chapter 2: the context of managing strategically strategic management in action by mary coulter
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CHAPTER 2: THE CONTEXT OF MANAGING STRATEGICALLYStrategic Management in Action by Mary Coulter
Describe the Different Perspectives on Competitive Advantage2
Managing Strategically- formulating and implementing strategies that allow an organization to develop and maintain a competitive advantage.
Competitive Advantage- what sets and organization apart or what is its competitive edge.
Competitive advantage is necessary for an organization’s long term success and survival
3 Different Perspectives 3
Industrial Organization View (I/O View) Look at impact of external factors
Resource Based View (RBV) Emphasizes exploiting organizational
resources in order to develop and maintain a competitive advantage.
Guerrilla View More contemporary
Table 2.1 in SM in Action
The Industry Organization View
4
Developed by Michael Porter structural forces within an industry the competitive environment of firms how these influence competitive advantage
Emphasizes choosing the BEST industries Analyze external forces and base
strategic decisions on the analysis Competitive advantage relates to
competitive positioning in the industry
Resource Based View5
Resources are most important in getting and keeping competitive advantage
Value- resource used to exploit external circumstances
Rare-no competing firms possess resource
Hard to Imitate and Substitute- inability to duplicate
Ability to exploit
Guerrilla View6
Competitive advantage is temporary Why? The environment is characterized by
continual and often revolutionary changes. Successful organizations must disrupt the
current situation and surprise competitors with strategic actions designed to keep competitors off balance
Successful organizations create new competitive advantages based on how the context is changing
Drivers of Business Environment
7
The Information Revolution Information has always been used in
producing goods and services, to design work tools, organizational processed, management systems, and products, as organizations searched for ways to be more efficient and effective. Now, Information is the essential resource of production.
Drivers of Business Environment
8
Technology- using equipment, materials, knowledge, and experience to perform tasks. Innovation- turning a creative idea into a product
or process that can be used or sold Developing, making, and marketing a product to
generate revenue Bottom-up Capability- mass collaboration
capability Internet, personal messaging systems, and social
networking is shifting from industry to individual Organizational Performance
Technology is a powerful tool to enhance the business, but not a replacement for understanding the economics of their business
Drivers of Business Environment
9
Globalization Chapter 1 discussed how globalization and
the global economy are impacting strategic management.
Transformed the business environment Influences strategic management in two
ways Global Markets Global Competitors
Implications of Driving Forces
10
Continual Change External/Internal Conditions
Transitions in structure Ex: Greeting Card-E Cards Ex: Movie Rentals
Reduced Need for Physical Assets Physical Assets=Power Intangibles-information, people, ideas, & knowledge
Vanishing Distance & Compressed Time No Geographical limitations Instant Interactions-email, video conferencing
Vulnerability Open to viruses and threats
Critical Success Factors11
Ability to Embrace Change Need change agents
Initiates and oversees changes Creativity & Innovation Capabilities
Ability to combine ideas in unique ways and make associations
Being a World Class Organization Organizations make strategic decisions to
become the best in the world at what it does.
Two Elements of Guidance12
Organizational Vision and Mission Vision
Broad picture of what the leaders of an organization want to become
They must: Build on organizations core value and beliefs Elaborate a purpose for organization Brief summary of what the organization does Specify broad goals
Mission Statement of what units do and what they hope to
accomplish Corporate Social Responsibility and Ethics
Restates vision and mission to reflect commitment to CSR
Summary of Chapter 2
Perspectives of Competitive Advantage Industrial Organization View, Resource
Based View, Guerilla View Drivers of Business Environment
Information, Technology, Globalization Implications of Drivers
Continual Change Critical Success Factors Elements of Guidance
13
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