Twenty-First Century Competition Rapid Globalization technological change Increasing importance of The global economy Today’s knowledge and people Competitive Markets © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–1 Strategic Competitiveness Formulation Formulation and and implementation implementation of of a a superior superior value-creating value-creating strategy strategy Commitments Commitments and and actions actions to to achieve achieve above-average above-average performance performance and and returns returns What What the the firm firm will will do Competitive Competitive advantage advantage What What the the firm firm will will not not do © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–2 • Market volatility and instability due to the rapid pace of change in markets ng ng Increasi Increasi The Global Competitive Landscape • • • Blurring of market boundaries Globalized flow of financial capital Need for flexibility, speed, innovation, and integration in the use of technology • Strategic and operational complexity of global-scale competition • Decreasing Decreasing • • • Rising product quality standards Traditional time for adapting to change Traditional sources of competitive advantage Traditional managerial mindset © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–3 Hypercompetition Global economy Use Use of of price-quality price-quality positioning positioning to to build build market market presence presence Strategic options in hypercompetitive environments Creation Creation of of new new know-how know-how and and use use of of first-mover first-mover advantage advantage Technology Protection Protection or or invasion invasion of of established established geographic geographic or or product product markets markets © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–4 Competitive Success Factors Are Are market/ market/ customer-needs customer-needs Make Make effective effective oriented oriented use use of of valuable valuable competencies competencies Offer Offer new new Have Have an an entrepreneurial/ entrepreneurial/ and and innovative innovative products products and and opportunistic opportunistic mindset mindset Top Corporate services services Performers © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–5 Strategic Flexibility • Strategic Flexibility – involves coping with the uncertainty and risks of hypercompetitive environments – must first overcome built-up organizational inertia – requires developing the capacity for continuous learning and applying the new and updated skills sets and competencies to the firm’s competitive advantage © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–6 The Industry Organization (I/O) Model of Above-Average Returns Diversification Diversification Product Product differentiation differentiation Barriers Barriers to to market market entry entry Economies Economies of of scale scale Industry Industry concentration concentration The Firm’s Strategic Choices Market Market frictions frictions © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–7 Figure 1.2 The I/O Model of Above-Average Returns © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–8 The Resource-Based Model of Above-Average Returns e g a t an v d a e v i t ti e p m o c i ng d l i Bu Capability An integrated set of Resources resources Core competence A source of competitive advantage Physical, human, and organizational capital (tangible and intangible) © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–9 Resources As Core Competencies Costly to imitate Rare How resources become core competencies Valuable Nonsubstitutable © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–10 Figure 1.3 The Resource-Based Model of Above-Average Returns © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–11 Vision Statement • A Successful Vision – is an enduring word picture of what the firm wants to be and expects to achieve in the future – – – – – stretches and challenges its people reflects the firm’s values and aspirations is most effective when its development includes all stakeholders recognizes the firm’s internal and external competitive environments is supported by upper management decisions and actions © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–12 Mission Statement • An Effective Mission – specifies the present business or businesses in which the firm intends to compete and customers it intends to serve – has a more concrete, near-term focus on current product markets and customers than the firm’s vision – should be inspiring and relevant to all stakeholders © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–13 Stakeholders Can Can affect affect development development of of the the firm’s firm’s vision vision and and mission mission Are Are affected affected by by the the strategic strategic outcomes outcomes achieved achieved by by the the firm firm Primary stakeholders (individuals, (individuals, groups, groups, and and organizations) organizations) Can Can have have enforceable enforceable claims claims on on the the firm’s firm’s performance performance Are Are influential influential when when in in control control of of critical critical or or valued valued resources resources © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–14 Classification of Stakeholders Categories of stakeholders Capital Market Stakeholders Product Market Stakeholders Organizational Stakeholders © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–15 Figure 1.4 The Three Stakeholder Groups © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–16 Capital Market Stakeholders Preservation of investment Influence Conflicting expectations of shareholders and lenders Risk/return Enhanced wealth © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–17 Product Market Stakeholders Types of product market stakeholders Suppliers Customers Host communities Unions © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–18 Organizational Stakeholders Responsibilities of strategic leaders for development and effective use of the firm’s human capital Education Organizational culture and Strategic goals and global and skills of employees ethical work environment standards International assignments © 2015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1–19 [...]...Figure 1. 3 The Resource-Based Model of Above-Average Returns © 2 015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1 11 Vision Statement • A Successful Vision –... Market Stakeholders Organizational Stakeholders © 2 015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1 15 Figure 1. 4 The Three Stakeholder Groups © 2 015 Cengage Learning All rights reserved May not be... classroom use 1 17 Product Market Stakeholders Types of product market stakeholders Suppliers Customers Host communities Unions © 2 015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1 18 Organizational... external competitive environments is supported by upper management decisions and actions © 2 015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1 12 Mission Statement • An Effective Mission – specifies... firm’s vision – should be inspiring and relevant to all stakeholders © 2 015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1 13 Stakeholders Can Can affect affect development development of of the the... permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1 16 Capital Market Stakeholders Preservation of investment Influence Conflicting expectations of shareholders and lenders Risk/return Enhanced wealth © 2 015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted... control of of critical critical or or valued valued resources resources © 2 015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1 14 Classification of Stakeholders Categories of stakeholders Capital Market... password-protected website for classroom use 1 18 Organizational Stakeholders Responsibilities of strategic leaders for development and effective use of the firm’s human capital Education Organizational culture and Strategic goals and global and skills of employees ethical work environment standards International assignments © 2 015 Cengage Learning All rights reserved May not be copied, scanned, or duplicated, in... website for classroom use 1 13 Stakeholders Can Can affect affect development development of of the the firm’s firm’s vision vision and and mission mission Are Are affected affected by by the the strategic strategic outcomes outcomes achieved achieved by by the the firm firm Primary stakeholders (individuals, (individuals, groups, groups, and and organizations) organizations) Can Can have have enforceable... copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1 19 ... website for classroom use 1 5 Strategic Flexibility • Strategic Flexibility – involves coping with the uncertainty and risks of hypercompetitive environments – must first overcome built-up organizational... otherwise on a password-protected website for classroom use 1 10 Figure 1. 3 The Resource-Based Model of Above-Average Returns © 2 015 Cengage Learning All rights reserved May not be copied, scanned,... classroom use 1 13 Stakeholders Can Can affect affect development development of of the the firm’s firm’s vision vision and and mission mission Are Are affected affected by by the the strategic strategic