Chapter 1 Flashcards
Strategic management
a integrative management field that combines analysis, formulation, and implementation in the quest of competitive advantage. view organisation as a entirety. enables you to think like a general manager to help position your organisation for superior performance.
What is Strategy?
set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors. compete for resources to achieve superior performance. New ventures compete for financial and human capital, existing company compete for profitable growth.
Good Strategy enables what?
enables a firm to achieve superior performance and sustainable competitive advantage relative to its competitors. Good strategy based on a strategic management process that consists 3 key elements:
- a diagnosis of the competitive challenge, which is accomplished through analysis of a company’s external and internal environment.
- a guiding policy to address the competitive challenge, which is accomplished through strategy formulation, resulting in the firms corporate, business, and financial strategies
- a set of coherent actions to implement int the firms guiding policy, which is accomplished though strategic implementation.
Mini Case: Tesla
- performing quite well compared to competitors (stock appreciation)
- underperforms in profits compared to competitors
- losses are common for startups early on
- seems to be starting with a promising strategy
- in the process of achieving superior performance
elements of a good strategy:
competitive challenge: good vision, to succeed must manufacture attractive and affordable vehicles using its new technology. Needs required infrastructure for electric cars (charging stations)
Guiding Policy: Tesla’s current guiding strategy: to build a cots-competitive mass-market vehicle.
Coherent actions: implements its strategy with coherent actions. Tesla must benefit from economies of scale in order to gain a competitive advantage. To accomplish the goal of 0 emission tesla decided to make some of its proprietary available to the public.
What is competitive advantage?
- superior performance compared to the other firms in the industry.
- always relative not absolute
- firm compared to the benchmark (other firms)
- Over longer period -> sustainable competitive advantage
What is competitive advantage?
- superior performance compared to the other firms in the industry.
- always relative not absolute
- firm compared to the benchmark (other firms)
- Over longer period -> sustainable competitive advantage
Competitive parity
two firms performing at the same level
grandiose statements
are not strategy (our strategy is to win)
Stakeholders Strategy
- stakeholders have invested claim or interest in the performance of the firm
- can be external (costumers, suppliers, creditors, governments..) or internal (employees, stockholders, board members)
- make specific contributes to the firm
- firm in a multifaceted exchange relationship with stakeholders
- Stakeholder Strategy: an integrative approach to managing a divers set of stakeholders effectively in order to gain competitive advantage
- allows firm to analyse and manage how various external and internal stakeholders interact to jointly Create and trade value
Pros:
-statisfyed stakeholders more cooperative -> more likely to reveal information
- increased trust lowers cost for buisnises transactions
- can lead to greater organisational adaptibilly and flexibility
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Stakeholders impact analysis
- effectively balance needs of various shareholders
- firm needs to assure stakeholder achieve their objectives
- needs to recognize and address concerns of stakeholders
impact analysis: tool that strategic leaders use to recognize, prioritize and address the needs of different shareholders. helps the firm to gain a competitive advantage while acting as a cooperate citizen.
5 steps: pay attention to top power (stakeholder has power over the company), legitimacy (legally valid, appropriate), urgency (requires imminent attention and repose)
1: Identity stakeholder
- focus on stakeholders that have or will have a material effect on a company
- priorities/identifies the most powerful stakeholders and their needs
- Identify stakeholder’s interest
- strategic leaders need to specify/assess the interest and claims of the pertinent stakeholders using power, legitimacy, urgency criteria
- as legal owners, shareholders have the most legit claim on companies profit
- shareholders can buy or sell a large number of shares changing voting rights (corporate government process) - Identify opportunities and threats
- consumer boycotts can be a threat to the company
4. Identify social responsibilities corporate social responsibilities-> economic responsibility: gain and sustain competitive advantage legal: laws regulations ethical: do what's right/fair philanthropic: corporate citizen
- address stakeholder concerns
- strategic leaders need to decide appropriate course of action for the firm
Stakeholders impact analysis
- effectively balance needs of various shareholders
- firm needs to assure stakeholder achieve their objectives
- needs to recognise and address concerns of stakeholders
impact analysis: tool which strategic leaders use to recognise, prioritise and address needs of different shareholders. helps firm to gain competitive advantage while acting as a cooperate citizen.
5 steps: pay attention top power (stakeholder has power over the company), legitimacy (legally valid, appropriate), urgency (requires imminent attention and repose)
1: Identify stakeholder
- focus on stakeholders that have or will have material effect on a company
- priorities/identifies the most powerful stakeholders
AFI Framework
This framework explains and predicts differences in performance and helps leaders to formulate and implement strategies that will lead to competitive advantage
Analysis:
Strategic Leadership and the Strategy Process: Managing the strategy progress
external analysis: Industry structure, competituve forces, strategic groups
internal: resources, capabilities, core competencies
Competetive advantage: firm performance, business models
Formulation:
Business Strategy: How should firm compete: cost leadership, differentiation or value innovation.
Coroperate Strategy: Where should the firm compet: idustry, markets, geography
Global strategy: How and where should firm compete: local, regional, national or international
Implemation:
Organizational design: How should the firm organize to turn the formulated strategy into action
corporate governace business ethis: what type of corporate governance is most effective? How does the firm anchor strategic decisions in a business ethic?
