THE CONTEXT OF MANAGING STRATEGICALLY

Group 4Alma PenaJose MedinaLaura RandallMona ShaferMelissa DunlopRaul Guerrero

Chapter 2

COMPETITIVE ADVANTAGE

Managing Strategically: To formulate and implement strategies that

allow an organization to develop and maintain a competitive advantage

Competitive Advantage: Aspect that sets a company apart in the

industry

Under Armour vs. Nike

Getting and keeping a competitive advantage is what managing strategically is all about

3 PERSPECTIVES OF COMPETITIVE ADVANTAGE

1. Industrial Organization (I/O)2. Resource-Based View (RBV)3. Guerrilla View

INDUSTRIAL ORGANIZATION VIEW

Industrial Organization View focuses on: structural forces within an industry competitive environment of firms and the influence of competitive advantage

RESOURCE-BASED VIEW

Looking internally at your resources Exploit your resources Financial, physical, human, intangible, and

structural or cultural assets

VALUABLE & RARE

Unique resource adds value to your firm Exploit external circumstances that increase

revenue Avoid negative external environment that

changes cash flows Context of what else is going on externally A resource is rare if no other competing form

already has it

HARD TO IMITATE/SUBSTITUTE & EXPLOITATION

A firm should have resources that a competing firm should not be able to imitate or substitute

A firm needs to be able to also exploit their unique resources in order to create a competitive advantage

GUERRILLA VIEW

Concept that a firm’s competitive advantage is only temporary, and that the environment is constantly changing

Through the guerrilla view a firm needs to be able to constantly adapt to new changes in technology, market instabilities, and any other change that may affect their industry

THE BUSINESS ENVIRONMENT Information Revolution Technology Globalization

THE INFORMATION REVOLUTION

Information has set the tone for the business environment Information is used to make processes more effective and

efficiento Producing goods and serviceso Designing work toolso Organizational processes o Management systems

Today Information is an essential resource of production

TECHNOLOGY

Using equipment, materials, knowledge, and experience to perform tasks

Technology plays different roles in different industries The later part of the 20th century technology really took off Technology effects three areas in the business environment

Innovation Bottom-up Capability Organizational Performance

GLOBALIZATION

Globalization influences strategic management in two ways Global Markets

To sustain a competitive advantage a company may need to break into new markets

Any location is a potential marketplace but to be strategic managers should consider the global economic climate

Global Competition It may be more challenging to understand a company with a

different background Global alliances

IMPLICATIONS OF DRIVING FORCES

Continual Change

Reduced Need for Physical Assets

Vanishing Distance and Compressed Time

Vulnerability

CONTINUAL CHANGE

All organizations deal with change

Stimulates need for organizational change

REDUCED NEED FOR PHYSICAL ASSETS

In the past, the more physical assets you had, the more economically powerful you were

Now, value is in intangible factors Achieve competitive advantage with nonphysical assets

VANISHING DISTANCE & COMPRESSED TIME

Physical distance and time constraints have disappeared Geography no longer an important role Potential markets and competitors found anywhere Ability to instantly interact

VULNERABILITY

Information, facilities, and employees are vulnerable Global computer viruses Terrorist attacks Biological attacks

CRITICAL SUCCESS FACTORS

ABILITY TO EMBRACE CHANGE

Opportunities ChallengesThe internet and iTunes

CHANGE AGENTS

Strategic decision makers Initiate & Oversee Facilitate successful implantation Provide support

CREATIVITY AND INNOVATION CAPABILITIES

7 Dimensions of Organizational Innovation

1. Challenges 2. Customer Focus3. Creativity4. Communication 5. Collaboration6. Completion7. Contemplation

Innovative Organization: The ability to channel creativity into useful outcomes

“create and innovate or fail”

VISION STATEMENT

Broad Looks into the Future Single Vision

4 Components Built on the organization’s core values and beliefs Elaborate a purpose for the organization Brief summary of what the organization does Specifies broad goals

MISSION STATEMENT

Specific Looks into the Present Several Missions

CORPORATE SOCIAL RESPONSIBILITY

Organizations have larger societal roles to play and serve many constituents. Not just stockholders!!

Shareholders Governments Customers Social Action Groups Employees Communities Suppliers Trade Associations Political Action Groups

BP: Gulf Oil Spill

ETHICS

Doing the right Thing!

Involves the principles that define right and wrong decisions and behavior. In other words, as we live our lives.

THREE TAKEAWAYS

To sustain a competitive advantage in a constantly changing environment all three views (Industrial Organization, Resourced-Based and Guerilla View) should be taken into consideration.

The three driving forces of the business environment are information, technology, and globalization.

Vision, Mission, Corporate Social Responsibility and Ethics are four elements that strategic decision makers should consider when guiding and managing an organization.