Strategic Management &
Strategic Competitiveness
Chapter One
© 2006 by Nelson, a division of Thomson Canada Limited.
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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 worldclass 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 investor’s 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 organization’s 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
Resources and Capabilities
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
Resources and Capabilities
Valuable
Core Competencies
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Core Competencies are the basis for
a firm’s
Competitive
advantage
Strategic
competitiveness
Core Competencies
Ability to earn
above-average
returns
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CEO’s 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
it’s 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 it’s business.
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Predicting Outcomes
of Strategic Decisions
1.
2.
3.
4.
Define the profit pool’s boundaries.
Estimate the pool’s 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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