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Strategic Management & Strategic Competitiveness

Chapter One

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Chapter 5Bus. - Level

Strategy

Chapter 6Competitive

Dynamics

Chapter 7Corp. - Level

Strategy

Chapter 9International

Strategy

Chapter 10CooperativeStrategies

Chapter 8Acquisitions &Restructuring

Chapter 11

CorporateGovernance

Chapter 12Structure& Control

Chapter 13Strategic

Leadership

Chapter 14Entrepreneurship & Innovation

Str

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Str

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Str

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esChapter 4Internal

Environment

Chapter 3External

Environment Strat. Intent

Strat. Mission

The Strategic .

Management .

Process

Strategy Formulation Strategy Implementation

Strategic Competitiveness

Chapter 1

Above Average Returns

Chapter 2 Feedback

Strategic Competitiveness

Chapter 1

“Canada is rather cool”**The Economist 2003

Canada is home not only to world-class commercial competitors but to

dominant companies in their industries

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Strategic Management and Strategic Competitiveness

Knowledge objectives1. Define strategic competitiveness, competitive

advantage and above average returns.

2. Describe the 21st century competitive landscape and explain how globalization and technological changes shape it.

3. Use the industrial organization (I/O) model to explain how firms can earn above average returns.

4. Use the resource-based model to explain how firms can earn above-average returns.

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Strategic Management and Strategic Competitiveness

Knowledge objectives – continued…

5. Describe strategic intent and strategic mission and discuss their value.

6. Define stakeholders and describe their ability to influence organizations.

7. Describe strategists’ work.

8. Explain the strategic management process.

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Desired Strategic Outcomes

Strategic CompetitivenessAchieved when a firm successfully formulates and implements a value-creating strategy.

Occurs when a firm develops a strategy that competitors are not simultaneously implementing.

Sustained Competitive Advantage

Above-Average ReturnsReturns in excess of what an investor expects to earn from other investments with similar risk.

Provides benefits which current and potential competitors are unable to duplicate.

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Important definitions

RiskAn investor’s uncertainty about the economic gains or losses resulting from a particular investment.

Returns equal to what an investor expects from other investments with similar amount of risk.

Average returns

Strategic management processThe full set of committee's decisions and actions required for a firm to achieve strategic competitiveness and earn above average returns.

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The Strategic Management Process

The full set of commitments, decisions, The full set of commitments, decisions, and actions required for a firm to and actions required for a firm to

achieve strategic competitiveness and achieve strategic competitiveness and earn above-average returns.earn above-average returns.

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The Strategic Management Process

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What is Strategy?

• An integrated and coordinated set of commitments & actions designed to exploit core competencies and gains and gain a

competitive advantage.

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What is Strategy?“A unified, comprehensive, and integrated plan designed to ensure that the basic objectives of the enterprise are achieved.” (Glueck, 1980:9)

“The pattern or plan that integrates an organization’s major goals, policies, and action sequences into a cohesive whole.” (Quinn, 1980)

“A good strategy… neutralizes threats and exploits opportunities while capitalizing on strengths and avoiding or fixing weaknesses.” (Barney, 1997:17)

“A pattern of resource allocation that enables firms to maintain or improve their performance.

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Intended, Emergent and Realized Strategies

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Alternative Models of Superior Returns

Industrial Organization Model

The External Environment

An Attractive Industry

Strategy Formulation

Assets and Skills

Strategy Implementation

Superior Returns

Resource-BasedModel

Resources

Capabilities

Competitive Advantage

An Attractive Industry

Strategy Implementation

Superior Returns

OIOI

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Four Attributes of Resources and Capabilities (Competitive Advantage)

The firm is organized appropriately to The firm is organized appropriately to obtain the full benefits of the resources in obtain the full benefits of the resources in order to realize a competitive advantage. order to realize a competitive advantage.

ValuableValuable Allow the firm to exploit opportunities or Allow the firm to exploit opportunities or neutralize threats in its external neutralize threats in its external environment.environment.

RareRare Possessed by few, if any, current and Possessed by few, if any, current and potential competitors.potential competitors.

Costly to imitateCostly to imitate When other firms cannot obtain them or When other firms cannot obtain them or must obtain them at a much higher cost.must obtain them at a much higher cost.

Organized to be Organized to be exploited exploited

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Core CompetenciesCore Competencies

Resources and capabilities that meet these four criteria become a source

of:

ValuableValuable

RareRare

Costly to imitateCostly to imitate

Organized to be Organized to be exploitedexploited

Core CompetenciesCore Competencies

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Core Competencies are the basis for a firm’s

Competitive Competitive advantageadvantage

Strategic Strategic competitivenesscompetitiveness

Ability to earn Ability to earn above-average above-average

returnsreturns

Core CompetenciesCore Competencies

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CEO’s ranking of business importance

1. A strong & well thought out strategy

2. Maximizing customer satisfaction & loyalty

3. Business leadership, quality products & services

4. Concern for consistent profits

5. Strong & consistent profits

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21st Century Values

• Flexibility

• Speed to market

• Innovation

• Integration

• Handling challenges from constantly changing conditions

• Hypercompetition

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The Global Economy

One in which goods, services, people, skills, and ideas move freely across geographic

borders

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World competitiveness ratings

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Technology and Technological Change

• Increasing rate of technological change and diffusion

Perpetual innovation

• The information agePersonal computers, cellular phones, artificial

intelligence, virtual reality, massive databases, electronic networks, e-business

• Increasing knowledge intensityInformation, intelligence, expertise, strategic

flexibility.

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Internally focused, it is the leveraging of a firms resources, capabilities, and

core competencies to establish the firms goals in the competitive

environment.

Strategic Intent

Together, strategic intent and strategic mission yield the insights required to formulate and implement strategies. Externally focused, it is a statement of a

firms unique purpose and the scope of it’s operations in product and market

terms.

Strategic Mission

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Stakeholders

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Organizational strategists

Top level managers, executives, top management team, or general managers

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Organizational culture

A complex set of ideologies, symbols and core values that influence how the firm conducts it’s business.

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Predicting Outcomes of Strategic Decisions

1. Define the profit pool’s boundaries.2. Estimate the pool’s overall size.3. Estimate the size of the value chain.4. Reconcile the calculations.

The strategic management process calls for disciplined approaches to the development of competitive advantage.