Summary Chapter 1 Strategy and Organisation Book 2
- Organizations face the challenge of finding ways of changing themselves or changing their
environments to become technically, economically and ethically more responsive and
effective.
- Globalization: markets, technologies and organizations are becoming increasingly
interconnected. Companies large and small are searching for the structures and processes
that can help them reap the advantages of global interdependence and minimize the
disadvantages.
- Ethics and social responsibility: are becoming increasingly more important.
- Responsiveness: a challenge for organizations is to respond quickly and decisively to
environmental changes, organizational crises and shifting customer expectations.
- The digital workplace: organizations are becoming enmeshed in electronic networks.
Disintermediation means eliminating the middleman often by consuming the unpaid time of
the customer who experiences the frustration of waiting for, and dealing with, responses
from call centres.
- Diversity: in todays society there is much more diversity at workspaces.
- Organizations are diverse both in their composition and the conditions of their operation.
- Organizations are social entities that are goal-directed, are designed as deliberately
structured and coordinated activity systems, and are linked to the external environment.
- Social entities indicates that organizations are cultural and political as well as economic
phenomena.
- Goal-directed emphasizes how activity in organizations is highly instrumental rather than
intrinsically meaningful.
- The activities of managers in for-profit organizations are directed primarily at producing
goods and services in a way that retains the confidence of shareholders.
- Organizations are credited with:
1. Bringing together resources to achieve desired goals and outcomes.
2. Producing goods and services.
3. Facilitating innovation.
4. Harnessing modern manufacturing, service and information technologies.
5. Adapting to and influencing a changing environment.
6. Creating value.
7. Accommodating ongoing challenges of diversity, ethics and the motivation and
coordination of employees.
Summary Chapter 1 Strategy and Organisation Book 1
- Firms use the strategic management process to achieve strategic competitiveness and earn
above-average returns. Firms analyse the external environment and their internal
organization, then formulate and implement a strategy to achieve a desired level of
performance. The firm’s level of strategic competitiveness and the extent to which it earns
above-average returns reflects its performance. Firms achieve strategic competitiveness by
developing and implementing a value-creating strategy. Above-average returns provide the
foundation for satisfying all of a firm’s stakeholders simultaneously.
- The fundamental nature of competition is different in the current competitive landscape. As
a result, those making strategic decisions must adopt a different mind-set, one that allows
them to learn how to compete in highly turbulent and chaotic environments that produce a
, great deal of uncertainty. The globalization of industries and their markets along with rapid
and significant technological changes are the 2 primary factors contributing to the
turbulence of the competitive landscape.
- Firms use 2 major models to help develop their vision and mission when choosing one or
more strategies to pursue strategic competitiveness and above-average returns. The core
assumption of the I/O model is that the firm’s external environment has a larger influence
on the choice of strategies than does its internal resources, capabilities and core
competencies. Thus, firms use the I/O model to understand the effects an industry’s
characteristics can have on them when selecting a strategy or strategies to use to compete
against rivals. The logic supporting the I/O model suggests that firms earn above-average
returns by locating an attractive industry or part of an attractive industry and then
implementing the strategy dictated by that industry’s characteristics successfully.
- The core assumption of the resource-based model is that the firm’s unique resources,
capabilities and core competencies have more of an influence on selecting and using
strategies than does the firm’s external environment. When firms use their valuable, rare,
costly to imitate, and non-substitutable resources and capabilities effectively when
competing against rivals in one or more industries, they earn above-average returns.
Evidence indicates that both models’ insights help firms as they select and implement
strategies. Thus, firms want to use their unique resources, capabilities and core-
competencies as the foundation to engage in one or more strategies that allow them to
compete effectively against rivals.
- The firm’s vision and mission guide its selection of strategies based on the information form
analyses of its external environment and internal organization. Vision is a picture of what the
firm wants to be and what it wants to achieve ultimately. Flowing form the vision, the
mission specifies the business or businesses in which the firm intends to compete and the
customers it intends to serve. Vision and mission provide direction to the firm and signal
important descriptive information to stakeholders.
- Stakeholders are those who can affect, and are affected by, a firm’s performance. Because a
firm is dependent on the continuing support of stakeholders, they have enforceable claims
on the company’s performance. When earning above-average returns, a firm generally has
the resources it needs to satisfy the interests of all stakeholders. However, when earning
only average returns, the firm must manage its stakeholders carefully to retain their support.
A firm earning below-average returns must minimize the amount of support it loses form
unsatisfied stakeholders.
- Strategic leasers are people located in different areas and levels of the firm using the
strategic management process to help the firm achieve its vision and fulfill its mission. In
general, CEOs are responsible for making certain that their firms use the strategic
management process properly. The effectiveness of the strategic management process
increases when grounded in ethical intentions and behaviors. The strategic leader’s work
demands decision trade-offs, often among attractive alternatives. It is important for all
strategic leaders, especially the CEO and other members of the top management team, to
conduct thorough analyses of condition facing the firm, be brutally and consistently honest,
and work collaboratively with others to select and implement strategies.
