Chapter 3 - STRATEGY
Core competencies = the resources and capabilities that make up the strategic
advantages of a firm
– They are not easily replicated by other firms
– Basically what a firm can do better than its rivals
A competitive advantage’s sustainability (lifetime) is a function of three factors
– The rate of core competence obsolescence because of environmental
changes
– The availability of substitutes for the core competencies
– The imitability of the core competencies
In order for firms to achieve strategic competitiveness, earn above-average
returns and remain ahead of competitors in the short and long term
-> they need to effectively manage current core competencies while
simultaneously developing new ones.
Global mindset = the ability to analyse, understand and manage an internal
organisation in ways that are not dependent on the assumptions of a single
country, culture or context
Value is measured by a product’s performance characteristics and by its
attributes for which customers are willing to pay
Firms use their resources to create goods with value for customers -> leading
to above-average returns for a firm
They do that by using their resources to form capabilities and core
competencies
The strategic decisions (e.g. the resources the firm needs to collect, how to
best manage and leverage them) managers make about the internal
organisation are non-routine, have ethical implications, and significantly
influence the firm’s ability to make above-average returns.
This is hard - many managers make mistakes when doing that e.g. thinking a
capability is in the firm’s core competencies when it is not
But a firm can improve by studying its mistakes
– Uncertainty
Uncertainty exists about the characteristics of the firm’s general and
industry environments and customer needs
– Complexity
Results from the interrelationships among conditions shaping a firm
– Intraorganisational conflict
May exist among managers making decisions as well as among those
affected by the decisions
Affect managers as they analyse the internal organisation and make decisions
Core competencies = the resources and capabilities that make up the strategic
advantages of a firm
– They are not easily replicated by other firms
– Basically what a firm can do better than its rivals
A competitive advantage’s sustainability (lifetime) is a function of three factors
– The rate of core competence obsolescence because of environmental
changes
– The availability of substitutes for the core competencies
– The imitability of the core competencies
In order for firms to achieve strategic competitiveness, earn above-average
returns and remain ahead of competitors in the short and long term
-> they need to effectively manage current core competencies while
simultaneously developing new ones.
Global mindset = the ability to analyse, understand and manage an internal
organisation in ways that are not dependent on the assumptions of a single
country, culture or context
Value is measured by a product’s performance characteristics and by its
attributes for which customers are willing to pay
Firms use their resources to create goods with value for customers -> leading
to above-average returns for a firm
They do that by using their resources to form capabilities and core
competencies
The strategic decisions (e.g. the resources the firm needs to collect, how to
best manage and leverage them) managers make about the internal
organisation are non-routine, have ethical implications, and significantly
influence the firm’s ability to make above-average returns.
This is hard - many managers make mistakes when doing that e.g. thinking a
capability is in the firm’s core competencies when it is not
But a firm can improve by studying its mistakes
– Uncertainty
Uncertainty exists about the characteristics of the firm’s general and
industry environments and customer needs
– Complexity
Results from the interrelationships among conditions shaping a firm
– Intraorganisational conflict
May exist among managers making decisions as well as among those
affected by the decisions
Affect managers as they analyse the internal organisation and make decisions
