Strategic Competitiveness: Above-Average Returns Risk Average Returns Strategic Management Process
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AlexStrategic Competitiveness: Above-Average Returns Risk Average Returns Strategic Management Process
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AlexChapter 1:
Strategic competitiveness is achieved when a firm successfully formulates and implements a value
creating strategy.
A strategy is an integrated and coordinated set of commitments and actions designed to exploit core
competencies and gain a competitive advantage.
A firm has a competitive advantage when it implements a strategy that creates superior value for
customers and that competitors are unable to duplicate or find it too costly to try to imitate.
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.
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
Hypercompetition
describes competition that
is excessive such that it
creates inherent instability
and necessitates constant
disruptive change for firms in
the competitive landscape
A global economy is one in which goods, services, people, skills, and ideas move freely
across geographic borders.
A global economy is one in which goods, services, people, skills, and ideas move freely
across geographic borders.
Perpetual innovation is a term used to describe how rapidly and consistently new,
information-intensive technologies replace older ones.
Knowledge (information, intelligence, and expertise) is the basis of technology and its
application.
Strategic flexibility is a set of capabilities used to respond to various demands and
opportunities existing in a dynamic and uncertain competitive environment
The industrial
organization (I/O) model of above-average returns explains the external environment’s
dominant influence on a firm’s strategic actions. The model specifies that the industry or
segment of an industry in which a company chooses to compete has a stronger influence
on performance than do the choices managers make inside their organizations.
Resources are inputs into
a firm’s production process,
such as capital equipment,
the skills of individual
employees, patents, finances,
and talented managers.
A capability is the capacity
for a set of resources to
perform a task or an activity in
an integrative manner.
Core competencies are
capabilities that serve as
a source of competitive
advantage for a firm over
its rivals.
The resource-based model of above-average returns assumes that each organization
is a collection of unique resources and capabilities. The uniqueness of its resources
and capabilities is the basis of a firm’s strategy and its ability to earn above-average
returns