Your SlideShare is downloading. ×
McGraw-Hill Ryerson Copyright © 2006 by The McGraw-Hill ...
Upcoming SlideShare
Loading in...5

Thanks for flagging this SlideShare!

Oops! An error has occurred.

Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

McGraw-Hill Ryerson Copyright © 2006 by The McGraw-Hill ...


Published on

1 Like
  • Be the first to comment

No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

No notes for slide


  • 1. Chapter 1 Strategic Management: Creating Competitive Advantages: An Overview Part 1: Strategic Analysis
  • 2. Learning Objectives
        • The essence and definitions of strategy, strategic management, and competitive advantages.
        • The four key attributes of strategic management and the three principal and interrelated activities of the strategic management process.
        • The vital role of corporate governance and stakeholder management in the strategic management process and the long-term success of all organizations.
    • After reading this chapter, you should have a good understanding of:
  • 3. Learning Objectives
    • After reading this chapter, you should have a good understanding of:
      • The key environmental forces that create unpredictable change and call for a greater strategic management perspective throughout the organization.
      • How an awareness of a hierarchy of strategic goals can help an organization achieve coherence in its strategic direction.
  • 4. Two Perspectives on Leadership
    • Romantic view
      • Leader is the key force in organization’s success
    • External control perspective
      • Focus is on external factors that affect an organization’s success
  • 5. Two Perspectives on Leadership
    • Leaders can make a difference
      • Must be aware of opportunities and threats faced in external environment
      • Must have thorough understanding of the firm’s resources and capabilities
  • 6. Strategic Management
    • Analysis
      • Strategic goals (vision, mission, strategic objectives)
      • Internal and external environment of the firm
    • Decisions
      • What industries should we compete in?
      • How should we compete in those industries?
    • Actions
      • Allocate necessary resources
      • Design the organization to bring intended strategies to reality
  • 7. Strategic Management
    • Strategic management is the study of why some firms outperform others
      • How to compete in order to create competitive advantages in the marketplace
      • How to create competitive advantages in the market place
        • Unique and valuable
        • Difficult for competitors to copy or substitute
  • 8. Strategic Management Concepts
    • Definition: Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.
    • Key attributes of strategic management
      • Directs the organization toward overall goals and objectives.
      • Includes multiple stakeholders in decision making
      • Incorporates short-term and long-term perspectives
      • Recognizes trade-offs between efficiency and effectiveness
    Adapted from Exhibit 1.1 Strategic Management Concepts
  • 9. Strategic Management Process Adapted from Exhibit 1.2 Realized Strategy and Intended Strategy: Usually Not the Same Source:H. Mintzberg and J. A. Waters, “Of Strategies, Deliberate and Emergent,” Strategic Management Journal 6 (1985), pp. 257-72.
  • 10. Strategic Analysis
    • Starting point in the strategic management process
    • Precedes effective formulation and implementation of strategies
    Exhibit 1.3 The Strategic Management Process
  • 11. Strategic Analysis (cont.)
    • Clear goals and objectives permit effective allocation of resources
    • Hierarchy of goals
      • Vision
      • Mission
      • Strategic objectives
    Adapted from Exhibit 1.3 The Strategic Management Process
  • 12. Strategic Analysis (cont.)
    • Managers
      • Scan the environment
      • Analyze competitors
    • General environment
    • Industry environment
    Adapted from Exhibit 1.3 The Strategic Management Process
  • 13. Strategic Analysis (cont.)
    • Frameworks for analyzing a firm’s internal environment
      • Strengths
      • Weaknesses
    • Analyzing strengths can uncover potential sources of competitive advantage
    Adapted from Exhibit 1.3 The Strategic Management Process
  • 14. Strategic Analysis (cont.)
    • Intellectual assets are drivers of
      • Competitive advantages
      • Wealth creation
    • Networks and relationships among
      • Employees
      • Customers
      • Suppliers
      • Alliance partners
    Adapted from Exhibit 1.3 The Strategic Management Process
  • 15. Strategic Formulation
    • Successful firms develop bases for competitive advantage
      • Cost leadership
      • Differentiation
      • Focusing on narrow or industry-wide market segments
    • Sustainability
    • Industry life cycle
    Adapted from Exhibit 1.3 The Strategic Management Process
  • 16. Strategic Formulation (cont.)
    • Firm’s portfolio or group of businesses
      • What business(es) should we be in?
      • How can we create synergies among the businesses?
    • Diversification
      • Related
      • Unrelated
    Adapted from Exhibit 1.3 The Strategic Management Process
  • 17. Strategic Formulation (cont.)
    • Appropriate entry strategies
    • Sustain competitive advantage in global markets
    Adapted from Exhibit 1.3 The Strategic Management Process
  • 18. Strategic Formulation (cont.)
    • Digital technologies change the way business is conducted
      • Added value
      • Impact on performance
    • Digital technologies can enhance
      • Cost leadership
