Chapter 1 Strategic competitiveness

Resources

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

Strategic leaders

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

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, 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.

strategic management process

is the full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average return

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.

mission

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

Core competencies

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

Resource-based model steps

1. Identify the firm's resources. Study its strengths and weaknesses compared with those of competitors. 2. Determine the firm's capabilities. What do the capabilities allow the firm to do better than its competitors? 3. Determine the potential of the firm's resources and capabilities in terms of a competitive advantage. 4. Locate an attractive industry. 5. Select a strategy that best allows the firm to utilize its resources and capabilities relative to opportunities in the external environment.

I/O Model steps

1. Study the external environment, especially the industry environment. 2. Locate an industry with high potential for above- average returns. 3. Identify the strategy called for by the attractive industry to earn above- average returns. 4. Develop or acquire assets and skills needed to implement the strategy. 5. Use the firm's strengths (its developed or acquired assets and skills) to implement the strategy.

Stakeholder groups

1. the capital market stakeholders (shareholders and the major suppliers of a firm's capital), 2. the product market stakeholders (the firm's primary customers, suppliers, host communities, and unions representing the work- force) 3. the organizational stakeholders (all of a firm's employees, including both non- managerial and managerial personnel).

e I/O model has four underlying assumptions.

1.First, the external environment is assumed to impose pressures and constraints that determine the strategies that would result in above-average returns 2.Second, most firms competing within an industry or within a segment of that industry are assumed to control similar strategically relevant resources and to pursue similar strategies in light of those resources. 3.Third, resources used to implement strategies are assumed to be highly mobile across firms, so any resource differences that might develop between firms will be short-lived. 4.Fourth, 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.

Stakeholder conflicts

Because of potential conflicts, each firm must carefully manage its stakeholders. First, a firm must thoroughly identify and understand all important stakeholders. Second, it must prioritize them in case it cannot satisfy all of them.

Resource-based model assumptions

This model also assumes that firms acquire different resources and develop unique capabilities based on how they combine and use the resources; that resources and certainly capabilities are not highly mobile across firms; and that the differences in resources and capabilities are the basis of competitive advantage.

Factors driving Hyper competition

The emergence of a global economy and technology, specifically rapid technological change, are the two primary drivers of hyper competitive environments and the nature of today's competitive landscape.

Perpetual innovation

a term used to describe how rapidly and consistently new, information-intensive technologies replace older ones.

Hypercompetition

describes competition that is excessive such that it creates inherent instability and necessitates constant disruptive change for firms in the competitive landscape.

resource-based model ( what strategies to use to utilize competitive advatange in an attractive industry}

differences in firms' performances across time are due primarily to their unique resources and capabilities rather than the industry's structural characteristics.

Vision

is a picture of what the firm wants to be and, in broad terms, what it wants to ultimately achieve.

The five forces model of competition(how to identify and choose an attractive industry)

is an analytical tool used to help firms find the industry that is the most attractive for them.encompasses several variables and tries to capture the complexity of competition. The five forces model suggests that an industry's profitability (i.e., its rate of return on invested capital relative to its cost of capital) is a function of interactions among five forces: suppliers, buyers, competitive rivalry among firms currently in the industry, product substitutes, and potential entrants to the industry

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.

The industrial organization (I/O) model of above-average returns

the external environment's dominant influence on a firm's strategic actions. The model specifies that the industry or segment of an industry in which a company chooses to compete has a stronger influence on performance than do the choices managers make inside their organizations.76

Strategic flexibility

y is a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment.