Ch1-1 Sustained Competitive Advantage Above-Average Returns Returns in excess of what an investor...
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Transcript of Ch1-1 Sustained Competitive Advantage Above-Average Returns Returns in excess of what an investor...
Ch1-1
Sustained Competitive AdvantageSustained Competitive Advantage
Above-Average ReturnsAbove-Average ReturnsReturns in excess of what an investor expects to Returns in excess of what an investor expects to earn from other investments with similar riskearn from other investments with similar risk
Occurs when a firm develops a strategy that Occurs when a firm develops a strategy that competitors are not simultaneously implementingcompetitors are not simultaneously implementing
Provides benefits which current and potential Provides benefits which current and potential competitors are unable to duplicatecompetitors are unable to duplicate
Strategic CompetitivenessStrategic CompetitivenessAchieved when a firm successfully formulates Achieved when a firm successfully formulates and implements a value-creating strategyand implements a value-creating strategy
Ch1-2
which are required for firms to achieve:which are required for firms to achieve:
Above-Average ReturnsAbove-Average Returns
Strategic CompetitivenessStrategic Competitiveness
Sustained Competitive AdvantageSustained Competitive Advantage
The Strategic Management ProcessThe Strategic Management Process
Involves the full set of:Involves the full set of:
ActionsActionsCommitmentsCommitments DecisionsDecisions
Ch1-3
The StrategicThe StrategicManagementManagement
ProcessProcess
The StrategicThe StrategicManagementManagement
ProcessProcessChapter 3Chapter 3InternalInternal
EnvironmentEnvironment
Chapter 2Chapter 2ExternalExternal
EnvironmentEnvironmentStrategic IntentStrategic Intent
Strategic MissionStrategic Mission
Strategy FormulationStrategy Formulation Strategy ImplementationStrategy Implementation
Chapter 4Chapter 4Business-LevelBusiness-Level
StrategyStrategy
Chapter 5Chapter 5CompetitiveCompetitiveDynamicsDynamics
Chapter 6Chapter 6Corporate-LevelCorporate-Level
StrategyStrategy
Chapter 8Chapter 8InternationalInternational
StrategyStrategy
Chapter 9Chapter 9CooperativeCooperative
StrategiesStrategies
Chapter 7Chapter 7Acquisitions &Acquisitions &RestructuringRestructuring
Chapter 10Chapter 10CorporateCorporate
GovernanceGovernance
Chapter 11Chapter 11StructureStructure& Control& Control
Chapter 12Chapter 12StrategicStrategic
LeadershipLeadership
Chapter 13Chapter 13Entrepreneurship & InnovationEntrepreneurship & Innovation
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StrategicStrategicCompetitivenessCompetitivenessAbove AverageAbove Average
ReturnsReturns
Ch1-4
Competitive success is transient...unless care is taken to preserve competitive positionCompetitive success is transient...unless care is taken to preserve competitive position
Only 16 of the 100 largest U.S. companies at the start of the 20th century are still identifiable today!
Only 16 of the 100 largest U.S. companies at the start of the 20th century are still identifiable today!
In a recent year, 44,367 businesses filed for bankruptcy and many more U.S. businesses failedIn a recent year, 44,367 businesses filed for bankruptcy and many more U.S. businesses failed
Challenge of Strategic ManagementChallenge of Strategic Management
Ch1-5
Best Stocks of the DecadeBest Stocks of the Decade
Challenge of Strategic ManagementChallenge of Strategic Management
The goals of achieving The goals of achieving strategic competitiveness strategic competitiveness and earning above-and earning above-average returns are average returns are challenging challenging
The performance of The performance of some companies more some companies more than meets strategic than meets strategic management's management's challenge challenge
Ch1-6
• Rapid technological changes• Rapid technological changes
• Rapid technology diffusions• Rapid technology diffusions
• Dramatic changes in information and communication technologies
• Dramatic changes in information and communication technologies
• Increasing importance of knowledge
• Increasing importance of knowledge
Fundamental nature of competition is changingFundamental nature of competition is changing
The pace of change is relentless....and increasing
The pace of change is relentless....and increasing
Traditional industry boundaries are blurring, such as...
Traditional industry boundaries are blurring, such as...
