Creating Competitive Advantage
1. What is exciting about strategic management and why should we study it? Creating
2. Why out of 500 companies in 1950s in S&P 500, less than 71 of them are still there?
Lost competitive advantage *lea
Corporate governance the relationship among various participants in determining the
direction and performance of corporations.
The primary participants are
o (1) The shareholders
o (2) The management (led by the chief executive office
The bargaining power of the buyer: Can the buyers force the firm to have lower profit?
If a firm has a single buyer: buyers have more power
If firms product is a commodity: buyers have more power
If buyers have lower switching cost than
Predicting and detecting changes in our environment such as:
o Time to market - How can we help it?
o Shifting roles and responsibilities - Engineering jobs
Monitoring the evolution and the se
Sociocultural segment: includes the values and beliefs and lifestyle.
More women at work , more business clothes, cooking
More temp workers
Better life style (dual income)
Health and fitness
Daycare and having children later in life
Making Strategic Decisions and the Impacts on Them
Some key driving forces to involve the entire organization in the firms strategic decisions:
Globalization branches all over the world new ideas, new technology, new customers
o All business now is global
The External Environment
Chinas growing market of consumers:
Today china has 25% of all household savings and in 2025 they will have 60% of the
Why should we analyze our competitive environment?
IBC: (1930 2004): costs and inn
The General Environment
Focuses on the following factors that have dramatic affect on the firms strategy:
o Demographic Genetic and observable characteristics of a population, including
the levels of growth of age, density, sex, race, ethnicity, education
Threat of New Entrants into the Market
The threat of the substitute products and services: the probability that firms product would be
replaced by other products.
Example: a Generic drug product replaced a brand name drug, steel was replaced by
Porters 5-Force Models
Porters 5-force model of the industry competition: It is used to determine the firms
competitiveness and/or our industry.
1. The treat of new entrants the possibility that the profits of established firms in the
industry may be erod