Strategic Management
Table of Contents
Week 1: Strategic Management and External Analysis.......................................................1
Week 2: Internal Analysis and Integrating Resources.......................................................14
Week 3: Rivalry, Business-level Strategy, Corporate-level Strategy...................................25
Week 4: no class...............................................................................................................40
Week 5: Leadership, Corporate Governance, Structure.....................................................40
Week 6: Corporate Entrepreneurship and Strategic Renewal............................................52
COLOR CODING EXPLAINED:
Heading 1 = each week’s topic
Yellow = Textbook chapter heading
Pink = Textbook chapter subheading
Red = important terms, definitions
Green = Compulsory readings
Red font = material that was added by Googling
Week 1: Strategic Management and External Analysis
Strategic Management and Strategic Competitiveness
- Strategy comes from strategos (Greek), which means “the general’s view”
,- Strategic Competitiveness = is achieved when a firm successfully formulates and
implements a value-creating strategy
- Strategy = an integrated and coordinated set of commitment and actions designed
to exploit core competencies and gain competitive advantage
o Indicates what the firm will do as well as what it will not do
- Competitive Advantage = a firm has a competitive advantage when it implements
strategy competitors are unable to duplicate or find too costly to try to imitate
Three factors:
o The rate of core competence obsolescence because of environmental
changes
o The availability of substitutes for the core competence
o The imitability of the core competence
o No competitive advantage is permanent. The speed with which competitors
are able to acquire the skills needed to duplicate the benefits of a firm’s
value-creating strategy determines how long the competitive advantage will
last.
- Risk = an investor’s uncertainty about the economic gains or losses that will result
from a particular investment
- Returns = often measured in terms of accounting figures – return on assets, return
on equity, return on sales, BUT can be also measured on the basis of stock market
returns (monthly returns, etc.)
- Average Returns = those returns equal to those an investor expects to earn from
other investments with a similar amount of risk
- Above-average returns = returns in excess of what an investor expects to earn from
other investments with a similar amount of risk; above the average of the industry
- Industry = offering the same group of products or services, fulfilling similar needs. An
industry’s structure has big effects on profitability.
- Strategic management process = the full set of commitments, decisions, and actions
required for a firm to achieve strategic competitiveness and earn above-average
returns.
o Analyzing external environment and internal organization = to determine
the firm’s resources, capabilities, core competencies (= sources of “strategic
inputs”)
o Creating vision and mission formulating strategy
,Competitive Landscape
= Global economy + globalization + rapid technological change
- Conventional sources of competitive advantage such as economies of scale and huge
advertising budgets are not as effective as they once were
- Managers must adopt a new mindset speed, flexibility, innovation, integration,
changing conditions
- The investments that are required to compete on a global scale are enormous
consequences of failure are severe
- Government interference = with industries such as banking, IT, oil
o Especially if a firm is active in multiple countries political negotiations
- Hypercompetition = assumptions of market stability are replaced by notions of
inherent instability and change; Hypercompetition results from the dynamics of
strategic maneuvering among global and innovative combatants.
o it is a condition of rapidly escalating competition based on price-quality
positioning, competition to create new know-how, and establish first-mover
advantage, and competition to protect or invade established or geographic
markets.
o In a hypercompetitive market, firms often aggressively challenge their
competitors in the hopes of improving their competitive position and
ultimately their performance
o Factors that influence Hypercompetition = global economy + rapid
technological change
, Global Economy
= economy in which goods, services, people, skills, and ideas move freely across geographic
borders
- Globalization = increasing economic interdependence among countries and their
organizations as reflected in the flow of goods and services, financial capital and
knowledge across country borders
o A result of a large number of firms competing in an increasing number of
global economies
o In globalized markets and industries, financial capital might be obtained in
one national market and used to buy raw materials in another one
o Globalization increases the range of opportunities for companies in the
current competitive landscape
- Risks of globalized markets = it requires time and resources to develop skills and
knowledge to compete in markets that are new to the firm; another risk is
overdiversification beyond the firm’s ability to manage these extended operations
Technology and Technological Changes
- Technology diffusion = the rate at which new technologies become available and are
used
o Perpetual innovation = describes how rapidly and consistently new
information-intensive technologies replace older ones
o The shorter product life cycles resulting from these rapid diffusions of new
technologies place a competitive premium on being able to quickly introduce
new, innovative goods and services into the marketplace
o Speed to market = competitive advantage
o Patents = effective way of protecting proprietary technology
- Disruptive technologies = can destroy the value of an existing technology and create
new markets; radical and breakthrough innovations
- The information age = the era of technological innovation, rapid change, accessibility
of technologies (declining cost of technologies), computing power the
competitive potential of information technologies is now available to companies of
all sizes that are located in countries throughout the world including those emerging
as well as developed economies.
