Chapter 1

Strategic
Management and
Competitiveness

INGREDIENTS OF SUCCESS
Queen Elizabeth &
The House of
Windsor

Lady Gaga and the

Haus of Gaga

Goals

Life-long dedication to role

as head of state and
reigning monarch

Single-minded quest for

stardom through her Lady
Gaga persona

Understand
ing the
Environmen
t

Alertness to the changing

political environment
Sensitive to the mood and
needs of the British people

Awareness of the new

economics of the music
business, the marketing
potential of social
networking and needs of
Generation Y

Resource
Appraisal

Recognized lack of formal

authority and need to
exploit traditional loyalties
and informal influence

Exploited her innate

theatricality, eccentricity,
design capability and
musical skills

Implementa Resolute commitment;

strong self discipline;
tion

emphasis on building an

Devotion to living the Lady

Gaga character; wiliness to
2
create new
images on

WHAT MAKES A SUCCESSFUL

STRATEGY?
Successful
Strategy

EFFECTIVE
IMPLEMENTATION
Long term,
simple and
agreed
objectives

Profound
understandin
g of the
competitive
environment

Objective
appraisal of
resources

WHAT IS STRATEGY?
Distinguishing strategy from tactics:
Strategy is the overall plan for deploying
resources to establish a favorable position.
Tactic is a scheme for a specific maneuver.

Characteristics of strategic
decisions:
Important.
Involve a significant commitment of
resources.
4
Not easily reversible.

IMPORTANT DEFINITIONS
RISK
An investors uncertainty about the economic
gains or losses that will result from a particular
investment

ABOVE-AVERAGE RETURNS
Returns in excess of what an investor expects to
earn from other investments with a similar amount
of risk
AVERAGE RETURNS
Returns equal to those an investor expects to earn
5
from other investments with a similar amount of risk

THE STRATEGIC MANAGEMENT

PROCESS

FIRST
External environment and internal
organization are analyzed to determine
resources, capabilities, and core
competenciesthe sources of strategic
inputs.
NEXT
Vision and mission are developed;
strategies are formulated.
6

THE STRATEGIC MANAGEMENT

PROCESS

THEN
Strategies are implemented with the goal
of achieving strategic competitiveness and
above-average returns.
DYNAMIC PROCESS
Continuously changing markets and
industry conditions must match evolving
strategic inputs.

THE STRATEGIC MANAGEMENT

PROCESS

THE COMPETITIVE LANDSCAPE

INDUSTRY BOUNDARIES BLURRING
EXAMPLES
Computer networks and telecommunications have
blurred the boundaries of the entertainment
industry

HYPERCOMPETITION
by

characterized

Market instability and change

Aggressive challengers
Strategic maneuvering to establish first-mover
9

THE COMPETITIVE LANDSCAPE

TWO DRIVERS
GLOBALIZATION - emergence of a global
economy
TECHNOLOGY - rapid technological changes

10

THE COMPETITIVE LANDSCAPE

TECHNOLOGY AND TECHNOLOGICAL CHANGES

Rapid Technology Diffusion - the speed at

which new technologies become available and are
used; has increased substantially over the past 15
to 20 year.
Perpetual Innovation - describes how rapidly
and consistently new, information-intensive
technologies replace older ones
Competitive Premium - the shorter product
life cycles resulting from rapid diffusions of new
technologies place a competitive premium on
being able to quickly introduce new, innovative
goods and services.
11

THE COMPETITIVE LANDSCAPE

TECHNOLOGY AND TECHNOLOGICAL CHANGES

Disruptive Technologies - technologies

that destroy the value of an existing technology
and create new markets.(e.g., iPods, iPads, WiFi,
and the browser)

The Information Age - Information

technology have occurred in recent years, e.g.,
PCs, cellular phones, massive databases, and
social networking sites. The ability to effectively
and efficiently access and use information has
become an important source of competitive.
(The
12

THE COMPETITIVE LANDSCAPE

TECHNOLOGY AND TECHNOLOGICAL CHANGES

Increasing Knowledge Intensity

Knowledge: information, intelligence, and
expertise are the basis of technology and its
application. knowledge gained through
experience, observation, and inference is an
intangible resource.

Knowledge spillover: Knowledge falls into

competitors hands, e.g., hiring of professional
staff/managers by competitors. Because of the
potential for spillovers, firms must act quickly to
use their knowledge in productive ways
13

THE COMPETITIVE LANDSCAPE

Strategic flexibility is
important!

14

15

Vision
A picture of what the firm wants to be and, in
broad terms, what it wants to ultimately achieve.
A vision statement is short and concise, making it
easy to remember. Also, a vision tends to be
enduring.
It articulates the ideal description of the
organization and gives shape to its intended
future.
16

Mission
The vision is the foundation for the firms
mission.
The firms mission is more concrete than its
vision.
A mission specifies the business or businesses
in which the firm intends to compete and the
customers it intends to serve.
, whereas its mission can change in light of

17

VISION & MISSION

Vision

Examples:
Our vision is to

Mission

Be the best employer for our

people in each community
be the worlds
around the world and deliver
McDonalds best quick
operational excellence to
service
our customers in each of our
restaurant.
restaurants.
Our mission is to be
recognized by our
customers as the leader in
applications engineering.
Ford Motor
To make the
We always focus on the
Companys
automobile
activities customers desire;
vision when
accessible to
we are highly motivated and
established
every American. strive to advance our
by Henry
technical knowledge in the
Ford
18
areas of material, part

TWO MODELS OF STRATEGIC

DECISION MAKING
Firms use two major models to help develop their
vision and mission and then choose one or more
strategies in pursuit of strategic competitiveness and
above-average returns.

EXTERN
AL
I/O
MODEL

INTERN
AL
RESOUR
CEBASED
MODEL
19

THE I/O
MODEL OF
ABOVEAVERAGE
RETURNS

20

THE
RESOURCEBASED MODEL
OF ABOVEAVERAGE
RETURNS

21

CLASSIFICATION OF
STAKEHOLDERS

22

CLASSIFICATION OF
STAKEHOLDERS
Trade-offs
must be made in situations whe

re the objectives of various stakeholder gro

ups differ or conflict.
Conflict
examples:

High returns to customers might come at

the expense of lower returns for capital
market stakeholders and vice-versa.
23

STRATEGIC LEADERS AND

ORGANIZATIONAL CULTURE
Visionary Strategic Leaders emphasize not only maxi
mizing shareholder wealth, but maximizing the inter
ests of all stakeholders, underscoring a civic and pers
onal commitment to corporate citizenship.
Organizational culture affects strategic leaders and t
heir work. In turn, strategic leaders decisions and ac
tions shape a firms culture.
Organizational culture is the social energy that drives
or fails to drivethe organization, the ideologies, s
ymbols, and shared core values.
24

References
1. Ireland, RD., Hoskisson, R. & Titt, M. 2013. The
Management of Strategy Concepts (10e) So
uth-Western
2. Grant, R. 2013 Contemporary Strategy Analy
sis (8e) Wiley

25