1. Strategic Management & Strategic Competitiveness
Strategic Management & Strategic Competitiveness
Chapter One
© 2006 by Nelson, a division of Thomson Canada Limited.

2. Strategic Competitiveness Strategic Competitiveness
Chapter 4
Internal
Environment
Chapter 3
External
Strat. Intent
Strat. Mission
The Strategic
Management .
Process
Strategic
Inputs
Strategy Formulation
Strategy Implementation
Chapter 5
Bus. - Level
Strategy
Chapter 6
Competitive
Dynamics
Chapter 7
Corp. - Level
Chapter 9
International
Chapter 10
Cooperative
Strategies
Chapter 8
Acquisitions &
Restructuring
Chapter 11
Corporate
Governance
Chapter 12
Structure
& Control
Chapter 13
Strategic
Leadership
Chapter 14
Entrepreneurship
& Innovation
Strategic
Actions
Strategic
Outcomes
Feedback
Above Average Returns
Chapter 2
Strategic Competitiveness
Chapter 1
Strategic Competitiveness
Chapter 1
© 2006 by Nelson, a division of Thomson Canada Limited.

3. “Canada is rather cool”* *The Economist 2003
“Canada is rather cool”* *The Economist 2003
Canada is home not only to world-class commercial competitors but to dominant companies in their industries
© 2006 by Nelson, a division of Thomson Canada Limited.
1-3

4. Strategic Management and Strategic Competitiveness
Knowledge objectives
Define strategic competitiveness, competitive advantage and above average returns.
Describe the 21st century competitive landscape and explain how globalization and technological changes shape it.
Use the industrial organization (I/O) model to explain how firms can earn above average returns.
Use the resource-based model to explain how firms can earn above-average returns.
© 2006 by Nelson, a division of Thomson Canada Limited.

5. Strategic Management and Strategic Competitiveness
Strategic Management and Strategic Competitiveness
Knowledge objectives – continued…
5. Describe strategic intent and strategic mission and discuss their value.
6. Define stakeholders and describe their ability to influence organizations.
Describe strategists’ work.
Explain the strategic management process.
© 2006 by Nelson, a division of Thomson Canada Limited.

6. Desired Strategic Outcomes
Strategic Competitiveness
Achieved when a firm successfully formulates and implements a value-creating strategy.
Occurs when a firm develops a strategy that competitors are not simultaneously implementing.
Sustained Competitive Advantage
Provides benefits which current and potential competitors are unable to duplicate.
Above-Average Returns
Returns in excess of what an investor expects to earn from other investments with similar risk.
© 2006 by Nelson, a division of Thomson Canada Limited.

7. Important definitions
Risk
An 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 returns
Strategic management process
The full set of committee's decisions and actions required for a firm to achieve strategic competitiveness and earn above average returns.
© 2006 by Nelson, a division of Thomson Canada Limited.

8. The Strategic Management Process
The Strategic Management Process
The full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns.
© 2006 by Nelson, a division of Thomson Canada Limited.

9. The Strategic Management Process
© 2006 by Nelson, a division of Thomson Canada Limited.

10. © 2006 by Nelson, a division of Thomson Canada Limited.
What is Strategy?
An integrated and coordinated set of commitments & actions designed to exploit core competencies and gains and gain a competitive advantage.
© 2006 by Nelson, a division of Thomson Canada Limited.

11. © 2006 by Nelson, a division of Thomson Canada Limited.
What is Strategy?
“A unified, comprehensive, and 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, and action sequences into a cohesive whole.” (Quinn, 1980)
“A good strategy… neutralizes threats and exploits opportunities while capitalizing on strengths and avoiding or fixing weaknesses.” (Barney, 1997:17)
“A pattern of resource allocation that enables firms to maintain or improve their performance.
© 2006 by Nelson, a division of Thomson Canada Limited.

