1. Chapter 1: Introduction
Key Points:
Chapter 1: Introduction
Overview of the Strategic Management Process
Competitive Advantage
I/O Model of Above-Average Returns
Resource-Based Model of Above-Average Returns
Understand the importance and role of strategic intent and mission
Identify the concerns, interests, and claims of key stakeholders
Basic understanding of corporate culture

2. Competitive Advantage
Competitive Advantage: implementing a value-creating strategy that other firms are unable or unwilling (e.g., too costly) to duplicate
Allows a firm to achieve above-average returns
How long does competitive advantage from a particular strategy last?

3. Why is creating a successful strategy and sustaining a competitive advantage so challenging?

4. The Strategic Management Process
Chapter 2
External
Figure 1.1:
The Strategic Management Process
Environment
Strategic
Inputs
Strategic Intent
Strategic Mission
Chapter 3
Internal
Environment
Strategy Formulation
Strategy Implementation
Chapter 4
Chapter 5
Chapter 6
Chapter 10
Chapter 11
Business-Level
Competitive
Corporate-Level
Corporate
Structure
Strategic
Actions
Strategy
Dynamics
Strategy
Governance
& Control
Chapter 7
Chapter 8
Chapter 9
Chapter 12
Chapter 13
Acquisitions &
International
Cooperative
Strategic
Entrepreneurship
& Innovation
Restructuring
Strategy
Strategies
Leadership
Strategic
Outcomes
Strategic
Competitiveness
Above Average
Returns

5. Figure 1.3: The I/O Model of Superior Returns The External Environment
Study the general, industry,
and competitive environment
Assets and Skills
Develop or acquire assets and
skills to implement the strategy
An Attractive Industry
Find an industry in which your
firm can get above-ave. returns
Strategy Implementation
Take actions to effectively
implement the strategy
Strategy Formulation
Select the strategy linked with
above-ave. returns for industry
Superior Returns
Earn above-average returns

6. An Attractive Industry Strategy Formulation and Competitive Advantage
Figure 1.4:
The Resource-Based Model of Superior Returns
Resources
Inputs into a firm’s production
process
An Attractive Industry
An industry that allow a firm to
exploit its resources and capabilities
Capability
Integrated set of resources that
perform a task or activity
Strategy Formulation and
Implementation
Take actions to compete in industry
Competitive Advantage
Resource and capabilities allow
the firm to outperform rivals
Superior Returns
Earn above-average returns

7. Assumptions I/O Model Resource-Based Model
External environment is the basis of strategy and profits
Firms have similar resources and strategies
Resource are highly mobile across firms
Decision-makers are rational and act in best interest of firm
Resource-Based Model
Resources and capabilities are basis of strategy and profits
Firms have different resources and strategies
Resource may not be highly mobile across firms

8. Strategic Intent and Mission
Leveraging of a firm’s internal resources, capabilities, and core competencies to accomplish the firm’s goals
Stretch goals
Internally focused
Strategic Mission
Statement of a firm’s unique purpose and the scope of its operations in product and market terms
Externally focused

9. Stakeholders
Stakeholders: People who are affected by a firm’s performance or who have claims on its performance
Types
Capital Market (shareholders and suppliers of capital)
Product Market (external parties who are not capital market stakeholders)
Customers, suppliers, host communities, unions
Organizational (employees)

10. Organizational Culture
Complex set of ideologies, symbols, and core values shared throughout the firm and that influence the way it conducts business
Top managers role
Difficult to change