This paper develops the concept of market-focused strategic flexibility and reviews its historical perspectives. It explains market-focused strategic flexibility as related to capabilities and resource-based views of the firm. The paper proposes an integrative model that shows the mediating role of market-focused strategic flexibility in marketing strategy frameworks. It discusses how firms can develop market-focused strategic flexibility, its effects on performance under different environmental conditions, and implications for managers and theory.

1. MARKET-FOCUSED STRATEGIC FLEXIBITITY:
CONCEPTUAL ADVANCES AND AN
INTEGRATIVE MODEL
Jean L. Johnson Ruby Pui-Wan Lee Amit Saini
Washington State University
Bianca Grohmann
Concordia University
Úrsula Rodríguez Garrido
Juan Aguirre Garrido-Lestache
Journal Academy of Marketing Science
Winter 2003

2. This paper…
 Develops the concept of market-focused strategic
flexibility.
 Gives a review of the historical perspectives of strategic
flexibility
 Explain market-focused strategic flexibility as
conceptually related with capabilities and resource-
based views of the firm
 Propose an integrative model that explicates the
mediating role of market-focused strategic flexibility in
marketing strategy frameworks

3. CONTENTS
Market-focused strategy flexibility
 Origin
 Concept
 Historial perspectives
 Concept refinement
 How to develop it
 Integrative framework
 Customer orientation
 Competitors orientation
 Effects of turbulence
 Outcomes of Market-Focused Strategic Flexibility
 Discussion and implications
 Conclusion

4. Market-focused strategy flexibility
ORIGIN
 WHY IT ARISES?
HIGHER ADVANCED TECHNOLOGY INCREASING
GLOBALIZATION PROGRESS Firms have to face COMPETITION
 It is time for redefining and rethinking strategic
flexibility as MARKET FOCUSED
IT MEANS: reconceptualization of flexibility strategy
making emphasis on PRODUCTS and MARKETS

5. Market-focused strategy flexibility
CONCEPT
 Given such an ever-changing environment:
Market-focused strategic flexibility can be defined as:
“A firm's ability to quickly change directions and
reconfigure strategically, particularly with regard to
prod-uets and markets, which becomes crucial to
succeed and achieve sustainable competitive
advantage”

6. Market-focused strategy flexibility HISTORICAL PERSPECTIVES
The concepts of strategic flexibility are not new. They appear in the
management literature as early as the 1950s. However. in the decades since,
the concept has been defined in numerous ways:

7. Market-focused strategy flexibility
CONCEPTUAL REFINEMENT
 Flexibility is much more than an ability to respond or react
 It means: being capable of variation or modification
It is suggested a conceptual refinement of strategic flexibility
concept that incorporates both PROACTIVE AND
RESPONSIVE PERSPECTIVES
It implies:
 Market-linking activities, for example, products, their positioning, and their
distribu-tion
 The capabilities to change production processes and redeploy resources,
 THIS COULD PROVIDE FIRMS:
 Increases in environmental variability ("better able to respond successfully to
unfore-seen environmental changes." )
 The underpinning for the firm's long-term well-being

8. Market-focused strategy flexibility
HOW TO DEVELOP IT
 According to our conceptualization, there are four
steps to develop market-focused strategic flexibility:
1. The identification of resources
2. The acquisition of resources
3. The deployment of resources
4. The identification of options

9. Market-focused strategy flexibility INTEGRATIVE FRAMEWORK
A cultural variable that guides the market-focused strategic flexibility
Market-driven versus market-
driving perspectives:
 In market-driven perspective:
 Assume that customer
preferences can be measured
 Stronger emphasis on innovation
 In market-driving perspective:
 Assume that customers do not
know their own preferences and
the marketer can act to develop
and form them
 Full range of both innovation and
imitation.

10. Market-focused strategy flexibility
CUSTOMER ORIENTATION
 Customer orientation involves a focus on customers by
idetifying, analyzing, understanding and answering their
needs.
2 perspectives:
o Market-driven perspective reponds to customer signals within
a given established market structure.
• Firms tries to adjust and correct its offerings and straegies
after customer needs have been measured.
o Market driving perspective may adopt preentive
approaches.
• This involves anticipating customer needs and wants, and
shaping how market boundaries evolve.
Proposition: Customer orientation with an emphasis on market-driving approaches will
result in relatively high levels of market-focused strategic flexibility than customer
orientation with an emphasis on market-driven approaches.

11. Market-focused strategy flexibility
COMPETITOR ORIENTATION
 Competitor orientation involves a focus on generating,
disseminating and using information about competitors.
o Market-driven strategy: the firm will respond to its
competitors in a given structure.
• The firm adjust its strategies in response to
competitor´s moves.
o Market-driving strategy: the firm tends to take a
strategic approaches that redefine the competitive
structure and reshape the behaviors of competitive
players in the market.
Proposition: Competitor orientation with an emphasis on market-driving approaches will
result in relatively high levels of market-focused strategic flexibility than competitor
orientation with an emphasis on market-driven approaches.

