STRATEGY: RESPONSIBLE COMPETITIVENESS

CHAPTER 6
STRATEGY: RESPONSIBLE COMPETITIVENESS
INTRODUCTION
This chapter describes how to integrate the three domains of responsible management, sustainability,
responsibility, and ethics into the strategic management process with the goal of achieving responsible competitiveness. We divide the strategic management process into four phases, which are also
the main sections of this chapter. In phase 1, the task is to define the businesss broad strategic direction by crafting the vision and mission statements and strategic objectives. The environmental analysis conducted throughout phase 2 serves to identify strategically relevant internal and external parameters, often summarized in a strengths-weaknesses-opportunities-threats (SWOT) analysis. Phase
3, the strategy formulation process, consists of the development of strategies for manifold management situations. Strategies can be developed for single functional areas, a specific business unit, or
the whole corporation. Strategy implementation (phase 4) translates these strategies into organizational realities such as governance and organizational architecture structures, change management
activities, leadership, and entrepreneurial processes.

CHAPTER OBJECTIVES
After reading this chapter, students should be able to
integrate responsible management into an organizations strategy.
analyze an organizations responsible business strengths, weaknesses, threats, and
opportunities.
achieve responsible competitiveness.

CHAPTER OUTLINE
I. Strategy and Responsible Management: Sustainability, responsibility, and ethics
have become important considerations for strategic management. The broad perspective
on the intersection between strategy and responsible management describes any
advantage business can reap from responsible business behavior, while the narrow
perspective specifically refers to the integration of responsible management factors into
the traditional strategic management process. The strategic management process
consists of four main phases: (1) shaping vision and mission, (2) analyzing the internal
and external strategic environments, (3) shaping strategies, and (4) implementing and
evaluating strategies.

STRATEGY: RESPONSIBLE COMPETITIVENESS

II.
The Goal: Responsible Competitiveness: The goal of strategic responsible
management is the achievement of level-two responsible competitiveness, a situation in
which the organizations economic competitiveness is based on and enhanced by
responsible business competitiveness. Responsible competitiveness is a situation in
which an organization achieves a coexistence of a competitive advantage and aboveaverage responsible business performance.
III.
Phase 1: Formulating the Mission, Vision, and Strategic Objectives: Mission
and vision statements are a lighthouse for any subsequent organizational activity and
therefore should integrate responsible business considerations in addition to economic
aspirations.
IV.
Phase 2: Analyzing the Strategic Environment: The three strategic environments
are the companys internal, industry, and macro- environments. In each environment, responsible
management factors play a crucial role.
A. External Environment Analysis: For strategic analysis purposes, the external
company environment can be subdivided into a macro-environment summarizing broad factors
influencing many different industries, and into an industry-specific environment.
B. Internal Environment Analysis: To describe the internal environment we propose the
traditional value chain model that summarizes a companys internal functional structure and the
resource-based view on strategy that explains competitive advantage as based on the resources
and competences of a company.
C. Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis: The SWOT
(strengths-weaknesses-opportunities-threats) analysis summarizes the external and internal
analysis in the same management tool. The SWOT analysis can be seen as a summary of a more
detailed and extensive analysis process throughout businesses external and internal
environments. It is also used to achieve a quick first glance at environmental factors.

V.

Phase 3: Crafting the Strategy: The strategy hierarchy consists of corporate strategies
for a company with several strategic business units, the business unit strategy, and the functional
strategy. Together these three strategy levels constitute the strategic backbone of a company to which
various other strategies covering additional situations can be attached. Responsible management can
create valuable diversification advantages on the corporate level, support strategic positioning for
business units, and support functions contributions to the overall organizational strategy.
A. Corporate Level Strategy: The corporate level strategy answers the question In how
many markets do I want to compete and how many stages of my value chain activities do I
perform myself? It defines in how many markets a company competes (horizontal integration)
and to what degree the business performs activities throughout its upstream and downstream
supply chain (vertical integration).
B. Business Unit Level Strategy: The business level strategy gives guidance on How do
I manage a strategic business unit competing in a certain product market?
C. Functional Level Strategy: The functional level strategy answers the question How
do single business functions support the overarching strategic objectives? Strategic
considerations throughout single functions will be illustrated in great depth in subsequent
chapters that are each dedicated to one specific business function.

STRATEGY: RESPONSIBLE COMPETITIVENESS

VI.

Phase 4: Executing and Evaluating Strategy: The task of aligning business on all
levels and in all spheres with the crafted strategy, to bring the strategy into every instance of the
business, is the main task of strategy implementation. After strategy has been implemented,
companies should enter into a process of scrutinizing the effectsthe success or failureof the
strategy and use this observation to readjust parts of strategy to achieve the ultimate goal of a
responsible competitive advantage.
A. Strategy Implementation: Strategy implementation, especially when it is related to
responsible management, needs to be based on two fundamental activities, hardwiring and
softwiring. Hardwiring of a responsible management strategy refers to its implementation in
the organizational infrastructure, while softwiring refers to the implementation of responsible
management throughout the organizations social fabric.
B. Strategy Control, Review, and Evaluation: Organizational controls guide the use of
strategy, indicate how to compare actual with expected results, and suggest corrective actions
when the difference between actual and expected results is unacceptable. For instance, the
balanced scorecard is an excellent tool for controlling the social, environmental, and economic
indicators leading to responsible competitiveness.

STRATEGY: RESPONSIBLE COMPETITIVENESS

Principles of Strategy: Responsible Competitiveness (SUMMARY)

I. The goal of strategic responsible management is the achievement of level-two responsible
competitiveness, a situation in which the organizations economic competitiveness is based on
and enhanced by responsible competitiveness.
II. The strategic management process consists of four phases: (1) shaping vision and mission,
(2) analyzing the internal and external strategic environments, (3) shaping strategies, and (4)
implementing and evaluating strategies.
III. Mission and vision statements are a lighthouse for any subsequent organizational activity
and therefore should integrate responsible business considerations in addition to economic
aspirations.
IV. The three strategic environments are the companys internal environment, the industry,
and the macro-environment. In each environment, responsible management factors play a
crucial role.
V. The strategy hierarchy consists of corporate strategies for a company with several strategic
business units, the business unit strategy, and the functional strategy.
VI. Responsible management can create valuable diversification advantages on the corporate
level, support strategic positioning for business units, and support functions contributions to
the overall organizational strategy.
VII. The implementation of responsible management strategies is based on hardwiring them
into organizational structure, and softwiring them throughout the human factors.
VIII. The balanced scorecard is an excellent tool for controlling the social, environmental, and
economic indicators leading to responsible competitiveness.