Strategic Drift

2449 words 10 pages
University of Technology, Jamaica UTech/JIM School of Advanced Management, Postgraduate Division
Doctor of Business Administration

Module Title: Global Strategy
Exploring Corporate Strategy, Work Assignment 5.1 (page 205)

Prepared by: Rohan Anderson

Facilitator: Dr. Cecil Goodridge

Question 5.1 Identify four organisations that, in your view, are in the different phases of strategic drift (see Exhibit 5.2). Justify your selection.

Strategic drift, as defined by Gerry Johnson in Exploring Corporate Strategy, is the tendency to develop strategies incrementally on the basis of historical and cultural influences, while failing to keep pace with a changing environment. In such circumstances the strategy of the
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Resulting from lessons learnt from competition with arch rival Matsushita, Sony adjusted their strategy. Consequently, convinced that its record library had helped guarantee the success of the Compact Disc, Sony looked to CBS Records to provide the software necessary to ensure the success of its new Digital Audio Tape. In the years that followed Sony acquired expensive movie studios to showcase their impressive arsenal of hardware. As much attention was not paid to the American management team and the lavish spending spree on renovation production, management, and television ballooned. Overheads increased by 50 per cent to $300 million by 1991, some $60 million greater than other major studios, and its $700 million production budget were nearly twice that of its competitors. The average Sony motion picture cost $40 million versus the industry average of $28 million. In November 1994 Sony announced a $3.2 billion write-off related to Columbia Pictures which wiped out nearly 25 per cent of Sony’s shareholders’ equity. It was not until Sony found itself here in phase 3 of the strategic, drift having major decline in shareholder values, that it restructured its management team and strategies.
Wang Labs based on strategies created in an attempt to avoid the mistakes of the past found itself in phase 4 of the strategic drift as it filed for bankruptcy in 1992. An Wang, an inventor and innovator, sold several of his creations to companies who used them to make products for


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