Professional Documents
Culture Documents
Strategic
Leadership:
Managing the
Strategy-
Making
Process for
Competitive
Advantage
Chapter One
Strategic
Management
Process:
Managing the
Strategy-
Making
Process for
Competitive
Advantage
Why do some organizations
succeed while others fail?
Strategy is a set of related actions that managers
take to increase their company’s performance.
Strategic Leadership
• Task of most effectively managing a
company’s strategy-making process
Strategy Formulation
• Task of determining and selecting strategies
Strategy Implementation
• Task of putting strategies into action to improve a
company’s efficiency and effectiveness
Competitive Advantage
Results when a company’s strategies lead to
superior performance compared to competitors
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Superior Performance and
Sustainable Competitive Advantage
Superior Performance
• One company’s profitability relative to that of other companies in
the same or similar business or industry
• Maximizing shareholder value is the ultimate goal of profit making
companies
ROIC (Profitability) = Return On Invested Capital
• Net profit Net income after tax
ROIC = = Capital invested Equity
+ Debt to creditors
Competitive Advantage
• When a company’s profitability is greater than the average of all
other companies in the same industry & competing for the same
customers
Sustainable Competitive Advantage
When a company’s strategies enable it to maintain
above average profitability for a number of years
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Determinants of
Shareholder Value
Figure 1.1
Main
Components
of the
Strategy-
Making
Process