2 Strategic Management & Competitiveness Knowledge ObjectivesDefine and list preferred Strategic Outcomes.See how Industrial Organization & Resource-Based models show how firms earn above average returns.Discuss the value of strategic vision & mission.Discuss the the 21st Century Environment.Describe stakeholders ability to influence firms.Know how ‘Business Models’ differ from Strategies.
3 Desired Strategic Outcomes Strategic CompetitivenessAchieved when a firm successfully formulates & implements a value-creating strategy.Occurs when a firm develops a strategy that competitors are not simultaneously implementing.Sustained Competitive AdvantageProvides benefits which current and potential competitors are unable to duplicate.Above-Average ReturnsReturns in excess of what an investor expects to earn from other investments with similar risk.Outcomes & Basic Definitions
4 Important Definitions RiskAn investor’s uncertainty about the economic gains or losses resulting from a particular investment.Returns equal to what an investor expects from other investments with similar amount of risk.Average returnsStrategic management processThe full set of commitments, decisions and actions required for a firm to achieve strategic competitiveness & earn above average returns.Outcomes & Basic Definitions
6 What is Strategy?“A unified, comprehensive & integrated plan designed to ensure that the basic objectives of the enterprise are achieved.” (Glueck, 1980:9)“The pattern or plan that integrates an organization’s major goals, policies, & action sequences into a cohesive whole.” (Quinn, 1980)“A pattern of resource allocation that enables firms to maintain or improve their performance.… A good strategy… exploits opportunities & neutralizes threats while capitalizing on strengths & avoiding or fixing weaknesses.” (Barney, 1997:17)An integrated & coordinated set of commitments & actions designed to exploit core competencies and gain a competitive advantage.What is Strategy?
7 Intended, Emergent & Realized Strategies Deliberate StrategiesUnrealizedStrategiesEmergentStrategiesWhat is Strategy?
8 Intended, Emergent & Realized Strategies Example 1: _________ & 2: __________Break into the MarketBreak into the MarketNew Ads &channelsGot into the MarketNew CustomersSell to current types of customersBreak into the MarketBuild Mfg. & Dist. Op.sNew Ads &channelsGot into the MarketGot into the MarketSell to current types of customersSell to through current channelsNew CustomersNew ChannelsThus, strategy can emerge from“a Pattern in the stream of decisions or actions”What is Strategy?
9 Alternative Models of Superior Returns IOOResource-Based ModelIndustrial Organization ModelThe External EnvironmentAn Attractive IndustryResourcesCapabilitiesCompetitive AdvantageStrategy FormulationAssets and SkillsAn Attractive IndustryStrategy ImplementationStrategy ImplementationSuperior ReturnsSuperior ReturnsCompeting Approaches
10 Four Attributes that Create Competitive Advantage Resources and CapabilitiesValuable Allow firm to offsetthreats or exploit opportunitiesin its external environment.CoreCompetenciesRare Held by few, or no, currentand potential competitors.Costly to When other firms either can-Imitate not obtain them or mustobtain at a much higher cost.Are a basis for:Competitive advantage;Strategic competitiveness;Ability to earn above-average returns.Organized Supported by the appropriateto be structure, controls & rewards ExploitedCompeting Approaches
11 The 21st Century Environment ValuesFlexibilityInnovationIntegrationSpeed to marketHypercompetitionHandling constant changeGlobalizationGlobal Economy: One where goods, services, people, skills & ideas move freely across geographic borders.TechnologyIncreasing rate of tech. change & diffusion;Increasing knowledge intensity;The information age.Strategy & the 21st Century
12 Strategic Intent / Mission Strategic VisionStrategic VisionVision is a picture of what the firm wants to be and, in broad terms, what it wants to ultimately achieve.Together, strategic vision & strategic mission yield the insights required to formulate and implement strategies.The mission specifies the business or businesses in which the firm intends to compete and the customers it intends to serve.Strategic Intent / MissionMission & Vision
13 Tim Horton’s Strategic Vision “Our vision is to be the quality leader in everything we do.”Tim Horton’s Strategic Mission“Our guiding mission is to deliver superior quality products and services for our customers and communities through leadership, innovation and partnerships.”Mission & Vision
14 Groups who are affected by firm’s performance & have claims on its performance StakeholdersFirmCapital MarketStock market/InvestorsDebt suppliers/BanksOrganizationalEmployeesManagersNonmanagersProduct MarketPrimary CustomersHost CommunitiesUnionsSuppliersThe firm must maintain performance at an adequate level in order to maintain the participation of key stakeholders.Stakeholders
16 What are Business Models? B O N U SWhat are Business Models?Today’s version of the Razor & Blade Model.NeumanWho are the customersWhat is the value propositionWhyWhenAre-you-surePrice sensitive buyers.Low to no investment.Attract the most buyers.New product purchases.Lower buyer investment.Business Models