Strategic Management & Strategic Competitiveness

8/3/2019 Strategic Management & Strategic Competitiveness

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2006 by Nelson, a division of Thomson Canada Limited. 1-1

Strategic Management &

Strategic Competitiveness

Chapter One


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Chapter 5Bus. - Level

Strategy

Chapter 6Competitive

Dynamics

Chapter 7Corp. - Level

Strategy

Chapter 9International

Strategy

Chapter 10CooperativeStrategies

Chapter 8Acquisitions &Restructuring

Chapter 11

CorporateGovernance

Chapter 12

Stru

ctu

re& Control

Chapter 13

StrategicLeadership

Chapter 14Entrepreneurship

& Innovation

S

trategic

Inputs

StrategicA

ctions

Strategic

Outcome

s

Chapter 4

InternalEnvironment

Chapter 3External

Environment Strat. Intent

Strat. Mission

The Strategic .

Management .

Process

Strategy Formulation Strategy Implementation

StrategicCompetitiveness

Chapter 1

Above AverageReturns

Chapter 2 Feedback

StrategicCompetitiveness

Chapter 1


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Canada is rather cool**The Economist 2003

Canada is home not only to world-class commercial competitors but to

dominant companies in their industries



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Strategic Management and Strategic

Competitiveness

Knowledge objectives1. Define strategic competitiveness, competitive

advantage and above average returns.

2. Describe the 21st century competitive landscape andexplain how globalization and technological changes

shape it.

3. Use the industrial organization (I/O) model to explain

how firms can earn above average returns.4. Use the resource-based model to explain how firms

can earn above-average returns.


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Strategic Management and Strategic

Competitiveness

Knowledge objectives continued5. Describe strategic intent and strategic mission and

discuss their value.6. Define stakeholders and describe their ability to

influence organizations.

7. Describe strategists work.

8. Explain the strategic management process.


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Desired Strategic Outcomes

Strategic CompetitivenessAchieved when a firm successfully formulatesand implements a value-creating strategy.

Occurs when a firm develops a strategy thatcompetitors are not simultaneously implementing.

Sustained Competitive Advantage

Above-Average ReturnsReturns in excess of what an investor expects toearn from other investments with similar risk.

Provides benefits which current and potentialcompetitors are unable to duplicate.


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Important definitions

RiskAn investors uncertainty about the economicgains or losses resulting from a particularinvestment.

Returns equal to what an investor expects fromother investments with similar amount of risk.

Average returns

Strategic management processThe full set of committee's decisions and actionsrequired for a firm to achieve strategiccompetitiveness and earn above average returns.


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The Strategic Management Process

The full set of commitments, decisions,The full set of commitments, decisions,

and actions required for a firm toand actions required for a firm toachieve strategic competitiveness andachieve strategic competitiveness and

earn aboveearn above--average returns.average returns.


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The Strategic Management Process


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What is Strategy?

An integrated and coordinated set of

commitments & actions designed to exploitcore competencies and gains and gain a

competitive advantage.


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What is Strategy?

A unified, comprehensive, and integrated plan designed to

ensure that the basic objectives of the enterprise are achieved.(Glueck, 1980:9)

The pattern or plan that integrates an organizations major goals,

policies, and action sequences into a cohesive whole. (Quinn,1980)

A good strategy neutralizes threats and exploits opportunities

while capitalizing on strengths and avoiding or fixing

weaknesses.

(Barney, 1997:17)

A pattern of resource allocation that enables firms to maintain or

improve their performance.


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Intended, Emergent and Realized Strategies


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Alternative Models of Superior Returns

Indu

strialOrganization

Model

The External Environment

An Attractive Industry

Strategy Formulation

Assets and Skills

Strategy Implementation

SuperiorReturns

Resource-Based

Model

Resources

Capabilities

Competitive Advantage

An Attractive Industry

Strategy Implementation

SuperiorReturns

OIOI


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Four Attributes of Resources and

Capabilities (Competitive Advantage)

The firm is organized appropriately toThe firm is organized appropriately toobtain the full benefits of the resources inobtain the full benefits of the resources inorder to realize a competitive advantage.order to realize a competitive advantage.

ValuableValuable Allow the firm to exploit opportunities orAllow the firm to exploit opportunities orneutralize threats in its externalneutralize threats in its externalenvironment.environment.

RareRare Possessed by few, if any, current andPossessed by few, if any, current andpotential competitors.potential competitors.

Costly to imitateCostly to imitate When other firms cannot obtain them orWhen other firms cannot obtain them or

must obtain them at a much higher cost.must obtain them at a much higher cost.

Organized to beOrganized to be

exploitedexploitedResourcesandCapa

bilities

ResourcesandCapa

bilities


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Core CompetenciesCore Competencies

Resources and capabilities thatmeet these four criteria become a source

of:

ValuableValuable

RareRare

Costly to imitateCostly to imitate

Organized to beOrganized to be

exploitedexploited


ResourcesandCapabili

ties

ResourcesandCapabili

ties


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Core Competencies are the basis for

a firms

CompetitiveCompetitive

advantageadvantage

StrategicStrategic

competitivenesscompetitiveness

Ability to earnAbility to earnaboveabove--averageaverage

returnsreturns



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CEOs ranking of business importance

1. A strong & well thought out strategy

2. Maximizing customer satisfaction & loyalty

3. Business leadership, quality products & services

4. Concern for consistent profits

5. Strong & consistent profits


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21st Century Values

Flexibility

Speed to market

Innovation Integration

Handling challenges from constantly

changing conditions

Hypercompetition


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The Global Economy

One in which goods, services, people, skills,

and ideas move freely across geographic

borders


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World competitiveness ratings


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Technology and Technological

Change

Increasing rate of technological change anddiffusion

Perpetual innovation

The information agePersonal computers, cellular phones, artificialintelligence, virtual reality, massive databases,electronic networks, e-business

Increasing knowledge intensityInformation, intelligence, expertise, strategicflexibility.


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Internally focused, it is the leveraging of

a firms resources, capabilities, and corecompetencies to establish the firms

goals in the competitive environment.

Strategic Intent

Together,

strategic intent

and strategic

mission yield theinsights required

to formulate and

implement

strategies.Externally focused, it is a statement of afirms unique purpose and the scope of

its operations in product and market

terms.

Strategic Mission


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Stakeholders


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Organizational strategists

Top level managers, executives, topmanagement team, or general managers


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Organizational culture

A complex set of ideologies, symbols and

core values that influence how the firmconducts its business.


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Predicting Outcomes

of Strategic Decisions

1. Define the profit pools boundaries.

2. Estimate the pools overall size.

3. Estimate the size of the value chain.

4. Reconcile the calculations.

The strategic management process callsfor disciplined approaches to thedevelopment of competitive advantage.

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Strategic Management & Strategic Competitiveness

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