Involves the full set of:
Commitments
Decisions
Actions
which are required for firms to achieve:
Strategic Competitiveness Sustained Competitive Advantage Above-Average Returns
with abovereturns are linked possible Assets and average returns in a skills required to implement particular industry a chosen strategy
Ch1-13
I/O Model of Superior Returns
• Computers • Telecommunications
• Dramatic changes in information and communication technologies
• Increasing importance of knowledge
Ch1-6
21st Century Competitive Landscape
The 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
Ch1-3
Chapter One: Key Themes
Challenge of Strategic Management
Changing Competitive Landscape
Two Models of Superior Profitability • Industrial Organization Model • Resource-Based Model Key Stakeholder Groups
Alternative Models of Superior Returns
Industrial Organization Model
The External Environment
Resource-Based Model
Resources
An Attractive Industry
Strategy Formulation Assets and Skills Strategy Implementation
Action required: Identify strategy called for by the industry to earn above-average returns.
Environment Selection of a strategy suggest above-average with abovereturns are linked possible average returns in a particular industry
Ch1-14
I/O Model of Superior Returns
Action required: External Maintain selected strategy Environment Attractive in order to outperform GeneralIndustry Environment industry rivals. Strategy Industry Environment An industry whose Formulation Competitive structural characteristics Environment Assets and Skills Selection of a strategy suggest above-average
Strategic Competitiveness
Achieved when a firm successfully formulates and implements a value-creating strategy
Sustained Competitive Advantage
Occurs when a firm develops a strategy that competitors are not simultaneously implementing Provides benefits which current and potential competitors are unable to duplicate
Action required: Locate an industry with high potential for aboveaverage returns.
Ch1-11
I/O Model of Superior Returns
External Environment Attractive GeneralIndustry Environment Industry Environment Strategy An industry whose Formulation Competitive structural characteristics
with abovereturns are linked possible Assets and skills average returns in a Strategy required to implement Implementation particular industry a chosen strategy Selection of strategic actions linked with effective implementation of the chosen strategy
Capability
Competitive Advantage An Attractive Industry Strategy Implementation Superior Returns
Ch1-8
Superior Returns
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. This model largely focuses on industry structure or attractiveness of the external environment rather than internal characteristics of the firm.
Traditional sources of competitive advantage no longer guarantee success New keys to success include:
• • • • Flexibility Innovation Speed Integration
Ch1-7
Ch1-9
I/O Model of Superior Returns
External ent
General Environment Industry Environment Competitive Environment
Action required: Study the external environment, especially the industry environment.
Ch1-4
Challenge of Strategic Management
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 failed
Competitive success is transient...unless care is taken to preserve competitive position
Ch1-5
21st Century Competitive Landscape
Fundamental nature of competition is changing
Ch1-10
I/O Model of Superior Returns
External Environment An Attractive GeneralIndustry Environment
Industry Environment An industry whose Competitive structural characteristics Environment suggest above-average returns are possible
Ch1-12
I/O Model of Superior Returns
Action required: External Develop or acquire assets Environment Attractive and skills needed to GeneralIndustry Environment implement the strategy. Strategy Industry Environment An industry whose Formulation Competitive structural characteristics Environment Assets and Skills Selection of a strategy suggest above-average