Chapter 1

Strategic Management and Strategic Competitiveness

Session 1 - 2,3,9-6-2021
 A Strategy

1. a plan or course of action or a set of decision rules making a pattern or creating a

common thread of action

2. the pattern or common thread related to the organisation's activities which are
derived from the policies, objectives and goals;

3. focus to pursuing those activities which move an organisation from its current
position to a desired future state;

4. concerned with the resources necessary for implementing a plan or following a

course of action;
Hambrick and Fredrickson Model of Strategic Management

Internal and
External Strategic
Analysis

Strategy:
Arenas Implementation
Vision and Goals and Vehicles Levers and Strategic
Mission Objectives Differentiators Leadership
Staging
Economic logic

D. C. Hambrick & J. W. Fredrickson: “Are you sure you have a strategy?” (2001). Academy of Management Executive Vol. 15, No. 4,
pp. 48-59
 Twenty-First Century Competition

Rapid
Globalization technological
change

Increasing
The global importance of
economy Today’s knowledge
competitive and people
markets
 Competitive Advantage

Formulation and implementation

of
a superior value-creating strategy

Commitments and actions to achieve

above-average performance and returns

Competitive
What the firm will do advantage
What the firm will not do
The Strategic Management Process

1–
6
The Global Competitive Landscape

• Market volatility and instability due to

the rapid pace of change in markets
• Blurring of market boundaries
• Globalized flow of financial capital

Increasing
Increasing
• Need for flexibility, speed, innovation,
and integration in the use of technology
• Strategic and operational complexity
of global-scale competition
• Rising product quality standards

• Traditional time for adapting to change

Decreasing
Decreasing

• Traditional sources of competitive advantage

• Traditional managerial mindset
 Hypercompetition

Strategic options
Global in
Technology
economy hypercompetitive
environments

Use of Creation of new Protection or

price-quality know-how and invasion of
positioning to use of first- established
build market mover geographic or
presence advantage product markets
 Competitive Success Factors

Are market/ Make effective

customer-needs use of valuable
oriented competencies

Have an Offer new

entrepreneurial/ and innovative products
opportunistic mindset and services
Top corporate
performers
 Technology and Technological Changes

Increasing rate of technology diffusion

and the emergence
of disruptive technologies
Technology trends
impacting the global
competitive environment
The information age: Internet and the
global proliferation of low-cost computing
power

Increasing knowledge intensity

as an intangible source of competitive
advantage
 Strategic Flexibility

Strategic Flexibility:
• Involves coping with the uncertainty and risks of hypercompetitive
environments.

• Must first overcome built-up organizational inertia.

• Requires developing the capacity for continuous learning and applying the new
and updated skills sets and competencies to the firm’s competitive advantage.
 Strategic Choices

Diversification Product differentiation

Barriers to market entry Industry concentration

Economies The firm’s strategic Market

of scale choices frictions
 Five Forces Model of Competition

Substitutes
Substitutes

Suppliers Buyers
Industry
Industry rivalry
rivalry

Potential
Potential entrants
entrants
 Five Forces Model Assumptions

Industry profitability (i.e., rate of return on invested capital relative to cost of

capital) is a function of interactions among the five forces.
Industry attractiveness equates to its profitability potential for earning above-
average returns by:
1. producing standardized goods or services at costs below competitor costs (a
cost leadership strategy).
2. producing differentiated goods or services for which customers are willing to
pay a price premium (a differentiation strategy).
 Resources as Core Competencies

Costly to imitate

How resources
become core
Rare competencies Valuable

Non substitutable
Vision And Mission

Vision
It outlines what the organization wants to be, or how it wants the world in which
it operates to be.
It is a long-term view and concentrates on the future. It can be emotive and is a
source of inspiration.
For example, a charity working with the poor might have a vision statement
which reads "A World without Poverty."
Mission:
Defines the fundamental purpose of an organization or an enterprise,
succinctly describing why it exists and what it does to achieve its vision.
Example: the charity might have a mission statement as
"providing jobs for the homeless and unemployed".

17
 Characteristics of vision statement

In order to develop an effective shared vision statement, any company also
need to be able to describe the kinds of relationships that they want with:
a) his Customers,
b) his Suppliers,
c) his Competitors, and of course with his Team.
The main purpose of the vision statement is to outline the :dream” state of the

business. In other words: if your business could be everything you dreamed,

how would it be?
 Examples Vision Statements Of Different Companies

Bill Gates
“There will be a personal computer on every desk running Microsoft software.” And
now perhaps a little less famous, but still real example of a vision statement from the real
world (my company):
Canada Asia Management Development Ltd.
“Challenge is the path to Success!”
Components Of Mission Statement

A Mission Statement describes how your business is going to accomplish its vision.

