Strategic Fit versus Strategic Stretch

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Strategic Fit versus Strategic Stretch
Anneke Zwart, Moderator
According to Agnihotri (2014), literature has often overemphasized the importance of strategic fit. Many studies – such as the study of Johnson and Scholes (1999) - suggest that companies must assess the macro environment surrounding the firm so as to determine the threats and opportunities and how to deal with them. Firms must at least have a certain level of strategic fit in order to be successful.
However, a study of Prahalad and Hamel (1994) suggests that strategic fit is not the most important factor to take into account. Rather it is a matter of strategic stretch, which means that the successfulness of firms depends on the ability of companies to 'stretch' their available resources to achieve their objectives and intent. What arguments are in favor of stretch as a more important determinant of corporate success?

1. Stretch can better explain why small companies often outperform large companies in competition.
2. Several cases have shown that companies can create opportunities in unfavorable environments, with a low level of strategic fit. For example, McDonald's decided to enter Russia so as to create a new opportunity for its foods. They thus deviated from the fit principle in Russia, because at the time Russia did not have enough skilled labor and suppliers available (Zurawicki and Becker, 1994).

What do you think about the fit principle versus the stretch principle? Which one do you believe to be more important? Why?
Agnihotri, A. (2014) “How Much is Strategic Ft Important?” Business Strategy Series Vol. 14 Iss. 4 pp. 99-105
Johnson, G. and Scholes, K. (1999), Exploring Corporate Strategy, 5th ed., Prentice Hall, Harlow, UK
Prahalad, C.K. and Hamel, G. (1994), ‘‘Strategy as a Feld of Study: Why Search for a New Paradigm?’’ Strategic Management Journal Vol. 15 Iss.2 pp. 5-16.
Zurawicki, L. and Becker, K. (1994), ‘‘Marketing Issues and Strategies for Change in the Central and Eastern European and CIS countries’’ Journal of Euromarketing, Vol. 32 Iss. 2 pp. 61-90.



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