Ch01 Strategic Management and Strategic Competitiveness - Major Concepts

Chapter 1: Strategic Management
and Strategic Competitiveness –

major concepts
• strategic competitiveness • industrial-organizational
• sustainable competitive (I/O) model of above-
advantage average returns
• above-average returns • resource-based model of
• “strategic” management above-average returns
• strategic management • strategic intent
process
• mission statement
• external strategic fit
• internal strategic fit • stakeholders
• hypercompetition • social responsibility
• organizational values
Transparency 1-1
Strategic Competitiveness
Achieved when a firm successfully formulates and
implements a value-creating strategy
Transparency 1-2
Sustained Competitive Advantage

Occurs when a firm develops a strategy that competitors
are not simultaneously implementing
Provides benefits which current and potential competitors
are unable to duplicate
Transparency 1-3

Occurs when a firm develops a strategy that competitors
are not simultaneously implementing
Provides benefits which current and potential competitors
are unable to duplicate
Above-Average Returns
Returns in excess of what an investor expects to earn from
other investments with similar risk
Transparency 1-4
Strategic Management Process
Involves the full set of:
Commitments Decisions Actions
which are required for firms to achieve
Above-Average Returns
Transparency 1-5
Chapter 2
External
Environment
The Strategic
Strategic Intent
Strategic Mission
Management
Chapter 3
Internal
Environment
Process
Transparency 1-6
Chapter 2
External
Environment
The Strategic
Strategic Intent
Strategic Mission
Management
Chapter 3
Internal
Environment
Process
Strategy Formulation Strategy Implementation
Transparency 1-7
Chapter 2
External
Environment
The Strategic
Strategic Intent
Strategic Mission
Management
Chapter 3
Internal
Environment
Process
Chapter 4 Chapter 5 Chapter 6

Business-Level Competitive Corporate-Level
Strategy Dynamics Strategy
Chapter 7 Chapter 8 Chapter 9

Acquisitions & International Cooperative
Restructuring Strategy Strategies
Transparency 1-8
Chapter 2
External
Environment
The Strategic
Strategic Intent
Strategic Mission
Management
Chapter 3
Internal
Environment
Process
Chapter 4 Chapter 5 Chapter 6 Chapter 10 Chapter 11

Business-Level Competitive Corporate-Level Corporate Structure
Strategy Dynamics Strategy Governance & Control

Acquisitions & International Cooperative Strategic Entrepreneurship
Restructuring Strategy Strategies Leadership & Innovation
Transparency 1-9
Chapter 2
External
Environment
The Strategic
Strategic Intent
Strategic Mission
Management
Chapter 3
Internal
Environment
Process


Strategic
Competitiveness
Above Average
Returns
Transparency 1-10
Chapter 2
Strategic External
Environment
The Strategic
Management
Inputs
Strategic Intent
Strategic Mission
Chapter 3
Internal
Environment
Process

Strategic
Actions

Outcomes
Strategic
Strategic
Competitiveness
Above Average
Feedback
Returns
Transparency 1-11
Strategic Management – “shooting at a moving
target of co-alignment” (Thompson, 1967)
External Strategic Fit = Internal Strategic Fit =
Strategy formulation to Strategy implementation to

-match internal capabilities -match the skills and
with specific attractive
resources of the firm to
external opportunities;
requirements for successful
-create strategies
strategy execution;
that effectively adapt to
external (industry and -ensure that actions and
competitive) trends. resources facilitate strategy
accomplishment.
Transparency 1-12
Chapter One: Key Themes
Challenge of Strategic Management
Transparency 1-13
Changing Competitive Landscape
Transparency 1-14
“Hypercompetition” =
fleeting competitive advantage due to
aggressive/relentless challengers
Globalization Technology change
• more opportunities • perpetual/disruptive
• more competitors technology change
• greater complexity • org’l learning, agility
• are critical attributes
“liability of
foreignness” • tap key information
• increasing global and org’l intellect
interdependencies • role of org’l culture
Transparency 1-15
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
Transparency 1-16
Changing Competitive Landscape
Two Models of Superior Profitability

