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1-1 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches.

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Presentation on theme: "1-1 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches."— Presentation transcript:

1 1-1 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision 1 18 Chapter Three: The External Environment Chapter Three: The External Environment © Hitt, Ireland, Hoskission, Rowe & Sheppard Strategic Management N o t e s Chapter One: Strategic Management & Strategic Competitiveness Competitiveness & Globalization

2 1-2 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision 2 18 Strategic Management & Competitiveness Knowledge Objectives 1.Define and list preferred Strategic Outcomes. 2.See how Industrial Organization & Resource-Based models show how firms earn above average returns. 3.Discuss the value of strategic vision & mission. 4.Discuss the the 21 st Century Environment. 5.Describe stakeholders ability to influence firms. 6.Know how Business Models differ from Strategies.

3 1-3 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision 3 18 Desired Strategic Outcomes Strategic Competitiveness Achieved 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 Advantage Above-Average Returns Returns in excess of what an investor expects to earn from other investments with similar risk. Provides benefits which current and potential competitors are unable to duplicate. Outcomes & Basic Definitions

4 1-4 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision 4 18 Important Definitions Risk An investors 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 returns Strategic management process The full set of commitments, decisions and actions required for a firm to achieve strategic competitiveness & earn above average returns. Outcomes & Basic Definitions

5 1-5 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision 5 18 Implementation Inputs The Strategic Management Process Chapter 5: Bus.-Level Strategy Chapter 6: Competitive Dynamics Chapter 7: Corp.-Level Strategy Chapter 8: Acquisition & Restructuring Chapter 9: International Strategy Chapter 10: Cooperative Strategy Strategy Formulation Chapter 11: Corporate Governance Ch. 12: Org. Structure & Controls Chapter 13: Strategic Leadership Chapter 14: Org. Renewal & Innovation Strategy Implementation Strategic Actions Ch. 1: Strat. Mgmt. & Com- petitiveness Ch. 2: Strat. Mgmt. & Performance Chapter 3: The External Environment Chapter 4: The Internal Environment Strategic Competitiveness Strategic Mission & Strategic Intent Strategic Objectives & Inputs Chapter 1: Strategic Management Strategic Competitiveness Chapter 1: Strategic Management Strategic Competitiveness Strategic Vision & Intent / Mission Formulation The Strategic Mgmt. Process

6 1-6 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision 6 18 What is Strategy? A unified, comprehensive & integrated plan designed to ensure that the basic objectives of the enterprise are achieved. (Glueck, 1980:9)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 organizations major goals, policies, & action sequences into a cohesive whole. (Quinn, 1980) … A good strategy… exploits opportunities & neutralizes threats while capitalizing on strengths & avoiding or fixing weaknesses. (Barney, 1997:17) … A good strategy… exploits opportunities & neutralizes threats while capitalizing on strengths & avoiding or fixing weaknesses. (Barney, 1997:17) A pattern of resource allocation that enables firms to maintain or improve their performance.A pattern of resource allocation that enables firms to maintain or improve their performance. An integrated & coordinated set of commitments & actions designed to exploit core competencies and gain a competitive advantage. What is Strategy?

7 1-7 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision 7 18 Intended, Emergent & Realized Strategies Intended Strategies RealizedStrategies Deliberate Strategies EmergentStrategies UnrealizedStrategies What is Strategy?

8 1-8 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision 8 18 Intended, Emergent & Realized Strategies Example 1: _________ Break into the Market New Ads & channels Got into the Market New Customers Sell to current types of customers Break into the Market Build Mfg. & Dist. Op.s Got into the Market New Channels Sell to through current channels Thus, strategy can emerge from a Pattern in the stream of decisions or actions Break into the Market New Ads & channels Got into the Market New Customers Sell to current types of customers & 2: __________ What is Strategy?

