THE COMPETITIVE LANDSCAPE

HYPER-COMPETITION - characterized by
■ Market instability and change
■ Rapidly escalating competition
■ Aggressive challengers

■ TWO DRIVERS
- GLOBALIZATION
- TECHNOLOGY
INDUSTRY BOUNDARIES BLURRING

■ EXAMPLES - computer networks and telecommunications

have blurred the boundaries of the entertainment industry

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 THE COMPETITIVE LANDSCAPE
THE GLOBAL ECONOMY

Goods, services, people, skills, and

ideas move freely across geographic
borders

■ New opportunities and challenges

emerge

■ Competitive environments are

broader and increasingly more
complex

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product or service or otherwise on a password-protected website for classroom use.
 THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL
CHANGES

Technology is significantly altering the nature of

competition and enabling unstable competitive
environments
■Technology Diffusion & Disruptive
Technologies
■ Information Age
■ Increasing Knowledge Intensity

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product or service or otherwise on a password-protected website for classroom use.
 TWO MODELS OF STRATEGIC DECISION MAKING

Firms use two major models to help develop their vision

and mission and then choose one or more strategies in
pursuit of strategic competitiveness and above-average
returns.

EXTERNAL INTERNAL
RESOURCE
I/O
-BASED
MODEL
MODEL
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product or service or otherwise on a password-protected website for classroom use.
 THE I/O MODEL OF ABOVE-AVERAGE
RETURNS

Grounded in economics, the I/O model has

Four Underlying Assumptions

First, the external environment is assumed to

impose pressures and constraints that determine the
strategies that would result in above-average returns.

Second, most firms competing within an industry or

within a segment of that industry are assumed to
control similar strategically relevant resources and to
pursue similar strategies in light of those resources.

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product or service or otherwise on a password-protected website for classroom use.
 THE I/O MODEL of ABOVE-AVERAGE RETURNS

Third, resources used to implement strategies are

assumed to be highly mobile across firms, so any
resource differences that might develop between firms
will be short-lived.

Fourth, organizational decision-makers are assumed to

be rational and committed to acting in the firm’s best
interests, as shown by their profit-maximizing behavior.
©2013 Cengage Learning.  All Rights Reserved.  May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.