2. 2.1 Perspectives of Competitive Advantage Managing Strategically – formulating and implementing strategies that allow an organization to develop and maintain a Competitive Advantage. 1. Industrial Organization 2. Resource Based View 3. Guerilla View

3. Industrial Organization I/O View focuses on the structural forces within an industry, the competitive environment of firms, and how these influence competitive advantage.

4. Resource Based View A firms resources are most important in getting and sustaining a competitive advantage. Financial- Banks Physical – GM Human – Southwest Airlines Intangible – Coca Cola Cultural – Walmart

5. Resource Based View contd.

6. Guerilla View The view that organizations competitive advantage is temporary

7. Old VS. New Business Environment Old Drivers Labor Force Production Resources Funding New Drivers Information Revolution Technology Globalization

8. Information Revolution The amount of digital information is 3 million times all the books ever written Information saved in a single year could fill half a million libraries size of the Library in Congress Growing at a rate of 57% a year

9. Information Revolution Cont. Information is now the essential resource of production with a supporting cast of Labor, Land and Capitol Information provides a sustainable competitive advantage when used correctly with traditional factors of production.

10. Technology What is Technology ? One impact of technology is called “Bottom Up” where the power has shifted from the institutions to individuals Technology impacts innovation, which we define as turning creative idea into a product or process that can be sold

11. Technology in Innovation How important is innovation? IBM’s CEO Sam Palmisano says, “The way you will thrive in this environment is by innovating – innovating in technologies, innovating in strategies, innovating in business models”

12. Globalization The days where the U.S. produce all consumer products are gone Globalization influences strategic management in two ways… GLOBAL MARKETS GLOBAL COMPETITORS

13. Globalization Cont. To sustain a competitive advantage you must look globally for customers as long with resources from different locations Some cases to make the most effective strategy is to partner with a competitor to create or market products

14. Four Implications of Driving Forces 1. Organization/Continual change - can be external or internal and defined as structured transition in what an organization does or how it does it 2. Reduced need for physical assets – Large Corporations are finding value in intangible factors such as ideas, employee knowledge sharing, customer databases, product innovation and online ordering systems

15. Implications Cont. 3. Vanishing Distance & Compressed Time – Limitations of physical distance have disappeared along with time constraints 4. Vulnerability – Threats of computer viruses, terrorist attacks, and biological attacks illustrate the increased vulnerability that organizations face from interconnectedness and openness

16. Critical Success Factors 1. Ability to Embrace Change – Change can bring new opportunity and exploit challenges dealing with change. 2. Creativity and Innovation Capabilities – “Create and innovate or fail” 3. Being a World Class Organization – Strategic decision makers take actions to help it be the best in the world at what it does

17. 2.3 Organizational Elements that Guide Strategic Decision Makers Organizational vision and mission CSR and Ethics

18. Vision Four components of vision 1. Vision must be “Built on a foundation of the organizations core values and beliefs” 2. Vision should “Elaborate a purpose for the organization” 3. Vision should “Include a brief summary of what the organization does” 4. Visions “Specify broad goals”

19. Mission Statement Statement of what specific organizational units do, and what they hope to accomplish Can be mission statements for several different departments of the firm. (divisional, group projects, etc.) Starbucks mission statement “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time..”

20. Corporate Social Responsibility and Ethics CSR – The obligation of the organizational decision makers to make decisions and act in ways that recognize the interrelatedness of business and society. Formerly – what is in the best interest of the stockholder Today – what is in the best interest of the stakeholders, or possible future stakeholders.

21. CSR Potential Stakeholder Target Market

22. CSR & Ethics Ethics – Ethics involves the principles that define right and wrong decisions and behavior. being able to decipher in given situations what most would consider “right or wrong.” Ethical decisions are involved a great deal in managing strategically.