1. Transparency 1-1 Chapter 1: Strategic Management and Strategic Competitiveness – major concepts “strategic” management strategic management process external strategic fit internal strategic fit sustainable competitive advantage above-average returns hypercompetition industrial-organizational (I/O) model of above- average returns resource-based model of above-average returns mission statement strategic intent organizational values stakeholders social responsibility

2. Transparency 1-2 “Strategic” Management long-term, “planned” forward-looking, “visionary” externally responsive internally realistic FITS INTERNAL STRENGTHS TO EXTERNAL OPPORTUNITIES involves product-market positioning “big picture”; major impact

3. Transparency 1-3 which are required for firms to achieve Above-Average Returns Strategic Competitiveness Sustained Competitive Advantage Strategic Management Process Involves the full set of: Actions Commitments Decisions

4. Transparency 1-4 Chapter 3 Internal Environment Chapter 2 External Environment The Strategic ManagementProcess ManagementProcess Strategic Intent Strategic Mission Strategic Competitiveness Above Average Returns Feedback Strategy Formulation Chapter 4 Business-Level Strategy Chapter 5 Competitive Dynamics Chapter 6 Corporate-Level Strategy Chapter 8 International Strategy Chapter 9 Cooperative Strategies Chapter 7 Acquisitions & Restructuring Strategy Implementation Chapter 10 Corporate Governance Chapter 11 Structure & Control Chapter 12 Strategic Leadership Chapter 13 Entrepreneurship & Innovation Entrepreneurship & Innovation Strategic Inputs Strategic Actions Strategic Outcomes

5. Transparency 1-5 Strategic Management – “shooting at a moving target of co-alignment” (Thompson, 1967) External Strategic Fit = Strategy formulation to -match internal capabilities with specific attractive external opportunities; -create strategies that effectively adapt to external (industry and competitive) trends. Internal Strategic Fit = Strategy implementation to -match the skills and resources of the firm to requirements for successful strategy execution; -ensure that actions and resources facilitate strategy accomplishment.

6. Transparency 1-6 Two Models of Superior Profitability; Two different perspectives on how to best achieve competitive advantage Two Models of Superior Profitability; Two different perspectives on how to best achieve competitive advantage Industrial Organization Model Resource-Based Model

7. Transparency 1-7 I/O Model of Superior Returns The Industrial Organization Model suggests that above-average returns for any firm are largely determined by characteristics outside the firm. The I/O model largely focuses on industry structure or attractiveness of the external environment rather than internal characteristics of the firm.

8. Transparency 1-8 Action required: External Environment General Environment Industry Environment Competitive Environment Study the external environment, especially the industry environment. I/O Model of Superior Returns

9. Transparency 1-9 External Environment General Environment Industry Environment Competitive Environment An Attractive Industry An industry whose structural characteristics suggest above-average returns are possible Action required: Locate an industry with high potential for above- average returns. I/O Model of Superior Returns

10. Transparency 1-10 External Environment General Environment Industry Environment Competitive Environment Attractive Industry An industry whose structural characteristics suggest above-average returns are possible Action required: Identify strategy called for by the industry to earn above-average returns. I/O Model of Superior Returns Selection of a strategy linked with above- average returns in a particular industry Strategy Formulation Strategy Formulation

11. Transparency 1-11 External Environment General Environment Industry Environment Competitive Environment Attractive Industry An industry whose structural characteristics suggest above-average returns are possible Strategy Formulation Selection of a strategy linked with above- average returns in a particular industry Action required: Develop or acquire assets and skills needed to implement the strategy. Assets and Skills Assets and skills required to implement a chosen strategy I/O Model of Superior Returns

12. Transparency 1-12 External Environment General Environment Industry Environment Competitive Environment Attractive Industry An industry whose structural characteristics suggest above-average returns are possible Strategy Formulation Selection of a strategy linked with above- average returns in a particular industry Assets and Skills Assets and skills required to implement a chosen strategy Action required: Use the firm’s strengths (its assets or skills) to implement the strategy. Strategy Implementation Selection of strategic actions linked with effective implementation of the chosen strategy I/O Model of Superior Returns

