THE CONTEXT OF
MANAGING
STRATEGICALLY
Katie Klingele
John Stewart
Heather Hignojos
Learning Outcomes



The different perspectives on competitive
advantage
The driving forces, implications, and
critical success factors of the business
environment
Two organizational elements that guide
strategic decision makers in managing
strategically in today’s context
What is a Competitive Advantage?



This is what sets an organization apart or
what is its competitive edge.
Managing strategically- formulating and
implementing strategies that allow an
organization to develop and maintain a
competitive advantage.
A key concept in strategic management,
competitive advantage is necessary for an
organization’s long-term success and
survival.
Perspectives on Competitive Advantage

Industrial Organization View (I/O)

Suggests organizations look at the impact of external
factors.


Resource-based View (RBV)


Coca-Cola regionalizes their recipes for different areas.
Emphasizes exploiting organizational resources in order
to develop and maintain competitive advantage.
Guerrilla View

It proposes that an organization's competitive advantage
is temporary and can be gained only by peppering the
competitive marketplace with rapid radical surprises.
Comparing the I/O, RBV, and Guerilla View
I/O View
RBV
Guerrilla View
Competitive
Advantage
Positioning in
industry
Possessing unique
organizational
assets or capabilities
Temporary
Determinants of
Profitability
Characteristics of
industry, firm’s
position within
industry
Type, amount, and
nature of firm’s
resources
Ability to change and
radically surprise
competitors with strategic
actions
Focus of Analysis
External
Internal
External and Internal
Major Concern
Competition
Resourcescapabilities
Continual, radical, and
chaotic conditions
Strategic Choices
Choosing attractive
industry;
appropriate position
Developing unique
resources and
distinctive
capabilities
Rapidly and repeatedly
disrupting current situation
and surprising competitors
The Business Environment

What forces are driving it?




What are the implications?





1. The Information Revolution
2. Technology
3. Globalization
1.
2.
3.
4.
Continual Change
Reduced need for physical assets
Vanishing Distance and Compressed Time
Increased Vulnerability
What are the critical success factors?



1. Ability to embrace change
2. Creativity and innovation capabilities
3. Being a world-class organization
Drivers of the Business Environment

The Information Revolution


Technology


The instant availability of information has radically changed the
nature of the business environment, which, in turn, affects the
context of strategic management.
Technology continues to have far-reaching effects on how
organizations do their work. We can see this in three areas:
innovation, bottom-up capability and organizational performance.
Globalization

Globalization has transformed and continues to transform the
business environment. Globalization influences strategic
management in two ways: (1) global markets and (2) global
competitors.
Implications

Continual Change


Reduced Need for Physical Assets


Physical assets are no longer the main power companies
have, it’s also value in intangible factors such as
information, people, ideas, and knowledge
Vanishing Distance and Compressed Time


Change is the order of business in today’s context as all
organizations deal with changing conditions.
The limitations of physical distance and time have
disappeared.
Vulnerability

Organizations face increased vulnerability from being
more connected and open.
Critical Success Factors

Ability to Embrace Change
 Being successful in a business environment means not
only being tolerant of change but seeking it out and
embracing it.

Creativity and Innovation Capabilities


“Create and innovate or fail”.
Being a World-Class Organization

Strategic decision makers take actions to help it’s
organization be the best in the world at what it does.
Two Organizational Elements in
Managing Strategically

Organizational Vision and Mission



Organizational vision is a broad comprehensive picture of
what a leader wants an organization to become
Mission statement is a statement of what specific
organizational units do and what they hope to accomplish
Corporate Social Responsibility (CSR) and
Ethics.


CSR is the obligation of organizational decision makers to
make decisions and act in ways that recognize the
interrelatedness of business and society.
Ethics involves the principles that define right and wrong
decisions and behavior
Organizational Vision and Mission

An effective organizational vision should include 4
components:
(1) Be built on a foundation of the organization’s
core values and beliefs
 (2) Elaborate a purpose for the organization
 (3) Include a brief summary of what the
organization does
 (4) Specify broad goals

•
A mission statement provides a focus for
employees as they make and implement strategic
decisions.
Corp. Social Responsibility and Ethics


CSR recognizes the organization’s various
stakeholders and how they’re dealt with.
What this means for managing strategically is
making decisions in ways that will enhance
the various stakeholder relationships.
Ethical considerations should play a role in
managing strategically. Some individuals
believe ethics is both a personal and an
organizational issue and should be part of
the strategic management process.
Stakeholders
Many organizations believe that strong and socially responsible
stakeholder relationships make them more competitive. The figure
below identifies potential stakeholders with whom the Coca-Cola
Company may have to contend.
Customers
Governments
Shareholders
Employees
Political
Action
Groups
Trade
Associations
Social Action
Groups
Communities
CocaCola
Company
Suppliers
Recap

Competitive Advantage


Driving Forces of the Business Environment


Information revolution, Technology, Globalization
Organizational Vision and Mission


Necessary for a company’s long-term success and
survival
Essential for long-term growth and direction
CSR/Ethics

Keeps companies accountable, and builds positive
image