Senior Seminar in Business AdministrationBUS499 Strategic Ma.docx

Senior Seminar in Business Administration
BUS499
Strategic Management and Strategic Competitiveness
Welcome to the Government Contract Law.
In this lesson we will discuss Strategic Management and
Strategic Competitiveness.
Please go to the next slide.
Objectives
Upon completion of this lesson, you will be able to:
Identify the vision, mission, and stakeholders of a firm
When you complete this lesson you will be able to:
Identify the vision, mission, and stakeholders of a firm.
Supporting Topics
The Competitive Landscape
The I/O Model of Above Average-Returns
The Resource-Based Model of Above Average-Returns
Vision and Mission
Stakeholders
Strategic Leaders
The Strategic Management Process

In order to achieve this objective, the following supporting
topics will be covered:
The competitive landscape;
The I/O model of above average-returns;
The resource-based model of above average-returns;
Vision and mission;
Stakeholders;
Strategic leaders; and
The strategic management process.
Competition is Changing
Money is scare
Markets are becoming volatile
Firms effectively using the strategic management process
Hypercompetition
Challenge competitors
Competition between many of the world’s industries is
changing. Many of these industries are competing due to money
being scare and markets becoming volatile. Boundaries that
once seemed drawn between industries are becoming blurred.
An example of this challenge would be the advances in

interactive computer networks and telecommunications. These
advancements have entered into the realm of the entertainment
industry. We also see that many partnerships in the
entertainment industry further blur the boundaries of the
industry. In order to be successful and maintain a competitive
edge, managers must adopt new strategies to stay current with
the evolving conditions.
Many firms effectively use the strategic management process to
help reduce the likelihood of failure with various challenges
they may encounter.
Hypercompetition is a term often used to illustrate the
competitive landscape. The conditions of hypercompetition
assume that market stability is replaced by notions of inherent
instability and change.
Hypercompetition results from the dynamics of strategic
maneuvering among global and innovative combatants. It is a
condition of rapidly escalating competition based on the
following:
Price quality positioning;
Competition to create new know-how and establish first mover
advantage; and
Competition to protect or invade established product or
geographic markets.
In a hypercompetitive market, firms will want to challenge their
competitors with the end goal of improving their competitive
position and performance. The emergence of a global economy
and technology along with specifically rapid technological
changes are the two primary elements of hypercompetitive
environments and help create today’s competitive landscape.

4
The Competitive Landscape, continued
Global Economy
Helps create opportunities and challenges
Examples
European Union
700,000,000 potential customers
China
Seen as a low competition market and low cost producer
Now is an extremely competitive market
A global economy refers to the goods, services, people, skills,
and ideas that move freely across geographic borders. The
emergence of the global economy helps create interesting
opportunities and challenges. For example, the European Union
has become one of the world’s largest markets, with seven
hundred million potential customers. For several years China
was seen as a low competition market and a low cost producer.
Today, China is now an extremely competitive market, with
local markets seeking MNCs or multinational corporations. Now
these local markets must fiercely compete against other MNCs
and those local companies that are more cost effective and
faster with their product development.
5
Globalization
Seen as a product of large firms competing against each other

Can increase the range of opportunities for companies
Higher Performance Standards
Firms must exceed global standards to earn above average
returns
Overdiversification
Globalization refers to a growing interdependence among
countries and their organizations, as shown by the flow of goods
and services, financial capital, and knowledge across the
countries’ borders. Globalization can be seen as a product of
large numbers of firms competing against each other throughout
a number of global economies.
In some globalized markets and industries, financial capital can
be obtained in one national market and used to buy raw
materials in another. This goes to show that globalization can
increase the range of opportunities for companies competing in
the current competitive landscape. Firms must make culturally
sensitive decisions when engaging in globalization with their
operations. Overall, it is important to note that globalization has
led to higher performance standards in many competitive
dimensions, including the following:
Quality;
Cost;
Productivity;
Product introduction time; and
Operational efficiency.
Firms must understand that in order to compete in today’s
world, companies must exceed global standards to earn above
average returns. Globalization, while positive, does offer
potential risks. Risks of participating outside of the firm’s
domestic country in the global economy is referred to as a
liability of foreignness. One risk of entering the global market

