This document provides an overview of strategic management concepts. It defines key terms like strategic competitiveness, competitive advantage, and above-average returns. It describes models for achieving returns, like utilizing resources and capabilities. It also outlines the strategic management process of analyzing internal/external environments to formulate strategies to implement and achieve strategic competitiveness.

1. © 2006 by Nelson, a division of Thomson Canada Limited. 1- Strategic Management & Strategic Competitiveness Chapter One 0 © 2006 by Nelson, a division of Thomson Canada Limited.

2. “ Canada is rather cool”* * The Economist 2003 Canada is home not only to world-class commercial competitors but to dominant companies in their industries © 2006 by Nelson, a division of Thomson Canada Limited. 1- 0

3. Strategic Management & Competitiveness Knowledge Objectives Define strategic competitiveness, competitive advantage and above average returns. Describe the 21 st century competitive landscape & ex-plain how globalization & technological changes shape it. Use the industrial organization (I/O) model to explain how firms can earn above average returns. Use the resource-based model to explain how firms can earn above-average returns. Describe strategic intent and strategic mission and discuss their value. 6. Describe stakeholders & their ability to influence firms. Describe strategists’ work & the strategic mgmt. process. © 2006 by Nelson, a division of Thomson Canada Limited. 1- 0

4. Desired Strategic Outcomes © 2006 by Nelson, a division of Thomson Canada Limited. 1- Provides benefits which current and potential competitors are unable to duplicate. 0 Strategic Competitiveness Achieved when a firm successfully formulates and implements a value-creating strategy. Occurs when a firm develops a strategy that competitors are not simultaneously implementing. Sustained Competitive Advantage Above-Average Returns Returns in excess of what an investor expects to earn from other investments with similar risk.

5. Important Definitions © 2006 by Nelson, a division of Thomson Canada Limited. 1- 0 Risk An investor’s uncertainty about the economic gains or losses resulting from a particular investment. Returns equal to what an investor expects from other investments with similar amount of risk. Average returns Strategic management process The full set of commitments, decisions and actions required for a firm to achieve strategic competitiveness and earn above average returns.

6. The Strategic Management Process © 2006 by Nelson, a division of Thomson Canada Limited. 1- Strategic  Actions  Ch. 1: Strat. Mgmt. & Com-petitiveness Ch. 2: Strat. Mgmt . & Performance Chapter 3: The External Environment Chapter 4: The Internal Environment Strategic Competitiveness Strategic Objectives & Inputs Chapter 1: Strategic Management Chapter 1: Strategic Management Chapter 5: Bus.-Level Strategy Chapter 6: Competitive Dynamics Chapter 7: Corp.-Level Strategy Chapter 8: Acquisition & Restructuring Chapter 9: International Strategy Chapter 10: Cooperative Strategy Strategy Formulation Chapter 11: Corporate Governance Ch. 12: Org. Structure & Controls Chapter 13: Strategic Leadership Chapter 14: Org. Renewal & Innovation Strategy Implementation Strategic Mission & Strategic Intent Strategic Competitiveness Strategic Competitiveness Strategic Mission & Strategic Intent

7. What is Strategy? An integrated and coordinated set of commitments & actions designed to exploit core competencies and gain a competitive advantage. © 2006 by Nelson, a division of Thomson Canada Limited. 1- 0

8. What is Strategy? © 2006 by Nelson, a division of Thomson Canada Limited. 1- “ A unified, comprehensive, and integrated plan designed to ensure that the basic objectives of the enterprise are achieved.” (Glueck, 1980:9) “ The pattern or plan that integrates an organization’s major goals, policies, and action sequences into a cohesive whole.” (Quinn, 1980) 0 “ A good strategy… neutralizes threats and exploits opportunities while capitalizing on strengths and avoiding or fixing weaknesses.” (Barney, 1997:17) “ A pattern of resource allocation that enables firms to maintain or improve their performance.

9. Intended, Emergent & Realized Strategies © 2006 by Nelson, a division of Thomson Canada Limited. 1- Intended Strategies Realized Strategies Deliberate Strategies Emergent Strategies Unrealized Strategies Thus, strategy can emerge from “ a Pattern in the stream of decisions or actions”

10. Alternative Models of Superior Returns © 2006 by Nelson, a division of Thomson Canada Limited. 1- Industrial Organization Model Strategy Formulation Assets and Skills Strategy Implementation Superior Returns An Attractive Industry Strategy Implementation Superior Returns O I O I 0 The External Environment An Attractive Industry Resource-Based Model Resources Capabilities Competitive Advantage

11. Four Attributes of Resources and Capabilities (Competitive Advantage) © 2006 by Nelson, a division of Thomson Canada Limited. 1- * an * Rare possessed by few, if any, current and potential competitors Costly to when other firms either can’t obtain them Imitate or must obtain at a much higher cost Organized supported by the appropriate structure, to be controls, and rewards Exploited Resources and Capabilities Valuable allow firm to neutralize threats or exploit opportunities in its external environment

