Chapter 3 Internal Environment Chapter 2 External Environment The Strategic ManagementProcess ManagementProcess Strategic Intent Strategic Mission Strategic Competitiveness Above Average Returns Feedback Strategy Formulation Chapter 4 Business-Level Strategy Chapter 5 Competitive Dynamics Chapter 6 Corporate-Level Strategy Chapter 8 International Strategy Chapter 9 Cooperative Strategies Chapter 7 Acquisitions & Restructuring Strategy Implementation Chapter 10 Corporate Governance Chapter 11 Structure & Control Chapter 12 Strategic Leadership Chapter 13 Entrepreneurship & Innovation Entrepreneurship & Innovation Strategic Inputs Strategic Actions Strategic Outcomes

Challenge of Strategic Management Changing Competitive Landscape Two Models of Superior Profitability Key Stakeholder Groups Industrial Organization Model Resource-Based Model Chapter One: Key Themes

Competitive success is transient...unless care is taken to preserve competitive position Challenge of Strategic Management Only 2 of the top 25 U.S. corporations in 1900 are still competitive today! In a recent year, almost 150,000 U.S. businesses failed or filed for bankruptcy

The pace of change is relentless.... and increasing The pace of change is relentless.... and increasing Traditional industry boundaries are blurring...such as Computers Telecommunications New Competitive Landscape Rapid technological changes Rapid technology diffusions Dramatic changes in information and communication technologies Increasing importance of knowledge Fundamental nature of competition is changing

The global economy is changing Traditional sources of competitive advantage no longer guarantee success New keys to success include: Flexibility Innovation Integration Speed New Competitive Landscape People, goods, services and ideas move freely across geographic boundaries New opportunities emerge in multiple global markets Markets and industries become more internationalized

2 2 Alternative Model of Superior Returns Industrial Organization Model 1 1 Resource-Based Model

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.

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. Resource-Based Model of Superior Returns

Winning competitive battles through deciding how to leverage internal resources, capabilities, and core competencies. Strategic Intent An application of strategic intent in terms of products to be offered and markets to be served. Strategic Mission

Stakeholders Firm Groups who are affected by a firm’s performance and who have claims on its performance Product Market Organizational Capital Market Stock market/Investors Debt suppliers/Banks Employees Managers Non-Managers Employees Managers Non-Managers The firm must maintain performance at an adequate level in order to maintain the participation of key stakeholders Primary Customers Suppliers Primary Customers Suppliers