CHAPTER 2: THE CONTEXT OF MANAGING STRATEGICALLYStrategic Management in Action by Mary Coulter

Describe the Different Perspectives on Competitive Advantage2

Managing Strategically- formulating and implementing strategies that allow an organization to develop and maintain a competitive advantage.

Competitive Advantage- what sets and organization apart or what is its competitive edge.

Competitive advantage is necessary for an organization’s long term success and survival

3 Different Perspectives 3

Industrial Organization View (I/O View) Look at impact of external factors

Resource Based View (RBV) Emphasizes exploiting organizational

resources in order to develop and maintain a competitive advantage.

Guerrilla View More contemporary

Table 2.1 in SM in Action

The Industry Organization View

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Developed by Michael Porter structural forces within an industry the competitive environment of firms how these influence competitive advantage

Emphasizes choosing the BEST industries Analyze external forces and base

strategic decisions on the analysis Competitive advantage relates to

competitive positioning in the industry

Resource Based View5

Resources are most important in getting and keeping competitive advantage

Value- resource used to exploit external circumstances

Rare-no competing firms possess resource

Hard to Imitate and Substitute- inability to duplicate

Ability to exploit

Guerrilla View6

Competitive advantage is temporary Why? The environment is characterized by

continual and often revolutionary changes. Successful organizations must disrupt the

current situation and surprise competitors with strategic actions designed to keep competitors off balance

Successful organizations create new competitive advantages based on how the context is changing

Drivers of Business Environment

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The Information Revolution Information has always been used in

producing goods and services, to design work tools, organizational processed, management systems, and products, as organizations searched for ways to be more efficient and effective. Now, Information is the essential resource of production.

Drivers of Business Environment

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Technology- using equipment, materials, knowledge, and experience to perform tasks. Innovation- turning a creative idea into a product

or process that can be used or sold Developing, making, and marketing a product to

generate revenue Bottom-up Capability- mass collaboration

capability Internet, personal messaging systems, and social

networking is shifting from industry to individual Organizational Performance

Technology is a powerful tool to enhance the business, but not a replacement for understanding the economics of their business

Drivers of Business Environment

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Globalization Chapter 1 discussed how globalization and

the global economy are impacting strategic management.

Transformed the business environment Influences strategic management in two

ways Global Markets Global Competitors

Implications of Driving Forces

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Continual Change External/Internal Conditions

Transitions in structure Ex: Greeting Card-E Cards Ex: Movie Rentals

Reduced Need for Physical Assets Physical Assets=Power Intangibles-information, people, ideas, & knowledge

Vanishing Distance & Compressed Time No Geographical limitations Instant Interactions-email, video conferencing

Vulnerability Open to viruses and threats

Critical Success Factors11

Ability to Embrace Change Need change agents

Initiates and oversees changes Creativity & Innovation Capabilities

Ability to combine ideas in unique ways and make associations

Being a World Class Organization Organizations make strategic decisions to

become the best in the world at what it does.

Two Elements of Guidance12

Organizational Vision and Mission Vision

Broad picture of what the leaders of an organization want to become

They must: Build on organizations core value and beliefs Elaborate a purpose for organization Brief summary of what the organization does Specify broad goals

Mission Statement of what units do and what they hope to

accomplish Corporate Social Responsibility and Ethics

Restates vision and mission to reflect commitment to CSR

Summary of Chapter 2

Perspectives of Competitive Advantage Industrial Organization View, Resource

Based View, Guerilla View Drivers of Business Environment

Information, Technology, Globalization Implications of Drivers

Continual Change Critical Success Factors Elements of Guidance

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