ch01 strategic management and strategic competitiveness – major concepts

Transparency 1-1Transparency 1-1

Chapter 1: Strategic Management and Strategic Competitiveness –

major concepts• strategic competitiveness• sustainable competitive

advantage• above-average returns• “strategic” management• strategic management

process• external strategic fit• internal strategic fit• hypercompetition

• industrial-organizational (I/O) model of above- average returns

• resource-based model of above-average returns

• strategic intent• mission statement• stakeholders• social responsibility• organizational values


Strategic CompetitivenessStrategic CompetitivenessAchieved when a firm successfully formulates and Achieved when a firm successfully formulates and implements a value-creating strategyimplements a value-creating strategy


Sustained Competitive AdvantageSustained Competitive AdvantageOccurs when a firm develops a strategy that competitors Occurs when a firm develops a strategy that competitors are not simultaneously implementingare not simultaneously implementingProvides benefits which current and potential competitors Provides benefits which current and potential competitors are unable to duplicateare unable to duplicate

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


Sustained Competitive AdvantageSustained Competitive Advantage

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

Occurs when a firm develops a strategy that competitors are not simultaneously implementingOccurs when a firm develops a strategy that competitors are not simultaneously implementingProvides benefits which current and potential competitors are unable to duplicateProvides benefits which current and potential competitors are unable to duplicate

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


which are required for firms to achievewhich are required for firms to achieve

Above-Average ReturnsAbove-Average Returns

Strategic CompetitivenessStrategic Competitiveness

Sustained Competitive AdvantageSustained Competitive Advantage

Strategic Management ProcessStrategic Management Process

Involves the full set of:Involves the full set of:

ActionsActionsCommitmentsCommitments DecisionsDecisions


Chapter 3Chapter 3InternalInternal

EnvironmentEnvironment

Chapter 2Chapter 2ExternalExternal

EnvironmentEnvironmentThe StrategicThe StrategicManagementManagement

ProcessProcess

The StrategicThe StrategicManagementManagement

ProcessProcess

Strategic IntentStrategic Intent

Strategic MissionStrategic Mission






ProcessProcess


ProcessProcess



Strategy FormulationStrategy Formulation Strategy ImplementationStrategy Implementation






ProcessProcess


ProcessProcess



Strategy FormulationStrategy Formulation

Chapter 4Chapter 4Business-LevelBusiness-Level

StrategyStrategy

Chapter 5Chapter 5CompetitiveCompetitiveDynamicsDynamics

Chapter 6Chapter 6Corporate-LevelCorporate-Level

StrategyStrategy

Chapter 8Chapter 8InternationalInternational

StrategyStrategy

Chapter 9Chapter 9CooperativeCooperativeStrategiesStrategies

Chapter 7Chapter 7Acquisitions &Acquisitions &RestructuringRestructuring

Strategy ImplementationStrategy Implementation






ProcessProcess


ProcessProcess





StrategyStrategy



StrategyStrategy


StrategyStrategy




Chapter 10Chapter 10CorporateCorporate

GovernanceGovernance

Chapter 11Chapter 11StructureStructure& Control& Control

Chapter 12Chapter 12StrategicStrategic

LeadershipLeadership

Chapter 13Chapter 13Entrepreneurship & InnovationEntrepreneurship & Innovation






ProcessProcess


ProcessProcess



StrategicStrategicCompetitivenessCompetitivenessAbove AverageAbove Average

ReturnsReturns



StrategyStrategy



StrategyStrategy


StrategyStrategy















ProcessProcess


ProcessProcess



StrategicStrategicCompetitivenessCompetitivenessAbove AverageAbove Average

ReturnsReturnsFeedback



StrategyStrategy



StrategyStrategy


StrategyStrategy










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Str

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Strategic Management – “shooting at a moving target of co-alignment” (Thompson, 1967)

External Strategic Fit =

Strategy formulation to

-match internal capabilities

with specific attractive

external opportunities;

-create strategies

that effectively adapt to

external (industry and

competitive) trends.

Internal Strategic Fit =

Strategy implementation to

-match the skills and

resources of the firm to

requirements for successful

strategy execution;

-ensure that actions and

resources facilitate strategy

accomplishment.


Challenge of Strategic ManagementChallenge of Strategic Management

Chapter One: Key ThemesChapter One: Key Themes



Changing Competitive LandscapeChanging Competitive Landscape



“Hypercompetition” =fleeting competitive advantage due to

aggressive/relentless challengersGlobalization

• more opportunities• more competitors• greater complexity• “liability of

foreignness”• increasing global

interdependencies

Technology change• perpetual/disruptive

technology change• org’l learning, agility

are critical attributes• tap key information

and org’l intellect• role of org’l culture


Strategic Intent

• “leveraging the firm’s resources, capabilities, and competencies to accomplish the firm’s goals in a competitive environment” (pg. 21)

• a passion to win that is widely shared by organizational participants

• strong internal drive and commitment to the organization and its goals



Changing Competitive LandscapeChanging Competitive Landscape

Two Models of Superior ProfitabilityTwo Models of Superior Profitability

Industrial Organization ModelIndustrial Organization ModelResource-Based ModelResource-Based Model



I/O Model of Superior ReturnsI/O Model of Superior Returns

The Industrial Organization Model suggests that above-average returns for any firm are largely determined by characteristics outside the firm.






