P. Norman, BUS 4385 Key Points:

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P. Norman, BUS 4385 Key Points:

  1. 1. Key Points: Chapter 1: Introduction <ul><li>Overview of the Strategic Management Process </li></ul><ul><ul><li>Competitive Advantage </li></ul></ul><ul><ul><li>I/O Model of Above-Average Returns </li></ul></ul><ul><ul><li>Resource-Based Model of Above-Average Returns </li></ul></ul><ul><ul><li>Understand the importance and role of strategic intent and mission </li></ul></ul><ul><ul><li>Identify the concerns, interests, and claims of key stakeholders </li></ul></ul><ul><ul><li>Basic understanding of corporate culture </li></ul></ul>
  2. 2. Competitive Advantage <ul><li>Competitive Advantage: implementing a value-creating strategy that other firms are unable or unwilling (e.g., too costly) to duplicate </li></ul><ul><li>Allows a firm to achieve above-average returns </li></ul><ul><li>How long does competitive advantage from a particular strategy last? </li></ul>
  3. 3. Why is creating a successful strategy and sustaining a competitive advantage so challenging?
  4. 4. Figure 1.1: The Strategic Management Process Chapter 3 Internal Environment Chapter 2 External Environment Strategic Intent Strategic Mission Strategic Competitiveness Above Average Returns Strategy Formulation Chapter 4 Business-Level Strategy Chapter 5 Competitive Dynamics Chapter 6 Corporate-Level Strategy Chapter 8 International Strategy Chapter 9 Cooperative Strategies Chapter 7 Acquisitions & Restructuring Strategy Implementation Chapter 10 Corporate Governance Chapter 11 Structure & Control Chapter 12 Strategic Leadership Chapter 13 Entrepreneurship & Innovation Strategic Outcomes Strategic Actions Strategic Inputs
  5. 5. Figure 1.3: The I/O Model of Superior Returns The External Environment Study the general, industry, and competitive environment An Attractive Industry Find an industry in which your firm can get above-ave. returns Strategy Formulation Select the strategy linked with above-ave. returns for industry Assets and Skills Develop or acquire assets and skills to implement the strategy Strategy Implementation Take actions to effectively implement the strategy Superior Returns Earn above-average returns
  6. 6. Figure 1.4: The Resource-Based Model of Superior Returns Resources Inputs into a firm’s production process Capability Integrated set of resources that perform a task or activity Competitive Advantage Resource and capabilities allow the firm to outperform rivals An Attractive Industry An industry that allow a firm to exploit its resources and capabilities Strategy Formulation and Implementation Take actions to compete in industry Superior Returns Earn above-average returns
  7. 7. Assumptions <ul><li>I/O Model </li></ul><ul><li>External environment is the basis of strategy and profits </li></ul><ul><li>Firms have similar resources and strategies </li></ul><ul><li>Resource are highly mobile across firms </li></ul><ul><li>Decision-makers are rational and act in best interest of firm </li></ul><ul><li>Resource-Based Model </li></ul><ul><li>Resources and capabilities are basis of strategy and profits </li></ul><ul><li>Firms have different resources and strategies </li></ul><ul><li>Resource may not be highly mobile across firms </li></ul>
  8. 8. Strategic Intent and Mission <ul><li>Strategic Intent </li></ul><ul><ul><li>Leveraging of a firm’s internal resources, capabilities, and core competencies to accomplish the firm’s goals </li></ul></ul><ul><ul><li>Stretch goals </li></ul></ul><ul><ul><li>Internally focused </li></ul></ul><ul><li>Strategic Mission </li></ul><ul><ul><li>Statement of a firm’s unique purpose and the scope of its operations in product and market terms </li></ul></ul><ul><ul><li>Externally focused </li></ul></ul>
  9. 9. Stakeholders <ul><li>Stakeholders: People who are affected by a firm’s performance or who have claims on its performance </li></ul><ul><li>Types </li></ul><ul><ul><li>Capital Market (shareholders and suppliers of capital) </li></ul></ul><ul><ul><li>Product Market (external parties who are not capital market stakeholders) </li></ul></ul><ul><ul><ul><li>Customers, suppliers, host communities, unions </li></ul></ul></ul><ul><ul><li>Organizational (employees) </li></ul></ul>
  10. 10. Organizational Culture <ul><li>Complex set of ideologies, symbols, and core values shared throughout the firm and that influence the way it conducts business </li></ul><ul><li>Top managers role </li></ul><ul><li>Difficult to change </li></ul>

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