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AND STRATEGIC
COMPETITIVENESS
(STRATEGIC MANAGEMENT INPUT)
Important Concepts
Management
It is the function that coordinates the efforts of
people to accomplish goals andobjectivesusing
available resources efficiently and effectively.
Management comprisesplanning, organizing,
leading and controllinganorganization to
accomplish the goal.
Strategy
An integrated and coordinated set of actions
and commitments to exploit core competencies
and gain a competitive advantage.
Important Concepts
Strategic Management
The systematic analysis of the customer
and competitor (external environment) and
the organization itself (internal
environment) to provide basis for optimum
management practice.
The objective of SM is to achieve better
alignment of business level strategies and
corporate level strategies to meet ultimate
objective and earn above average return.
Important Concepts
Competitive Advantage
When a firm implements a strategy that its competitors
are unable to duplicate or find too costly to try to imitate.
Core Competencies
It is the combination of resources and capabilities
that allow a business to be competitive in the
marketplace.
OR
Acore competencyis fundamental knowledge,
ability, or expertise in a specific subject area or skill
set.
Strategic Competitiveness
When a firm successfully formulates and implements a
value-creating strategy.
Important Concepts
Risk
An investors uncertainty about the economic
gains or losses that will result from a particular
investment.
Average Returns
Returns equal to those an investor expects to earn
from other investments with a similar amount of
risk.
Above-average Returns
Returns in excess of what an investor expects to
earn from other investments with a similar amount
of risk.
Important Concepts
VISION
An inspirational description of what an org.
would like to achieve or accomplish in future.
It focuses on the potential inherent in the
company's future or simply what they intend
to be.
MISSION
It is the purpose of an organization or person
that explain its reason for existence.
A strong mission statement brings your
essence into focus so it is crystal clear who
you are and why you do it.
Low cost
Differentiated
Core Competencies
8
Rare
Costly to
imitate
Nonsubstitut
able
ResourcesandCapabilities
Valuabl
e
CoreCompetencies
Core Competencies
9
Competitiv
e
advantage
Strategic
competitive
ness
Ability to
earn aboveaverage
returns
CoreCompetencies
Rapid technological
change
Strategic maneuvering
among global and innovative
combatants
positioning
Competition to create
new know-how and
establish first-mover
advantage
Competition to
protect or invade
established product
or geographic
Economies of scale
Barriers to market entry
Diversification
Product differentiation
Degree of concentration of firms in the industry
I/O Model
External Environments
Global
ic
ph
ra
og
m
De
Po
li t
ica
l/L
eg
al
General
1.
l
ra
ltu
cu
cio
So
Competitor
Environment
Technological
Environment
Ec
on
om
ic
Industry
Environment
2.
Strategy is dictated by
the external
environment of the firm
what opportunities
exist in these
environments?
Firm develops internal
skills required by
external environment
what can the firm do
about the opportunities?
Industrial Organization
Model
Study the external
1.
environment, especially
the industry environment:
Economies of scale
Barriers to market entry
Diversification
Product differentiation
Degree of concentration
of firms in the industry
Industrial Organization
Model
The External Environment
Attractive Industry
2. Locate an attractive
industry with a high
potential for aboveaverage returns.
Attractive industry:
One whose structural
characteristics suggest
above-average returns.
Strategy formulation:
Selection of a strategy
linked with above-average
returns in a particular
industry.
Industrial Organization
Model
The External Environment
Attractive Industry
Strategy Formulation
Assets and Skills
Strategy Implementation
Model Assumptions
The Resource-Based
Model
Resource-Based Model
Strategy:
Competitive Advantage
Resources
Capabilities
Core Competencies
Environment
Environment
Resources
Capabilities
Capacity of a set of
resources to perform
in an integrative
manner
Patents
A capability should
not be:
Finances
So simple that it is
highly imitable.
So complex that it
defies internal
steering and
control.
Capital
equipment
Skills
of individual
employees
Talented
managers
Resource-Based Model
Resources
Resources: inputs into a
firms production process
Resource-Based Model
Resources
Capability
Capability: capacity of an
integrated set of resources
to integratively perform a
task or activity.
Resource-Based Model
(contd)
Resources
Capability
Competitive Advantage
Competitive advantage:
ability of a firm to
outperform its rivals.
Resource-Based Model
(contd)
Resources
Capability
Competitive Advantage
Attractive Industry
Attractive industry: an
industry with opportunities
that can be exploited by the
firms resources and
capabilities.
Resource-Based Model
(contd)
Resources
Capability
Competitive Advantage
Attractive Industry
Strategy Formulation
and Implementation
Strategy formulation
and implementation:
strategic actions taken
to earn above average
returns.
Resource-Based Model
(contd)
Resources
Capability
Competitive Advantage
Attractive Industry
Strategy Formulation
and Implementation
Superior Returns
Superior returns:
earning above-average
returns
I/O MODEL
RESOUCE BASED
MODEL