• Computers• Telecommunications• Computers• Telecommunications
21st Century Competitive Landscape21st Century Competitive Landscape
Ch1-7
The global economy is changingThe global economy is changing
• People, goods, services and ideas move freely across geographic boundaries
• New opportunities emerge in multiple global markets
• Markets and industries become more internationalized
• People, goods, services and ideas move freely across geographic boundaries
• New opportunities emerge in multiple global markets
• Markets and industries become more internationalized
Traditional sources of competitive advantage no longer guarantee success
Traditional sources of competitive advantage no longer guarantee success
New keys to success include:New keys to success include:
• Flexibility• Innovation• Speed• Integration
• Flexibility• Innovation• Speed• Integration
21st Century Competitive Landscape21st Century Competitive Landscape
1999 1998 Country CompetitivenessIndex 1999
CompetitivenessIndex 1998
1 1 Singapore 2.12 2.162 3 United States 1.58 1.413 2 Hong Kong 1.41 1.914 6 Taiwan 1.38 1.195 5 Canada 1.33 1.276 8 Switzerland 1.27 1.107 10 Luxembourg 1.25 1.058 4 United Kingdom 1.17 1.299 7 Netherlands 1.13 1.13
10 11 Ireland 1.11 1.0511 15 Finland 1.11 0.7012 14 Australia 1.04 0.7913 13 New Zealand 10.1 0.8414 12 Japan 1.00 0.9715 9 Norway 0.92 1.0916 17 Malaysia 0.86 0.5917 16 Denmark 0.85 0.6118 30 Iceland 0.59 -0.1819 23 Sweden 0.58 0.2520 20 Austria 0.37 0.3721 18 Chile 0.57 0.5722 19 Korea 0.46 0.3923 22 France 0.44 0.2524 27 Belgium 0.39 -0.0325 24 Germany 0.37 0.1526 25 Spain 0.16 0.02
Country Competitiveness RankingsCountry Competitiveness RankingsA country’s A country’s competitiveness is competitiveness is achieved through the achieved through the accumulation of accumulation of individual firms’ individual firms’ strategic strategic competitiveness in competitiveness in the global economythe global economy
Achieving improved Achieving improved competitiveness competitiveness allows a country's allows a country's citizens to have a citizens to have a higher standard of higher standard of living living
21st Century Competitive Landscape21st Century Competitive Landscape
Ch1-9
Alternative Models of Superior ReturnsAlternative Models of Superior Returns
Resource-BasedResource-BasedModelModel
Industrial Organization Industrial Organization ModelModel
The External EnvironmentThe External Environment
An Attractive IndustryAn Attractive Industry
Strategy FormulationStrategy Formulation
Assets and SkillsAssets and Skills
Strategy ImplementationStrategy Implementation
Superior ReturnsSuperior Returns
ResourcesResources
CapabilityCapability
Competitive AdvantageCompetitive Advantage
An Attractive IndustryAn Attractive Industry
Strategy ImplementationStrategy Implementation
Superior ReturnsSuperior Returns
Ch1-10
I/O Model of Superior ReturnsI/O Model of Superior Returns
The Industrial Organization model suggests that above-average returns for any firm are largely determined by characteristics outside the firm.
This model largely focuses on industry structure or attractiveness of the external environment rather than internal characteristics of the firm.
The Industrial Organization model suggests that above-average returns for any firm are largely determined by characteristics outside the firm.
This model largely focuses on industry structure or attractiveness of the external environment rather than internal characteristics of the firm.
Ch1-11
Action required:Action required:External EnvironmentExternal Environment
General EnvironmentGeneral Environment
Industry EnvironmentIndustry Environment
Competitive EnvironmentCompetitive Environment
Study the external environment, especially the industry environment.
I/O Model of Superior ReturnsI/O Model of Superior Returns
Ch1-12
External EnvironmentExternal Environment
General EnvironmentGeneral Environment
Industry EnvironmentIndustry Environment
Competitive EnvironmentCompetitive Environment
An Attractive IndustryAn Attractive Industry
An industry whose structural characteristics suggest above-average returns are possible
An industry whose structural characteristics suggest above-average returns are possible
Action required:Action required:Locate an industry with high potential for above-average returns.
I/O Model of Superior ReturnsI/O Model of Superior Returns
Ch1-13
External EnvironmentExternal Environment
General EnvironmentGeneral Environment
Industry EnvironmentIndustry Environment
Competitive EnvironmentCompetitive Environment
Attractive IndustryAttractive Industry
An industry whose structural characteristics suggest above-average returns are possible
An industry whose structural characteristics suggest above-average returns are possible
Action required:Action required:Identify strategy called for by the industry to earn above-average returns.
Selection of a strategy linked with above-average returns in a particular industry
Selection of a strategy linked with above-average returns in a particular industry
StrategyFormulationStrategyFormulation
I/O Model of Superior ReturnsI/O Model of Superior Returns
Ch1-14
External EnvironmentExternal Environment
General EnvironmentGeneral Environment
Industry EnvironmentIndustry Environment
Competitive EnvironmentCompetitive Environment
Attractive IndustryAttractive Industry
An industry whose structural characteristics suggest above-average returns are possible
An industry whose structural characteristics suggest above-average returns are possible
Strategy FormulationStrategy Formulation
Selection of a strategy linked with above-average returns in a particular industry
Selection of a strategy linked with above-average returns in a particular industry
Action required:Action required:Develop or acquire assets and skills needed to implement the strategy.
