Strategic Competitiveness
is achieved when a firm successfully formulates and implements a value-creating strategy
is a set of actions designed to exploit core competencies and gain a competitive advantage
when a firm implements a strategy that creates superior value for customers and competitors are unable to duplicate or find it too costly to imitate
returns in excess of what an investor expects to earn from other investments with a similar amount of risk
an investor's uncertainty about the economic gains or losses that will result from a particular investment.
No competitive advantage is ________
Results are often measured in terms of accounting figures...can you name 3?
- return on assets
- return on equity
- return on sales
returns equal to those an investor expects to earn from other investments with a similar amount of risk
strategic management process
the full set actions and decisions needed to achieve strategic competitiveness and earn above-average returns
The first step in the SMP (strategic management process) is to analyze what 2 things?
- external environment (SWOT)
- internal organization (to determine its resources, capabilities, and core competencies)
The first 3 sources for your "strategic inputs" are what?
- resources
- capabilities
- core competencies
The second step in the SMP to develop what 2 things?
- vision
- mission
-strategies are formulated
strategies are implemented with the goal of achieving strategic competitiveness and above average returns
dynamic process-continuoulsy changing markets and industry conditions must match evolving strategic inputs
What 3 things are currently changing the competitive landscape for companies?
- the emergence of a global economy
- the resulting globalization
- rapid technological changes
the approach firms use to achieve strategic competitiveness and earn above avg returns
what 2 types of strategic actions must be simultaneously integrated to successfully employ the SMP
formulation and implementation
Name the 2 models of forming the firm's mission and vision.
- Industrial Organization (I/O)
- Resource Based
An industrial organization model suggests...
the external environment is the primary determinant of a firm's strategic actions. Identifying and then competing
successfully in an attractive industry (or segment of an industry) are the keys to competitive success.
The resource-based organizational model suggests that....
a firm's unique resources and capabilities are the critical link to strategic competitiveness.
Name 2 conventional sources of competitive advantage that are not as effective as they once were in earning above-average returns.
- economies of scale
- huge advertising budgets
a term often used to capture the realities of the competitive landscape. Assumptions of market stability are replaced by notions of inherent instability and change.
___________ results from the dynamics of strategic maneuvering among global and innovative combatants.
__________ is a condition of rapidly escalating competition based on price-quality positioning, competition to create new know-how and establish first-mover advantage, and competition to protect or invade established product or geographic markets.
one in which goods, services, people, skills, and ideas move freely across geographic borders.
Chinese word for strong relationships in which each party feels obligated to help one another
is the increasing economic interdependence among countries and their organizations as reflected in the flow of goods and services, financial capital, and knowledge across country borders
A Chinese company. The largest manufacturer of phone network equipment in China and second in the global markets. They have had US based operations for 10+ years now.
two drivers of hypercompetition
globalization and technology
-time to learn -overdiversification -stay competitive in both domestic and international markets
operating in too many foreign countries (cultures) and being unable to manage the differences and challenges that arise
What are the 3 types of technology related trends/conditions?
- technology diffusion & disruptive technologies
- information age
- increasing knowledge intensity
the speed at which new technologies become available and are used
a term used to describe how rapidly and consistently new, information-intensive technologies replace older ones
can create essentially a new industry or can seriously harm or destroy old industries.
refers to our current era where the ease of access to information and the time it takes for competitors to analyze and compete.
knowledge consists of what 3 things (according to the text)?
- information
- intelligence
- expertise
__________ is the basis of technology and its application.
increasing knowledge intensity
the probability of achieving strategic competitiveness is enhanced for the firm that develops the ability to capture intelligence, transform it into usable knowledge, and diffuse it rapidly throughout the company.
is a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment
______ ________ involves coping with uncertainty and its accompanying risks
from the 1960's-1980's the ________ environment was thought to be the primary determinant of strategies
4 underlying assumptions about the I/O Model
- external environment is assumed to impose pressures and constrains that determine the strategies to get above avg returns
- most firms competing are assumed to control similar strategically relevant resources and pursue strategies based on those resources
- resources are assumed to by highly mobile across firms
- organizational decision makers are assumed to be rational and committed to acting in firms best interest
the __________ __________ model specifies that the industry (or segment of the industry) has a stronger influence on performance than do the choices managers make inside their organizations
industrial organization model
List 5 industry properties that affect strategy in the I/O model.
- economies of scale
- barriers to market entry
- diversification
- product differentiation
- degree of concentration of firms
The I/O model has 4 assumptions, number 1 is...
the external environment imposes pressures/constraints that determine strategies resulting in above-avg returns
The I/O model has 4 assumptions, number 2....
most competing firms are assumed to control similar strategically relevant resources and to pursue similar strategies in light of those resources
The I/O model has 4 assumptions, number 3...
resources used to implement strategies are assumed to be highly mobile across firms. (therefore any resource advantage one firm may get will probably be short lived)
The I/O model has 4 assumptions, number 4...
organizational decision makers are assumed to be rational and committed to acting in the firm's best interests, as shown by their profit-maximizing behaviors
The five forces model is used to identify what?
the attractiveness of an industry
Five Forces Model
(suggests the an industry's profitability is a function of interactions among these five forces).....