12. Market-focused strategy flexibility
EFFECTS OF TURBULENCES
Market orientation influences market-focused strategic
flexibility.Enviromental turbulence modifies Market-driven and
Market-driving perspectives.
• High turbulence: Market-driving perspective
o Firms orientation:Leads the firm to a higher level of market-focused
strategic flexibility.This requires a large number of alternative options that
can be used when preemption efforts become obsolete due to changes
in th environment.
o Competitor orientation: Result in high levels of market –focused strategies.
(similar pattern)
• Low turbulence: In a Market-driving perspective
o The firm´s intent to develop market structures and direct customer
behaviors in its inmediate task require a wide-ranging bundle of options.

13. Market-focused strategy flexibility
OUTCOMES
 In the Long Term:
o Strategic outcomes such as advantageous market
positions, market shares, growth… might reflect the
long term effects of Market-focused strategic
flexibility.
• It would enhance long-term financial outcomes such as
return on assets.
 In the short term
o Market-focused strategic flexibility introduces costs
and investments mean to pay off in an uncertain
future.
• Financial perfoemances outcomes, such cash flows,
may be adversely affected.

14. Market-focused strategy flexibility
OUTCOMES
 Proposition: Environmental turbulence moderates the
effects of Market-focused strategic flexibility on short-term
performance such that:
o HIGH turbulence coupled with HIGH market-focused strategic flexibility results in
ENHANCED performance (cell 1)
o LOW turbulence coupled with LOW market-focused strategic flexibility results in
ENHANCED performance (cell 4)
o HIGH turbulence coupled with LOW market-focused strategic flexibility results in
DEPRESSED performance (cell 3)
o LOW turbulence coupled with HIGH market-focused strategic flexibility results in
DEPRESSED performance (cell 2)

15. Market-focused strategy flexibility
OUTCOMES
 Proposition: Environmental turbulence moderates the effects of
Market-focused strategic flexibility on long-term performance
such that:
o HIGH turbulence coupled with HIGH market-focused strategic flexibility results in
ENHANCED performance (cell 1)
o LOW turbulence coupled with LOW market-focused strategic flexibility results in
NO INFLUENCE on performance (cell 4)
o HIGH turbulence coupled with LOW market-focused strategic flexibility results in
DEPRESSED performance (cell 3)
o LOW turbulence coupled with HIGH market-focused strategic flexibility results in
NO INFLUENCE on performance (cell 2)

16. Market-focused strategy flexibility
DISCUSSION AND IMPLICATIONS
 Theoretical contributions:
o Develop of the notion of market-focused
strategic flexibility.
o Intent is crucial.
o Understanding the strategic options.
o Market-focused strategic flexibility is a crucial
role in gaining superior outcomes for the firm.
• Stable environments:
• Turbulent environments:

17. Market-focused strategy flexibility
DISCUSSION AND IMPLICATIONS
Theoretical contributions:
o Develop of the notion of market-focused strategic flexibility
o Intent is crucial because it involves the drive and willigness to develop the
neccessary ex ante capabilities, to make commitments to the appropiate
type of resource portfolio and to embrace the otion of strategic shift.
o Understanding the paths and patterns of unfolding strategic options essentially
enlarges the firm´s options bundle.
o Market-focused strategic flexibility is a crucial role in gaining superior
outcomes for the firm even when responding and reacting to the
environments.
•Stable environments:
 A firm need not have high market-focused strategic flexibility if the
firm whises to maintain its status quo in the industry.
 If the firm is oriented toward driving market, it is more likely to have a
higher level of market-focused strategic flexibility.
•Turbulent environments:
 The level of market-focused strategic flexibility ishigher if the firm
wants to follow the market
 A market-driving perspective should require the highest level of
market-focused strategic flexibility

18. Market-focused strategy flexibility
DISCUSSION AND IMPLICATIONS
 Managerial concerns
The effectiveness of market-focused strategic flexibility depends on the firm´s
exploration and experimentation of threshold levels and satisficing levels of
market-focused strategic flexibility.
 Benefits for managers from this conceptualization:
• Operational and tactical flexibility do not necessarily result in market-
focused strategic flexibility.
• The creation of strategic options requires the development of critical
resource identification, adquisition and option identification whitin the
firm.
• Strategic options are useful only if the firm is willing to strike at some
point in time
• Market-focused strategic flexibility will result in better performance
only if a firm focuses on providing superior value to its customers.

19. CONCLUSION
 Market-focused strategy formulation helps to understanding of
the current markets
 Markets, however, tend to change rapidly in modern societies
(products that have come and gone, and business that have
failed and hailed, fashions and habits that have come and
gone)
 Under such rapid change, it becomes difficult to maintain
stability and constancy needed for long-term strategy
To serve long-term strategy, it seems more advisable to
view the firm as a bundle of evolving and emerging
resources, skills and capabilities, and focus on building
long-term strategy based on the synergy and the
development of these resources and capabilities

20. THANK YOU FOR YOUR ATTENTION