Chapter 1: Strategic Management & Strategic Competitiveness

Risk

an investor's uncertainty about the economic gains or losses that will result from a particular investment

Core Competencies

are capabilities that service as a source of competitive advantage for a firm over its rivals

Organizational culture

refers to the complex set of ideologies, symbols, and core value that individuals throughout the firm share and that influence how the firm conducts business

Capability

the capacity for a set of resources to perform a task or activity in an integrative manner

Strategic Management Process

the full set of commitments, decisions, and actions firms take to achieve strategic competitiveness and earn above-average returns

Stakeholders

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

Vision

a picture of what the firm wants to be and in broad terms what it wants to achieve

Strategic Flexibility

a set of capabilities firms use to respond to various demand and opportunities existing in today's dynamic and uncertain competitive environment

Strategy

an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage

competitive advantage

A firm has ______ when by implementing a chosen strategy, it creates superior value for customers and when competitors are not able to imitate the value the firm's products create or find it too expensive to attempt imitation

How would you describe the work of strategic leaders?

Are people located in different areas and levels of the firm using the strategic management process to help the firm achieve its vision and fulfill its mission. The effectiveness of the strategic management process increases when grounded in ethical intentions and behaviors. The strategic leader's work demands decision trade-offs, often among attractive alternative. It is important for all strategic leaders to conduct thorough analyses of conditions facing the firm, be brutally and consistently honest, and work collaboratively with others to select and implement strategies

Global Economy

Is one in which goods, services, people, skills, and ideas more freely across geographic borders.

Strategic Leaders

People located in different areas and levels of the firm using the strategic management process to select actions that help the firm achieve its vision and fulfill its mission

What are stakeholders? How do the three primary stakeholder groups influence organizations?

Stakeholders are those who can affect, and are affected by a firm's performance. Because a firm is dependent on the continuing support of stakeholders, they have enforceable claims on the company's performance. Capital Market Stakeholders Product Market Stakeholders Organizational Stakeholders

What are strategic competitiveness, strategy, competitive advantage, above-average returns, and the strategic management process?

Strategic Competitiveness - formulation and implementation of a superior value-creating strategy - reflects performance Strategy - commitments and actions to achieve above-average performance and returns Competitive Advantage - What the firm will and will not do - creating superior value for customers when competitors are not able to imitate the value the firm;s products create or find too expensive to attempt imitation Above-average returns - in excess of what investors expect to earn from other investments with similar levels of risk - provide the foundation for satisfying all of a firm's stakeholders simultaneously Strategic Management Process - use to achieve strategic competitiveness and earn above-avg returns - Firms analyze the external environment and their internal organizations, then formulate and implement a strategy to achieve a desired level of performance (A-S-P)

What are vision and mission? What is their value for the strategic management process?

The firm's vision and mission guide its selection of strategies based on the information from analyses of its external environment and internal organization. Vision is a picture of what the firm wants to be and, in broad terms, what it wants to achieve ultimately. Flowing from the vision, the mission specifies the business or businesses in which the firm intends to compete and the customers it intends to serve. Vision and mission provide direction to the firm and signal important descriptive information to stakeholders

According to the I/O model, what should a firm do to earn above-average returns?

The logic supporting the I/O model suggests firms earn above-average returns by locating an attractive industry or part of an attractive industry and then implement the strategy dictated by that industry's characteristics successfully (5 Forces Model)

What are the characteristics of the current competitive landscape? What two factors are the primary drivers of this landscape?

Those making strategic decisions must adopt a different mindset, one that allows them to learn how to compete in highly turbulent and chaotic environments that produce a great deal of uncertainty. The two primary factors that have created the current competitive landscape are globalization of industries and their markets along with rapid significant technological changes

What are the elements of the strategic management process? How are they interrelated?

Used to achieve strategic competitiveness and earn above average returns The ASP Process: Analyses - The external and internal organization Strategies - Business Level, Marketplace Competition, Corporate-level, Diversified portfolio, International Strategy, Cooperative Strategy Performance - Governance mechanisms, organizational structure, strategic leadership, strategic entrepreneurship

What does the resource-based model suggest a firm should do to earn above-average returns?

When firms use their valuable, rare, costly-to-imitate, and non-substitutable resources and capabilities effectively when competing against rivals in one or more industries, they earn above-average returns

Hypercompetition

a condition where competitors engage in intense rivalry, markets change quickly and often, and entry barriers are low

Strategic Competitiveness

achieved when a firm successfully formulates and implements a value-creating strategy

Average Returns

are returns equal to those an investor expects to earn from other investments possessing a similar amount of risk

Above Average Returns

are returns in excess of what an investor expects to earn from other investments with a similar amount of risk

Resources

inputs into a firm's production process, such as capital equipment, the skills of individual employees, patents, finances, and talented managers.

Mission

specifies the business in which the firm intends to compete and the customers it intends to serve