management

Stakeholder

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.

Strategy

can be defined as an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage.

how?

firms use core competencies to implement value-creating strategies and thereby satisfy customer needs. Pick a Business level strategy

strategic management process

framework that can assist firms in their quest for strategic competitiveness is the strategic management process, the full set of commitments, decisions and actions required for a firm to systematically achieve strategic competitiveness and earn above-average returns. This process is illustrated in Figure 1.1.

Globalization

is the increasing economic interdependence among countries as reflected in the flow of goods and services, financial capital, and knowledge across country borders. Globalization enhances the available range of opportunities for firms.

who?

market segmentation, identify customers based on their specific needs and wants demographics, geographic, consumption patterns, etc

Strategic Leader

primary organizational strategist in every organization. Have a strong strategic orientation that relies on thorough analysis. Located at various locations in the firm. Wants everyone to accomplish more. Innovative thinkers.

Profit Pool

profit pools are the total profits earned in an industry at all points along the value chain

Capabilities

represent its capacity to integrate individual firm resources to achieve a desired objective, though this ability does not emerge overnight. reflected in it's knowledge base and the ability of its human capital

Strategic Flexibility

represents the set of capabilities—in all areas of their operations—that firms use to respond to respond to the various demands and opportunities that are found in dynamic, uncertain environments. This implies that firms must develop certain capabilities, including the capacity to learn continuously, which will provide the firm with new skill sets.

strategic outcomes (SMP)

strategic competitiveness and above-average returns—result when a firm is able to successfully formulate and implement value-creating strategies that others are unable to duplicate.

Components of Internal Analysis

tangible and intangible resources represent capabilities which represent core competencies. Core Competencies have a chance to become potential sources of competitive advantage. • if a firm is able to use its core competencies to achieve a competitive advantage, it will achieve strategic competitiveness and earn above-average returns so long as competitors are unable or unwilling to imitate them successfully

Globalization negatives

the "liability of foreignness" (i.e., the risk of competing internationally) overdiversification beyond the firm's ability to successfully manage operations in multiple foreign markets

Resource based model 5 steps

1. Firm should identify their internal resources and asses their strengths and weaknesses relative to competitors 2. Firms should identify the set of resources that provide the firm with capabilities that are unique to the firm, relative to its competitors. 3. Determine how to get competitive advantage 4. Locate and compete in an attractive industry. 5. Take advantage of their resources and do better in the external market then their competitors

I/O five steps

1. Study the external environment 2. Select an industry with a high potential for returns 3. Select the strategies to get above average returns 4. Acquire or develop the critical resources—skills and assets—needed to successfully implement the strategy that has been selected. 5. If you leverage your strengths (skills and resources) Above average returns will accrue.

I/O 4 ASSumptions

1. The External Environment - the general, industry and competitive environments impose pressures and constraints on firms and determines strategies that will result in superior returns. 2. Similarity - This assumption presumes that, given a similar availability of resources, most firms competing in a specific industry (or industry segment) have similar capabilities and thus follow strategies that are similar 3. Resource Mobility - Resources used to implement strategies are highly mobile across firms. 4. Profit Maximizing - Organizational decision-makers are assumed to be rational and committed to acting only in the best interests of the firm.

Five Forces Model of Competition

1. Threat of new Entrants (barrier of entry) 2. Threat of substitute products 3. bargaining power of buyers (customers) 4. bargaining power of sellers 5. Rivalry among firms in an industry (intensity, slow growth, high fixed costs, lack of difference)

Mission

A firm's mission is an externally focused application of its vision that states the firm's unique purpose and the scope of its operations in product and market terms.

Perpetual innovation

A term that is used to describe rapid and consistent replacement of current technologies by new, information-intensive technologies is

Information Age

Ability to search for almost anything at any time, new methods of bringing products to consumers

Intangible Resources

Assets that can not be seen or quantified, but rather identified as important. Human Resources: knowledge, trust innovation resources: science, innovate etc

Resources as core dependencies (RBM)

Costly to imitate, valuable, rare, nonsubstitutional

Profit Pool 4 steps

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

Competitor Analysis

However, a structured competitor analysis enables the firm to focus its attention on those firms with which it will directly compete, and is especially important when a firm faces a few powerful competitors.

Strategic Decision Making (two models)

I/O Model, Resource based Model

Internal Analysis Ideas

Increasingly, those analyzing their firm's internal environment should use a global mind-set (i.e., the ability to study an internal environment in ways that are not dependent on the assumptions of a single country, culture, or Context). Understanding how to leverage the firm's unique bundle of resources and capabilities is a key outcome decision makers seek when analyzing the internal environment.

Disruptive Technologies

New ones that make other ones lose value and become obselete

Reach, Richness, Affiliation

Reach: continually thinking about accessing and connecting with customers Richness: maintaining information with depth and dealt for customers Affiliation: facilitating useful interactions

Above-average returns

So long as a firm can sustain (or maintain) a competitive advantage, investors will earn above-average returns. Above-average returns represent returns that exceed returns that investors expect to earn from other investments with similar levels of risk (investor uncertainty about the economic gains or losses that will result from a particular investment). In other words, above average-returns exceed investors' expected levels of return for given risk levels.

