Strategic Management:

Creating
Competitive
Advantages
 The Importance of Leadership
1-2

Consider…
Maintaining competitive success or even
surviving over long periods of time is difficult
for companies of any size.
SO how much credit (or blame) does a leader
deserve?
 Leaders can make a difference
1-3

▪ Must be proactive - anticipate change

▪ Continually refine strategies
▪ Be aware of external opportunities and threats
▪ Thoroughly understand their firm’s resources and
capabilities
▪ Make strategic management both a process
and a way of thinking throughout the
organization
 Defining Strategic Management
1-4

Strategic Management involves

▪ Analysis
▪ Strategic goals (vision, mission,
strategic objectives)
▪ Internal and external environment
▪ Decisions - Formulation
▪ What industries should we compete in?
▪ How should we compete in those
industries?
▪ Actions - Implementation
▪ Allocate necessary resources
 Two Fundamental Questions
1-5

1. How should we compete in order to create

competitive advantages in the marketplace?
2. How can we create competitive advantages
in the marketplace that are unique, valuable,
and difficult for rivals to copy or substitute?
NOTE: Operational effectiveness is not enough to
sustain a competitive advantage.
 Intended vs. Realized Strategies
1-6 The Business Environment is far from predictable.

Intended
Intended Strategy
Strategy RealizedStrategy
Realized Strategy
▪ Organizational ▪ Decisions are
decisions are determined by both
determined only by analysis (deliberate) &
analysis
versus unforeseen
▪ Intended strategy environmental
rarely survives in its developments,
original form unanticipated resource
constraints, and/or
changes in managerial
preferences (emergent)
 Strategy Formulation
1-7

▪ Based on strategy analysis

▪ Developed at several levels
▪ Involves decisions that can create and sustain
competitive advantage
▪ Investment decisions
▪ Commitment of resources
▪ Operational synergies
▪ Recognizing viable opportunities
 Strategy Formulation cont.
1-8

Formulating Business-Level Strategy

▪ Successful firms develop bases for sustainable
competitive advantage through
▪ Cost leadership and/or
▪ Differentiation, as well as
▪ Focusing on a narrow or industrywide
market segment
Formulating Corporate-Level Strategy
▪ Addresses a firm’s portfolio (or group) of businesses
▪ What business(es) should we compete
in?
▪ How can we manage this portfolio of
businesses to create synergies?
 Strategy Formulation cont.
1-9

Formulating International Strategy

▪ What is the appropriate entry strategy?
▪ How do we go about attaining competitive
advantage in international markets?
Entrepreneurial Strategy and Competitive
Dynamics
▪ How do we recognize viable opportunities?
▪ How do we formulate effective strategies?
 Strategy Implementation
1-10

Strategic Control & Corporate Governance

▪ Informational control
▪ Monitor & scan the environment
▪ Respond effectively to threats &
opportunities
▪ Behavioral control
▪ Proper balance of rewards &
incentives
▪ Appropriate cultures & boundaries (or
constraints)
▪ Effective corporate governance
 Strategy Implementation cont.
1-11

Creating Effective Organizational Designs

▪ Organizational structures must be consistent with
strategy
▪ Organizational boundaries must be flexible &
permeable
▪ Strategic alliances must capitalize on capabilities of
other organizations
 Strategy Implementation cont.
1-12

Fostering Corporate Entrepreneurship

▪ Firms must continually improve & grow
▪ Firms must find new ways to renew themselves
▪ Entrepreneurship & innovation provide for new
opportunities
▪ Enhance a firm’s innovative capacity