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Chapter 1 - Introduction To Strategic Management
Chapter 1 - Introduction To Strategic Management
Management
MANA 5336
What is Strategy?
Strategy is the overall plan for
deploying resources to establish a
favorable position.
Tactic is a scheme for a specific
maneuver.
Important
Involve a significant commitment of resources
Not easily reversible
Basic Framework
External
Environment
The firm
Goals & Values
Resources &
Capabilities
Structures &
Systems
Competitors
Strategy
Customers
Suppliers
etc
Definitions
Strategic Management Process
The full set of commitments, decisions, and
actions required for a firm to create value and
earn above-average returns
Value Creation
What is achieved when a firm successfully
formulates and implements a strategy that
other companies are unable to duplicate or
find too costly to imitate.
Definitions
Average Returns
Returns that are equal to those an investor
expects to earn from other investments with a
similar amount of risk
Above-Average Returns
Returns that are in excess of what an investor
expects to earn from other investments with a similar
amount of risk
Definitions
Risk
An investors uncertainty about the economic
gains or losses that will result from a
particular investment
Competitive Landscape
Dynamics of strategic
maneuvering among global
and innovative combatants
Price-quality positioning,
new know-how, first
mover
Hypercompetitive
environments
Fundamental nature of
competition is changing
Protect or invade
established product or
geographic markets
Competitive Landscape
Emergence of global
economy
Hypercompetitive
environments
Fundamental nature of
competition is changing
Competitive Landscape
Emergence of global
economy
Rapid technological
change
Increasing rate of
technological change and
diffusion
The information age
Hypercompetitive
environments
Fundamental nature of
competition is changing
Increasing knowledge
intensity
Strategic Flexibility
A set of capabilities used to respond to
various demands and opportunities existing
in a dynamic and uncertain competitive
environment
It involves coping with uncertainty and the
accompanying risks
Strategic Flexibility
Organizational
slack
Strategic
reorientation
Capacity to
learn
Strategic
Flexibility
flexibility
General
Industry
Environment
Competitor
Environment
Global
Technological
Environment
Locate an attractive
industry with a high
potential for aboveaverage returns
Attractive industry: one
whose structural
characteristics suggest
above-average returns
Strategy Formulation
Strategy Formulation
Assets and Skills
Strategy Formulation
Assets and Skills
Strategy Implementation
Strategy Formulation
Assets and Skills
Strategy Implementation
Superior Returns
Find an environment in
which to exploit these
assets (where are the best
opportunities?)
Competitive Advantage
Competitive Advantage
An Attractive Industry
Competitive Advantage
An Attractive Industry
Strategy Form/Impl
Competitive Advantage
An Attractive Industry
Strategy Form/Impl
Superior Returns
Strategic Intent
Strategic Mission
Deliberate
Strategy
Unrealized
Strategy
Realized
Strategy
Emergent
Strategy
From Strategy Formation in an Adhocracy by Henry Mintzberg and Alexandra McHugh, Administrative Science Quarterly,
Vol. 30, No. 2, June 1985. Reprinted by permission of Administrative Science Quarterly.
External
Analysis
Strategic
Choice
INTENDED STRATEGY
Organizing for
Implementation
Internal
Analysis
Missions
and Goals
Strategic Choice
Does It Fit?
EMERGENT STRATEGY
Organizational
Grassroots
Internal
Analysis
Shareholders
Major suppliers of capital
Banks
Private lenders
Venture capitalists
Primary customers
Suppliers
Host communities
Unions
Organizational Stakeholders
Employees
Managers
Nonmanagers
Values
Johnson
4.
Levels of Strategy