is the amount of time required for firms to learn the proper
ways to be competitive in new markets. If a firm does not grasp
the concepts of being competitive, their performance can suffer
until this knowledge is grasped sufficiently.
Additionally, a firm’s performance may suffer with substantial
amounts of globalization. A firm may suffer from this principle
by overdiversifying internationally beyond their ability. As a
result of this, overdiversification negatively affects a firm’s
overall performance.
Due to all of these possible issues, it is best to effectively use
the strategic management process. While getting involved in
global markets is an attractive option for some companies, it is
not the only way a company can be strategically competitive.
6
Technology Related Trends and Conditions
Technology Diffusion
Has increased greatly over 15-20 years
Perceptual innovation
Imitation of Competitor Actions
Technology-related trends and conditions can be placed into the
following three categories:
Technology diffusion and disruptive technologies;
The information age; and

Increasing knowledge intensity.
These three categories illustrate several different ways that
technology is significantly altering competition and
contributing to unstable competitive environments.
The rate of technology diffusion has increased greatly over the
past fifteen to twenty years. A word often used along with
technology diffusion is perpetual innovation. This term refers to
the rapidly and consistently new technologies that replace older
ones. A competitive premium is placed on being able to produce
new innovative and creative products quickly. We see that
products which are somewhat indistinguishable because of the
growth of technology use the speed to market strategy. These
new innovative products derive from an understanding of global
standards and expectations of product functionality.
Another indicator of rapid technology diffusion is that it now
may take less time for firms to gather information about their
competitors’ research, development and product decisions. We
see that in the global economy, competitors will often imitate a
firm’s successful competitive actions within a few days. As a
result of methods like this, we see a reduction in the
competitive benefits of patents. However, we also see that
patents used today are an effective way of protecting
proprietary technology.
7
Changes in Information Technology
Technological Developments
Cell phones, computers, and social networking
Declining Costs of Information Technologies

Global proliferation
Availability of Information Technologies
Internet
Price changes from ISPs
Hypercompetition
Dramatic changes in information technology have occurred in
recent years. Everything we use in our daily live, such as
personal computers, cellular phones, and multiple social
networking sites, shows the end result of technological
developments. An important outcome of these changes is the
ability to effectively and efficiently access and use information.
These information technology advances have given small firms
more flexibility in competing with large firms. Using
technology efficiently will help promote and increase
technology diffusion.
The declining costs of information technologies and the
increased accessibility to these technologies further paints an
image of the current competitive landscape. We also see that
the global proliferation of relatively inexpensive computing
power and the ability to link on a global scale via computer
networks further supports the diffusion of information
technologies.
Due to this unification and diffusion, the competitive potential
of information technologies is now available to companies of all
sizes throughout the world. The Internet has really boomed, and
is a centerpiece in our everyday lives. The Internet has also
promoted hypercompetition amongst its users. Because the
Internet is available to people throughout the world, it allows
the delivery of information to computers in any location. Access
to the Internet on smaller devices such as cell phones is another
aspect that is having an impact on competition between

companies.
However, there is a possibility that changes to Internet
Management and Strategic Competitiveness Service Providers’
or ISPs’ pricing structures could affect the rate of growth for
Internet-based applications. Many users today are downloading
or streaming high definition movies, playing video games
online, and so forth. If these pricing changes were to be
implemented, the users would be affected the most by a pricing
structure based around total usage.
8
Knowledge
Basis of technology and its applications
Shift from hard assets to intangible resources
Today’s competitive landscape puts a huge value on intangible
resources
Capturing Intelligence
Turn intelligence into usable knowledge
Gaining of a competitive advantage
Develop and acquire knowledge to integrate into the
organization
Strategic Flexibility
The basis of technology and its applications is knowledge. In
today’s competitive world, knowledge is a critical
organizational resource and increasingly a very valuable source
of competitive advantage. We saw that starting in the 1980s, the
basis of competition shifted from hard assets to intangible
resources. An example of intangible resources would be
relationships with customers and suppliers. Intangible resources