Tangible Resources

Tangible - assets that can be seen or quantified. physical resources, financial resources they will not by themselves represent capabilities that will serve as sources of core competencies.

I/O Model of Above Average Returns

The I/O or Industrial Organization model adopts an external perspective to explain that forces outside of the organization represent the dominant influences on a firm's strategic actions. Conditions present in the external environment determine the appropriateness of strategies that are formulated in the internal setting

Resource based Model of above average returns

The resource-based model of above-average returns is grounded in the uniqueness of a firm's internal resources and capabilities.

Core Competencies

The resources and capabilities that are a source of competitive advantage for the firm over its competitors. They emerge over time through a process of accumulating and learning how to deploy different resources and capabilities.

Speed to Market (diffusion)

The shorter product life cycles that result from rapid diffusion of innovation often means that products may be replicated within very short time periods, placing a competitive premium on a firm's ability to rapidly introduce new products into the marketplace. In fact, speed-to-market may become the sole source of competitive advantage

Conditions affecting managerial decisions (internal organization)

Uncertainty - is present because of the inherent difficulty in identifying, assessing, and predicting changes and trends in characteristics of the external environment Complexity - is increased because of the uncertain nature of interrelationships among the characteristics of the external environment and the related challenge regarding how to assess the effects of changes in one set of characteristics on other characteristics. Intraorganizational - When managers make decisions regarding the identification of the firm's capabilities and choose to nurture them (with resources) to develop core competencies that can be exploited to achieve a competitive advantage, they must make these important decisions without absolute certainty that the decision is correct Must exercise judgement to make successful decisions.

Customer Focus

Who to serve What customer needs will be satisfied How those needs will be satisfied through the strategy selected

hypercompetition

a condition that results from the dynamics of strategic moves and countermoves among innovative, global firms: a condition of rapidly escalating competition that is based on price-quality positioning, efforts to create new know-how and achieve first-mover advantage, and battles to protect or to invade established product or geographic markets

Differentiation Strategy

a strategy that provides products that customers perceive as being unique in ways that are important to them and, because this uniqueness offers value, customers are willing to pay a premium price for them

Cost Leadership Strategy

a strategy that provides products—goods or services—with features acceptable to customers at the lowest competitive price relative to other competitors. standardized products

• Strategic actions (SMP)

are guided by the firm's vision and mission, and are represented by strategies that are formulated or developed and subsequently implemented or put into action.

Importance of analyzing and understanding the firms external environment

affect firm growth and profitability technological advances sociological changes government policies can influence where/how we do business - Helps the business build new capabilities and buffer itself from those environment impacts

competitive landscape

can be described as one in which the fundamental nature of competition is changing in a number of the world's industries. Further, the boundaries of industries are becoming blurred and more difficult to define. (e.g. The new competitive mind set must value flexibility, speed, innovation, integration, and the challenges that evolve from constantly changing conditions. )

strategic group

groups of firms in an industry following the same or similar strategies along the same strategic dimensions The strategic group concept can be useful in analyzing the competitive structure of an industry and can serve as a framework for assessing competition, positioning alternatives, and potential profitability of firms in an industry. Firms that form into this strategic group remain relatively stable and don't change their practices much.

Valuable (4 criteria of sustainable strategic capabilities)

help a firm exploit opportunities and/or neutralize threats in the external environment. Allow a firm to develop and implement strategies that create customer value.

• Strategic inputs (SMP)

in the form of information gained by scrutinizing the internal environment and scanning the external environment, are used to develop the firm's vision and mission.

Vision

is a picture of what the firm wants to be and, in broad terms, what it wants to ultimately achieve. Vision is "big picture" thinking with passion that helps people feel what they are supposed to be doing.

strategic competitveness

is achieved when a firm successfully formulates and implements a value-creating strategy. By implementing a value-creating strategy that current and potential competitors are not simultaneously implementing and that competitors are unable to duplicate, or find too costly to imitate, a firm achieves a competitive advantage

Global Economy

is one in which goods, services, people, skills and ideas move freely across geographic borders.

Resources

these represent inputs into a firm's production process, such as capital equipment, the skills of people, brand names, etc

Four Criteria of Sustainable Strategic Capabilities

valuable rare costly-to-imitate nonsubstitutable Used to determine whether or not a firm's capabilities are core competencies and can be a source of competitive advantage.

what?

we must identify the targeted customer group's needs that its good or services can satisfy. From a strategic perspective, a basic need of all customers is to buy products that create value for them. The most effective firms continuously strive to anticipate changes in customers' needs.

Business Level Strategy

which detail actions taken to provide value to customers and gain a competitive advantage by exploiting core competencies in specific, individual product or service markets. developed based on a firm's core competencies and indicate how an organization chooses to compete in a particular market to gain a competitive advantage over competitors.

organizational structure

which refers to the complex set of ideologies, symbols, and core values shared throughout the firm and that influences the way it conducts business

Value and discuss it's importance

• Value is measured by the product's performance and by its attributes for which customers are willing to pay. • Ultimately, value is the foundation for earning above-average profits. Exploit core competencies and meeting the standards of global competition, because customers perceive value to be higher if it's global and not domestic.