MNGT 4800
Dr. Shook

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Strategic management defined
Strategic management process
Schools of thought
Stakeholder management
Environmental forces creating change
Hierarchy of strategic goals

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Strategic Choice Perspective
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(Romantic view)
Leader is the key force in organization’s success
Population Ecology
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(External control perspective)
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Focus is on external factors that affect an organization’s success

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Leaders can make a difference
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Must be aware of opportunities and threats faced in external environment
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Must have thorough understanding of the firm’s resources and capabilities

Definition: Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.
Key attributes of strategic management
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Directs the organization toward overall goals and objectives.
Includes multiple stakeholders in decision making
Needs to incorporate short-term and long-term perspectives
Recognizes trade-offs between efficiency and effectiveness

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Analysis (Chs. 1, 2, 3, and 4)
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Strategic goals (vision, mission, strategic objectives)
Internal and external environment of the firm
Strategic decisions (Chs 5, 6, 7, and 8)
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In which industry(ies) should we compete?
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How should we compete in those industries?
Actions (Chs 9, and 10)
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Allocate necessary resources
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Design the organization to bring intended strategies to reality

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Strategic management is the study of why some firms outperform others
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How to compete in order to create competitive advantages in the marketplace
How to create competitive advantages in the market place
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Unique and valuable
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Difficult for competitors to copy or substitute

Intended
Strategy
Deliberate
Strategy
Realized
Strategy
Unrealized
Strategy
Emergent
Strategy

Two Foundational Schools of Thought
1 Industrial Organization Model
2 Resource-Based Model

I/O Model of Superior Returns
– Assumptions:
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The external environment imposes constraints that
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 determine the strategies that can result in superior profitability.
Competing firms control similar resources and pursue similar strategies
Resources utilized by firms are highly mobile thus homogeneous

I/O Model of Superior Returns
The Industrial Organization Model suggests that above-average returns for any firm are largely determined by characteristics outside the firm .

I/O Model of Superior Returns
The Industrial Organization Model suggests that above-average returns for any firm are largely determined by characteristics outside the firm .
The I/O model largely focuses on industry structure or attractiveness of the external environment rather than internal characteristics of the firm.

Resource-Based Model of Superior Returns
– Assumptions:
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Firms acquire different resources over time
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Resources heterogeneity within a particular
 industry
Resources may not be highly mobile across
 firms
Difference in resources and how they are used form the basis of competitive advantage

Resource-Based Model of Superior Returns
The Resource-Based Model suggests that above-average returns for any firm are largely determined by characteristics inside the firm .

Resource-Based Model of Superior Returns
The Resource-Based Model suggests that above-average returns for any firm are largely determined by characteristics inside the firm .
The Resource-Based view focuses on developing or obtaining valuable resources and capabilities which are difficult or impossible for rivals to imitate.

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Two views of stakeholder management
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Zero sum
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Stakeholders compete for attention and resources of the organization
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Gain of one is a loss to the other
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Symbiosis
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Stakeholders are dependent upon each other
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Mutual benefits

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Social responsibility: the expectation that businesses or individuals will strive to improve the overall welfare of society
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Managers must take active steps to make society better
Socially responsible behavior changes over time
Triple bottom line

In addition to financial capital
Type of Capital Description
Ecological
Material
Human
Social
Renewable resources generated by living systems, such as wood or animal by-products
Nonrenewable or geological resources such as mineral ores and fossil fuels
People’s knowledge, skills, health, nutrition, safety, security, and motivation
Assets of civil society, such as social cohesion, trust, reciprocity, equity, and other values that provide mutual benefit

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Integrative view of the organization
Assess how functional areas and activities “fit together” to achieve goals and objectives
All managers and employees must take and integrative, strategic perspective of issues facing the organization

Company vision
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Massively inspiring
Overarching
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Long-term
Driven by and evokes passion
Fundamental statement of the organization’s
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Values
Aspiration
Goals
Company vision
Hierarchy of Goals

Mission statements
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Purpose of the company
Basis of competition and competitive advantages
More specific than vision
Focused on the means by which the firm will compete
Company vision
Mission statements
Hierarchy of Goals

Strategic objectives
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Operationalize the mission statement
Provide guidance on how the organization can fulfill or move toward the
“higher goals”
More specific
Cover a more welldefined time frame
Company vision
Mission statements
Strategic objectives
Hierarchy of Goals

Strategic objectives
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Measurable
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Specific
Appropriate
Realistic
Timely
Challenging
Resolve conflicts that arise
Yardstick for rewards and incentives
Company vision
Mission statements
Strategic objectives
Hierarchy of Goals