When management seeks to stretch the resource limits of an organisation by adopting a philosophy of leverage, the management inevidently realises both the possibilities and limitations, which are associated with strategic leverage. Resource leverage helps the organisation to understand aspects of differentiation, cost leadership and focus. When managers begin to ignore their strategic leverage and become too concerned with short-term tactical gains, they gradually lose market share and position. Management should also be aware of the fact that understanding the whole concept odf strategic leverage starts off first, with a realistic understanding of a company’s freedom in a market, this indirectly depends on the structure of the industry in concern and the company’s competitive position within it.
Taking on the core of Hamel & Prahalad’s perception of "Strategy as Stretch and Leverage" to another level, one should look into aspects such as; understand your competitors and understand your potential partners. To expand on the former, when trying to understand your competitors, management should firstly, go beyond the standard static analysis of competitors.They should then examine their competitors national history (e.g., dominant religion, government-business relationships, level of economic development), management should also analyse their managerial values. Goals and strategy. Lastly it would be perhaps worthwhile to also profile the competitors strategic orientations and predict their strategic intent.
In the area of trying to understand a company’s’ potential partners, management should progress towards analysing their corporate culture, structure and operating systems. They should also decipher who well the specific alliance will fit into the partners overall strategy. On the financial side, costs should be analysed, to stretch it a bit further even intangible costs should be included. Most importantly it is also important to determine the partners strategic intent for the alliance.