The Mission Statement describes the ‘what’ of your business. It states why

your organization is in business and what you are hoping to achieve.

 A typical mission statement contains three components:

1.The overall purpose of your business - what are you trying to achieve.
2. What your business does - products and services it provides.
3.What's important to your business - the values your business lives by.
 Examples of mission statement of different companies:

Dell Computers mission statement

"With the power of Dell's team of talented people, we are able to provide customers with superb
value; high-quality, relevant technology; customized systems; superior service and support; and
products and services that are easy to buy and use".

Purpose: provide customers with superb value technology

Business: high quality, relevant technology, customized systems

Values: superior service and support, easy to buy, easy to use

 Pfizer Pharmaceutical's mission statement:

 "We dedicate ourselves to humanity's quest for longer, healthier, happier lives through

innovation in pharmaceutical, consumer and animal health products".

 Purpose: quest for longer, healthier, happier lives

 Business: pharmaceutical, consumer and animal health products

 Values: innovation
 McDonalds

"To provide the fast food customer food prepared in the same high-quality manner
world-wide that is tasty, reasonably-priced and delivered consistently in a low-key décor
and friendly atmosphere.“
 Key Market: The fast food customer world-wide

Contribution: tasty and reasonably-priced food prepared in a high-quality manner

Distinction: delivered consistently (world-wide) in a low-key décor and friendly

atmosphere.
 Unilever

Our mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene

and personal care with brands that help people look good, feel good and get more out
of life.
Purpose: to add Vitality to life

Business: nutrition, hygiene and personal care

Values: look good, feel good and get more out of life.
 Toyota Company

Vision:
 Toyota will lead the way to the future of mobility, enriching lives around the world with the safest
and most responsible ways of moving people.
 Through our commitment to quality, constant innovation and respect for the planet, we aim to
exceed expectations and be rewarded with a smile.

Mission:

Supplying the range of vehicles, parts, accessories and services to meet the requirements
 Ensuring that products are of outstanding quality, value for money and instill pride of ownership
 Vision:
Apple Company
 We believe that we are on the face of the earth to make great products and that’s
not changing. We are constantly focusing on innovating.
 We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate
in a way that others cannot.
Mission:

 Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and
professional software.
 Apple leads the digital music revolution with its iPods and iTunes online store.
 Apple reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently
introduced its magical iPad which is defining the future of mobile media and computing devices.”
 Stakeholders

Can affect development of the firm’s

vision and mission

Are affected by the strategic outcomes

Primary achieved by the firm
stakeholders
(individuals, groups and
organizations) Can have enforceable claims
on the firm’s performance

Are influential when in control

of critical or valued resources
 Classification of Stakeholders

Categories of stakeholders

Capital market Product market

Organizational stakeholders
stakeholders stakeholders
 Product Market Stakeholders

Types of product market stakeholders

Suppliers Customers Host communities Unions

 Organizational Stakeholders

Responsibilities of strategic leaders for development and effective use of

the firm’s human capital

Education Organizational culture and Strategic goals and

and skills of employees International assignments
ethical work environment global standards
 The Work of Effective Strategic Leaders

Strategic Leaders: A strategic leader takes an active role in the company and acts as the driver
to steer the company down the right path for success. A driving personality has the ability to
motivate others, keep them on task, and pay attention to the end goal.
1. have a strong strategic orientation that relies on thorough analysis when
taking action.
2. are located at various levels throughout the firm.
3. want the firm and its people to accomplish more.
4. are innovative thinkers who promote innovation.
5. can leverage relationships with external parties while simultaneously
promoting exploratory learning.
6. have an ambicultural (global mindset) approach to management.
 The Strategic Management Process: The ASP Process

Analyses
C2: The external environment
C3: The internal organization
Performance
C10: Governance mechanisms
Strategies
C11: Organizational structure
C4: Business-level strategies
C12: Strategic leadership
C5: Marketplace competition
C13: Strategic entrepreneurship
C6: Corporate-level strategies
C7: Diversified portfolio management
C8: International strategies
C9: Cooperative strategies
 Comprehensive Model of Strategic Management

Strategic Intent Strategy Formulation Strategy Strategic

Implementation Evaluation
Vision Environmental Appraisal
Mission Organisational Appraisal Project
Business definition SWOT Analysis Procedural Strategic evaluation
Business model Corporate-level Strategies Resource allocation and control
Objectives Business-level Strategies Structural
Strategic analysis and choice Behavioural
Strategic plan Functional &
Operational
Implementation

Strategic control