Chapter 1: Strategic Management and Strategic Competitiveness 1-1 Chapter 1 Strategic Management and Strategic Competitiveness KNOWLEDGE OBJECTIVES 1. Define strategic competitiveness, strategy, competitive advantage, above-average returns, and the strategic management process. 2.Describe the competitive landscape and explain how globalization and technological changes shape it. 3. Use the industrial organization (I/O) model to explain how firms can earn above-average returns. 4. Use the resource-based model to explain how firms can earn above average-returns. 5. Describe vision and mission and discuss their value. 6. Define stakeholders and describe their ability to influence organizations. 7. Describe the work of strategic leaders. 8. Explain the strategic management process. 1 Define strategic competitiveness, strategy, competitive advantage, above-average returns, and the strategic management process. Strategic competitivenessis achieved when a firm successfully formulates and implements a value-creating strategy. By implementing a value-creating strategy that current and potential competitors are not simultaneouslyimplementing and that competitors are unableto duplicate, or find too costly to imitate, a firm achieves a competitive advantage.Strategy can be defined as an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. So long as a firm can sustain (or maintain) a competitive advantage, investors will earn above-average returns. Above-average returnsrepresent returns that exceed returns that investors expect to earn from other investments with similar levels ofrisk(investor uncertainty about the economic gains or losses that will result from a particular investment). In other words, above average-returns exceed investors' expectedlevels of return for given risk levels. In smaller new venture firms, performance is sometimes measured in terms of the amount and speed of growth rather than more traditional profitability measures –new ventures require time to earn acceptable returns. A framework that can assist firms in their quest for strategic competitiveness is the strategic management process, the full set of commitments, decisions and actions required for a firm to systematically achieve strategic competitiveness and earn above-average returns. This process is illustrated inFigure 1.1. FIGURE 1.1 - The Strategic Management ProcessFigure 1.1illustrates the dynamic, interrelated nature of the elements of the strategic management process and provides an outline of where the different elements of the process are covered in this text. Feedback linkages among the three primary elements indicate the dynamic nature of the strategic management process: strategic inputs, strategic actions and strategic outcomes. Strategic inputs, in the form of information gained by scrutinizing the internal environment and scanning the external environment, are used to develop the firm's vision and mission. Strategic actions
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- Summer '12
- Business, Management, Strategic Management and Strategic Competitiveness