build knowledge through experience, observation, and
inference. Today’s competitive landscape puts a huge value on
intangible resources, and they are expanding as a proportion of
total shareholder value.
To enhance the probability of achieving strategic
competitiveness, firms want to develop the ability to capture
intelligence. They then want to transform this intelligence into
usable knowledge, and then diffuse it rapidly throughout the
company. Therefore, to gain a competitive advantage, firms
must develop and acquire knowledge and then integrate it into
the organization. Innovations require a strong knowledge base.
Firms that lack the appropriate internal knowledge resources are
less likely to invest money into research and development.
Knowledge spillovers are common, so firms must continue to
keep current with their information. Due to this risk of
spillovers, firms try to use their knowledge in productive ways.
Firms will often build routines that facilitate the diffusion of
local knowledge throughout the organization.
Strategic flexibility allows firms to get better in areas in which
they may be lacking Using strategic flexibility allows for a set
of capabilities to respond to various demands and opportunities
that exist in today's dynamic and uncertain competitive
environments. Being strategically flexible sometimes means
coping with uncertainty and risks that may follow. Firms should
try to develop strategic flexibility in all areas of their
operations. However, it is important for firms to develop
strategic flexibility because inertia can build up over time. It is
also important to note that a firm’s focus and past core
competencies may actually slow change and affect strategic
flexibility.

9
The I/O Model of Above- Average Returns
Determining Strategies to Be a Successful Firm
External Environment
1960s-1980s
Industrial Organization Model of Above-Average Returns
Performance based on range of industry properties
Contains four assumptions
Challenges firms to find the best industry to thrive in
From the 1960s through the 1980s, the external environment
was thought to be the most important factor in determining
strategies firms need in order to be successful. The external
environment’s influence on a firm's strategic actions is shown
using the industrial organization model of above-average
returns. This model specifies that the industry or segment of an
industry that chooses to compete in the market has a stronger
influence on performance than the decisions mangers make
within the company. The firm’s performance is believed to be
determined primarily by a range of industry properties,
including the following:
Economies of scale;
Barriers to market entry;
Diversification;
Product differentiation; and
The degree of concentration of firms in the industry.
Based around economics, the I/ O model contains four
underlying assumptions. The first assumption is that the
external environment is assumed to impose pressures and
constraints that determine the strategies of above-average
returns. Secondly, it is assumed that most firms competing
within an industry are controlled using similar strategically

relevant resources. These firms then pursue similar strategies in
light of those resources. The third assumption is that resources
used to implement strategies are highly mobile across firms.
This would mean that any resource differences that might
develop between firms will be short-lived. Lastly, it is assumed
that organizational decision-makers are rational and committed
to acting in the firm’s best interests. This can be attributed to
their various profit maximizing behaviors.
The I/ O model challenges firms to find the best industry to
thrive in. Since most firms have similar valuable resources that
are mobile, performance can only increase if they operate in an
area of high profit potential. It is also important to use
resources wisely to implement a successful strategy.
10
The I/O Model of Above-Average Returns, continued
The Five Forces Model of Competition
Suppliers
Buyers
Competitive Rivalry Among Industry Firms
Product Substitutes
Potential Entrants to the Industry
Many firms use this model to identify the attractiveness of an
industry
The five forces model of competition is an analytical tool that
firms use to help find the most attractive area of operation. The
model encompasses several variables and tries to capture the
complexity of competition. The five forces model suggests that
the industry’s profitability results from the interactions among
five forces which include the following:

Suppliers;
Buyers;
Competitive rivalry among current industry firms;
Product substitutes; and
Potential entrants to the industry.
Many firms use the five forces model to help them identify the
attractiveness of an industry, as well as to find the best area to
set up operations. This model promotes the idea that firms can
earn above-average returns by producing either standardized
goods or services at costs below those of competitors. These
firms can also produce differentiated goods or services for
which customers will pay a price premium.
11
The Resource- Based Model of Above Average Returns
Assumes Organizations Consist of Unique Resources and
Capabilities
Three Categories of Resources
Physical
Human
Organizational Capital
Either Tangible or Intangible
Capacities
Core Competencies

