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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
2006 by Nelson, a division of Thomson Canada Limited. 1-3
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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
Core CompetenciesCore Competencies
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
Core CompetenciesCore Competencies
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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.