Chapter 2 THE CONTEXT OF MANAGING STRATEGICALLY Group

Chapter 2 THE CONTEXT OF MANAGING STRATEGICALLY Group 4 Alma Pena Jose Medina Laura Randall Mona Shafer Melissa Dunlop

COMPETITIVE ADVANTAGE � Managing Strategically: � To formulate and implement strategies that allow an organization to develop and maintain a competitive advantage � Competitive � Aspect Advantage: 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. 2. 3. Industrial Organization (I/O) Resource-Based View (RBV) 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 efficient o o � Producing goods and services Designing work tools Organizational processes 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 20 th 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 � Challenges The internet and i. Tunes

CHANGE AGENTS � Strategic � Initiate decision makers & Oversee � Facilitate successful implantation � Provide support

CREATIVITY AND INNOVATION CAPABILITIES “create and innovate or fail” Innovative Organization: The ability to channel creativity into useful outcomes 7 Dimensions of Organizational Innovation 1. Challenges 2. Customer Focus 3. Creativity 4. Communication 5. Collaboration 6. Completion 7. Contemplation

Egalitarian Climate Flexible Organization Structure Significant Technological Support World-Class Organization Creative Human Resource Management Strong Customer Focus Continual Learning and improvement

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.