12. Intended, Emergent and Realized Strategies
© 2006 by Nelson, a division of Thomson Canada Limited.

13. Alternative Models of Superior ReturnsO I
Industrial Organization Model
Resource-Based Model
The External Environment
An Attractive Industry
Resources
Capabilities
Competitive Advantage
Strategy Formulation
Assets and Skills
An Attractive Industry
Strategy Implementation
Strategy Implementation
Superior Returns
Superior Returns
© 2006 by Nelson, a division of Thomson Canada Limited.

14. Four Attributes of Resources and Capabilities (Competitive Advantage)
Four Attributes of Resources and Capabilities (Competitive Advantage)
Valuable
Allow the firm to exploit opportunities or neutralize threats in its external environment.
Rare
Possessed by few, if any, current and potential competitors.
Resources and Capabilities
Costly to imitate
When other firms cannot obtain them or must obtain them at a much higher cost.
Organized to be exploited
The firm is organized appropriately to obtain the full benefits of the resources in order to realize a competitive advantage.
© 2006 by Nelson, a division of Thomson Canada Limited.

15. © 2006 by Nelson, a division of Thomson Canada Limited.
Resources and capabilities that meet these four criteria become a source of:
Valuable
Rare
Core Competencies
Core Competencies
Resources and Capabilities
Costly to imitate
Organized to be exploited
© 2006 by Nelson, a division of Thomson Canada Limited.

16. Core Competencies are the basis for a firm’s
Core Competencies are the basis for a firm’s
Competitive advantage
Strategic competitiveness
Core Competencies
Ability to earn above-average returns
© 2006 by Nelson, a division of Thomson Canada Limited.

17. CEO’s ranking of business importance
A strong & well thought out strategy
Maximizing customer satisfaction & loyalty
Business leadership, quality products & services
Concern for consistent profits
Strong & consistent profits
© 2006 by Nelson, a division of Thomson Canada Limited.

18. © 2006 by Nelson, a division of Thomson Canada Limited.
21st Century Values
Flexibility
Speed to market
Innovation
Integration
Handling challenges from constantly changing conditions
Hypercompetition
© 2006 by Nelson, a division of Thomson Canada Limited.

19. © 2006 by Nelson, a division of Thomson Canada Limited.
The Global Economy
One in which goods, services, people, skills, and ideas move freely across geographic borders
© 2006 by Nelson, a division of Thomson Canada Limited.

20. World competitiveness ratings
© 2006 by Nelson, a division of Thomson Canada Limited.

21. Technology and Technological Change
Increasing rate of technological change and diffusion
Perpetual innovation
The information age
Personal computers, cellular phones, artificial intelligence, virtual reality, massive databases, electronic networks, e-business
Increasing knowledge intensity
Information, intelligence, expertise, strategic flexibility.
© 2006 by Nelson, a division of Thomson Canada Limited.

22. © 2006 by Nelson, a division of Thomson Canada Limited.
Internally focused, it is the leveraging of a firms resources, capabilities, and core competencies to establish the firms goals in the competitive environment.
Strategic Intent
Together, strategic intent and strategic mission yield the insights required to formulate and implement strategies.
Externally focused, it is a statement of a firms unique purpose and the scope of it’s operations in product and market terms.
Strategic Mission
© 2006 by Nelson, a division of Thomson Canada Limited.

23. © 2006 by Nelson, a division of Thomson Canada Limited.
Stakeholders
© 2006 by Nelson, a division of Thomson Canada Limited.

24. Organizational strategists
Organizational strategists
Top level managers, executives, top management team, or general managers
© 2006 by Nelson, a division of Thomson Canada Limited.

25. Organizational culture
Organizational culture
A complex set of ideologies, symbols and core values that influence how the firm conducts it’s business.
© 2006 by Nelson, a division of Thomson Canada Limited.

26. Predicting Outcomes of Strategic Decisions
Define the profit pool’s boundaries.
2. Estimate the pool’s overall size.
3. Estimate the size of the value chain.
Reconcile the calculations.
The strategic management process calls for disciplined approaches to the development of competitive advantage.
© 2006 by Nelson, a division of Thomson Canada Limited.