2.1 Perspectives of Competitive AdvantageManaging Strategically – formulating and

implementing strategies that allow an organization to develop and maintain a Competitive Advantage.

1. Industrial Organization

2. Resource Based View

3. Guerilla View

Industrial Organization

I/O View focuses on the structural forces within an industry, the competitive environment of firms, and how these influence competitive advantage.

Resource Based View A firms resources are most important in

getting and sustaining a competitive advantage.

Financial- BanksPhysical – GMHuman – Southwest AirlinesIntangible – Coca ColaCultural – Walmart

Resource Based View contd.

Guerilla ViewThe view that organizations competitive

advantage is temporary

Old VS. New Business EnvironmentOld Drivers

Labor ForceProductionResourcesFunding

New DriversInformation Revolution

TechnologyGlobalization

Information RevolutionThe amount of digital information is 3 million

times all the books ever writtenInformation saved in a single year could fill

half a million libraries size of the Library in Congress

Growing at a rate of 57% a year

Information Revolution Cont.Information is now the essential resource of

production with a supporting cast of Labor, Land and Capitol

Information provides a sustainable competitive advantage when used correctly with traditional factors of production.

TechnologyWhat is Technology?One impact of technology is called “Bottom

Up” where the power has shifted from the institutions to individuals

Technology impacts innovation, which we define as turning creative idea into a product or process that can be sold

Technology in InnovationHow important is innovation?IBM’s CEO Sam Palmisano says, “The way

you will thrive in this environment is by innovating – innovating in technologies, innovating in strategies, innovating in business models”

GlobalizationThe days where the U.S. produce all

consumer products are goneGlobalization influences strategic

management in two ways…GLOBAL MARKETSGLOBAL COMPETITORS

Globalization Cont.To sustain a competitive advantage you must

look globally for customers as long with resources from different locations

Some cases to make the most effective strategy is to partner with a competitor to create or market products

Four Implications of Driving Forces1. Organization/Continual change - can be

external or internal and defined as structured transition in what an organization does or how it does it

2. Reduced need for physical assets – Large Corporations are finding value in intangible factors such as ideas, employee knowledge sharing, customer databases, product innovation and online ordering systems

Implications Cont.3. Vanishing Distance & Compressed Time –

Limitations of physical distance have disappeared along with time constraints

4. Vulnerability – Threats of computer viruses, terrorist attacks, and biological attacks illustrate the increased vulnerability that organizations face from interconnectedness and openness

Critical Success Factors1. Ability to Embrace Change – Change can

bring new opportunity and exploit challenges dealing with change.

2. Creativity and Innovation Capabilities – “Create and innovate or fail”

3. Being a World Class Organization – Strategic decision makers take actions to help it be the best in the world at what it does

2.3 Organizational Elements that Guide Strategic Decision Makers

Organizational vision and mission

CSR and Ethics

VisionFour components of vision

1. Vision must be “Built on a foundation of the organizations core values and beliefs”

2. Vision should “Elaborate a purpose for the organization”

3. Vision should “Include a brief summary of what the organization does”

4. Visions “Specify broad goals”

Mission Statement

Statement of what specific organizational units do, and what they hope to accomplishCan be mission statements for several different

departments of the firm. (divisional, group projects, etc.)

Starbucks mission statement “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time..”

Corporate Social Responsibility and Ethics

CSR – The obligation of the organizational decision makers to make decisions and act in ways that recognize the interrelatedness of business and society.

Formerly – what is in the best interest of the stockholder

Today – what is in the best interest of the stakeholders, or possible future stakeholders.

CSR Potential Stakeholder Target Market

CSR & Ethics

Ethics – Ethics involves the principles that define right and wrong decisions and behavior.

being able to decipher in given situations what most would consider “right or wrong.” Ethical decisions are involved a great deal in managing strategically.