1. Chapter 1 What is Strategy & the Strategic Management Process?

2. Key Chapter Objectives
Have an understanding of:
what is strategic management.
the strategic management process.
what competitive advantage is
why stakeholders are important.
key environmental forces that are creating dynamic fast-paced change.
the need for a hierarchy of goals

3. What is Strategic Management?
“The analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages” (Dess & Lumpkin, 2003; p.3).
“A pattern in a stream of actions or decisions (Henry Mintzberg).

4. Types of Strategies Strategy as a Plan Strategy as a Ploy
Strategy as a Pattern
Strategy as a Perspective
Strategy as a Position

5. Key Attributes of Strategy
Directs organization toward overall goals & objectives.
Includes multiple stakeholders in decision making.
Must incorporate short- & long-term perspectives.
Recognizes trade-offs between efficiency & effectiveness.

6. Challenges of Strategic Managers
Short-term Goals Long-term Goals
Profitability
Key Stakeholders
Network
Changing Landscape
Long-Term Planning
Quarterly Performance
Develop Cohesive Organization
Diverse Workforce

7. Overall View of the Strategic Management Process
Analysis
Decisions
Actions

8. Strategic Management Process
Mission
&
Objectives
External
Analysis
Internal
Strategy
Formulation
Implementation
Feedback

9. Strategic Management Process
External
Analysis
Strategic
Choice
Strategy
Implementation
Competitive
Advantage
Objectives
Internal
Analysis
Mission
Barney & Hesterly p. 5

10. Analysis: Mission & Objectives
Vision statements are an inspiring, overarching, and long-term statement.
Mission statements encompasses both the purpose of the company and the basis of competition and competitive advantage.
Objectives are developed from the vision and mission statements.

11. Analysis: External & Internal
Analysis of the Firm’s External Environment:
What are the trends in the industry?
What are the trends in the general environment?
What are the competitor’s trends?
Analysis of the Firm’s Internal Environment:
What are the firm’s resources?
What are the firm’s capabilities?
What are the firm’s distinctive competencies?

12. Decisions (Strategic Choice)
Strategy Formulation:
Functional-level (HR, Manufacturing, Marketing, etc.)
Business-level (Cost, differentiation, focus, or integrative)
Corporate-level (diversification, restructuring)

13. Actions (Strategy Implementation)
Strategy Implementation through:
Organizational Structure.
Control Systems.
Leadership.
Response to Change.

14. Competitive Advantage
Definition: the ability to create more economic value than competitors

15. Competitive Parity The firm’s offerings are ‘average’
People do not have a preference for the
firm’s offering
The firm does not have a cost advantage
over others
Some things that may lead to competitive
parity may still be critical to success
(e.g., telephones)

16. Competitive Disadvantage
People may have an aversion to the firm’s offering.
A firm may have outdated technology/ equipment.
The firm may have a cost disadvantage.
A firm may have a negative reputation.

17. Competitive Advantage
Two Types of Difference:
Preference for the firm’s output
people choose the firm’s output over others’
people are willing to pay a premium
Cost advantage vis-à-vis competitors
lower costs of production/distribution

18. Competitive Advantage
Competitive advantage is often temporary:
Competitive advantage typically results in high profits.
Profits attract competition.
Competition limits the duration of competitive advantage in most cases.

19. Competitive Advantage
However, may be sustainable if:
Competitors are unable to imitate the source of advantage
No one conceives of a better offering.

20. Measuring Competitive Advantage
Two Classes of Measures:
Accounting Measures
ROA, ROS, ROE, etc. that exceed industry averages.
Economic Measures
earning a return in excess of the cost of capital

21. Emergent vs. Intended Strategies
The strategic management process leads managers to intended strategies.
However,
Conditions often change or new information becomes available.
Managers respond and adopt emergent strategies.

22. Stakeholders
Stakeholders are individuals or groups inside or outside the company, that has a stake in and can influence an organization’s performance.
Five primary stakeholder groups:
Customers, 4. the Community
Employees, 5. Owners
Suppliers

23. Strategic Management Process
Summary:
This course is not about mere survival, it is about thriving—achieving competitive advantage.
the strategic management process helps managers achieve competitive advantage.
competitive advantage depends on differences.
strategy is about discovering and exploiting these differences.

24. Strategic Management Process
Applying Strategy to Your Career:
a solid understanding of strategy concepts will help set you apart from other job candidates.
you can use the process to identify and exploit difference between you and others.
you can use the process to determine if you want to stay with a company.