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THE CONTEXT OF MANAGING STRATEGICALLY
Group 4Alma PenaJose MedinaLaura RandallMona ShaferMelissa DunlopRaul Guerrero
Chapter 2
COMPETITIVE ADVANTAGE
Managing Strategically: To formulate and implement strategies that
allow an organization to develop and maintain a competitive advantage
Competitive Advantage: Aspect that sets a company apart in the
industry
Under Armour vs. Nike
Getting and keeping a competitive advantage is what managing strategically is all about
3 PERSPECTIVES OF COMPETITIVE ADVANTAGE
1. Industrial Organization (I/O)2. Resource-Based View (RBV)3. Guerrilla View
INDUSTRIAL ORGANIZATION VIEW
Industrial Organization View focuses on: structural forces within an industry competitive environment of firms and the influence of competitive advantage
RESOURCE-BASED VIEW
Looking internally at your resources Exploit your resources Financial, physical, human, intangible, and
structural or cultural assets
VALUABLE & RARE
Unique resource adds value to your firm Exploit external circumstances that increase
revenue Avoid negative external environment that
changes cash flows Context of what else is going on externally A resource is rare if no other competing form
already has it
HARD TO IMITATE/SUBSTITUTE & EXPLOITATION
A firm should have resources that a competing firm should not be able to imitate or substitute
A firm needs to be able to also exploit their unique resources in order to create a competitive advantage
GUERRILLA VIEW
Concept that a firm’s competitive advantage is only temporary, and that the environment is constantly changing
Through the guerrilla view a firm needs to be able to constantly adapt to new changes in technology, market instabilities, and any other change that may affect their industry
THE BUSINESS ENVIRONMENT Information Revolution Technology Globalization
THE INFORMATION REVOLUTION
Information has set the tone for the business environment Information is used to make processes more effective and
efficiento Producing goods and serviceso Designing work toolso Organizational processes o Management systems
Today Information is an essential resource of production
TECHNOLOGY
Using equipment, materials, knowledge, and experience to perform tasks
Technology plays different roles in different industries The later part of the 20th century technology really took off Technology effects three areas in the business environment
Innovation Bottom-up Capability Organizational Performance
GLOBALIZATION
Globalization influences strategic management in two ways Global Markets
To sustain a competitive advantage a company may need to break into new markets
Any location is a potential marketplace but to be strategic managers should consider the global economic climate
Global Competition It may be more challenging to understand a company with a
different background Global alliances
IMPLICATIONS OF DRIVING FORCES
Continual Change
Reduced Need for Physical Assets
Vanishing Distance and Compressed Time
Vulnerability
CONTINUAL CHANGE
All organizations deal with change
Stimulates need for organizational change
REDUCED NEED FOR PHYSICAL ASSETS
In the past, the more physical assets you had, the more economically powerful you were
Now, value is in intangible factors Achieve competitive advantage with nonphysical assets
VANISHING DISTANCE & COMPRESSED TIME
Physical distance and time constraints have disappeared Geography no longer an important role Potential markets and competitors found anywhere Ability to instantly interact
VULNERABILITY
Information, facilities, and employees are vulnerable Global computer viruses Terrorist attacks Biological attacks
CRITICAL SUCCESS FACTORS
ABILITY TO EMBRACE CHANGE
Opportunities ChallengesThe internet and iTunes
CHANGE AGENTS
Strategic decision makers Initiate & Oversee Facilitate successful implantation Provide support
CREATIVITY AND INNOVATION CAPABILITIES
7 Dimensions of Organizational Innovation
1. Challenges 2. Customer Focus3. Creativity4. Communication 5. Collaboration6. Completion7. Contemplation
Innovative Organization: The ability to channel creativity into useful outcomes
“create and innovate or fail”
VISION STATEMENT
Broad Looks into the Future Single Vision
4 Components Built on the organization’s core values and beliefs Elaborate a purpose for the organization Brief summary of what the organization does Specifies broad goals
MISSION STATEMENT
Specific Looks into the Present Several Missions
CORPORATE SOCIAL RESPONSIBILITY
Organizations have larger societal roles to play and serve many constituents. Not just stockholders!!
Shareholders Governments Customers Social Action Groups Employees Communities Suppliers Trade Associations Political Action Groups
BP: Gulf Oil Spill
ETHICS
Doing the right Thing!
Involves the principles that define right and wrong decisions and behavior. In other words, as we live our lives.
THREE TAKEAWAYS
To sustain a competitive advantage in a constantly changing environment all three views (Industrial Organization, Resourced-Based and Guerilla View) should be taken into consideration.
The three driving forces of the business environment are information, technology, and globalization.
Vision, Mission, Corporate Social Responsibility and Ethics are four elements that strategic decision makers should consider when guiding and managing an organization.
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