Industrial Organization Model
Resource-Based Model
Transparency 1-17
I/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.
Transparency 1-18
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.
Transparency 1-19
External Action required:

Environment Study the external
environment, especially
General Environment the industry environment.
Industry Environment
Competitive
Environment
Transparency 1-20

Environment Locate an industry with
An Attractive high potential for above-
GeneralIndustry
Environment average returns.
An industry whose
Competitive
structural characteristics
Environment
suggest above-average
returns are possible
Transparency 1-21

Environment Identify strategy called for
Attractive by the industry to earn
GeneralIndustry
Environment above-average returns.
Strategy
An industry whose
Competitive Formulation
Environment Selection of a strategy
suggest above-average
returns are linked with above-
possible
average returns in a
particular industry
Transparency 1-22

Environment Develop or acquire assets
Attractive and skills needed to
GeneralIndustry
Environment implement the strategy.
Strategy
An industry whose
Environment Selection ofAssets
suggest above-average and Skills
a strategy
returns arelinked with above-
possible
Assetsinand
average returns a skills
required to implement
particular industry
a chosen strategy
Transparency 1-23

Environment Use the firm’s strengths
Attractive (its assets or skills) to
GeneralIndustry
Environment implement the strategy.
Strategy
An industry whose
a strategy
possible
average returns a Strategy
Assetsinand skills
required to
particular industry Implementation
implement
a chosen strategy
Selection of strategic
actions linked with
effective implementation
of the chosen strategy
Transparency 1-24

Environment Maintain selected strategy
Attractive in order to outperform
GeneralIndustry
Environment industry rivals.
Strategy
An industry whose
a strategy
possible
average returns a Strategy
Assetsinand skills
required to
particular industry Implementation
implement
a chosen strategy Superior Returns
Selection of strategic
actions linked with
Earning of above-
effective implementation
average
of the chosen returns
strategy
Transparency 1-25
Resource-Based Model of Superior Returns
The Resource-Based Model suggests

that above-average returns for any
firm are largely determined by
characteristics inside the firm.
Transparency 1-26
The Resource-Based Model suggests

that above-average returns for any
firm are largely determined by
characteristics inside the firm.
The Resource-Based view focuses on
developing or obtaining valuable
resources and capabilities which are
difficult or impossible for rivals to
imitate.
Transparency 1-27
Action required:
Resources Identify firm resources.
Study strengths and weak-
Inputs to a firm’s nesses relative to rivals.
production process.
Transparency 1-28
Action required:
Resources Determine what firm
Capability capabilities allow it to do
Inputs to a firm’s better than rivals.
production process.
Capacity for an integrated
set of resources to
integratively perform a
task or activity.
Transparency 1-29
Action required:
Resources Determine how firm’s
Capability resources and capabilities
Inputs to a firm’s may create competitive
production process.
Capacity Competitive
for an integrated advantage.
Advantage
set of resources to
integratively perform a
Ability of a firm to
task or activity.
outperform its rivals
Transparency 1-30
Action required:
Resources Locate an attractive
Capability industry.
Inputs to a firm’s
production process.
for an integrated
Advantage
set of resources to
integratively perform An a Attractive
Ability of aIndustry
task or activity. firm to
outperform its rivals
Location of an industry
with opportunities that
can be exploited by the
firm’s resources and
capabilities
Transparency 1-31
Action required:
Resources Select strategy that best
Capability exploits resources and
Inputs to a firm’s capabilities relative to
production process.
for an integrated opportunities in environs.
Advantage
set of resources to
outperform its rivalsStrategy
Formulation
with opportunities that and
Implementation
can be exploited by the
Strategic actions taken to
capabilities
earn above-average
returns
Transparency 1-32
Action required:
Resources Maintain selected strategy
Capability in order to outperform
Inputs to a firm’s industry rivals.
production process.
for an integrated
Advantage
set of resources to
outperform its rivalsStrategy
Formulation
with opportunities that and
can be exploited Superior Returns
Implementation
by the
Strategic actions
capabilities taken
Earning to
of above-
earn above-average
average returns
returns
Transparency 1-33
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. product
2. target market
3. differentiating feature
Transparency 1-34
Rape and Abuse Crisis Center
provides crisis intervention, advocacy,
and counseling services
– free of charge –
to all persons in the region who have
been victims of domestic violence or
sexual assault.
Transparency 1-35
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
Transparency 1-36
Mission Statements –
So what?
Who cares?
Why bother?
Transparency 1-37
To be the leader in providing
strategic business management solutions
to the midmarket
through a global network of partners
dedicated to lasting customer relationships
Transparency 1-38
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)
Transparency 1-39
Why is it so difficult
to develop a concise, compelling, and
agreed-upon mission statement?
Transparency 1-40
ELDERHOSTEL’s mission statement
We are the nation’s first and the world’s

