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Chapter 1: Creating Competitive Advantages

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Two Perspectives of Leadership. Leaders can make a difference. Must be aware of opportunities and threats faced in external environment ... – PowerPoint PPT presentation

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Title: Chapter 1: Creating Competitive Advantages


1
Chapter 1 Creating Competitive Advantages
  • MNGT 4800
  • Dr. Shook

2
Agenda
  • Strategic management defined
  • Strategic management process
  • Schools of thought
  • Stakeholder management
  • Environmental forces creating change
  • Hierarchy of strategic goals

3
Two Perspectives of Leadership
  • Strategic Choice Perspective
  • (Romantic view)
  • Leader is the key force in organizations success
  • Population Ecology
  • (External control perspective)
  • Focus is on external factors that affect an
    organizations success

4
Two Perspectives of Leadership
  • Leaders can make a difference
  • Must be aware of opportunities and threats faced
    in external environment
  • Must have thorough understanding of the firms
    resources and capabilities

5
Strategic Management
  • 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
  • Needs to incorporate short-term and long-term
    perspectives
  • Recognizes trade-offs between efficiency and
    effectiveness

6
Strategic Management
  • Analysis (Chs. 1, 2, 3, and 4)
  • Strategic goals (vision, mission, strategic
    objectives)
  • Internal and external environment of the firm
  • Strategic decisions (Chs 5, 6, 7, and 8)
  • In which industry(ies) should we compete?
  • How should we compete in those industries?
  • Actions (Chs 9, and 10)
  • 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 Intentions
Intended Strategy
Deliberate Strategy
Realized Strategy
Unrealized Strategy
Emergent Strategy
9
Two Foundational Schools of Thought
Resource-Based Model
10
I/O Model of Superior Returns
  • Assumptions
  • The external environment imposes constraints
    that
  • determine the strategies that can result
    in superior
  • profitability.
  • Competing firms control similar resources and
    pursue
  • similar strategies
  • Resources utilized by firms are highly mobile
  • thus homogeneous

11
I/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.
12
I/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.
The I/O model largely focuses on industry
structure or attractiveness of the external
environment rather than internal characteristics
of the firm.
13
Resource-Based Model of Superior Returns
  • Assumptions
  • Firms acquire different resources over time
  • Resources heterogeneity within a particular
  • industry
  • Resources may not be highly mobile across
  • firms
  • Difference in resources and how they are used
  • form the basis of competitive advantage

14
Resource-Based Model of Superior Returns
The Resource-Based Model suggests that
above-average returns for any firm are largely
determined by characteristics inside the firm.
15
Resource-Based Model of Superior Returns
The Resource-Based Model suggests that
above-average returns for any firm are largely
determined by characteristics inside the firm.
The Resource-Based view focuses on developing or
obtaining valuable resources and capabilities
which are difficult or impossible for rivals to
imitate.
16
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

17
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 behavior changes over time
  • Triple bottom line

18
Four Additional Types of Capital
  • In addition to financial capital

Type of Capital
Description
19
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

20
Coherence in Strategic Direction
  • Company vision
  • Massively inspiring
  • Overarching
  • Long-term
  • Driven by and evokes passion
  • Fundamental statement of the organizations
  • Values
  • Aspiration
  • Goals

Company vision
21
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
22
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
23
Coherence in Strategic Direction
Strategic objectives
  • Measurable
  • Specific
  • Appropriate
  • Realistic
  • Timely
  • Challenging
  • Resolve conflicts that arise
  • Yardstick for rewards and incentives
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