The next model we will look at is the resource-based model.
This model assumes that each organization consists of a group
of unique resources and capabilities. The basis of a firm’s
strategy and its ability to earn above-average returns is based
around the diversity of its resources and capabilities. Resources
are inputs into a firm’s production process. A firm’s resources
are classified into three categories, which include:
Physical;
Human; and
Organizational capital.
As we described previously, resources are either tangible or
intangible in nature. Individual resources alone may not yield a
competitive advantage. Capacities are a source of competitive
advantage and stem from resources. A capability is the capacity
for a set of resources to perform a task or an activity in an
integrative manner. These capabilities can evolve over time, and
managing them in a dynamic manner can help promote above-
average returns. Resources and capabilities serve as another
source of competitive advantage and are referred to as core
competencies. These core competencies are often visible in the
form of organizational functions.
12
The Resource- Based Model of Above Average Returns,
continued
Basis of Competitive Advantage
Resources and capabilities not being mobile across firms
Capabilities
Become stronger and more difficult to imitate
When Resources and Capabilities Don’t Yield a Competitive

Advantage
Valuable
Rare
Costly to Imitate
No substitutable
This model also assumes that firms acquire different resources
and develop unique capabilities based on how they combine and
use resources. The basis of competitive advantage with this
model stems from resources and capabilities not being highly
mobile across firms. Through continued use, capabilities
become stronger and more difficult for competitors to
understand and imitate. It is important to note that a capability
should not be too easy or too hard.
Not all of a firm’s resources and capabilities have the potential
to be the foundation for a competitive advantage. This potential
is realized when resources and capabilities are the following:
Valuable;
Rare
Costly to imitate; and
Nonsubstitutable.
Resources are deemed valuable when they allow a firm to take
advantage of opportunities or neutralize threats in the external
environment. When resources are labeled as rare, they are
possessed by few current or potential competitors. Resources
that are costly to imitate are often non-obtainable or obtainable
only at a cost disadvantage. They are nonsubstitutable when
they have no structural equivalents. Many resources can either
be imitated or substituted over time. Due to this, it is hard to
achieve and maintain a competitive advantage based on
resources alone. Integration of individual resources is often
completed in the form of capabilities. These capabilities are

more likely to have the four attributes we reviewed.
When these four criteria are met, resources and capabilities
form core competencies. As noted previously, research shows
that both the industry environment and a firm’s internal assets
affect that firm’s performance over time.
13
Strategic Competitiveness & Competitive Advantage
Strategic Competitiveness
Value-creating strategy
Strategy
Competitive Advantage
Competitors do not duplicate
No competitive advantage is permanent
Strategic competitiveness is achieved when a firm successfully
formulates and implements a value-creating strategy. A strategy
is an integrated and coordinated set of commitments and actions
designed to exploit core competencies and gain a competitive
advantage. When choosing a strategy, firms make choices
among competing alternatives. In this sense, the chosen strategy
indicates what the firm intends to do, as well as what it does not
intend to do.
A firm has a competitive advantage when it implements a
strategy competitors are unable to duplicate or find too costly to
try to imitate. An organization can be confident that its strategy
has resulted in one or more useful competitive advantages only
after competitors’ efforts to duplicate its strategy have ceased
or failed. In addition, firms must understand that no competitive

advantage is permanent. The speed with which competitors are
able to acquire the skills needed to duplicate the benefits of a
firm’s value-creating strategy determines how long the
competitive advantage will last.
Above-Average Returns
Definition
Exploiting a competitive advantage
Average returns
Above-average returns are returns in excess of what an investor
expects to earn from other investments with a similar amount of
risk. Risk is an investor’s uncertainty about the economic gains
or losses that will result from a particular investment. Returns
are often measured in terms of accounting figures, such as
return on assets, return on equity, or return on sales.
Alternatively, returns can be measured on the basis of stock
market returns, such as monthly returns.
In smaller, new venture firms, performance is sometimes
measured in terms of the amount and speed of growth rather
than more traditional profitability measures, because new
ventures require time to earn acceptable returns on investors’
investments. Understanding how to exploit a competitive
advantage is important for firms that seek to earn above-average
returns.
Firms without a competitive advantage or that are not
competing in an attractive industry earn, at best, average
returns. Average returns are returns equal to those an investor
expects to earn from other investments with a similar amount of
risk. In the long run, an inability to earn at least average returns
results in failure. Failure occurs because investors withdraw