The I/O model largely focuses on industry structure or attractiveness of the external environment rather than internal characteristics of the firm.

The I/O model largely focuses on industry structure or attractiveness of the external environment rather than internal characteristics of the firm.


Action required:Action required:External EnvironmentExternal Environment

General EnvironmentGeneral Environment

Industry EnvironmentIndustry Environment

Competitive EnvironmentCompetitive Environment

Study the external environment, especially the industry environment.



External EnvironmentExternal Environment




An Attractive IndustryAn Attractive Industry

An industry whose structural characteristics suggest above-average returns are possible


Action required:Action required:Locate an industry with high potential for above-average returns.







Attractive IndustryAttractive Industry



Action required:Action required:Identify strategy called for by the industry to earn above-average returns.


Selection of a strategy linked with above-average returns in a particular industry


StrategyFormulationStrategyFormulation












Action required:Action required:Develop or acquire assets and skills needed to implement the strategy.

Assets and SkillsAssets and Skills

Assets and skills required to implement a chosen strategy

















Action required:Action required:Use the firm’s strengths (its assets or skills) to implement the strategy.


Selection of strategic actions linked with effective implementation of the chosen strategy

















Action required:Action required:




Superior ReturnsSuperior Returns

Earning of above-average returnsEarning of above-average returns

Maintain selected strategy in order to outperform industry rivals.



The Resource-Based Model suggests that above-average returns for any firm are largely determined by characteristics inside the firm.


Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns




The Resource-Based view focuses on developing or obtaining valuable resources and capabilities which are difficult or impossible for rivals to imitate.

The Resource-Based view focuses on developing or obtaining valuable resources and capabilities which are difficult or impossible for rivals to imitate.



ResourcesResources

Inputs to a firm’s production process.Inputs to a firm’s production process.

Action required:Action required:Identify firm resources. Study strengths and weak- nesses relative to rivals.



ResourcesResources


Action required:Action required:Determine what firm capabilities allow it to do better than rivals.


CapabilityCapability

Capacity for an integrated set of resources to integratively perform a task or activity.



ResourcesResources





Competitive AdvantageCompetitive Advantage

Ability of a firm to outperform its rivalsAbility of a firm to outperform its rivals

Action required:Action required:Determine how firm’s resources and capabilities may create competitive advantage.



ResourcesResources







An AttractiveIndustryAn AttractiveIndustry

Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities


Action required:Action required:Locate an attractive industry.



ResourcesResources










Action required:Action required:Select strategy that best exploits resources and capabilities relative to opportunities in environs.

Strategy Formulation and Implementation


Strategic actions taken to earn above-average returns




ResourcesResources










Action required:Action required:Maintain selected strategy in order to outperform industry rivals.






Superior ReturnsSuperior Returns

Earning of above-average returnsEarning of above-average returns


Mission Statements

• typically the starting point for strategic planning

• provide a relatively enduring yet basic description of an organization’s domain

• should clearly include three core elements:1. product2. target market3. differentiating feature


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To create meaningful mission statements . . .

• PRODUCT description should be carefully balanced - not too broad, not too narrow

• TARGET MARKET should be expressed as specifically as possible

• DIFFERENTIATING FEATURE should be meaningful and realistic


Mission Statements –

So what?

Who cares?

Why bother?


To be the leader in providing

strategic business management solutions

to the midmarket

through a global network of partners

dedicated to lasting customer relationships


Mission Statement for NDSU’s College of Business?

Be sure to clearly and appropriately include

1. Product(s)

2. Target market(s)

3. Differentiating feature(s)


Why is it so difficult to develop a concise, compelling, and

agreed-upon mission statement?


ELDERHOSTEL’s mission statement

We are the nation’s first and the world’s largest education and travel organization foradults 55 and over, dedicated to providingexceptional learning opportunities atremarkable value.

We value stimulating, expert information;adventure; and the spirit of camaraderie.


Organizational Values

• values and beliefs that are widely shared and endorsed by org’l participants

• can lead to an ingrained way of thinking and acting within the org’n

• often linked to competitive advantage


StakeholdersStakeholders Groups who are affected by a firm’s performance and who have claims on

its performance

Groups who are affected by a firm’s performance and who have claims on

its performance

The firm must maintain performance at an adequate level in order to maintain the participation of key stakeholders


StakeholdersStakeholders

FirmFirm


its performance


its performance

Capital MarketCapital Market

Stock market/InvestorsStock market/Investors

Debt suppliers/BanksDebt suppliers/Banks




FirmFirm


its performance


its performance

Product MarketProduct Market




Primary Customers SuppliersPrimary Customers Suppliers




FirmFirm


its performance


its performance

Product MarketProduct MarketOrganizationalOrganizational




EmployeesManagersNon-Managers

EmployeesManagersNon-Managers


Primary Customers SuppliersPrimary Customers Suppliers


Social Responsibility

• Uses a very broad view of stakeholders

• Considers the long-term interests of society in strategic decision-making

• Involves ethical actions (which are often beyond legal requirements)

• Responds to social expectations

• Strives for good corporate citizenship

• Difficult balancing of stakeholder interests


Social Responsibility

So what?

Who cares?

Why bother?

How to demonstrate?

ch01 strategic management and strategic competitiveness – major concepts

Documents

strategic leadership

strategic inputs chapter

international strategy

external environment

competitive dynamics

strategic management

strategy transparency

corporate governance