part 1 Strategic Analysis
Chapter 1
Strategic Management: Creating Competitive Advantages ... 1-2
What Is Strategic Management?............................................................... 1-5
Defining Strategic Management ...................................................................................... 1-5
The Four Key Attributes of Strategic Management ......................................................... 1-5
The Strategic Management Process.......................................................... 1-7
Intended versus Realized Strategies ................................................................................ 1-7
Strategy Analysis ............................................................................................................. 1-7
Strategy Formulation ....................................................................................................... 1-7
Strategy Implementation .................................................................................................. 1-8
The Role of Corporate Governance
and Stakeholder Management .................................................................. 1-9
Alternative Perspectives of Stakeholder Management .................................................... 1-11
Social Responsibility and Environmental Sustainability:
Moving Beyond the Immediate Stakeholders ....................................................... 1-11
The Strategic Management Perspective:
An Imperative throughout the Organization........................................... 1-13
Ensuring Coherence in Strategic Direction ............................................. 1-15
Organizational Vision...................................................................................................... 1-15
Mission Statements .......................................................................................................... 1-16
Strategic Objectives ......................................................................................................... 1-18
Issue for Debate 1-19
Reflecting on Career Implications ............................................................ 1-20
Summary ..................................................................................................... 1-22
Connect Resources 1-30
,Chapter 1
Strategic Management:
Creating Competitive Advantages
Summary/Objectives
PowerPoint Slide 2: Learning Objectives
At the heart of strategic management is the question: “How and why do some firms
outperform others?” The challenge to managers is to develop and implement strategies that
will provide competitive advantages that will be sustainable over time. This chapter is
divided into five sections.
1. The first section addresses the broad question: “What is strategic
management?” Here, we define strategic management as “consisting of
the analysis, decisions, and actions an organization undertakes to create
and sustain competitive advantages.” We also address the four key
attributes of strategic management: concern with overall objectives;
involvement of multiple stakeholders; incorporation of short- and long-
term perspectives; and recognition of tradeoffs between effectiveness
and efficiency. We also introduce the concept of “ambidextrous
behaviors”—the need to combine alignment and adaptability.
2. The second section discusses the strategic management process. Here, we
present the three processes—analysis, formulation, and
implementation—that provide the framework for the overall
organization of the thirteen chapters of the book.
3. The third section focuses on the vital role of corporate governance, which is
essential to ensuring that the actions of a firm’s management are consistent with
, the goals of its owners—the shareholders. We also address stakeholder
management. It must be taken into account throughout the strategic
management process. Although the interests of stakeholders may, at times,
conflict, we discuss how firms are able to achieve “symbiosis” among
stakeholders wherein various interests are considered interdependent and can
be attained simultaneously. We address the importance of social responsibility,
including environmental sustainability, as well as challenges associated with
making the case for sustainability initiatives.
4. The fourth section addresses today’s greater need for a strategic management
perspective throughout the organization. With the emergence of the knowledge
of economy and globalization, leaders must mobilize people throughout the
organization.
5. The fifth section discusses the need for organizations to attain consistency in
their vision, mission, and strategic objectives. Collectively, they form a hierarchy
of goals.
, Lecture/Discussion Outline
We begin the chapter in LEARNING FROM MISTAKES with a clever quote from Arthur
Martinez, Sears’s former chairman: “Today’s peacock is tomorrow’s feather duster” to help
illustrate the rapid turnover among the Fortune 500 firms over a period of time. With rapid
changing technologies and intensified global competition success can be temporary, and
new entrants can shake up long-standing industries.
The SUPPLEMENT below, from a website provides an interesting perspective on the
digital economy.
Extra Example: The Digital Disruption Has Already Happened
• World’s largest taxi company owns no taxis. (Uber)
• Largest accommodation provider owns no real estate. (Airbnb)
• Largest phone companies own no telco infrastructure. (Skype, WeChat)
• World’s most valuable retailer has no inventory. (Alibab)
• Most popular media owner owns no content. (Facebook)
• Fastest growing banks have no actual money. (SocietyOne)
• World’s largest movie house owns no cinemas. (Netflix)
• Largest software vendors don’t write the apps. (Apple and Google)
Source: www.ibmforentreprenuers.com.
Discussion Question 1: What are the implications for your careers? (This is a rather
general question, but it might help remind students that they must be sensitive to
changes in industry dynamics that could provide new opportunities—as well as,
perhaps, erode opportunities that they may have thought they had in a particular
industry.)
