Critical Note - Case Study Example

Reading 6 Strategy and Business Portfolio by Barry Hedley, makes some excellent points in terms of how a business portfolio should run properly, but his examples demonstrate that he overvalues business portfolio strategy and its ability to affect outcomes, especially when compared to overall market trends. He states that the fall of the British motorcycle industry was due to a misunderstanding “of the strategic importance of market share,” and that Japanese ascension in the motorcycle industry was solely about its ability to gobble up market share, thus causing “real costs to drop rapidly” for them (Hedley 1977, 325).
Hedley gets the wrong end of a chicken/egg argument. He seems to imply that a properly managed portfolio would not have allowed British motorcycle share to have fallen so significantly, and that, if only someone had valued market share, the demise of the industry would not have occurred. This argument, however, discounts the overriding market forces that would have debilitated the motorcycle industry in any event. It was not a lack of market share that caused British costs to remain stubbornly high, but wages, lack of natural resources, and the overall decline of British manufacturing (Turnbull et. al. 1992). Not a single motorcycle or automotive company has effectively navigated the murky waters of British cost and regulation without being bought out or constructed off-shore (Turnbull et. al. 1992), so arguing that clever portfolio management could have stopped this disaster is untrue. Portfolio management is surely important, but this example describes it more as a panacea, which is a bad way to think about it.
Works Cited
Hedley, Barry (1977). “Strategy and the Business Portfolio” Long Range Planning 10.1. 9-15
Turnbull, P., Oliver, N., & Wilkinson, B. (1992). Buyer‐supplier relations in the UK‐automotive industry: Strategic implications of the Japanese manufacturing model. Strategic Management Journal, 13(2), 159-168. Read More