Strategic management chapter 1 twenty first century competition

Twenty-First Century Competition

Rapid

Globalization

technological change

Increasing importance of
The global economy

Today’s

knowledge
and people

Competitive
Markets

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website for classroom use.

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Strategic Competitiveness

Formulation
Formulation and
and implementation
implementation

of
of
a
a superior
superior value-creating
value-creating
strategy
strategy

Commitments
Commitments and
and actions
actions to
to achieve
achieve above-average
above-average performance
performance and
and
returns
returns

What
What the
the firm
firm will
will do
do

Competitive
Competitive advantage

advantage

What
What the
the firm
firm will
will not
not do
do

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website for classroom use.

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•

Market volatility and instability due to
the rapid pace of change in markets

ng
ng

Increasi
Increasi

The Global Competitive Landscape

•

•
•

Blurring of market boundaries
Globalized flow of financial capital
Need for flexibility, speed, innovation,
and integration in the use of technology

•

Strategic and operational complexity
of global-scale competition

•

Decreasing
Decreasing

•
•
•

Rising product quality standards

Traditional time for adapting to change
Traditional sources of competitive advantage
Traditional managerial mindset

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website for classroom use.

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Hypercompetition

Global economy

Use
Use of
of
price-quality
price-quality positioning
positioning to
to build
build
market
market presence
presence

Strategic options in
hypercompetitive environments

Creation
Creation of
of new
new know-how
know-how and
and
use

use of
of first-mover
first-mover advantage
advantage

Technology

Protection
Protection or
or invasion
invasion of
of
established
established geographic
geographic or
or
product
product markets
markets

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website for classroom use.

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Competitive Success Factors

Are
Are market/

market/ customer-needs
customer-needs

Make
Make effective
effective

oriented
oriented

use
use of
of valuable
valuable competencies
competencies

Offer
Offer new
new

Have
Have an
an entrepreneurial/
entrepreneurial/

and
and innovative
innovative products
products and
and

opportunistic
opportunistic mindset
mindset

Top Corporate

services
services

Performers

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website for classroom use.

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Strategic Flexibility

•

Strategic Flexibility

–

involves coping with the uncertainty and risks of hypercompetitive environments.

–

must first overcome built-up organizational inertia.

–

requires developing the capacity for continuous learning and applying the new and updated
skills sets and competencies to the firm’s competitive advantage.

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website for classroom use.

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The Industry Organization (I/O) Model
of Above-Average Returns

Diversification
Diversification

Product
Product differentiation
differentiation

Barriers
Barriers to
to market
market entry
entry

Economies

Economies
of
of scale
scale

Industry
Industry concentration
concentration

The Firm’s
Strategic Choices

Market
Market
frictions
frictions

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website for classroom use.

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Figure 1.2
The I/O Model of
Above-Average
Returns

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website for classroom use.

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The Resource-Based Model
of Above-Average Returns

e
g
a
t
an
v
d
a
e
v
i
t
ti
e
p
m
o
c
i ng
d
l
i
Bu

Capability
An integrated set of

Resources

resources

Core
competence
A source of competitive
advantage

Physical, human, and organizational
capital
(tangible and intangible)

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website for classroom use.

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Resources As Core Competencies

Costly to imitate

Rare

How resources become
core competencies

Valuable

Nonsubstitutable

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website for classroom use.

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Figure 1.3
The Resource-Based
Model of Above-Average
Returns

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website for classroom use.

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Vision Statement

•

A Successful Vision

–

is an enduring word picture of what the firm wants to be and expects to achieve in
the future.

–
–
–
–
–

stretches and challenges its people.
reflects the firm’s values and aspirations.
is most effective when its development includes all stakeholders.
recognizes the firm’s internal and external competitive environments.
is supported by upper management decisions and actions.

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website for classroom use.

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Mission Statement

•

An Effective Mission

–

specifies the present business or businesses in which the firm intends to compete and

customers it intends to serve.

–

has a more concrete, near-term focus on current product markets and customers than the
firm’s vision.

–

should be inspiring and relevant to all stakeholders.

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website for classroom use.

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Stakeholders

Can
Can affect
affect development
development of
of the
the firm’s
firm’s vision
vision and
and mission
mission

Are
Are affected
affected by
by the
the strategic
strategic outcomes
outcomes achieved
achieved by
by the
the
firm
firm

Primary stakeholders
(individuals,
(individuals, groups,
groups, and
and
organizations)
organizations)

Can
Can have
have enforceable
enforceable claims
claims
on
on the
the firm’s
firm’s performance

performance

Are
Are influential
influential when
when in
in control
control
of
of critical
critical or
or valued
valued resources
resources

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website for classroom use.

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Classification of Stakeholders

Categories of stakeholders

Capital Market Stakeholders

Product Market Stakeholders

Organizational Stakeholders

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website for classroom use.

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Figure 1.4
The Three
Stakeholder
Groups

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website for classroom use.

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Capital Market Stakeholders

Preservation
of investment

Influence

Conflicting expectations of
shareholders and lenders

Risk/return

Enhanced wealth

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website for classroom use.

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Product Market Stakeholders

Types of product market stakeholders

Suppliers

Customers

Host communities

Unions

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website for classroom use.

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Organizational Stakeholders

Responsibilities of strategic leaders for development and effective use of the firm’s human
capital

Education

Organizational culture and

Strategic goals and global

and skills of employees

ethical work environment

standards

International assignments

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website for classroom use.

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