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Complete summary of Strategic Management textbook with quizlet sets

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Universiteit Van Amsterdam (UvA)

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Strategic Management

With this summary, you do not need to make your own notes from over-900-pages textbook for your important exams! This is the full summary of the book 'Strategic Management: Competitiveness & Globalization' for the course Strategic Management at UvA (6012B0430Y). All terminologies with definitions...

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Geupload op 28 december 2021
Aantal pagina's 124
Geschreven in 2021/2022
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Chapter 1 Strategic management inputs
All firms use the strategic management process as the foundation of the commitments,
decisions and actions they will take when pursuing strategic competitiveness and above
average returns.

Strategic competitiveness is achieved when a firm successfully formulates and implements a
value-creating strategy.
A strategy is an integrated and coordinated set of communities and actions designed to
develop and exploit core competencies and gain a competitive advantage.
- The chosen strategy indicates what the firm will do as well as what the firm will not do.
A firm as a competitive advantage when it implements a strategy competitors are unable to
duplicate or find too costly to try to imitate.

Risk is an investor’s uncertainty about the economic gains or losses that will result from a
particular investment. The most successful companies learn how to effectively manage risks.

Average returns are returns equal to those an investor expects to earn from other investments
with a similar amount of risk.

,Above-average returns are returns in excess of what an investor expects to earn from other
investments with a similar amount of risk.
- Effectively managing risks reduces investor’s uncertainty about the results of their
investments in individual companies.
- Understanding how to exploit a competitive advantage is important for firms seeking to
earn above-average returns.

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.
- Analyzing its external environment and internal organizations to determine its resources,
capabilities, and core competencies... the sources of its “strategic inputs”... is the first
step the firm takes in this process.
- With the results of these analysis at hand, the firm develops its vision and mission and
formulates its strategy.
- The strategic management process is dynamic in nature as ever-changing markets and
competitive structures are coordinated with a firm’s
Learning how to successfully compete in the globalized world is one of the most significant
challenges for firms competing in the current century.

The competitive landscape
Financial capital is scarce and markets are increasingly volatile. The pace of change in the
nature of competition is relentless and is increasing. Even determining the boundaries of an
industry has become challenging.

Other noteworthy characteristics of the current competitive landscape
- Conventional sources of competitive advantage such as economies of scale and high
advertising budgets are not as effective as they once were.
- The traditional managerial mindset that values flexibility, speed, innovation, integration
and the challenges that evolve from constantly changing conditions.
- Government’s active stance : the influence of governments is particularly important when
firms are active in many countries. Facing the need to negotiate with politicians in
different countries complicates the challenge of building competitive advantage.

Hypercompetition 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 product or geographic markets.
- Under conditions of 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.

The emergence of a global economy and technology, specifically rapid technological change,
are the two primary drivers of hypercompetitive environments and the nature of today’s
competitive landscape.

,The global economy
The global economy is one in which goods, services, people, skills and ideas move freely
across geographic borders.
Relatively unfettered by artificial constraints, such as tariffs, the global economy significantly
expands and complicates a firm’s competitive environment. Interesting opportunities and
challenges are associated with the emergence of the global economy.
Many large multinational companies are also starting as significant global competitors from
these emerging economies.
The statistics detailing the nature of the global economy reflect the realities of a
hypercompetitive business environment, and challenge individual firms to think seriously about
the markets in which they will compete.

The march of globalization
Globalization is the increasing economic interdependence among countries and their
organizations as reflected in the flow of goods and services, financial capital and knowledge
across country borders.
Globalization increases the range of opportunities for companies in the current competitive
landscape.
- In globalized markets and industries, financial capital might be obtained in one national
market and used to buy raw materials in another one.
- Manufacturing equipment bought from a third national market can then be used
to produce products that are sold in yet a fourth market.
It is also important for firms to understand that globalization has led to higher levels of
performance standards in many competitive dimensions, including those of quality, costs,
productivity, product introduction time and operational efficiency. In addition to firms competing
in the global economy, these standards affect firms competing on a domestic-only basis.
- Employers are a key source of competitive advantage.

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.
- Firm’s performance cna suffer until this knowledge is either developed locally or
transferred from the home market to the newly established global location.
- Additionally, a firm’s performance may suffer with substantial amounts of globalization
The result of over diversification can have strong negative effects on a firm’s overall
performance
Thus, entry into international markets, even for firms with substantial experience in the global
economy, requires effective use of the strategic management process.

Technology and technological changes
technology -related trends and conditions can be placed into two categories: technology
diffusion and disruptive technologies, the information age and increasing knowledge intensity.

Technology diffusion and disruptive technologies

, Technology diffusion is the rate at which new technologies become available and are used.
- The rate of technology diffusion increased substantially over the last 20 years.
Perpetual innovation is a term used to describe how rapidly and consistently new
information-intensive technologies replace older ones.
- 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.
- Increasingly the global economy is driven by or revolves around constant innovations.
Such innovation must be derived from an understanding of global standards and global
expectations in terms of product functionality.
- Another indicator of rapid tech diffusion is that it now may take only 12-18 months for
firms to gather info about their competitor’s research and development and product
decisions.
- In this case, the rate of technological diffusion has reduced the competitive
benefits of parents.
Disruptive technologies are the technologies that destroy the value of an existing technology
and create a new market. It surfaces frequently in today’s competitive markets.

The information age
An important outcome of the change : ability to effectively and efficiently access and use
information has become an important source of competitive advantage in virtually all industries.
- The declining costs of information technologies and the increased accessibility to them
are also evident in the current competitive landscape.

The internet is another technological innovation contributing to hyper competition.
- The internet provides an infrastructure that allows the delivery of information to
computers in any location. Access to the internet on smaller devices is having an
ever-growing impact on competitions.
-
Increasing knowledge intensity
In the competitive landscape of the twenty-first century, knowledge is a critical organizational
resource and an increasingly valuable source of competitive advantage.
The basis of competition shifted from hard assets to intangible resources.
- Relationships with customers and suppliers are an example of an intangible resource.
Knowledge is gained through experience, observation and inference and is an intangible
resource.
The value of intangible resources, including knowledge, is growing as a proportion of total
shareholder value in today’s competitive landscape.
Firms can achieve strategic competitiveness when they realize that its survival depends on the
ability to capture intelligence, transform it into usable knowledge, and diffuse it rapidly
throughout the company.
Firms must build routines that facilitate the diffusion of local knowledge throughout the
organization for use where it has value.

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