Assets and SkillsAssets and Skills
Assets and skills required to implement a chosen strategy
Assets and skills required to implement a chosen strategy
I/O Model of Superior ReturnsI/O Model of Superior Returns
Ch1-15
External EnvironmentExternal Environment
General EnvironmentGeneral Environment
Industry EnvironmentIndustry Environment
Competitive EnvironmentCompetitive Environment
Attractive IndustryAttractive Industry
An industry whose structural characteristics suggest above-average returns are possible
An industry whose structural characteristics suggest above-average returns are possible
Strategy FormulationStrategy Formulation
Selection of a strategy linked with above-average returns in a particular industry
Selection of a strategy linked with above-average returns in a particular industry
Assets and SkillsAssets and Skills
Assets and skills required to implement a chosen strategy
Assets and skills required to implement a chosen strategy
Action required:Action required:Use the firm’s strengths (its assets or skills) to implement the strategy.
Strategy ImplementationStrategy Implementation
Selection of strategic actions linked with effective implementation of the chosen strategy
Selection of strategic actions linked with effective implementation of the chosen strategy
I/O Model of Superior ReturnsI/O Model of Superior Returns
Ch1-16
External EnvironmentExternal Environment
General EnvironmentGeneral Environment
Industry EnvironmentIndustry Environment
Competitive EnvironmentCompetitive Environment
Attractive IndustryAttractive Industry
An industry whose structural characteristics suggest above-average returns are possible
An industry whose structural characteristics suggest above-average returns are possible
Strategy FormulationStrategy Formulation
Selection of a strategy linked with above-average returns in a particular industry
Selection of a strategy linked with above-average returns in a particular industry
Assets and SkillsAssets and Skills
Assets and skills required to implement a chosen strategy
Assets and skills required to implement a chosen strategy
Action required:Action required:
Strategy ImplementationStrategy Implementation
Selection of strategic actions linked with effective implementation of the chosen strategy
Selection of strategic actions linked with effective implementation of the chosen strategy
Superior ReturnsSuperior Returns
Earning of above-average returnsEarning of above-average returns
Maintain selected strategy in order to outperform industry rivals.
I/O Model of Superior ReturnsI/O Model of Superior Returns
Ch1-17
The Resource-Based model suggests that above-average returns for any firm are largely determined by characteristics inside the firm.
The Resource-Based model suggests that above-average returns for any firm are largely determined by characteristics inside the firm.
This model focuses on developing or obtaining valuable resources and capabilities which are difficult or impossible for rivals to imitate.
This model focuses on developing or obtaining valuable resources and capabilities which are difficult or impossible for rivals to imitate.
Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns
Ch1-18
ResourcesResources
Inputs to a firm’s production process.Inputs to a firm’s production process.
Action required:Action required:Identify firm resources. Study strengths and weak- nesses relative to rivals.
Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns
Ch1-19
ResourcesResources
Inputs to a firm’s production process.Inputs to a firm’s production process.
Action required:Action required:Determine what firm capabilities allow it to do better than rivals.
CapabilityCapability
Capacity for an integrated set of resources to perform a task or activity.
Capacity for an integrated set of resources to perform a task or activity.
Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns
Ch1-20
ResourcesResources
Inputs to a firm’s production process.Inputs to a firm’s production process.
CapabilityCapability
Capacity for an integrated set of resources to integratively perform a task or activity.
Capacity for an integrated set of resources to integratively perform a task or activity.
Competitive AdvantageCompetitive Advantage
Ability of a firm to outperform its rivalsAbility of a firm to outperform its rivals
Action required:Action required:Determine how firm’s resources and capabilities may create competitive advantage.
Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns
Ch1-21
ResourcesResources
Inputs to a firm’s production process.Inputs to a firm’s production process.
CapabilityCapability
Capacity for an integrated set of resources to integratively perform a task or activity.
Capacity for an integrated set of resources to integratively perform a task or activity.
Competitive AdvantageCompetitive Advantage
Ability of a firm to outperform its rivalsAbility of a firm to outperform its rivals
An AttractiveIndustryAn AttractiveIndustry
Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities
Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities
Action required:Action required:Locate an attractive industry.
Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns
Ch1-22
ResourcesResources
Inputs to a firm’s production process.Inputs to a firm’s production process.
CapabilityCapability
Capacity for an integrated set of resources to integratively perform a task or activity.
Capacity for an integrated set of resources to integratively perform a task or activity.
Competitive AdvantageCompetitive Advantage
Ability of a firm to outperform its rivalsAbility of a firm to outperform its rivals
An AttractiveIndustryAn AttractiveIndustry
Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities
Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities
Action required:Action required:Select strategy that best exploits resources and capabilities relative to opportunities in environs.
