CHAPTER 1:

STRATEGIC MANAGEMENTAND STRATEGIC

COMPETITIVENESS

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

LEARNING OBJECTIVES

To define strategic competitiveness, strategy, competitive

advantage and the strategic management process;
and describe the competitive landscape and explain how
globalization and technological changes shape it.

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

IMPORTANT DEFINITIONS

STRATEGIC COMPETITIVENESS - achieved when a firm successfully formulates and

implements a value-creating strategy

STRATEGY - an integrated and coordinated set of commitments and actions designed to exploit
core competencies and gain a competitive advantage

COMPETITIVE ADVANTAGE - when a firm implements a strategy that creates superior value
for customers; competitors are unable to duplicate it or find too costly to imitate it

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

IMPORTANT DEFINITIONS CONT.

ABOVE-AVERAGE AVERAGE RETURNS -

RISK - an investor’s
RETURNS - returns in returns equal to those an
uncertainty about the
excess of what an investor investor expects to earn
economic gains or losses
expects to earn from other from other investments
that will result from a
investments with a similar with a similar amount of
particular investment
amount of risk risk

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 THE STRATEGIC
MANAGEMENT PROCESS
 FIRST: External environment and internal organization
are analyzed to determine resources, capabilities, and
core competencies—the sources of “strategic inputs.”
 NEXT: Vision and mission are developed; strategies are
formulated.
 THEN: Strategies are implemented with the goal of
achieving strategic competitiveness and above-average
returns.
 DYNAMIC PROCESS: Continuously changing markets
and industry conditions must match evolving strategic
inputs.

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 THE COMPETITIVE LANDSCAPE

 GLOBALIZATION - emergence of a global economy

 TECHNOLOGY - rapid technological changes
 HYPERCOMPETITION - characterized by
 Market instability and change
 Rapidly escalating competition
 Aggressive challengers
 Technology industries

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

THE RESOURCE-BASED MODEL OF ABOVE-
AVERAGE RETURNS
 The resource-based model assumes that each organization is a collection of unique
resources and capabilities.
 The uniqueness of its resources and capabilities is the basis of a firm’s strategy and its
ability to earn above-average returns.
 The core assumption of the resource-based model is that the firm’s unique resources,
capabilities, and core competencies have more influence on selecting and using
strategies than does the firm’s external environment.

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

VISION

 Vision is a picture of what the firm wants to be and, in broad terms, what it wants to
ultimately achieve. It articulates the ideal description of the organization and gives
shape to its intended future.
 Vision statements reflect a firm’s values and aspirations and are intended to capture
the heart and mind of each stakeholder.
 Examples:
 Our vision is to be the world’s best quick service restaurant. (McDonald’s)
 To make the automobile accessible to every American.(Ford Motor Company’s vision when
established by Henry Ford)

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

MISSION

 The vision is the foundation for the firm’s mission.

 A mission specifies the business or businesses in which the firm intends to compete
and the customers it intends to serve.
 Examples:
 Be the best employer for our people in each community around the world and deliver
operational excellence to our customers in each of our restaurants. (McDonald’s)

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 AIR ASIA
 Our vision

 To be the largest low-cost airline in Asia and serving the 3 billion

people who are currently underserved with poor connectivity and
high fares.
 Our mission

 To be the best company to work for whereby employees are

treated as part of a big family
 Create a globally recognized ASEAN brand

 To attain the lowest cost so that everyone can fly with AirAsia

 Maintain the highest quality product, embracing technology to

reduce cost and enhance service levels

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

STRATEGIC LEADERS

 Strategic Leaders
 People located in different parts of the firm who are using the strategic management
process to help the firm reach its vision and mission.

 Prerequisites for Effective Strategic Leadership

 Hard work
 Honesty
 Desire for accomplishment
 Common sense

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 THANK YOU 

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning