Exam 1 Review - Strategic Management

Strategic Management

• a diagnosis of the competitive challenge (analysis of firm’s internal/external environments)

• guiding policy to address the competitive challenge (formulation results in corporate, business, and functional strategies)

• set of coherent actions to implement the firm’s guiding policy (implementation)

Sustainable Competitive Advantage

a firm is able to outperform its competitors or the industry average over a prolonged period

Difficulty of Sustainable Competitive Advantage

pace of technology and external factor increase the difficulty in sustaining competitive advantage

Unique Strategic Position

a successful combination of strategic activities

Where does competitive advantage come from

• performing different activities

• performing the same activities differently than rivals

Vision

What do we want to accomplish ulimately?

Mission

How do we accomplish our goals?

Values

• what commitments do we make?

• what safeguards do we put in place?

• how do we act both legally and ethically as we pursue our vision and mission?

Scenario Planning

Tradeoffs

Managers must make tradeoffs

• how to allocate resources?

• which activities to pursue?

The PESTEL Framework

1.) Political

2.) Economic

3.) Sociocultural

4.) Technological

5.) Ecological

6.) Legal

Strategic Positioning

a firms ability to create value for customers (V) while containing costs (C)

• goal is to generate a large gap between V-C

Porter’s Five Forces Model

Resources, Capabilities, and Activities

help organizations develop core competencies

Resources

any asset that firms can draw on when crafting and executing strategy (cash, buildings, machinery, IP)

Capabilities

organizational and managerial skills needed to orchestrate resources (structure, routine, culture)

Activities

distinct and fine-grained business procedures (order-taking, invoicing)

Core Competencies

unique strengths embedded deep within a firm; expressed through structures, processes, routines and allow the firm to differentiate from rivals

Resource-Based View (RBV)

helps identify core competencies; resources (assets, capabilities, competencies) are key to superior firm performance

Resources fall into 2 categories:

• tangible resources that have physical and visible attributes

• intangible resources are not physical or visible

Resource Heterogeneity

a firm is a unique bundle of resources, capabilities, and competencies; these bundles differ across firms

Resource Immobility

• resources are “sticky” and do move easily from firm to firm

• are difficult to replicate

• can last for a long time

firm value chain

core strategic vision

an organization's aspirational, future-oriented destination and the compelling purpose that guides its actions and decisions to achieve long-term goals, providing direction, inspiring stakeholders, and aligning resources toward a shared ambition

• are the company’s resources, capabilities, and strategy aligned with core vision, mission, and value statements?