Professional Documents
Culture Documents
Part I: Strategic Management Inputs Chapter 1: Strategic Management and Strategic Competitiveness
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Nature of Competition The 21st Century Competitive Landscape I/O Model of Above-Average Returns (AAR) Resource-Based Model of AAR Strategic Vision and Mission Stakeholders Strategic Leaders The Strategic Management Process
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Airbus EU Government owned and subsidized Won competitor battle with Boeing between 2001 & 2005 Responded to customer demands with more efficient A-380 aircraft
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Strategic Competitiveness
Strategy
(Contd)
Average Returns Returns equal to what investor expects in comparison to other investments with similar risk Strategic Management Process (SMP) Full set of commitments, decisions and actions required for a firm to achieve strategic competitiveness and earn above average returns
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Nature of Competition The 21st Century Competitive Landscape I/O Model of Above-Average Returns (AAR) Resource-Based Model of AAR Strategic Vision and Mission Stakeholders Strategic Leaders The Strategic Management Process
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Introduction: The Competitive Landscape (CL) Pace of change is rapid Partnerships created by mergers & acquisitions (M&As) Other CL characteristics: Economies of scale, advertising budgets not as effective as before, change in managerial mind-set from traditional to more flexible and innovative
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(Contd)
Introduction: The Competitive Landscape (CL) Hypercompetition extremely intense rivalry among competing firms, characterized by Escalating & increasingly aggressive competitive moves Assumptions of market stability replaced with notion of INstability and change Two primary drivers of the competitive landscape: The global economy Technology
(Contd)
The Global Economy Goods, services, people, skills and ideas move freely across geographic borders Europe, through the European Union (EU) is the worlds largest single market EU vs U.S. GDP: 35% higher Emerging major competitive forces: China & India In summary: globalization increased economic interdependence among countries as reflected in the flow of goods and services, financial capital, and knowledge across country borders
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(Contd)
3 categories:
1. Technology diffusion & disruptive technologies 2. The information age 3. Increasing knowledge intensity
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(Contd)
(Contd)
Technology diffusion
Perpetual innovation: describes how new informationintensive technologies are replacing older forms Speed to market may be primary competitive advantage 12 18 month timeframe to gather info re: competitor R&D Technologies that
Destroy value of existing technology Create new markets
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Disruptive technologies
(Contd)
(Contd)
1. Technology diffusion & disruptive technologies 2. The information age 3. Increasing knowledge intensity
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(Contd)
(Contd)
The information age Dramatic changes over last several years Major technological developments: computers, phones, artificial intelligence, virtual reality Internet provides infrastructure for information anytime, anywhere Increasing knowledge intensity Defined as information, intelligence & expertise and is the basis of technology and its application Gained through experience, observations and inferences Strategic Flexibility set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment
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Nature of Competition The 21st C Competitive Landscape I/O Model of Above-Average Returns (AAR) Resource-Based Model of AAR Strategic Vision and Mission Stakeholders Strategic Leaders The Strategic Management Process
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Organizational decision makers are rational and committed to acting in the firm's best interests, as shown by their profit-maximizing behaviors
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Reinforces the importance of economic theory Analytical tool previously lacking in the field of strategy Determines the nature/level of competition and profit potential in an industry
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Cost Leadership
THE low-cost leader Customer willing to pay the premium price for being different
Differentiation
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(Contd)
resources & capabilities, in combination, is the basis for firm strategy and AAR
Each firms performance difference across time emerges (vs industrys structural characteristics) Combined uniqueness should define the firms strategic actions Resources are tangible and intangible
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(Contd)
Includes capital equipment, employee skills, patents, high-quality managers, financial condition, etc.
Basis for competitive advantage: When resources are valuable, rare, costly to imitate and nonsubsitutable Internal/firm-specific resources (N=3)
Physical
Things you can touch/feel = tangible
Human
People / employees
Organizational capital
Relative to the firm itself
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(Contd)
Capability Capacity for a set of resources to perform a task or activity in an integrative manner Core Competency A firms resources and capabilities that serve as sources of competitive advantage over its rival Summary A firm has superior performance because of
Unique resources and capabilities, and the combination makes them different, and better, than their competition driving the competitive advantage
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Nature of Competition The 21st C Competitive Landscape I/O Model of Above-Average Returns (AAR) Resource-Based Model of AAR Strategic Vision and Mission Stakeholders Strategic Leaders The Strategic Management Process
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Stakeholders
Basic Premise a firm can effectively manage
stakeholder relationships to create a competitive advantage and outperform its competitors Stakeholders are individuals and groups
They can affect, and are affected by, the strategic outcomes/performance a firm achieves Three (3) classifications
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Stakeholders
(Contd)
Expect returns commiserate with risk accepted by investments Higher the dependency relationship, the more direct and significant firms response The 4 groups benefit due to competitive battles The employees
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Product Market
Organizational
Nature of Competition The 21st C Competitive Landscape I/O Model of Above-Average Returns (AAR) Resource-Based Model of AAR Strategic Vision and Mission Stakeholders Strategic Leaders The Strategic Management Process
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Strategic Leaders
People located in different parts of the firm using
the strategic management process to help the firm reach its vision and mission
Decisive and committed to nurturing those around them Create and sustain organizational culture Organizational culture emerges from & sustained by leaders
Complex set of ideologies, symbols and core values shared throughout the firm Affects leaders/their work which in-turn shapes culture Influences how the firm conducts business
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Strategic Leaders
(Contd)
The Work of Effective Strategic Leaders Work long hours Must be able to think seriously and deeplyabout the purposes of the organizations they head or functions they perform, about strategies, tactics,..and peopleand about the important questions they need to ask. Predicting Outcomes: Profit Pools (PP) Anticipates their decisions relative to the PP Entails the total profits earned in an industry at all points along the value chain
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strategic competitiveness and earn above average returns (AAR) Figure 1.1 (Diagram of chapter relationships)
Part 1: Strategic Mgmt Inputs Part 2: Strategic Actions: Strategy Formulation Part 3: Strategic Actions: Strategy Implementation Part 4: Cases
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