Strategic Management and strategic competitiveness
The I/O Model of Above-Average Returns
explains the dominant influence of the external environment on a firm's strategic actions
Global economy
is one in which goods, services, people, skills, and ideas move freely across geographic borders
Capability
is the capacity for a set of resources to perform a task or an activity in an integrative manner
Global mind-set
is the capacity to appreciate the beliefs, values, behaviors, and business practices of individuals and organizations from a variety of regions and cultures
Strategic management process
is the full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns
Globalization
is the increasing economic interdependence among countries as reflected in the flow of goods and services, financial capital, and knowledge across country borders
Strategic intent
is the leveraging of a firm's resources, capabilities, and core competencies to accomplish the firm's goals in the competitive environment
Organizational culture
refers to the complex set of ideologies, symbols, and core values that are shared throughout the firm and that influence how the firm conducts business
Resource-based model
assumes that each organization is a collection of unique resources and capabilities that provides the basis for its strategy and that is the primary source of its returns
Knowledge
A critical organizational resource and is increasingly a valuable source of competitive advantage
Classification of Stakeholders
1. capital market stakeholders 2. product market stakeholders 3. organizational stakeholders
Four steps to map industry's profits
1. define the pool's boundaries 2. estimate the pool's overall size 3. estimate the size of the value-chain activity in the pool 4. reconcile the calculations
New keys to success
1. flexibility 2. innovation 3. speed 4. integration
Firm's resources can be classified into three categories
1. physical 2. human 3. organizational capital
Five forces model of competition
1. suppliers 2. buyers 3. competitive rivalry among firms currently in the industry 4. product substitutes 5. potential entrants to the industry
Four underlying assumptions of the I/O model
1. the external environment is assumed to impose pressures and constraints that determine the strategies that would result in above-average returns 2. most firms competing within a particular industry or within a certain segment of it are assumed to control similar strategically relevant resources and to pursue similar strategies in light of those resources 3. resources used to implement strategies are highly mobile across firms 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
Four criteria for resources and capabilities
1. valuable 2. rare 3. costly to imitate 4. nonsubstitutable
Strategic competitiveness
Is achieved when a firm successfully formulates and implements a value-creating strategy
Sustained/sustainable competitive advantage
Occurs when a firm implements a value-creating strategy and other companies are unable to duplicate it or find it too costly to imitate
Resources
are inputs into a firm's production process, such as capital equipment, the skills of individual employees, patents, finances, and talented managers
Core competencies
are resources and capabilities that serve as a source of competitive advantage for a firm over its rivals
Average returns
are returns equal to those an investor expects to earn from other investments with 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
Stakeholders
are the individuals and groups who can affect, and are affected by, the strategic outcomes achieved and who have enforceable claims on a firm's performance
Organizational strategists
are the people responsible for the design and execution of strategic management processes
Profit pool
entails the total profits earned in an industry at all points along the value chain
Strategic flexibility
is a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment
Strategic mission
is a statement of a firm's unique purpose and the scope of its operations in product and market terms
Strategy
is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage
Risk
is an investor's uncertainty about the economic gains or losses that will result from a particular investment
Hypercompetition
results from the dynamics of strategic maneuvering among global and innovative combatants. Also 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
Organizational slack
slack resources that allow the firm some flexibility to respond to environmental changes
Competitive success is:
transient- unless care is taken to preserve competitive position
Perpetual innovation
used to describe how rapidly and consistently new, information-intensive technologies replace older ones