Chapter 2
THE CONTEXT OF MANAGING
STRATEGICALLY
Group 4
Alma Pena
Jose Medina
Laura Randall
Mona Shafer
Melissa Dunlop
Raul Guerrero
COMPETITIVE ADVANTAGE

Managing Strategically:


To formulate and implement strategies that allow an
organization to develop and maintain a competitive
advantage
Competitive Advantage:

Aspect that sets a company apart in the industry
Under Armour vs. Nike
Getting and keeping a competitive advantage is
what managing strategically is all about
3 PERSPECTIVES OF
COMPETITIVE ADVANTAGE
1.
2.
3.
Industrial Organization (I/O)
Resource-Based View (RBV)
Guerrilla View
INDUSTRIAL ORGANIZATION VIEW

Industrial Organization View focuses on:
structural forces within an industry
 competitive environment of firms
 and the influence of competitive advantage

RESOURCE-BASED VIEW
Looking internally at your resources
 Exploit your resources
 Financial, physical, human, intangible, and
structural or cultural assets

VALUABLE & RARE
Unique resource adds value to your firm
 Exploit external circumstances that increase
revenue
 Avoid negative external environment that changes
cash flows
 Context of what else is going on externally
 A resource is rare if no other competing form
already has it

HARD TO IMITATE/SUBSTITUTE &
EXPLOITATION

A firm should have resources that a competing
firm should not be able to imitate or
substitute

A firm needs to be able to also exploit their
unique resources in order to create a
competitive advantage
GUERRILLA VIEW

Concept that a firm’s competitive advantage is
only temporary, and that the environment is
constantly changing

Through the guerrilla view a firm needs to be
able to constantly adapt to new changes in
technology, market instabilities, and any other
change that may affect their industry
THE BUSINESS ENVIRONMENT



Information Revolution
Technology
Globalization
THE INFORMATION REVOLUTION


Information has set the tone for the business environment
Information is used to make processes more effective and
efficient
o
o
o
o

Producing goods and services
Designing work tools
Organizational processes
Management systems
Today Information is an essential resource of production
TECHNOLOGY




Using equipment, materials, knowledge, and experience to
perform tasks
Technology plays different roles in different industries
The later part of the 20th century technology really took off
Technology effects three areas in the business environment



Innovation
Bottom-up Capability
Organizational Performance
GLOBALIZATION

Globalization influences strategic management in two ways
Global
Markets
 To
sustain a competitive advantage a company may
need to break into new markets
 Any location is a potential marketplace but to be
strategic managers should consider the global
economic climate

Global Competition


It may be more challenging to understand a company
with a different background
Global alliances
IMPLICATIONS OF DRIVING FORCES

Continual Change

Reduced Need for Physical Assets

Vanishing Distance and Compressed Time

Vulnerability
CONTINUAL CHANGE

All organizations deal with change

Stimulates need for organizational change
REDUCED NEED FOR PHYSICAL ASSETS



In the past, the more physical assets you had, the more
economically powerful you were
Now, value is in intangible factors
Achieve competitive advantage with nonphysical assets
VANISHING DISTANCE
& COMPRESSED TIME




Physical distance and time constraints have disappeared
Geography no longer an important role
Potential markets and competitors found anywhere
Ability to instantly interact
VULNERABILITY




Information, facilities, and employees are vulnerable
Global computer viruses
Terrorist attacks
Biological attacks
CRITICAL SUCCESS FACTORS
ABILITY TO EMBRACE CHANGE
Opportunities
 Challenges
The internet and iTunes

CHANGE AGENTS

Strategic decision makers
 Initiate
& Oversee
 Facilitate successful implantation
 Provide support
CREATIVITY AND INNOVATION
CAPABILITIES
“create and innovate or fail”
Innovative Organization: The ability to channel creativity into useful outcomes
7 Dimensions of Organizational Innovation
1. Challenges
2. Customer Focus
3. Creativity
4. Communication
5. Collaboration
6. Completion
7. Contemplation
Egalitarian
Climate
Flexible
Organization
Structure
Significant
Technological
Support
World-Class
Organization
Creative Human
Resource
Management
Strong Customer
Focus
Continual
Learning and
improvement
VISION STATEMENT
Broad
 Looks into the Future
 Single Vision


4 Components
Built on the organization’s core values and beliefs
 Elaborate a purpose for the organization
 Brief summary of what the organization does
 Specifies broad goals

MISSION STATEMENT
Specific
 Looks into the Present
 Several Missions

CORPORATE SOCIAL RESPONSIBILITY










Organizations have larger societal roles to play and
serve many constituents. Not just stockholders!!
Shareholders
Governments
Customers
Social Action Groups
Employees
Communities
Suppliers
Trade Associations
Political Action Groups
BP: Gulf Oil Spill
ETHICS
 Doing

the right Thing!
Involves the principles that define right and
wrong decisions and behavior. In other words, as
we live our lives.
THREE TAKEAWAYS

To sustain a competitive advantage in a constantly changing
environment all three views (Industrial Organization, Resourced-Based
and Guerilla View) should be taken into consideration.

The three driving forces of the business environment are information,
technology, and globalization.

Vision, Mission, Corporate Social Responsibility and Ethics are four
elements that strategic decision makers should consider when guiding
and managing an organization.