9 1-9 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision 9 18 Resource- Based Model Alternative Models of Superior Returns Industrial Organization Model The External Environment An Attractive Industry Strategy Formulation Assets and Skills Strategy Implementation Superior Returns Resources Capabilities Competitive Advantage An Attractive Industry Strategy Implementation Superior Returns O O I Competing Approaches

10 1-10 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision Four Attributes that Create Competitive Advantage Rare Held by few, or no, current and potential competitors. and potential competitors. Costly to When other firms either can- Imitate not obtain them or must obtain at a much higher cost. obtain at a much higher cost. Organized Supported by the appropriate to be structure, controls & rewards. Exploited Valuable Allow firm to offset threats or exploit opportunities threats or exploit opportunities in its external environment. in its external environment. CoreCompetencies Are a basis for: Competitive advantage; Strategic competitiveness; Ability to earn above-average returns. Resources and Capabilities Competing Approaches

11 1-11 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision The 21 st Century Environment Values Globalization Technology FlexibilityFlexibility InnovationInnovation IntegrationIntegration Speed to marketSpeed to market HypercompetitionHypercompetition Handling constant changeHandling constant change Global Economy: One where goods, services, people, skills & ideas move freely across geographic borders. Increasing rate of tech. change & diffusion;Increasing rate of tech. change & diffusion; Increasing knowledge intensity;Increasing knowledge intensity; The information age.The information age. Strategy & the 21 st Century

12 1-12 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision Strategic Vision Vision is a picture of what the firm wants to be and, in broad terms, what it wants to ultimately achieve. Strategic Vision 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. The mission specifies the business or businesses in which the firm intends to compete and the customers it intends to serve. Strategic Intent / Mission Mission & Vision

13 1-13 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision Tim Hortons Strategic Vision Our vision is to be the quality leader in everything we do. Tim Hortons 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 1-14 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision Stakeholders Groups who are affected by firms performance & have claims on its performance The firm must maintain performance at an adequate level in order to maintain the participation of key stakeholders. Firm Product Market Primary Customers Host Communities UnionsSuppliers Capital Market Stock market/Investors Debt suppliers/Banks Organizational EmployeesManagersNonmanagers Stakeholders

15 1-15 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision What are Business Models? Business models are at heart, stories that explain how enterprises work. Who, What, When, Where, Why, How, and Are-you-sure. They answer the critical questions of: The Razor & Blade Model King Gillette practically gave razors away & made money on the blades. © 2009 by J. Sheppard They allow us to think about customer value creation and corp. value capture separately. & Xerox & Standard Oil. B O N U S Business Models

16 1-16 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision What are Business Models? Who are the customers Who are the customers What is the value proposition What is the value proposition Why Why When When Are-you-sure Are-you-sure Price sensitive buyers. Price sensitive buyers. Low to no investment. Low to no investment. Attract the most buyers. Attract the most buyers. New product purchases. New product purchases. Lower buyer investment. Lower buyer investment. B O N U S Business Models Todays version of the Razor & Blade Model.

17 1-17 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision What are Business Models? 1.Business models address a series of broad functions that create value for the customer, rather than activities; 2.Business models do not show how an organizations activities are related, but the strategic value chain does; 3.Unlike the strategic value chain, business models do not address competitive advantage. Porter notes 3 main differences between business models and strategies: Porter notes 3 main differences between business models and strategies: © 2009 by J. Sheppard More importantly: More importantly: Business models separate out the notion of: Business models separate out the notion of: Value creation (for customers) versus,Value creation (for customers) versus, Value capture (for the organization).Value capture (for the organization). How do Business Models Differ from Strategies? B O N U S Business Models

18 1-18 Business Models Stakeholders Strategy & the 21 st Century Outcomes & Basic Definitions The Strategic Mgmt. Process What is Strategy? Competing Approaches Mission & Vision 18 The Strategic Management Process Chapter 5: Bus.-Level Strategy Chapter 6: Competitive Dynamics Chapter 7: Corp.-Level Strategy Chapter 8: Acquisition & Restructuring Chapter 9: International Strategy Chapter 10: Cooperative Strategy Strategy Formulation Chapter 11: Corporate Governance Ch. 12: Org. Structure & Controls Chapter 13: Strategic Leadership Chapter 14: Org. Renewal & Innovation Strategy Implementation Strategic Actions Ch. 1: Strat. Mgmt. & Com- petitiveness Ch. 2: Strat. Mgmt. & Performance Chapter 3: The External Environment Chapter 4: The Internal Environment Strategic Competitiveness Strategic Mission & Strategic Intent Strategic Objectives & Inputs Chapter 1: Strategic Management Strategic Competitiveness Chapter 1: Strategic Management Strategic Competitiveness Strategic Vision & Intent / Mission Chapter 1: Strategic Management Strategic Competitiveness Strategic Vision & I ntent / Mission


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