- suppliers
- buyers
- competitive rivalry
- product substitutes
- potential entrants
produces either standardized goods/services at costs below those of competitors
producing differentiated goods or services for which customers are willing to pay a premium price
20% of a firm's profitability is explained by the ________ in which it chooses to compete
the ________ _______ model assumes that each organization is a collection of unique resources and capabilities
the __________ of its resources and capabilities is the basis of a resource-based firm's strategy and its ability to earn above-average returns.
inputs into a firm's production process, such as capital, equipment, the skills of individual employees, patents, finances, and talented managers.
- physical
- human
- organizational capital
resources may not be enough to create a competitive advantage. They should be combined to form a ________
the capacity for a set of resources to perform a task or an activity in an integrative manner
__________ evolve overtime and must be managed dynamically in pursuit of above-average returns
are resources and capabilities that serve as a source of competitive advantage for a firm over its rivals.
In a ___________ ________ model resources/capabilities are NOT hilghly mobile across firms
in a ________ _________ model differences in resources/capabilities are the basis of a competitive advantage
through continued use, _________ become stronger and more difficult for competitors to understand and imitate.
the _____ _____ model identifies the attractive industry, the _____ ______ model suggest which strategy the firm should use
industrial organization model, resource based model
List the 4 criteria that make resources/capabilities competitive advantages
- valuable
- rare
- costly to imitate
- nonsubstitutable
resources are valuable when...
allow a firm to take advantage of opportunities or neutralize threats in its external environment
resources are rare when they....
are possessed by few, if any, current/potential competitors
resources are costly to imitate when...
other firms either cannot obtain them or are at a cost disadvantage in obtaining them compared with the firm that already possesses them
Resources are nonsubstitutable when ...
they have no structural equivalents.
_________ learn a great deal about a firm from studying its vision and mission.
after studying its external environment and its internal organization, a firm has the information it needs to create its ________ and ____________
the key purpose of the vision and mission statements are to inform the stakeholders of what 3 things?
- what the firm is
- what it seeks to accomplish
- who it seeks to serve
a picture of what the firm wants to be and, in broad terms, what it wants to ultimately achieve
the __________ statement articulates the ideal description of an organization and gives shape to its intended future.
a ______ statement points the firm in the direction of where it would like to be in the years to come
a __________ statement reflects a firm's values and aspirations and are intended to capture the HEART AND MIND of each employee and its other stakeholders.
a _______ should be enduring, while a _____ can change with new environmental conditions.
vision statements tend to be short and __________.
This... ...is an example of a _____ statement.
"...to be the world's bets quick service restaurant."
the vision is the foundation for the firm's _________
specifies the businesses in which the firm intends to compete and the customers it intends to serve
strategic vision/intent focuses on what 3 things
-internal focus -develop organization -focus on performance criteria
the individuals, groups, and organizations that can affect the firm's vision and mission, are affected by the strategic outcomes achieved, and have enforceable claims on the firm's performance
claims on a firm's performance are enforced through the ___________' ability to withhold participation essential to the organization's survival, competitiveness, and profitability.
__________ must find ways to either accommodate or insulate the organization from the demands of stakeholder controlling the critical resources
list the 3 types of stakeholders
- capital market
- product market
- organizational
give 2 examples of capital market stakeholders
- shareholders
- suppliers of major capital
give 4 examples of product market stakeholders
- customers
- suppliers
- host communities
- unions
give 2 examples of organizational stakeholders
- managerial personnel
- employees
individuals and groups who have invested capital in a firm in the expectation of earning a positive return on their investments
shareholders who hold a large share of stock and are influential
people located in diff. areas and levels of the firm using the strategic management process to select strategic actions that help the firm achieve it's vision and fulfill it's mission
successful ________ _________ are...
- decisive
- committed to nurturing those around them
- committed to helping the firm create value for all stakeholder groups
refers to the complex set of ideologies, symbols, and core values that are shared throughout the firm and influence how the firm conducts business
____________ _____________ is the social energy that drives- or fails to drive- the organization
List 5 pre-requisites for a successful strategic leader
- hard work
- thorough analysis
- willingness to be brutally honest
- penchant for wanting the firm/people to accomplish more
- tenacity
strategic leaders must be ________ thinkers
if your firm SIMULTANEOUSLY promotes exploratory learning of new and unique forms of knowledge and exploitative learning that adds incremental knowledge to existing knowledge bases, allowing them to better understand and use their existing products; it is said to be _______________
the operational term used for a dream that challenges and energizes a company is ______________
strategic _________ attempt to predict the outcomes of their decisions before taking efforts to implement them
mapping an industry's _______ _____ is something strategic leaders can do to anticipate the possible outcomes of different decisions and to focus on growth in profits rather than strictly growth in revenues
entails the total profits earned in an industry at all points along the value chain
4 Steps to Identifying Profit Pools
- Define the pool’s boundaries
- Estimate the pool’s overall size
- Estimate the size
of the value-chain activity in the pool
- Reconcile the calculations
the _________ ______________ ______________ is a rational approach firms use to achieve strategic competitiveness and earn above-average returns
strategic management process
the firm's strategic ________ provide the foundation for choosing one or more strategies and deciding how to implement them
strategic mission focuses on what and shows how the firm will what?
external focus, will go to market