. The review will then investigate the underlying assumptions made and evaluate the strengths and weaknesses of the article. The main argument of the article is that companies focus too much on evaluating their environment and creating strategy based on those factors. Hamel and Prahalad
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This argument that managers, as a unique internal resource of the business, can create a valuable strategic position for a company is supported by Mosakowski (1998) who said that managerial prescriptions can increase long term revenues as their nonunique choices can create unique resources. Throughout the writing of the article Hamel and Prahalad (1993) base their arguments on several assumptions. The primary assumption made is that “Creating stretch, a misfit between resources and aspirations, is the single most important task senior management faces” (Hamel and Prahalad, 1993). Having established this core assumption the authors then use this as a platform to emphasise the necessity of a resource leveraging strategy in order to bridge the gap between the inflated expectations and the resource base of the company. Following on from this the authors make their second assumption whilst describing the advantages of stretch and leverage driven strategy to smaller businesses. Hamel and Prahalad (1993) argue that larger companies lack of ambition, and as a result their policy of downsizing acts as a de-motivator. There is support for the downsizing being demotivating argument from Minnick and Ireland (2005) who say “For employees adversely affected by these changes, the effects can be demoralizing.” The final key assumption made in the article is that

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