1. 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
Above-Average Returns
Returns in excess of what an investor expects to earn from other investments with similar risk 4

2. The Strategic Management Process
Involves the full set of:
Commitments
Decisions
Actions
which are required for firms to achieve:
Strategic Competitiveness
Sustained Competitive Advantage
Above-Average Returns 9

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

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 22

5. Challenge of Strategic Management
Best Stocks of the Decade
The goals of achieving strategic competitiveness and earning above-average returns are challenging
The performance of some companies more than meets strategic management's challenge

6. 21st Century 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 pace of change is relentless....
and increasing
Traditional industry boundaries are blurring, such as...
Computers
Telecommunications 25

7. 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
Traditional sources of competitive advantage no longer guarantee success
New keys to success include:
Flexibility
Innovation
Speed
Integration 30

8. 21st Century Competitive Landscape
Country Competitiveness Rankings
A country’s competitiveness is achieved through the accumulation of individual firms’ strategic competitiveness in the global economy
Achieving improved competitiveness allows a country's citizens to have a higher standard of living

9. Alternative Models of Superior Returns Industrial Organization Model
Resource-Based Model
The External Environment
An Attractive Industry
Strategy Formulation
Assets and Skills
Strategy Implementation
Superior Returns
Resources
Capability
Competitive Advantage
An Attractive Industry
Strategy Implementation
Superior Returns 31

10. 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. 33

11. I/O Model of Superior Returns
Action required:
External Environment
Study the external environment, especially the industry environment.
General Environment
Industry Environment
Competitive Environment 34

12. I/O Model of Superior Returns
External Environment
General Environment
Industry Environment
Competitive Environment
Action required:
Locate an industry with high potential for above-average returns.
An Attractive Industry
An industry whose structural characteristics suggest above-average returns are possible 35

13. I/O Model of Superior Returns
External Environment
General Environment
Industry Environment
Competitive Environment
Action required:
Identify strategy called for by the industry to earn above-average returns.
Attractive Industry
An industry whose structural characteristics suggest above-average returns are possible
Selection of a strategy linked with above-average returns in a particular industry
Strategy
Formulation 36

14. I/O Model of Superior Returns
External Environment
General Environment
Industry Environment
Competitive Environment
Action required:
Develop or acquire assets and skills needed to implement the strategy.
Attractive Industry
An industry whose structural characteristics suggest above-average returns are possible
Strategy Formulation
Selection of a strategy linked with above-average returns in a particular industry
Assets and Skills
Assets and skills required to implement a chosen strategy 37

15. I/O Model of Superior Returns
External Environment
General Environment
Industry Environment
Competitive Environment
Action required:
Use the firm’s strengths (its assets or skills) to implement the strategy.
Attractive Industry
An industry whose structural characteristics suggest above-average returns are possible
Strategy Formulation
Selection of a strategy linked with above-average returns in a particular industry
Assets and Skills
Assets and skills required to implement a chosen strategy
Strategy Implementation
Selection of strategic actions linked with effective implementation of the chosen strategy 38

16. I/O Model of Superior Returns
External Environment
General Environment
Industry Environment
Competitive Environment
Action required:
Maintain selected strategy in order to outperform industry rivals.
Attractive Industry
An industry whose structural characteristics suggest above-average returns are possible
Strategy Formulation
Selection of a strategy linked with above-average returns in a particular industry
Assets and Skills
Assets and skills required to implement a chosen strategy
Strategy Implementation
Selection of strategic actions linked with effective implementation of the chosen strategy
Superior Returns
Earning of above-average returns 39

17. 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.
This model focuses on developing or obtaining valuable resources and capabilities which are difficult or impossible for rivals to imitate. 41

18. Resource-Based Model of Superior Returns
Action required:
Identify firm resources. Study strengths and weak- nesses relative to rivals.
Resources
Inputs to a firm’s production process. 42

19. Resource-Based Model of Superior Returns
Action required:
Determine what firm capabilities allow it to do better than rivals.
Resources
Inputs to a firm’s production process.
Capability
Capacity for an integrated set of resources to perform a task or activity. 43

20. Resource-Based Model of Superior Returns
Action required:
Resources
Inputs to a firm’s production process.
Determine how firm’s resources and capabilities may create competitive advantage.
Capability
Capacity for an integrated set of resources to integratively perform a task or activity.
Competitive
Advantage
Ability of a firm to outperform its rivals 44

21. Resource-Based Model of Superior Returns
Action required:
Resources
Inputs to a firm’s production process.
Locate an attractive industry.
Capability
Capacity for an integrated set of resources to integratively perform a task or activity.
Competitive
Advantage
Ability of a firm to outperform its rivals
An Attractive
Industry
Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities 45

22. Resource-Based Model of Superior Returns
Action required:
Resources
Inputs to a firm’s production process.
Select strategy that best exploits resources and capabilities relative to opportunities in environs.
Capability
Capacity for an integrated set of resources to integratively perform a task or activity.
Competitive
Advantage
Ability of a firm to outperform its rivals
An Attractive
Industry
Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities
Strategy Formulation and Implementation
Strategic actions taken to earn above-average returns 46

23. Resource-Based Model of Superior Returns
Action required:
Resources
Inputs to a firm’s production process.
Maintain selected strategy in order to outperform industry rivals.
Capability
Capacity for an integrated set of resources to integratively perform a task or activity.
Competitive
Advantage
Ability of a firm to outperform its rivals
An Attractive
Industry
Location of an industry with opportunities that can be exploited by the firm’s resources and capabilities
Strategy Formulation and Implementation
Strategic actions taken to earn above-average returns
Superior Returns
Earning of above-average returns 47

24. When these four criteria are met, Resources and Capabilities become:
Core Competencies
Core Competencies are resources and capabilities that can serve as a source of Competitive Advantage.
The Resource-Based model argues that Core Competencies are the basis for a firm’s Competitive Advantage, Strategic Competitiveness and Ability to Earn Above-average Returns. 53

25. Stakeholders:
Groups who are affected by a firm’s performance and who have claims on its wealth
The firm must maintain performance at an adequate level in order to maintain the participation of key stakeholders
Capital Market
Stock market/Investors
Debt suppliers/Banks
Firm
Product Market
Primary Customers
Suppliers
Organizational
Employees
Managers
Non-Managers 59

26. Stakeholder Involvement
Each of the key stakeholders wants a piece of the same pie 1
How do you divide the pie in order to keep all of the stakeholders involved? 2
How do you increase the size of the pie so that there is more to go around? 62

27. The Strategic Management Process Strategy Formulation
Chapter 2
The Strategic
Management
Process
External
Strategic
Inputs
Environment
Strategic Intent
Strategic Mission
Chapter 3
Internal
Environment
Strategy Formulation
Strategy Implementation
Chapter 4
Chapter 5
Chapter 6
Chapter 10
Chapter 11
Business-Level
Competitive
Corporate-Level
Corporate
Structure
Strategy
Dynamics
Strategy
Governance
& Control
Strategic
Actions
Chapter 7
Chapter 8
Chapter 9
Chapter 12
Chapter 13
Acquisitions &
International
Cooperative
Strategic
Entrepreneurship
& Innovation
Restructuring
Strategy
Strategies
Leadership
Strategic
Outcomes
Strategic
Competitiveness
Above Average
Feedback
Returns 63