Chapter 1
Strategic Management: Creating Competitive Advantages ... 1-2
What Is Strategic Management?............................................................... 1-5
Defining Strategic Management ...................................................................................... 1-5
The Four Key Attributes of Strategic Management ......................................................... 1-5
The Strategic Management Process.......................................................... 1-7
Intended versus Realized Strategies ................................................................................ 1-7
Strategy Analysis ............................................................................................................. 1-7
Strategy Formulation ....................................................................................................... 1-7
Strategy Implementation .................................................................................................. 1-8
The Role of Corporate Governance
and Stakeholder Management .................................................................. 1-9
Alternative Perspectives of Stakeholder Management .................................................... 1-11
Social Responsibility and Environmental Sustainability:
Moving Beyond the Immediate Stakeholders ....................................................... 1-11
The Strategic Management Perspective:
An Imperative throughout the Organization........................................... 1-13
Ensuring Coherence in Strategic Direction ............................................. 1-15
Organizational Vision...................................................................................................... 1-15
Mission Statements .......................................................................................................... 1-16
Strategic Objectives ......................................................................................................... 1-18
Issue for Debate 1-19
Reflecting on Career Implications ............................................................ 1-20
Summary ..................................................................................................... 1-22
Connect Resources 1-30
,Chapter 1
Strategic Management:
Creating Competitive Advantages
Summary/Objectives
PowerPoint Slide 2: Learning Objectives
At the heart of strategic management is the question: “How and why do some firms
outperform others?” The challenge to managers is to develop and implement strategies that
will provide competitive advantages that will be sustainable over time. This chapter is
divided into five sections.
1. The first section addresses the broad question: “What is strategic
management?” Here, we define strategic management as “consisting of
the analysis, decisions, and actions an organization undertakes to create
and sustain competitive advantages.” We also address the four key
attributes of strategic management: concern with overall objectives;
involvement of multiple stakeholders; incorporation of short- and long-
term perspectives; and recognition of tradeoffs between effectiveness
and efficiency. We also introduce the concept of “ambidextrous
behaviors”—the need to combine alignment and adaptability.
2. The second section discusses the strategic management process. Here, we
present the three processes—analysis, formulation, and
implementation—that provide the framework for the overall
organization of the thirteen chapters of the book.
3. The third section focuses on the vital role of corporate governance, which is
essential to ensuring that the actions of a firm’s management are consistent with
, the goals of its owners—the shareholders. We also address stakeholder
management. It must be taken into account throughout the strategic
management process. Although the interests of stakeholders may, at times,
conflict, we discuss how firms are able to achieve “symbiosis” among
stakeholders wherein various interests are considered interdependent and can
be attained simultaneously. We address the importance of social responsibility,
including environmental sustainability, as well as challenges associated with
making the case for sustainability initiatives.
4. The fourth section addresses today’s greater need for a strategic management
perspective throughout the organization. With the emergence of the knowledge
of economy and globalization, leaders must mobilize people throughout the
organization.
5. The fifth section discusses the need for organizations to attain consistency in
their vision, mission, and strategic objectives. Collectively, they form a hierarchy
of goals.
, Lecture/Discussion Outline
We begin the chapter in LEARNING FROM MISTAKES with a clever quote from Arthur
Martinez, Sears’s former chairman: “Today’s peacock is tomorrow’s feather duster” to help
illustrate the rapid turnover among the Fortune 500 firms over a period of time. With rapid
changing technologies and intensified global competition success can be temporary, and
new entrants can shake up long-standing industries.
The SUPPLEMENT below, from a website provides an interesting perspective on the
digital economy.
Extra Example: The Digital Disruption Has Already Happened
• World’s largest taxi company owns no taxis. (Uber)
• Largest accommodation provider owns no real estate. (Airbnb)
• Largest phone companies own no telco infrastructure. (Skype, WeChat)
• World’s most valuable retailer has no inventory. (Alibab)
• Most popular media owner owns no content. (Facebook)
• Fastest growing banks have no actual money. (SocietyOne)
• World’s largest movie house owns no cinemas. (Netflix)
• Largest software vendors don’t write the apps. (Apple and Google)
Source: www.ibmforentreprenuers.com.
Discussion Question 1: What are the implications for your careers? (This is a rather
general question, but it might help remind students that they must be sensitive to
changes in industry dynamics that could provide new opportunities—as well as,
perhaps, erode opportunities that they may have thought they had in a particular
industry.)