Strategy Formulation and Implementation
Strategy Formulation and Implementation
Strategic actions taken to earn above-average returns
Strategic actions taken to earn above-average returns
Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns
Ch1-23
ResourcesResources
Inputs to a firm’s production process.Inputs to a firm’s production process.
CapabilityCapability
Capacity for an integrated set of resources to integratively perform a task or activity.
Capacity for an integrated set of resources to integratively perform a task or activity.
Competitive AdvantageCompetitive Advantage
Ability of a firm to outperform its rivalsAbility of a firm to outperform its rivals
An AttractiveIndustryAn AttractiveIndustry
Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities
Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities
Action required:Action required:Maintain selected strategy in order to outperform industry rivals.
Strategy Formulation and Implementation
Strategy Formulation and Implementation
Strategic actions taken to earn above-average returns
Strategic actions taken to earn above-average returns
Superior ReturnsSuperior Returns
Earning of above-average returnsEarning of above-average returns
Resource-Based Model of Superior ReturnsResource-Based Model of Superior Returns
Ch1-24
Core CompetenciesCore Competencies
When these four When these four criteria are met, criteria are met, Resources and Resources and Capabilities Capabilities become:become:
Core Competencies are resources and capabilities Core Competencies are resources and capabilities that can serve as a source of that can serve as a source of Competitive AdvantageCompetitive Advantage..
The Resource-Based model argues that Core The Resource-Based model argues that Core Competencies are the basis for a firm’s Competitive Competencies are the basis for a firm’s Competitive Advantage, Strategic Competitiveness and Ability to Advantage, Strategic Competitiveness and Ability to Earn Above-average Returns. Earn Above-average Returns.
Ch1-25
Stakeholders:Stakeholders: Groups who are affected by a firm’s Groups who are affected by a firm’s performance and who have claims on its performance and who have claims on its wealthwealth
The firm must maintain The firm must maintain performance at an adequate level in performance at an adequate level in order to maintain the participation order to maintain the participation of key stakeholdersof key stakeholders
OrganizationalOrganizationalOrganizationalOrganizational
EmployeesEmployeesManagersManagersNon-ManagersNon-Managers
EmployeesEmployeesManagersManagersNon-ManagersNon-Managers
FirmFirmFirmFirm
Capital MarketCapital MarketCapital MarketCapital Market
Stock market/InvestorsStock market/InvestorsStock market/InvestorsStock market/Investors
Debt suppliers/BanksDebt suppliers/BanksDebt suppliers/BanksDebt suppliers/Banks
Product MarketProduct MarketProduct MarketProduct Market
Primary Customers Primary Customers SuppliersSuppliersPrimary Customers Primary Customers SuppliersSuppliers
Ch1-26
Stakeholder InvolvementStakeholder InvolvementEach of the key stakeholders Each of the key stakeholders wants a piece of the same piewants a piece of the same pie
1111 How do you How do you divide divide the piethe pie in order to in order to keep all of the keep all of the stakeholders stakeholders involved?involved?
How do you How do you divide divide the piethe pie in order to in order to keep all of the keep all of the stakeholders stakeholders involved?involved?
2222
How do you How do you increase increase the sizethe size of the pie so of the pie so that there is more to that there is more to go around?go around?
How do you How do you increase increase the sizethe size of the pie so of the pie so that there is more to that there is more to go around?go around?
Ch1-27
Chapter 3Chapter 3InternalInternal
EnvironmentEnvironment
Chapter 2Chapter 2ExternalExternal
EnvironmentEnvironmentThe StrategicThe StrategicManagementManagement
ProcessProcess
The StrategicThe StrategicManagementManagement
ProcessProcess
Strategic IntentStrategic Intent
Strategic MissionStrategic Mission
StrategicStrategicCompetitivenessCompetitivenessAbove AverageAbove Average
ReturnsReturnsFeedback
Strategy FormulationStrategy Formulation
Chapter 4Chapter 4Business-LevelBusiness-Level
StrategyStrategy
Chapter 5Chapter 5CompetitiveCompetitiveDynamicsDynamics
Chapter 6Chapter 6Corporate-LevelCorporate-Level
StrategyStrategy
Chapter 8Chapter 8InternationalInternational
StrategyStrategy
Chapter 9Chapter 9CooperativeCooperative
StrategiesStrategies
Chapter 7Chapter 7Acquisitions &Acquisitions &RestructuringRestructuring
Strategy ImplementationStrategy Implementation
Chapter 10Chapter 10CorporateCorporate
GovernanceGovernance
Chapter 11Chapter 11StructureStructure& Control& Control
Chapter 12Chapter 12StrategicStrategic
LeadershipLeadership
Chapter 13Chapter 13Entrepreneurship & InnovationEntrepreneurship & Innovation
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