Strategic Management & Strategic Competitiveness Chp1

Strategic Management & Strategic Competitiveness Chapter One

© 2006 by Nelson, a division of Thomson Canada Limited.

1-1

The Strategic Management Process.

1-2

“Canada is rather cool”*
*The Economist 2003

Canada is home not only to worldclass commercial competitors but to dominant companies in their industries

© 2006 by Nelson, a division of Thomson Canada Limited.

1-3Strategic Management and Strategic Competitiveness Knowledge objectives
1. 2. Define strategic competitiveness, competitive advantage and above average returns. Describe the 21st century competitive landscape and explain how globalization and technological changes shape it. Use the industrial organization (I/O) model to explain how firms can earn above average returns. Use the resource-basedmodel to explain how firms can earn above-average returns.

3. 4.

© 2006 by Nelson, a division of Thomson Canada Limited.

1-4

Strategic Management and Strategic Competitiveness Knowledge objectives – continued…
5. 6. 7. 8. Describe strategic intent and strategic mission and discuss their value. Define stakeholders and describe their ability to influence organizations. Describestrategists’ work. Explain the strategic management process.

© 2006 by Nelson, a division of Thomson Canada Limited.

1-5

Desired Strategic Outcomes Strategic Competitiveness
Achieved when a firm successfully formulates and implements a value-creating strategy.

Sustained Competitive Advantage
Occurs when a firm develops a strategy that competitors are not simultaneously implementing.Provides benefits which current and potential competitors are unable to duplicate.

Above-Average Returns
Returns in excess of what an investor expects to earn from other investments with similar risk.
© 2006 by Nelson, a division of Thomson Canada Limited. 1-6

Important definitions Risk
An investor’s uncertainty about the economic gains or losses resulting from a particular investment.Average returns
Returns equal to what an investor expects from other investments with similar amount of risk.

Strategic management process
The full set of committee's decisions and actions required for a firm to achieve strategic competitiveness and earn above average returns.
© 2006 by Nelson, a division of Thomson Canada Limited. 1-7

The Strategic Management Process

The full set ofcommitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns. above-

© 2006 by Nelson, a division of Thomson Canada Limited.

1-8

The Strategic Management Process

© 2006 by Nelson, a division of Thomson Canada Limited.

1-9

What is Strategy? • An integrated and coordinated set of commitments & actions designed to exploitcore competencies and gains and gain a competitive advantage.

© 2006 by Nelson, a division of Thomson Canada Limited.

1-10

What is Strategy?
“A unified, comprehensive, and integrated plan designed to ensure that the basic objectives of the enterprise are achieved.” (Glueck, 1980:9) “The pattern or plan that integrates an organization’s major goals, policies, and action sequences into acohesive whole.” (Quinn, 1980) “A pattern of resource allocation that enables firms to maintain or improve their performance. “A good strategy… neutralizes threats and exploits opportunities while capitalizing on strengths and avoiding or fixing weaknesses.” (Barney, 1997:17)
© 2006 by Nelson, a division of Thomson Canada Limited. 1-11

Intended, Emergent and Realized Strategies

© 2006 byNelson, a division of Thomson Canada Limited.

1-12

Alternative Models of Superior Returns
Industrial Organization Model

The External Environment An Attractive Industry Strategy Formulation Assets and Skills Strategy Implementation Superior Returns

O I

ResourceBased Model
Resources Capabilities Competitive Advantage An Attractive Industry Strategy Implementation Superior Returns...