CHAPTER 1: Strategic Management and Competitiveness
Strategic Competitiveness is achieved when a firm successfully formulates and implements a value-creating strategy.
A strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage.
It determines WHAT THE FIRM WILL DO ANDWHAT WILL NOT DO.
A firm has a competitive advantage when it implements a strategy competitors are unable to duplicate or find too costly to try to imitate.
Above average returns are returns in excess of what an investor expects to earn from other investments with a similar amount of risk.
Risk is an investor’s uncertainty about the economic gains or losses that will result from a particularinvestment.
THE MOST SUCCESFUL COMPANIES LEARN HOW TO EFFECTIVELY MANAGE RISK.
Average returns are returns equal to those an investor expects to earn from other investments with a similar amount of risk.
The 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.
Hypercompetition. The emergence of a global economy and technology, specifically rapid technological change, are the two primary drivers of hypercompetitive environments and the nature of today’s competitive landscape.
A global economy is one in which goods, services, people, skills, and ideas move freely across geographic borders.
Relatively unfettered by artificial constraints,such as tariffs, the global economy significantly expands and complicates a firm’s competitive environment.
Globalization is the increasing economic interdependence among countries and their organizations as reflected in the flow of goods and services, financial capital, and knowledge across country borders.
Globalization has led to higher levels of performance standards in many competitivedimensions, including those of quality, cost, productivity, product introduction time, and operational efficiency.
Technology related trends and conditions can be placed into three categories: technology diffusion and disruptive technologies, the information age, and increasing knowledge intensity.
Technology diffusion is the speed at which new technologies become available and are used.
Ittook the telephone 35 years to get into 25% of all homes in the US. It took TV 26 years, it took radio 22 years, it took PCs 16 years. It took the Internet 7 years.
Perpetual innovation means how rapidly and consistently new, information-intensive technologies replace older ones.
Disruptive technologies are the technologies that destroy the value of an existing technology and create new markets.The information age. The declining costs of information technologies and the increased accessibility to them are also evident in the current competitive landscape.
Increasing Knowledge intensity. Knowledge (information, intelligence, and expertise) is the basis of technology and its application.
Knowledge is gained through experience, observation, and inference and is an intangible resource.Strategic flexibility is a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment.
THE I/O MODEL OF ABOVE-AVERAGE RETURNS
It explains 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 astronger influence on performance than do the choices managers make inside their organizations.
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...