- Increasing knowledge intensity
o Knowledge = information, intelligence, and expertise; knowledge is gained
through experience, observation and interference
Knowledge is the basis of technology and its application
The value of intangible resources, including knowledge, is growing as
a proportion of total shareholder value in today’s competitive
landscape
Table of Contents
Week 1: Strategic Management and External Analysis.......................................................1
Week 2: Internal Analysis and Integrating Resources.......................................................14
Week 3: Rivalry, Business-level Strategy, Corporate-level Strategy...................................25
Week 4: no class...............................................................................................................40
Week 5: Leadership, Corporate Governance, Structure.....................................................40
Week 6: Corporate Entrepreneurship and Strategic Renewal............................................52
COLOR CODING EXPLAINED:
Heading 1 = each week’s topic
Yellow = Textbook chapter heading
Pink = Textbook chapter subheading
Red = important terms, definitions
Green = Compulsory readings
Red font = material that was added by Googling
Week 1: Strategic Management and External Analysis
Strategic Management and Strategic Competitiveness
- Strategy comes from strategos (Greek), which means “the general’s view”
,- Strategic Competitiveness = is achieved when a firm successfully formulates and
implements a value-creating strategy
- Strategy = an integrated and coordinated set of commitment and actions designed
to exploit core competencies and gain competitive advantage
o Indicates what the firm will do as well as what it will not do
- Competitive Advantage = a firm has a competitive advantage when it implements
strategy competitors are unable to duplicate or find too costly to try to imitate
Three factors:
o The rate of core competence obsolescence because of environmental
changes
o The availability of substitutes for the core competence
o The imitability of the core competence
o No competitive advantage is permanent. The speed with which competitors
are able to acquire the skills needed to duplicate the benefits of a firm’s
value-creating strategy determines how long the competitive advantage will
last.
- Risk = an investor’s uncertainty about the economic gains or losses that will result
from a particular investment
- Returns = often measured in terms of accounting figures – return on assets, return
on equity, return on sales, BUT can be also measured on the basis of stock market
returns (monthly returns, etc.)
- Average Returns = those returns equal to those an investor expects to earn from
other investments with a similar amount of risk
- Above-average returns = returns in excess of what an investor expects to earn from
other investments with a similar amount of risk; above the average of the industry
- Industry = offering the same group of products or services, fulfilling similar needs. An
industry’s structure has big effects on profitability.
- Strategic management process = the full set of commitments, decisions, and actions
required for a firm to achieve strategic competitiveness and earn above-average
returns.
o Analyzing external environment and internal organization = to determine
the firm’s resources, capabilities, core competencies (= sources of “strategic
inputs”)
o Creating vision and mission formulating strategy
,Competitive Landscape
= Global economy + globalization + rapid technological change
- Conventional sources of competitive advantage such as economies of scale and huge
advertising budgets are not as effective as they once were
- Managers must adopt a new mindset speed, flexibility, innovation, integration,
changing conditions
- The investments that are required to compete on a global scale are enormous
consequences of failure are severe
- Government interference = with industries such as banking, IT, oil
o Especially if a firm is active in multiple countries political negotiations
- Hypercompetition = assumptions of market stability are replaced by notions of
inherent instability and change; Hypercompetition results from the dynamics of
strategic maneuvering among global and innovative combatants.
o it is a condition of rapidly escalating competition based on price-quality
positioning, competition to create new know-how, and establish first-mover
advantage, and competition to protect or invade established or geographic
markets.
o In a hypercompetitive market, firms often aggressively challenge their
competitors in the hopes of improving their competitive position and
ultimately their performance
o Factors that influence Hypercompetition = global economy + rapid
technological change
, Global Economy
= economy in which goods, services, people, skills, and ideas move freely across geographic
borders
- Globalization = increasing economic interdependence among countries and their
organizations as reflected in the flow of goods and services, financial capital and
knowledge across country borders
o A result of a large number of firms competing in an increasing number of
global economies
o In globalized markets and industries, financial capital might be obtained in
one national market and used to buy raw materials in another one
o Globalization increases the range of opportunities for companies in the
current competitive landscape
- Risks of globalized markets = it requires time and resources to develop skills and
knowledge to compete in markets that are new to the firm; another risk is
overdiversification beyond the firm’s ability to manage these extended operations
Technology and Technological Changes
- Technology diffusion = the rate at which new technologies become available and are
used
o Perpetual innovation = describes how rapidly and consistently new
information-intensive technologies replace older ones
o The shorter product life cycles resulting from these rapid diffusions of new
technologies place a competitive premium on being able to quickly introduce
new, innovative goods and services into the marketplace
o Speed to market = competitive advantage
o Patents = effective way of protecting proprietary technology
- Disruptive technologies = can destroy the value of an existing technology and create
new markets; radical and breakthrough innovations
- The information age = the era of technological innovation, rapid change, accessibility
of technologies (declining cost of technologies), computing power the
competitive potential of information technologies is now available to companies of
all sizes that are located in countries throughout the world including those emerging
as well as developed economies.
- Increasing knowledge intensity
o Knowledge = information, intelligence, and expertise; knowledge is gained
through experience, observation and interference
Knowledge is the basis of technology and its application
The value of intangible resources, including knowledge, is growing as
a proportion of total shareholder value in today’s competitive
landscape