their investments from those firms earning less-than-average
returns.
Stakeholders
Affect the vision and mission
Affected by strategic outcomes achieved
Have enforceable claims
Not every stakeholder has the same level of influence
Every organization involves a system of primary stakeholder
groups with whom it establishes and manages relationships.
Stakeholders are the individuals and groups who can affect the
vision and mission of the firm, are affected by the strategic
outcomes achieved, and have enforceable claims on the firm’s
performance. Claims on a form’s performance are enforced
through the stakeholders’ ability to withhold participation
essential to the organization’s survival, competitiveness, and
profitability. Stakeholders continue to support an organization
when its performance meets or exceeds their expectations. Also,
recent research suggests that firms that effectively manage
stakeholder relationships outperform those that do not.
Stakeholder relationships can therefore be managed to be a
source of competitive advantage.
Although organizations have dependency relationships with
their stakeholders, they are not equally dependent on all
stakeholders at all times. As a consequence, not every
stakeholder has the same level of influence. The more critical
and valued a stakeholder’s participation, the greater a firm’s
dependency on it. Greater dependence, in turn, gives the
stakeholder more potential influence over a firm’s
commitments, decisions, and actions. Managers must find ways
to either accommodate or insulate the organization from the

demands of stakeholders controlling critical resources.
Stakeholders, continued
Capital market holders
Shareholders and major suppliers
Product market holders
Customers, suppliers, host communities, and unions
Organizational stakeholders
Employees
The parties involved with a firm’s operations can be separated
into at least three groups. These groups are the capital market
holders, the product market stakeholders, and the organizational
stakeholders.
Shareholders and the major suppliers of a firm’s capital
constitute the capital market holders. Shareholders and lenders
both expect a firm to preserve and enhance the wealth they have
entrusted to it. The returns they expect are commensurate with
the degree of risk accepted with those investments. Dissatisfied
lenders may impose stricter covenants on subsequent borrowing
of capital. Dissatisfied shareholders may reflect their concerns
through several means, including selling their stock.
Some might think that product market stakeholders, customers,
suppliers, host communities, and unions, share few common
interests. However, all four groups can benefit as firms engage
in competitive battles. For example, depending on product and
industry characteristics, marketplace competition may result in
lower product prices being charged to a firm’s customers and
higher prices being paid to its suppliers.
Employees, the firm’s organizational stakeholders, expect the

firm to provide a dynamic, stimulating, and rewarding work
environment. As employees, we are usually satisfied working
for a company that is growing and actively developing our
skills, especially those skills required to be effective team
members and to meet or exceed global work standards. Workers
who learn how to use new knowledge productively are critical
to organizational success. In a collective sense, the education
and skills of a firm’s workforce are competitive weapons
affecting strategy implementation and firm performance.
Vision
Points the firm in the direction of where it would like to be
Reflect a firm’s values and aspirations
Enduring
Relatively short and concise
CEO is responsible for working with others to form the firm’s
vision
Vision is a picture of what the firm wants to be and, in broad
terms, what it wants to ultimately achieve. Thus, a vision
statement articulates the ideal description of an organization
and gives shape to its intended future. In other words, a vision
statement points the firm in the direction of where it would
eventually like to be in the years to come.
It is also important to note that vision statements reflect a
firm’s values and aspirations and are intended to capture the
heart and mind of each employee and, hopefully, many of its
other stakeholders.
A firm’s vision tends to be enduring while its mission can
change in light of changing environmental conditions.

