Strategic Management &

Strategic Competitiveness
Chapter One

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Strategic
Inputs

Chapter 4
Internal
Environment

Strat. Intent
Strat. Mission

Strategy Formulation
Chapter 5
Bus. - Level
Strategy

Chapter 6
Chapter 7
Competitive Corp. - Level
Dynamics
Strategy

Chapter 9
Chapter 8
Acquisitions & International
Strategy
Restructuring
Strategic
Outcomes

Strategic Actions

Chapter 3
External
Environment

Chapter 2
Above Average
Returns

Chapter 10
Cooperative
Strategies

Chapter
Chapter 11
Strategic
Strategic
Competitiveness
Competitiveness

The Strategic

Management
Process

Strategy Implementation
Chapter 11
Corporate
Governance

Chapter 12
Structure
& Control

Chapter 13 Chapter 14
Strategic Entrepreneurship
Leadership & Innovation

Feedback

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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 objectives
1.
2.

3.
4.

Define strategic competitiveness, competitive

advantage and above average returns.
Describe the 21st century competitive landscape and
explain how globalization and technological changes
shape it.
Use the industrial organization (I/O) model to explain
how firms can earn above average returns.
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 continued
5.
6.
7.
8.

Describe strategic intent and strategic mission and

discuss their value.
Define stakeholders and describe their ability to
influence organizations.
Describe strategists work.
Explain the strategic management process.

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Desired Strategic Outcomes

Strategic Competitiveness
Achieved when a firm successfully formulates
and implements a value-creating strategy.

Sustained Competitive Advantage

Occurs when a firm develops a strategy that
competitors are not simultaneously implementing.
Provides benefits which current and potential
competitors are unable to duplicate.

Above-Average Returns
Returns in excess of what an investor expects to
earn from other investments with similar risk.
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Important definitions
Risk
An investors uncertainty about the economic
gains or losses resulting from a particular
investment.

Average returns

Returns equal to what an investor expects from

other investments with similar amount of risk.

Strategic management process

The full set of committee's decisions and actions
required for a firm to achieve strategic
competitiveness and earn above average returns.
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The Strategic Management Process

The full set of commitments, decisions,

and actions required for a firm to
achieve strategic competitiveness and
earn above-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
exploit core 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 pattern of resource allocation that enables firms to maintain or
improve their performance.
A good strategy neutralizes threats and exploits opportunities
while capitalizing on strengths and avoiding or fixing weaknesses.
(Barney,
1997:17)
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Intended, Emergent and Realized Strategies

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Alternative Models of Superior Returns

Industrial
Organization
Model

O
I

ResourceBased
Model

The External Environment

Resources

An Attractive Industry

Capabilities

Strategy Formulation

Competitive Advantage

Assets and Skills

An Attractive Industry

Strategy Implementation

Strategy Implementation

Superior Returns

Superior Returns

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Valuable
Rare
Costly to imitate
Organized to be
exploited

ResourcesandCapabilities

Four Attributes of Resources and

Capabilities (Competitive Advantage)
Allow the firm to exploit opportunities or
neutralize threats in its external
environment.
Possessed by few, if any, current and
potential competitors.
When other firms cannot obtain them or
must obtain them at a much higher cost.
The firm is organized appropriately to
obtain the full benefits of the resources in
order to realize a competitive advantage.

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Resources and capabilities that

meet these four criteria become a source
of:

Rare
Costly to imitate
Organized to be
exploited

ResourcesandCapabilities

Valuable

CoreCompetencies

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Core Competencies are the basis for

a firms
Competitive
advantage
Strategic
competitiveness

CoreCompetencies

Ability to earn
above-average
returns
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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 and
diffusion
Perpetual innovation

The information age

Personal computers, cellular phones, artificial
intelligence, virtual reality, massive databases,
electronic networks, e-business

Increasing knowledge intensity

Information, intelligence, expertise, strategic flexibility.

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Strategic Intent
Internally focused, it is the leveraging
of a firms resources, capabilities, and
core competencies to establish the
firms goals in the competitive
environment.

Strategic Mission
Externally focused, it is a statement of a
firms unique purpose and the scope of
its operations in product and market
terms.

Together,
strategic intent
and strategic
mission yield the
insights required
to formulate and
implement
strategies.

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Stakeholders

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Organizational strategists
Top level managers, executives, top
management team, or general managers

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Organizational culture
A complex set of ideologies, symbols and
core values that influence how the firm
conducts its business.

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Predicting Outcomes
of Strategic Decisions
1.
2.
3.
4.

Define the profit pools boundaries.

Estimate the pools overall size.
Estimate the size of the value chain.
Reconcile the calculations.
The strategic management process calls
for disciplined approaches to the
development of competitive advantage.
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