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