A vision statement tends to be relatively short and concise,
making it easily remembered.
As a firm’s most important and prominent strategic leader, the
CEO is responsible for working with others to form the firm’s
vision. Experience shows that the most effective vision
statement results when the CEO involves a host of people to
develop it.
Check Your Understanding
19
Mission
Vision is the foundation for the firm’s mission
Specifies businesses in which to compete and customers to
serve
Should establish a firm’s individuality
Should be inspiring and relevant to all stakeholders
Business ethics are a vital part
The vision is the foundation for the firm’s mission.
A mission specifies the business or businesses in which the firm
intends to compete and the customers it intends to serve. The
firm’s mission is more concrete than its vision.

However, like the vision, a mission should establish a firm’s
individuality and should be inspiring and relevant to all
stakeholders. Together, vision and mission provide the
foundation the firm needs to choose and implement one or more
strategies.
The probability of forming an effective mission increases when
employees have a strong sense of the ethical standards that will
guide their behaviors as they work to help the firm reach its
vision. Thus, business ethics are a vital part of the firm’s
discussions to decide what it wants to become as well as who it
intends to serve and how it desires to serve those individuals
and groups.
Strategic Leaders
Strategic Leaders
People located in different areas and levels of the firm
Qualities
Organizational Cultures
Force that drives or fails to drive the organization
We will now discuss strategic leaders. Strategic leaders are
defined as people located in different areas and levels of the
firm. These leaders use the strategic management process help
them select strategic actions that can help the firm achieve its
goals. There are several qualities that define a strategic leader
and they include the following:
Successful strategic leaders are decisive;
They are committed to nurturing those around them; and
These leaders are committed to helping the firm promote and
create value with all stakeholders.

CEOs and other high ranking mangers are often who we think of
when we talk about strategic leaders. These managers are indeed
looked upon as strategic leaders. CEOs have the responsibility
of making sure their firm uses the strategic management process
correctly. There is a lot of pressure and stress for CEOs to make
the best decisions involving their firm. There are however, other
members of a firm that aid in the determination of firm
decisions. Understanding how to effectively delegate strategic
responsibilities to people throughout the firm is very quality of
CEOs and top level managers. Delegation is very important
within a firm because it helps alleviate too much manager
control at the top of the firm.
We also see that the organizational culture of a firm has an
effect on strategic leaders and their work. Strategic leaders’
decisions and actions shape a firm’s culture. We defined
organizational culture as a set of complex ideologies, symbols,
and core values that are shared throughout the firm. These
ideologies in turn can influence how the firm conducts business.
The organizational culture is force that drives or fails to drive
the organization. It is important to understand that some
organizational cultures are a source of disadvantage. As a result
of this concept it is important for strategic leaders to understand
that regardless if the firm’s culture is functional or
dysfunctional; their effectiveness is influenced by that culture.
The relationship formed between the organizational culture and
strategic leaders’ help shape the leader’s leadership skills and
aids in the evolution of the organizational culture of the firm.
21
Strategic Leaders, continued
Characteristics
Strategic orientation

Promote innovation
Innovative thinking
Add ideas to a global mindset
Effective Strategic Leaders
Provide a vision as the foundation of the firm’s mission
Use one or more strategies
Strategic leaders must also have a strong strategic orientation
characteristic. They must be able to embrace change and deal
with it effectively. Strategic leaders can adapt to this
competitive landscape by promoting innovation and by
embracing innovative thinking. To promote innovation it must
be facilitated by a diverse management team that represents
different types of expertise and leveraging relationships.
Leveraging by strategic leaders can be completed when their
organizations are ambidextrous. This means that the
organization must promote exploratory and exploitative
learning. This process then allows incremental knowledge to be
added to existing knowledge bases. The end result is a better
understanding and use of existing products. To take this a step
further strategic leaders need to adapt these ideas in to a global
mindset and take on an ambicultural approach to management.
The most effective strategic leaders provide a vision as the
foundation for the firm’s mission and use of one or more
strategies.
22
Strategic Leaders, continued
Predicting of Outcomes Based on Decisions
Concerned with an uncertain future
Future plans