13. Transparency 1-13 External Environment General Environment Industry Environment Competitive Environment Attractive Industry An industry whose structural characteristics suggest above-average returns are possible Strategy Formulation Selection of a strategy linked with above- average returns in a particular industry Assets and Skills Assets and skills required to implement a chosen strategy Action required: Strategy Implementation Selection of strategic actions linked with effective implementation of the chosen strategy Superior Returns Earning of above- average returns Maintain selected strategy in order to outperform industry rivals. I/O Model of Superior Returns

14. Transparency 1-14 inside the firm. The Resource-Based Model suggests that above-average returns for any firm are largely determined by characteristics inside the firm. The Resource-Based view focuses on developing or obtaining valuable resources and capabilities which are difficult or impossible for rivals to imitate. Resource-Based Model of Superior Returns

15. Transparency 1-15 Resources Inputs to a firm’s production process. Action required: Identify firm resources. Study strengths and weak- nesses relative to rivals. Resource-Based Model of Superior Returns

16. Transparency 1-16 Resources Inputs to a firm’s production process. Action required: Determine what firm capabilities allow it to do better than rivals. Resource-Based Model of Superior Returns Capability Capacity for an integrated set of resources to integratively perform a task or activity.

17. Transparency 1-17 Resources Inputs to a firm’s production process. Capability Capacity for an integrated set of resources to integratively perform a task or activity. Competitive Advantage Competitive Advantage Ability of a firm to outperform its rivals Action required: Determine how firm’s resources and capabilities may create competitive advantage. Resource-Based Model of Superior Returns

18. Transparency 1-18 Resources Inputs to a firm’s production process. Capability Capacity for an integrated set of resources to integratively perform a task or activity. Competitive Advantage Competitive Advantage Ability of a firm to outperform its rivals An Attractive Industry An Attractive Industry Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities Action required: Locate an attractive industry. Resource-Based Model of Superior Returns

19. Transparency 1-19 Resources Inputs to a firm’s production process. Capability Capacity for an integrated set of resources to integratively perform a task or activity. Competitive Advantage Competitive Advantage Ability of a firm to outperform its rivals An Attractive Industry An Attractive Industry Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities Action required: Select strategy that best exploits resources and capabilities relative to opportunities in environs. Strategy Formulation and Implementation Strategic actions taken to earn above-average returns Resource-Based Model of Superior Returns

20. Transparency 1-20 Resources Inputs to a firm’s production process. Capability Capacity for an integrated set of resources to integratively perform a task or activity. Competitive Advantage Competitive Advantage Ability of a firm to outperform its rivals An Attractive Industry An Attractive Industry Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities Action required: Maintain selected strategy in order to outperform industry rivals. Strategy Formulation and Implementation Strategic actions taken to earn above-average returns Resource-Based Model of Superior Returns Superior Returns Earning of above- average returns

21. Transparency 1-21 “Hypercompetition” = fleeting competitive advantage due to aggressive/relentless challengers Globalization more opportunities more competitors greater complexity “liability of foreignness” increasing global interdependencies Technology change perpetual/disruptive technology change org’l learning, agility are critical attributes tap key information and org’l intellect role of org’l culture

22. Transparency 1-22 Mission Statements typically the starting point for strategic planning provide a relatively enduring yet basic description of an organization’s domain ideally express the “essence” or unique personality of an organization should clearly include three core elements: 1. product 2. target market 3. differentiating feature

23. Transparency 1-23 Rape and Abuse Crisis Center provides crisis intervention, advocacy, and counseling services – free of charge – to all persons in the region who have been victims of domestic violence or sexual assault.

