Study the external environment, especially the industry environment.
I/O Model of Superior ReturnsI/O Model of Superior Returns
Transparency 1-9Transparency 1-9
External EnvironmentExternal Environment
General EnvironmentGeneral Environment
Industry EnvironmentIndustry Environment
Competitive EnvironmentCompetitive Environment
An Attractive IndustryAn Attractive Industry
An industry whose structural characteristics suggest above-average returns are possible
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.
I/O Model of Superior ReturnsI/O Model of Superior Returns
Transparency 1-10Transparency 1-10
External EnvironmentExternal Environment
General EnvironmentGeneral Environment
Industry EnvironmentIndustry Environment
Competitive EnvironmentCompetitive Environment
Attractive IndustryAttractive Industry
An industry whose structural characteristics suggest above-average returns are possible
An industry whose structural characteristics suggest above-average returns are possible
Action required:Action required:Identify strategy called for by the industry to earn above-average returns.
I/O Model of Superior ReturnsI/O Model of Superior Returns
Selection of a strategy linked with above-average returns in a particular industry
Selection of a strategy linked with above-average returns in a particular industry
StrategyFormulationStrategyFormulation
Transparency 1-11Transparency 1-11
External EnvironmentExternal Environment
General EnvironmentGeneral Environment
Industry EnvironmentIndustry Environment
Competitive EnvironmentCompetitive Environment
Attractive IndustryAttractive Industry
An industry whose structural characteristics suggest above-average returns are possible
An industry whose structural characteristics suggest above-average returns are possible
Strategy FormulationStrategy Formulation
Selection of a strategy linked with above-average returns in a particular industry
Selection of a strategy linked with above-average returns in a particular industry
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
Assets and skills required to implement a chosen strategy
I/O Model of Superior ReturnsI/O Model of Superior Returns
Transparency 1-12Transparency 1-12
External EnvironmentExternal Environment
General EnvironmentGeneral Environment
Industry EnvironmentIndustry Environment
Competitive EnvironmentCompetitive Environment
Attractive IndustryAttractive Industry
An industry whose structural characteristics suggest above-average returns are possible
An industry whose structural characteristics suggest above-average returns are possible
Strategy FormulationStrategy Formulation
Selection of a strategy linked with above-average returns in a particular industry
Selection of a strategy linked with above-average returns in a particular industry
Assets and SkillsAssets and Skills
Assets and skills required to implement a chosen strategy
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.
Strategy ImplementationStrategy Implementation
Selection of strategic actions linked with effective implementation of the chosen strategy
Selection of strategic actions linked with effective implementation of the chosen strategy
I/O Model of Superior ReturnsI/O Model of Superior Returns
Transparency 1-13Transparency 1-13
External EnvironmentExternal Environment
General EnvironmentGeneral Environment
Industry EnvironmentIndustry Environment
Competitive EnvironmentCompetitive Environment
Attractive IndustryAttractive Industry
An industry whose structural characteristics suggest above-average returns are possible
An industry whose structural characteristics suggest above-average returns are possible
Strategy FormulationStrategy Formulation
Selection of a strategy linked with above-average returns in a particular industry
Selection of a strategy linked with above-average returns in a particular industry
Assets and SkillsAssets and Skills
Assets and skills required to implement a chosen strategy
Assets and skills required to implement a chosen strategy
Action required:Action required:
Strategy ImplementationStrategy Implementation
Selection of strategic actions linked with effective implementation of the chosen strategy
Selection of strategic actions linked with effective implementation of the chosen strategy
Superior ReturnsSuperior Returns
Earning of above-average returnsEarning of above-average returns
Maintain selected strategy in order to outperform industry rivals.
I/O Model of Superior ReturnsI/O Model of Superior Returns
Transparency 1-14Transparency 1-14
The Resource-Based Model suggests that above-average returns for any firm are largely determined by characteristics inside the firm.inside the firm.
The Resource-Based Model suggests that above-average returns for any firm are largely determined by characteristics inside the firm.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.
The Resource-Based view focuses on developing or obtaining valuable resources and capabilities which are difficult or impossible for rivals to imitate.
Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns
Transparency 1-15Transparency 1-15
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.
Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns
Transparency 1-16Transparency 1-16
ResourcesResources
Inputs to a firm’s production process.Inputs to a firm’s production process.
Action required:Action required:Determine what firm capabilities allow it to do better than rivals.
Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns
CapabilityCapability
Capacity for an integrated set of resources to integratively perform a task or activity.
Capacity for an integrated set of resources to integratively perform a task or activity.
Transparency 1-17Transparency 1-17
ResourcesResources
Inputs to a firm’s production process.Inputs to a firm’s production process.
CapabilityCapability
Capacity for an integrated set of resources to integratively perform a task or activity.
Capacity for an integrated set of resources to integratively perform a task or activity.
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.
Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns
Transparency 1-18Transparency 1-18
ResourcesResources
Inputs to a firm’s production process.Inputs to a firm’s production process.
CapabilityCapability
Capacity for an integrated set of resources to integratively perform a task or activity.
Capacity for an integrated set of resources to integratively perform a task or activity.
Competitive AdvantageCompetitive Advantage
Ability of a firm to outperform its rivalsAbility of a firm to outperform its rivals
An AttractiveIndustryAn AttractiveIndustry
Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities
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.
Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns
Transparency 1-19Transparency 1-19
ResourcesResources
Inputs to a firm’s production process.Inputs to a firm’s production process.
CapabilityCapability
Capacity for an integrated set of resources to integratively perform a task or activity.
Capacity for an integrated set of resources to integratively perform a task or activity.
Competitive AdvantageCompetitive Advantage
Ability of a firm to outperform its rivalsAbility of a firm to outperform its rivals
An AttractiveIndustryAn AttractiveIndustry
Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities
Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities
Action required:Action required:Select strategy that best exploits resources and capabilities relative to opportunities in environs.
Strategy Formulation and Implementation
Strategy Formulation and Implementation
Strategic actions taken to earn above-average returns
Strategic actions taken to earn above-average returns
Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns
Transparency 1-20Transparency 1-20
ResourcesResources
Inputs to a firm’s production process.Inputs to a firm’s production process.
CapabilityCapability
Capacity for an integrated set of resources to integratively perform a task or activity.
Capacity for an integrated set of resources to integratively perform a task or activity.
Competitive AdvantageCompetitive Advantage
Ability of a firm to outperform its rivalsAbility of a firm to outperform its rivals
An AttractiveIndustryAn AttractiveIndustry
Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities
Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities
Action required:Action required:Maintain selected strategy in order to outperform industry rivals.
Strategy Formulation and Implementation
Strategy Formulation and Implementation
Strategic actions taken to earn above-average returns
Strategic actions taken to earn above-average returns
Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns
Superior ReturnsSuperior Returns
Earning of above-average returnsEarning of above-average returns
Transparency 1-21Transparency 1-21
“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
Transparency 1-22Transparency 1-22
Mission Statements• typically the starting point for strategic planning
• provide a relatively enduring yet basic description of an organization’s domain
• ideally express the “essence” or unique personality of an organization
• should clearly include three core elements:1. product2. target market3. differentiating feature
Transparency 1-23Transparency 1-23
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 1-24Transparency 1-24
To create meaningful and strategically useful 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 1-25Transparency 1-25
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 1-26Transparency 1-26
Phoenix International
. . . designs and manufactures electronics
for harsh environments for the worldwide
original equipment manufacturer market.
Transparency 1-27Transparency 1-27
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 1-28Transparency 1-28
Why is it so difficult to develop a concise, compelling, and
agreed-upon mission statement?
Transparency 1-29Transparency 1-29
Peter Drucker . . .
“Establishing a mission should never be
made on plausibility alone, should never
be made fast, and should never be made
painlessly.
“The mission decision is far too important
to be made by acclamation.”
Transparency 1-30Transparency 1-30
Mission Statements –
So what?
Who cares?
Why bother?
Transparency 1-31Transparency 1-31
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 1-32Transparency 1-32
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.
Transparency 1-33Transparency 1-33
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 1-34Transparency 1-34
College of Business Values?
• resourcefulness
• individualistic
• belongingness
• bare bones efficiency
• non-hierarchical
• pragmatic
• modest
Transparency 1-35Transparency 1-35
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
Transparency 1-36Transparency 1-36
StakeholdersStakeholders
FirmFirm
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
Capital MarketCapital Market
Stock market/InvestorsStock market/Investors
Debt suppliers/BanksDebt suppliers/Banks
The firm must maintain performance at an adequate level in order to maintain the participation of key stakeholders
Transparency 1-37Transparency 1-37
StakeholdersStakeholders
FirmFirm
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