12. Resources and capabilities that meet these four criteria become a source of: © 2006 by Nelson, a division of Thomson Canada Limited. 1- * an * Core Competencies Core Competencies Resources and Capabilities Rare Costly to Imitate Organized to be Exploited Valuable

13. Core Competencies are the basis for a firm’s: © 2006 by Nelson, a division of Thomson Canada Limited. 1- * an * Core Competencies Core Competencies Competitive advantage Strategic competitiveness Ability to earn above-average returns 0

14. CEO’s ranking of business importance © 2006 by Nelson, a division of Thomson Canada Limited. 1- 0 A strong & well thought out strategy Maximizing customer satisfaction & loyalty Business leadership, quality products & services Concern for consistent profits Strong & consistent profits

15. 21 st Century Values Flexibility Speed to market Innovation Integration Handling challenges from constantly changing conditions Hypercompetition © 2006 by Nelson, a division of Thomson Canada Limited. 1- 0

16. The Global Economy One in which goods, services, people, skills, and ideas move freely across geographic borders © 2006 by Nelson, a division of Thomson Canada Limited. 1- 0

17. World competitiveness ratings © 2006 by Nelson, a division of Thomson Canada Limited. 1- 0 Population > 20 million (Ranks) Population < 20 million (Ranks) Country 2003 2002 2001 2000 Country 2003 2002 2001 2000 USA 1 1 1 1 Finland 1 2 4 3 Australia 2 3 3 3 Singapore 2 6 3 2 Canada 3 2 2 2 Denmark 3 4 10 10 Malaysia 4 6 10 9 Hong Kong 4 10 2 8 Germany 5 4 4 4 Switzerland 5 3 6 4 Taiwan 6 7 5 8 Luxembourg 6 5 5 6 U.K. 7 5 6 5 Sweden 7 7 7 7 France 8 9 8 7 Netherlands 8 1 1 1 Spain 9 8 7 8 Iceland 9 11 11 11 Thailand 10 13 14 13 Austria 10 8 9 12 Japan 11 11 9 10 Ireland 11 9 8 5 China 12 12 12 11 Norway 12 12 14 9

18. Technology and Technological Change Increasing rate of tech. change and diffusion Perpetual innovation The information age Personal computers, cellular phones, artificial intelligence, virtual reality, massive databases, electronic networks, e-business Increasing knowledge intensity Information, intelligence, expertise, strategic flexibility. © 2006 by Nelson, a division of Thomson Canada Limited. 1- 0

19. Strategic Intent © 2006 by Nelson, a division of Thomson Canada Limited. 1- Together, strategic intent and strategic mission yield the insights required to formulate and implement strategies. 0 Internally focused, it is the leveraging of a firms resources, capabilities, and core competencies to establish the firms goals in the competitive environment. Externally focused, it is a statement of a firms unique purpose and the scope of it’s operations in product and market terms. Strategic Mission

20. Stakeholders © 2006 by Nelson, a division of Thomson Canada Limited. 1- The firm must maintain performance at an adequate level in order to maintain the participation of key stakeholders Groups who are affected by firm’s performance & who have claims on its performance Firm Capital Market Stock market/Investors Debt suppliers/Banks Product Market Primary Customers Host Communities Unions Suppliers Organizational Employees Managers Nonmanagers

21. Organizational strategists Top level managers, executives, top management team, or general managers © 2006 by Nelson, a division of Thomson Canada Limited. 1- 0 Organizational culture A complex set of ideologies, symbols and core values that influence how the firm conducts it’s business.

22. Predicting Outcomes of Strategic Decisions Define the profit pool’s boundaries. 2. Estimate the pool’s overall size. 3. Estimate the size of the value chain. Reconcile the calculations. The strategic management process calls for disciplined approaches to the development of competitive advantage. © 2006 by Nelson, a division of Thomson Canada Limited. 1- 0

23. The Strategic Management Process © 2006 by Nelson, a division of Thomson Canada Limited. 1- Strategic  Actions  Chapter 1: Strategic Management Chapter 5: Bus.-Level Strategy Chapter 6: Competitive Dynamics Chapter 7: Corp.-Level Strategy Chapter 8: Acquisition & Restructuring Chapter 9: International Strategy Chapter 10: Cooperative Strategy Strategy Formulation Chapter 11: Corporate Governance Ch. 12: Org. Structure & Controls Chapter 13: Strategic Leadership Chapter 14: Org. Renewal & Innovation Strategy Implementation Ch. 1: Strat. Mgmt. & Com-petitiveness Ch. 2: Strat. Mgmt . & Performance Chapter 3: The External Environment Chapter 4: The Internal Environment Strategic Competitiveness Strategic Mission & Strategic Intent Strategic Objectives & Inputs Strategic Competitiveness Chapter 1: Strategic Management Strategic Competitiveness Strategic Mission & Strategic Intent Chapter 1: Strategic Management Strategic Competitiveness Strategic Mission & Strategic Intent