Mapping an industry’s profit pool
Analyzing the Profit Pool
Define pool boundaries
Estimate the pool’s overall size
Estimate the size of the value-chain activity
Reconcile the calculations
Strategic leaders attempt to predict the outcomes of their
decisions before taking efforts to implement them. Many
decisions made during the strategic management process are
concerned with an uncertain future and the firm’s future plans.
Managers try to combat uncertainty by trying to predict the
future effects on the firm’s profits as a result of strategic
decisions. Mapping an industry’s profit pool is something
strategic leaders can do to anticipate the possible outcomes of
different decisions and to focus on growth in profits rather than
strictly growth in revenues. A profit pool entails the total
profits earned in an industry at all points along the value chain.
Analyzing the profit pool in the industry may help a firm see
something others are unable to see and to understand the
primary sources of profits in an industry. There are four steps to
identifying profit pools which include the following:
Step one define the pool’s boundaries. A profit pool entails the
total profits earned in an industry at all points along the value;
Step two estimate the pool’s overall size;
Step three estimate the size of the value- chain activity in the
pool; and
Step four reconcile the calculations.

Profit pools are a potentially useful tool that can assist in the
actions being taken increase the likelihood of increasing profits.
It is important to note that profits made by a firm and in an
industry can be partially interdependent on the profits earned in
adjacent industries. An example of this would be the, profits
earned in the energy industry and how they can affect profits in
other industries. When oil prices are high, it can reduce the
profits earned in industries that must use a lot of energy to
provide their goods or services.
23
Strategic Management Process
Analyze external and internal environments
Develop mission and vision
Continuously evolving strategies
The strategic management process is the full set of
commitments, decisions, and actions required for a firm to
achieve strategic competitiveness and earn above-average
returns. The firm’s first step in the process is to analyze its
external and internal environments to determine its resources,
capabilities, and core competencies, the source of its strategic
inputs.
With this information, the firm develops its vision and mission
and formulates its strategy. To implement this strategy, the firm
takes actions toward achieving strategic competiveness and
above-average returns. Effective strategic actions that take
place in the context of carefully integrated strategy formulation
and implementation actions result in desired strategic outcomes.

It is a dynamic process, as ever-changing markets and
competitive structures are coordinated with a firm’s
continuously evolving strategic inputs.
Summary
The I/O Model of Above Average-Returns
The Resource-Based Model of Above Average-Returns
Vision and Mission
Stakeholders
Strategic Leaders
The Strategic Management Process
We have reached the end of this lesson. Let’s take a look at
what we have covered.
First, we discussed strategic competitiveness and competitive
advantage. Strategic competitiveness is achieved when a firm
successfully formulates and implements a value-creating
strategy. A firm has a competitive advantage when it
implements a strategy competitors are unable to duplicate or
find too costly to try to imitate.
Next, we went over above-average returns. Above-average
returns are returns in excess of what an investor expects to earn
from other investments with a similar amount of risk.
We then discussed stakeholders. Stakeholders are the
individuals and groups who can affect the vision and mission of
the firm, are affected by the strategic outcomes achieved, and
have enforceable claims on the firm’s performance.
Next, we talked about a firm’s vision and mission. Vision is a

picture of what the firm wants to be and, in broad terms, what it
wants to ultimately achieve. A mission specifies the business or
businesses in which the firm intends to compete and the
customers it intends to serve.
We concluded the lesson with a discussion on the strategic
management process. The strategic management process is the
full set of commitments, decisions, and actions required for a
firm to achieve strategic competitiveness and earn above-
average returns.
This completes this lesson.
PROPERTIES
On passing, 'Finish' button: Goes to Next SlideOn failing,
'Finish' button: Goes to Next SlideAllow user to leave quiz: At
any timeUser may view slides after quiz: At any timeUser may
attempt quiz: Unlimited times

Senior Seminar in Business AdministrationBUS499 Strategic Ma.docx

Recommended

Recommended

More Related Content

Similar to Senior Seminar in Business AdministrationBUS499 Strategic Ma.docx

Similar to Senior Seminar in Business AdministrationBUS499 Strategic Ma.docx (20)

More from klinda1

More from klinda1 (20)

Recently uploaded

Recently uploaded (20)

Senior Seminar in Business AdministrationBUS499 Strategic Ma.docx