Chapter 2: The Context of Managing Strategically Strategic Management in Action by Mary Coulter

Describe the Different Perspectives on Competitive Advantage Managing Strategically- formulating and implementing strategies that allow an organization to develop and maintain a competitive advantage. Competitive Advantage- what sets and organization apart or what is its competitive edge. Competitive advantage is necessary for an organization’s long term success and survival

3 Different Perspectives Industrial Organization View (I/O View) Look at impact of external factors Resource Based View (RBV) Emphasizes exploiting organizational resources in order to develop and maintain a competitive advantage. Guerrilla View More contemporary Table 2.1 in SM in Action

The Industry Organization View Developed by Michael Porter structural forces within an industry the competitive environment of firms how these influence competitive advantage Emphasizes choosing the BEST industries Analyze external forces and base strategic decisions on the analysis Competitive advantage relates to competitive positioning in the industry

Resource Based View Resources are most important in getting and keeping competitive advantage Value- resource used to exploit external circumstances Rare-no competing firms possess resource Hard to Imitate and Substitute- inability to duplicate Ability to exploit

Guerrilla View Competitive advantage is temporary Why? The environment is characterized by continual and often revolutionary changes. Successful organizations must disrupt the current situation and surprise competitors with strategic actions designed to keep competitors off balance Successful organizations create new competitive advantages based on how the context is changing

Drivers of Business Environment The Information Revolution Information has always been used in producing goods and services, to design work tools, organizational processed, management systems, and products, as organizations searched for ways to be more efficient and effective. Now, Information is the essential resource of production.

Drivers of Business Environment Technology- using equipment, materials, knowledge, and experience to perform tasks. Innovation- turning a creative idea into a product or process that can be used or sold Developing, making, and marketing a product to generate revenue Bottom-up Capability- mass collaboration capability Internet, personal messaging systems, and social networking is shifting from industry to individual Organizational Performance Technology is a powerful tool to enhance the business, but not a replacement for understanding the economics of their business

Drivers of Business Environment Globalization Chapter 1 discussed how globalization and the global economy are impacting strategic management. Transformed the business environment Influences strategic management in two ways Global Markets Global Competitors

Implications of Driving Forces Continual Change External/Internal Conditions Transitions in structure Ex: Greeting Card-E Cards Ex: Movie Rentals Reduced Need for Physical Assets Physical Assets=Power Intangibles-information, people, ideas, & knowledge Vanishing Distance & Compressed Time No Geographical limitations Instant Interactions-email, video conferencing Vulnerability Open to viruses and threats

Critical Success Factors Ability to Embrace Change Need change agents Initiates and oversees changes Creativity & Innovation Capabilities Ability to combine ideas in unique ways and make associations Being a World Class Organization Organizations make strategic decisions to become the best in the world at what it does.

Two Elements of Guidance Organizational Vision and Mission Vision Broad picture of what the leaders of an organization want to become They must: Build on organizations core value and beliefs Elaborate a purpose for organization Brief summary of what the organization does Specify broad goals Mission Statement of what units do and what they hope to accomplish Corporate Social Responsibility and Ethics Restates vision and mission to reflect commitment to CSR

Summary of Chapter 2 Perspectives of Competitive Advantage Industrial Organization View, Resource Based View, Guerilla View Drivers of Business Environment Information, Technology, Globalization Implications of Drivers Continual Change Critical Success Factors Elements of Guidance