largest education and travel organization for
adults 55 and over, dedicated to providing
exceptional learning opportunities at
remarkable value.
We value stimulating, expert information;

adventure; and the spirit of camaraderie.
Transparency 1-41
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
Transparency 1-42
Groups who are affected by a firm’s
Stakeholders 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
Transparency 1-43
its performance
the participation of key stakeholders Capital Market
Firm Stock market/Investor

Debt suppliers/Banks
Transparency 1-44
its performance

Product Market
Primary Customers
Suppliers
Transparency 1-45
its performance

Product Market
Organizational
Primary Customers
Suppliers Employees
Managers
Non-Managers
Transparency 1-46
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
Transparency 1-47
Social Responsibility
So what?
Who cares?
Why bother?
How to demonstrate?
Transparency 1-48

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Chapter 1: Strategic Management

and Strategic Competitiveness –

Sustained Competitive Advantage

Sustained Competitive Advantage

Involves the full set of:

Commitments Decisions Actions

which are required for firms to achieve

Strategy Formulation Strategy Implementation

Strategy Formulation Strategy Implementation

Chapter 4 Chapter 5 Chapter 6

Chapter 7 Chapter 8 Chapter 9

Strategy Formulation Strategy Implementation

Chapter 4 Chapter 5 Chapter 6 Chapter 10 Chapter 11

Chapter 7 Chapter 8 Chapter 9 Chapter 12 Chapter 13

Strategy Formulation Strategy Implementation

Chapter 4 Chapter 5 Chapter 6 Chapter 10 Chapter 11

Chapter 7 Chapter 8 Chapter 9 Chapter 12 Chapter 13

Strategy Formulation Strategy Implementation

Chapter 4 Chapter 5 Chapter 6 Chapter 10 Chapter 11

Strategy Dynamics Strategy Governance & Control

Chapter 7 Chapter 8 Chapter 9 Chapter 12 Chapter 13

Strategy formulation to Strategy implementation to

Challenge of Strategic Management

Challenge of Strategic Management

Changing Competitive Landscape

• “leveraging the firm’s resources,

Challenge of Strategic Management

Changing Competitive Landscape

Two Models of Superior Profitability

The Industrial Organization Model

The Industrial Organization Model

External Action required:

External Action required:

External Action required:

External Action required:

External Action required:

External Action required:

The Resource-Based Model suggests

The Resource-Based Model suggests

• provide a relatively enduring yet basic

• should clearly include three core elements:

• TARGET MARKET should be expressed

• DIFFERENTIATING FEATURE should be

strategic business management solutions

through a global network of partners

dedicated to lasting customer relationships

Be sure to clearly and appropriately include

We are the nation’s first and the world’s

We value stimulating, expert information;

• values and beliefs that are widely shared

• can lead to an ingrained way of thinking

• often linked to competitive advantage

Firm Stock market/Investor

Firm Stock market/Investor

Firm Stock market/Investor

• Uses a very broad view of stakeholders

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