      • Differentiation
    Adapted from Exhibit 1.3 The Strategic Management Process
  • 19. Strategic Implementation
    • Informational control
      • Monitor and scan the environment
      • Respond effectively to threats and opportunities
    • behavioural control
    • Effective corporate governance
      • Interests of managers and owners of the firm
    Adapted from Exhibit 1.3 The Strategic Management Process
  • 20. Strategic Implementation (cont.)
    • Organizational structure and design
    • Organizational boundaries
      • Flexible
      • Permeable
    • Strategic Alliances
    Adapted from Exhibit 1.3 The Strategic Management Process
  • 21. Strategic Implementation (cont.)
    • Develop organization that is committed to
      • Excellence
      • Ethical behaviour
    • Learning organization responsive to
      • Rapid and unpredictable change in today’s competitive environments
    Adapted from Exhibit 1.3 The Strategic Management Process
  • 22. Strategic Implementation (cont.)
    • Corporate entrepreneurship and innovation
      • New opportunities
      • Enhance innovative capacity
      • Autonomous entrepreneurial behaviour
      • Product champions
    Adapted from Exhibit 1.3 The Strategic Management Process
  • 23. Strategic Implementation (cont.)
    • New ventures and small businesses
      • Major engine of economic growth
      • Recognize viable opportunities
      • Entrepreneurial leadership skills
    Adapted from Exhibit 1.3 The Strategic Management Process
  • 24. Corporate Governance and Stakeholder Management
    • Corporate governance: the relationship among various participants in determining the direction and performance of corporations
      • Shareholders
      • Management (led by the CEO)
      • Board of directors
  • 25. Corporate Governance and Stakeholder Management
    • Board of directors
      • Elected represent- atives of the owners
      • Ensure interests and motives of man- agement are aligned with those of the owners
        • Effective and engaged board of directors
        • Shareholder activism
        • Proper managerial rewards and incentives
  • 26. Stakeholder Management
    • Two views of stakeholder management
      • Zero sum
        • Stakeholders compete for attention and resources of the organization
        • Gain of one is a loss to the other
      • Symbiosis
        • Stakeholders are dependent upon each other
        • Mutual benefits
  • 27. Social Responsibility
    • Social responsibility: the expectation that businesses or individuals will strive to improve the overall welfare of society
      • Managers must take active steps to make society better
      • Socially responsible behaviour changes over time
      • Triple Bottom Line
  • 28. Four Additional Types of Capital
    • In addition to financial capital
    Type of Capital Description Ecological Renewable resources generated by living systems, such as wood or animal by-products Material Nonrenewable or geological resources such as mineral ores and fossil fuels Human People’s knowledge, skills, health, nutrition, safety, security, and motivation Social Assets of civil society, such as social cohesion, trust, reciprocity, equity, and other values that provide mutual benefit
  • 29. Strategic Management Perspective
    • Integrative view of the organization
    • Assess how functional areas and activities “fit together” to achieve goals and objectives
    • All managers and employees must take and integrative, strategic perspective of issues facing the organization
  • 30. Strategic Management Perspective
    • Key driving forces increasing the need for strategic perspective and involvement
      • Globalization
      • Technology
      • Intellectual capital
    • These forces are
      • Interrelated
      • Accelerating the rate of change and uncertainty
  • 31. Enhancing Employee Involvement
    • Have significant profit and loss responsibility
    Local Line Leaders
  • 32. Enhancing Employee Involvement
    • Champion and guide ideas
    • Create a learning infrastructure
    • Establish a domain for taking action
    Executive Leaders Local Line Leaders
  • 33. Enhancing Employee Involvement
    • Have little positional power and formal authority
    • Generate their power through the conviction and clarity of their ideas
    Internal Networkers Local Line Leaders Executive Leaders
  • 34. Coherence in Strategic Direction
    • Company vision
    • Massively inspiring
    • Overarching
    • Long-term
    • Driven by and evokes passion
    • Fundamental statement of the organization’s
      • Values
      • Aspiration
      • Goals
    Company vision Hierarchy of Goals
  • 35. Coherence in Strategic Direction
    • Mission statements
    • Purpose of the company
    • Basis of competition and competitive advantages
    • More specific than vision
    • Focused on the means by which the firm will compete
    Mission statements Hierarchy of Goals Company vision
  • 36. Coherence in Strategic Direction
    • Strategic objectives
    • Operationalize the mission statement
    • Provide guidance on how the organization can fulfill or move toward the “higher goals”
    • More specific
    • Cover a more well-defined time frame
    Strategic objectives Hierarchy of Goals Company vision Mission statements
  • 37. Coherence in Strategic Direction
    • Measurable
    • Specific
    • Appropriate
    • Realistic
    • Timely
    • Challenging
    • Resolve conflicts that arise
    • Yardstick for rewards and incentives
    Strategic objectives Hierarchy of Goals Company vision Mission statements Strategic objectives