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Samenvatting Strategy And Organisation Business Administration
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Samenvatting Strategy And Organisation Business Administration
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Strategy and OrganisationWeek 1
Chapter 1 Strategic management and strategic competitiveness
In this study we define strategy as an integrated and coordinated set of commitments and
action designed to exploit core competencies and gain a competitive advantage. When
choosing a strategy, firms make choices among competing alternatives as the pathway for
deciding how they will pursue strategic competitiveness. Strategic competitiveness is
achieved when a firm successfully formulates and implements a value-creating strategy. You
will receive above-average returns as a firm.
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Strategic management process, figure 1.1 (find the link between those steps):
Part 1: strategic inputs: strategic management and strategic competitiveness, the external
environment, the internal organization and the integrating internal and external resources.
Part 2: Formulation (strategic actions): business-level strategy, competitive rivalry and
competitive dynamics, corporate level strategy, strategic acquisition and restructuring,
international strategy, cooperative strategy.
Part 3: Implementation(strategic actions): strategic leadership, corporate governance,
organizational structure and controls, strategic entrepreneurship and strategic renewal.
,Part 4: Performance: competitive advantage in above-average returns.
A firm’s strategy demonstrates how it differs from its competitors. A firm has a competitive
advantage when it implements a strategy competitors are unable to duplicate or find too
costly to try to imitate. An organization can be confident that its strategy has resulted in one
or morecompetitive advantages only after competitors’ efforts to duplicate its strategy have
ceas ed or failed. But a competitive advantage is not permanent, the speed with which
competitors will find skills to try imitate this is the time for the advantage to last.
Above average returns are returns in excess of what an investor expects to earn from other
investments with a similar amount of risk. Risk is an investor’s uncertainty about the
economic gains or losses that will result from a particular investment. Effectively managing
risks reduces investors’ uncertainty about the results of their investment in individual
companies. The returns are often measured in terms of accounting figures.
Firms without a competitive advantage or that are not competing in an attractive industry earn
average returns. Average returns are returns equal to those an investor expects to earn from
other investments with a similar amount of risk.
The strategic management process is the full set of commitments, decisions and actions
required for a firm to achieve strategic competitiveness and earn above-average returns.
Analysing its external environment and internal organisation to determine its resources,
capabilities and core competencies is the first step the firm takes in this process. With the
results at the end, the firm develops its vision and mission and formulates its strategy. The
effectiveness of the firm’s implementation and formulation actions increases when those
actions are effectively integrated. It is a dynamical process.
The competitive landscape is growing bigger:
• Boundaries of a industry become challenging
• Conventional sources of CompAdv such as economies
of scale and huge advertising budgets are not as effective as they once were.
• Traditional managerial mindset in unlikely to lead a firm to strategic competitiveness
o Changing conditions
• Hypercompetition is a term often used to capture the realities of the
competitive landscape.
• Under conditions of hypercompetition, assumptions of market stability are replaced by
notions of inherent instability and change. > results from dynamic of strategic
maneuvering among global and innovative combatants.
o The emergence of a global economy and technology, specifically
rapid technological change, are the two primary drivers of
hypercompetitive environments.
A global economy is one in which goods, services, people, skills and ideas move freely across
political borders. Relatively unfettered by artificial constraints, such as tariffs, the global
economy significantly expands and complicates a firms competitive environment. Interesting
opportunities and challenges are associated with this.
,GDP = gross domestic product
Globalization is the increasing economic interdependence among countries and their
organisations as reflected in the flow of goods and services, financial capital and knowledge
across country borders. Globalization is a product of a large number of firms competing
against one another in an increasing number of global economies.
• Financial capital might be obtained in one national market and used to buy raw
materials in another one.
• Globalization increases the range of opportunities for companies competing in the
current competitive landscape.
• One risk of entering the global market is the amount of time typically required for
firms to learn how to compete in markets that are new to them.
Technology and technological changes
Two categories: technology diffusion and disruptive technologies, the information age and
increasing knowledge intensity. Through these categories, technology is significantly altering
the nature of competition and contributing to unstable competitive environments as a result of
doing so.
• Technology diffusion is the rate at which new technologies become available
and are used.
> increased last years
o Perpetual innovation is a term used to describe how rapidly and consistently
new information-intensive technologies replace older ones.
o When products become somewhat indistinguishable because of the widespread
and rapid diffusion of technologies, speed to market with innovative products
may be the primary source of competitive advantage.
• Disruptive technologies can destroy the value of an existing technology and create
new markets. It can create
what is essentially a new industry or can harm industry incumbents.
Information technology advances have given small firms more flexibility in competing with
large firms, if that technology can be used with efficiency. Both the pace of change in
information technology and its diffusion will continue to increase.
The internet is another technological innovation contributing to hypercompetition. Available
to an increasing number of people throughout the world, the internet provides an
infrastructure that allows the delivery of information to computers in any location.
Increasing knowledge intensity:
Knowledge (information, intelligence, and expertise) is gained through experience,
observation and inference. It is the basis of technology and its application. In this competitive
landscape, knowledge is a critical organizational resource and an increasingly valuable source
of competitive advantage.
, Knowledge is an intangible resource. The value of intangible resources is growing as a
proportion of total shareholder value in today’s competitive landscape. Companies need
knowledge to integrate into the organisation to create capabilities and then apply it to gain a
CA.
Firms must build routines that facilitate the diffusion of local knowledge throughout the
organisation for use where it has value. Firms are better able to do these things when they
have strategic flexibility; this is a set of capabilities used to respond to various demands and
opportunities existing in a dynamic and uncertain competitive environment. This involves
coping with uncertainty and its accompanying risks.
Firms capable of rapidly and broadly applying what they have learned, exhibit the strategic
flexibility and the capacity to change in ways that will increase the probability of successfully
dealing with uncertain, hypercompetitive environments.
The I/O model of above-average returns (external environment)
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