24. Transparency 1-24 To create meaningful and strategically useful mission statements... PRODUCT description should be carefully balanced - not too broad, not too narrow TARGET MARKET should be expressed as specifically as possible DIFFERENTIATING FEATURE should be meaningful and realistic

25. Transparency 1-25 To be the leader in providing strategic business management solutions to the midmarket through a global network of partners dedicated to lasting customer relationships

26. Transparency 1-26 Phoenix International... designs and manufactures electronics for harsh environments for the worldwide original equipment manufacturer market.

27. Transparency 1-27 Mission Statement for NDSU’s College of Business? Be sure to clearly and appropriately include 1.Product(s) 2.Target market(s) 3.Differentiating feature(s)

28. Transparency 1-28 Why is it so difficult to develop a concise, compelling, and agreed-upon mission statement?

29. Transparency 1-29 Peter Drucker... “Establishing a mission should never be made on plausibility alone, should never be made fast, and should never be made painlessly. “The mission decision is far too important to be made by acclamation.”

30. Transparency 1-30 Mission Statements – So what? Who cares? Why bother?

31. Transparency 1-31 Strategic Intent “leveraging the firm’s resources, capabilities, and competencies to accomplish the firm’s goals in a competitive environment” (pg. 21) a passion to win that is widely shared by organizational participants strong internal drive and commitment to the organization and its goals

32. Transparency 1-32 ELDERHOSTEL’s mission statement We are the nation’s first and the world’s largest education and travel organization for adults 55 and over, dedicated to providing exceptional learning opportunities at remarkable value. We value stimulating, expert information; adventure; and the spirit of camaraderie.

33. Transparency 1-33 Organizational Values values and beliefs that are widely shared and endorsed by org’l participants can lead to an ingrained way of thinking and acting within the org’n often linked to competitive advantage

34. Transparency 1-34 College of Business Values? resourcefulness individualistic belongingness bare bones efficiency non-hierarchical pragmatic modest

35. Transparency 1-35 Stakeholders Groups who are affected by a firm’s performance and who have claims on its performance The firm must maintain performance at an adequate level in order to maintain the participation of key stakeholders

36. Transparency 1-36 Stakeholders Firm Groups who are affected by a firm’s performance and who have claims on its performance Capital Market Stock market/Investors Debt suppliers/Banks The firm must maintain performance at an adequate level in order to maintain the participation of key stakeholders

37. Transparency 1-37 Stakeholders Firm Groups who are affected by a firm’s performance and who have claims on its performance Product Market Capital Market Stock market/Investors Debt suppliers/Banks Primary Customers Suppliers Primary Customers Suppliers The firm must maintain performance at an adequate level in order to maintain the participation of key stakeholders

38. Transparency 1-38 Stakeholders Firm Groups who are affected by a firm’s performance and who have claims on its performance Product Market Organizational Capital Market Stock market/Investors Debt suppliers/Banks Employees Managers Non-Managers Employees Managers Non-Managers The firm must maintain performance at an adequate level in order to maintain the participation of key stakeholders Primary Customers Suppliers Primary Customers Suppliers

39. Transparency 1-39 Stakeholder Analysis = Identifying and prioritizing specific key stakeholder groups Anticipating reactions of key stakeholder groups Modifying strategic decisions in light of key stakeholder groups

40. Transparency 1-40 Social Responsibility Uses a very broad view of stakeholders Considers the long-term interests of society in strategic decision-making Involves ethical actions (which are often beyond legal requirements) Responds to social expectations Strives for good corporate citizenship Difficult balancing of stakeholder interests

41. Transparency 1-41 Social Responsibility: Prominent issues today? How to address?

42. Transparency 1-42 Social Responsibility So what? Who cares? Why bother?

43. Transparency 1-43 Hit a home run? Touch all the bases? 1. Consider external environment (“What MIGHT we do?”) 2. Consider internal environment (“What CAN we do?”) 3. Consider organizational values (“What do we WANT to do?”) 4. Consider social responsibility (“What SHOULD we do?”)