Key Points:
Chapter 1: Introduction
Overview of the Strategic Management Process
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•
•
•
Competitive Advantage
I/O Model of Above-Average Returns
Resource-Based Model of Above-Average Returns
Understand the importance and role of strategic
intent and mission
• Identify the concerns, interests, and claims of key
stakeholders
• Basic understanding of corporate culture
P. Norman, BUS 4385
Competitive Advantage
• Competitive Advantage: implementing a value-creating
strategy that other firms are unable or unwilling (e.g., too
costly) to duplicate
• Allows a firm to achieve above-average returns
• How long does competitive advantage from a
particular strategy last?
P. Norman, BUS 4385
Why is creating a successful strategy and sustaining a
competitive advantage so challenging?
P. Norman, BUS 4385
Strategic
Inputs
Chapter 2
External
Environment
Figure 1.1:
Strategic Intent
Strategic Mission
Chapter 3
Internal
Environment
Strategic
Outcomes
Strategic
Actions
Strategy Formulation
The Strategic
Management
Process
Strategy Implementation
Chapter 4
Business-Level
Strategy
Chapter 5
Competitive
Dynamics
Chapter 6
Corporate-Level
Strategy
Chapter 10
Corporate
Governance
Chapter 11
Structure
& Control
Chapter 7
Acquisitions &
Restructuring
Chapter 8
International
Strategy
Chapter 9
Cooperative
Strategies
Chapter 12
Strategic
Leadership
Chapter 13
Entrepreneurship
& Innovation
Strategic
Competitiveness
Above Average
Returns
P. Norman, BUS 4385
Figure 1.3:
The I/O Model of Superior Returns
The External Environment
Assets and Skills
Study the general, industry,
and competitive environment
Develop or acquire assets and
skills to implement the strategy
An Attractive Industry
Strategy Implementation
Find an industry in which your
firm can get above-ave. returns
Take actions to effectively
implement the strategy
Strategy Formulation
Superior Returns
Select the strategy linked with
above-ave. returns for industry
Earn above-average returns
P. Norman, BUS 4385
Figure 1.4:
The Resource-Based Model of Superior Returns
Resources
An Attractive Industry
Inputs into a firm’s production
process
An industry that allow a firm to
exploit its resources and capabilities
Capability
Strategy Formulation and
Implementation
Integrated set of resources that
perform a task or activity
Take actions to compete in industry
Competitive Advantage
Superior Returns
Resource and capabilities allow
the firm to outperform rivals
Earn above-average returns
P. Norman, BUS 4385
Assumptions
I/O Model
Resource-Based Model
• External environment is the
basis of strategy and profits
• Resources and capabilities
are basis of strategy and
profits
• Firms have similar
resources and strategies
• Firms have different
resources and strategies
• Resource are highly mobile
across firms
• Resource may not be
highly mobile across firms
• Decision-makers are
rational and act in best
interest of firm
P. Norman, BUS 4385
Strategic Intent and Mission
Strategic Intent
• Leveraging of a firm’s internal resources, capabilities, and
core competencies to accomplish the firm’s goals
• Stretch goals
• Internally focused
Strategic Mission
• Statement of a firm’s unique purpose and the scope of its
operations in product and market terms
• Externally focused
P. Norman, BUS 4385
Stakeholders
• Stakeholders: People who are affected by a firm’s
performance or who have claims on its performance
• Types
• Capital Market (shareholders and suppliers of capital)
• Product Market (external parties who are not capital
market stakeholders)
• Customers, suppliers, host communities, unions
• Organizational (employees)
P. Norman, BUS 4385
Organizational Culture
• Complex set of ideologies, symbols, and core values
shared throughout the firm and that influence the way
it conducts business
• Top managers role
• Difficult to change
P. Norman, BUS 4385