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Strategic Management. Strategic management requires an understanding of: Strategic management process How to develop an overall strategy Intended targets of the strategy. Competitive Advantage. Competitive advantage

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strategic management
Strategic Management

Strategic management requires an understanding of:

  • Strategic management process
  • How to develop an overall strategy
  • Intended targets of the strategy
competitive advantage
Competitive Advantage

Competitive advantage

  • The ability of a firm to win consistently over the long term in a competitive situation
  • Competitive advantage is created through the achievement of four qualities

Superior Value

Rarity

Difficult to Imitate

Non-substitutability

  • A competitive advantage should generate above-average returns: profits that are greater than the average for a comparable set of firms
strategic management process setting direction
Strategic Management Process: Setting Direction

Strategic management process is a planning process in which managers:

  • Set the organization's general direction and objectives
  • Formulate a specific strategy
  • Plan and carry out the strategy’s implementation
  • Monitor results and make necessary adjustments
strategic management process
Strategic Management Process

Determine strategic vision

Define organizational mission

Analyze external environment

Analyze internal resources

Establish objectives

Formulate strategy

  • Implement strategy
  • Action plans
  • Implement plans
  • Monitor outcomes

Adapted from Exhibit 5.1

determining the strategic vision
Determining the Strategic Vision

Strategic vision: provides a view of the firm over the long term and what it should achieve in the future.

  • Strategic vision:
    • Provides general identity, direction, and level of aspirations
    • Is the heart of the strategy and strategic plan
    • Is short and compelling
mission statement
Mission Statement

Mission statement articulates fundamental purpose of the organization

  • Company philosophy
  • Company identity, or self-concept
  • Principal products or services
  • Customers and markets
  • Geographic focus
  • Obligations to shareholders
  • Commitment to employees
external environmental analysis
External Environmental Analysis

Managers must conduct an analysis of the firm’s general environment:

  • Social/cultural
  • Technological
  • Economic
  • Political/legal
  • Global

Techno-

logical

Environment

Social/

Cultural

Environment

The

Firm

Economic

Environment

Political/

Legal

Environment

Global

Environment

industry and competitive environment
Industry and Competitive Environment

New Entrants

Industry

competitors

Rivalry among

existing firms

Suppliers

Customers

Substitutes

profits and industry forces
Profits and Industry Forces
  • Few competitors
  • Quality-based competition
  • High entry barriers
  • Few new entrants
  • Many customers
  • Fragmented customers
  • Many suppliers

Higher

Profits

  • Many competitors
  • Price-based competition
  • Low entry barriers
  • Many new entrants
  • Many substitutes
  • Few customers
  • United customers
  • Few suppliers

Lower

Profits

Adapted from Exhibit 5.4

the value chain
The Value Chain

Primary Activities

Support Activities

integrating internal and external analyses
Integrating Internal and External Analyses

Internal environment

  • Strengths
  • Weaknesses
  • Tools
    • Core competencies framework
    • Resource analysis framework
    • Value chain framework

Internal Environment

SWOT

integrating internal and external analyses1
Integrating Internal and External Analyses

External environment

  • Opportunities
  • Threats
  • Tools
    • Product life cycle analysis
    • Portfolio analysis
    • Five forces framework

SWOT

External Environment

strategic objectives
Strategic Objectives

Strategic objectives translate the strategic intent and mission into concrete and measurable goals

  • Facilitates a firm's ability to
    • Allocate resources appropriately
    • Reach a shared understanding of priorities
    • Delegate responsibilities
    • Hold people accountable for results
formulating a strategy
Formulating a Strategy

Competitive strategy: determining how the company is going to compete and achieve its strategic objectives, mission, and ultimate strategic intent

  • Generic strategies
  • Techniques and tools
formulating a strategy1
Formulating a Strategy

Generic competitive strategies

  • Cost leadership
  • Differentiation
  • Focus

Other generic competitive strategies

  • Integrated Differentiation-Cost Leadership
  • Multipoint Competition
generic strategies and scope
Generic Strategies and Scope

General player whose product

or service features command

industry average prices but

whose costs are significantly

below the industry average

Example: Wal-Mart

Niche player with average

Prices and below-average costs

That focuses on a segment of

customers or a specific

geography

Example: Columbia Sports

Cost leadership

Strategy

General player whose product

or service features command

premium prices and whose

costs are at the industry

average

Example: Sony

Niche player with average costs

but commanding premium

prices that focuses on the high

end and customers in a general

or specific geography

Example: Morgan Motors

Differentiation

General

Focused

Scope

strategy implementation

Strategy

Skills

Structure

Shared

Values

Systems

Staff

Style

Strategy Implementation