Resources are valuable when they allow a firm to take advantage of opportunities or neutralize
threats in its external environment.
, Resources are rare when possessed by few, if any, current and potential competitors.
Resources are costly to imitate when other firms either cannot obtain them or are at a cost
disadvantage in obtaining them compared with the firm that already possesses them.
Resources are non-substitutable when they have no structural equivalents.
Strategy an integrated and coordinated set of commitments and actions designed to exploit core
competencies and gain a competitive advantage.
Competitive advantage a firm has this when by implementing a chosen strategy, it creates
superior value for customers and when competitors are not able to imitate the value the firm’s
products create or find it too expensive to attempt imitation.
Above average returns returns in excess of what an investor expects to earn from other
investments with a similar amount of risk.
Average returns returns equal to those an investor expects to earn form other investments
possessing a similar amount of risk.
Strategic management process the full set of commitments, decisions, and actions firms take to
achieve strategic competitiveness and earn above average returns.
Hypercompetition a condition where competitors engage in intense rivalry, markets change
quickly and often, and entry barriers are low.
Global economy one in which goods, services, people, skills and ideas move freely across
geographic borders.
Strategic flexibility a set of capabilities firms use to respond to various demands and
opportunities existing in today’s dynamic and uncertain competitive environment.
Recourses inputs into a firm’s production process, such as capital equipment, the skills of
individual employees, patents, finances and talented managers.
Capability the capacity for a set of resources to perform a task or an activity in an integrative
manner.
Core competencies capabilities that serve as a source of competitive advantage for a firm over its
rivals.
Vision a picture of what the firm wants to be and, in broad terms, what it wants to achieve.
Mission specifies the business in which the firm intends to compete and the customers it intends
to serve.
Stakeholders individuals, groups and organizations that can affect the firm’s vision and mission,
are affected by the strategic outcomes achieved and have enforceable claims on the firm’s
performance.
- Organizations face the challenge of finding ways of changing themselves or changing their
environments to become technically, economically and ethically more responsive and
effective.
- Globalization: markets, technologies and organizations are becoming increasingly
interconnected. Companies large and small are searching for the structures and processes
that can help them reap the advantages of global interdependence and minimize the
disadvantages.
- Ethics and social responsibility: are becoming increasingly more important.
- Responsiveness: a challenge for organizations is to respond quickly and decisively to
environmental changes, organizational crises and shifting customer expectations.
- The digital workplace: organizations are becoming enmeshed in electronic networks.
Disintermediation means eliminating the middleman often by consuming the unpaid time of
the customer who experiences the frustration of waiting for, and dealing with, responses
from call centres.
- Diversity: in todays society there is much more diversity at workspaces.
- Organizations are diverse both in their composition and the conditions of their operation.
- Organizations are social entities that are goal-directed, are designed as deliberately
structured and coordinated activity systems, and are linked to the external environment.
- Social entities indicates that organizations are cultural and political as well as economic
phenomena.
- Goal-directed emphasizes how activity in organizations is highly instrumental rather than
intrinsically meaningful.
- The activities of managers in for-profit organizations are directed primarily at producing
goods and services in a way that retains the confidence of shareholders.
- Organizations are credited with:
1. Bringing together resources to achieve desired goals and outcomes.
2. Producing goods and services.
3. Facilitating innovation.
4. Harnessing modern manufacturing, service and information technologies.
5. Adapting to and influencing a changing environment.
6. Creating value.
7. Accommodating ongoing challenges of diversity, ethics and the motivation and
coordination of employees.
Summary Chapter 1 Strategy and Organisation Book 1
- Firms use the strategic management process to achieve strategic competitiveness and earn
above-average returns. Firms analyse the external environment and their internal
organization, then formulate and implement a strategy to achieve a desired level of
performance. The firm’s level of strategic competitiveness and the extent to which it earns
above-average returns reflects its performance. Firms achieve strategic competitiveness by
developing and implementing a value-creating strategy. Above-average returns provide the
foundation for satisfying all of a firm’s stakeholders simultaneously.
- The fundamental nature of competition is different in the current competitive landscape. As
a result, those making strategic decisions must adopt a different mind-set, one that allows
them to learn how to compete in highly turbulent and chaotic environments that produce a
, great deal of uncertainty. The globalization of industries and their markets along with rapid
and significant technological changes are the 2 primary factors contributing to the
turbulence of the competitive landscape.
- Firms use 2 major models to help develop their vision and mission when choosing one or
more strategies to pursue strategic competitiveness and above-average returns. The core
assumption of the I/O model is that the firm’s external environment has a larger influence
on the choice of strategies than does its internal resources, capabilities and core
competencies. Thus, firms use the I/O model to understand the effects an industry’s
characteristics can have on them when selecting a strategy or strategies to use to compete
against rivals. The logic supporting the I/O model suggests that firms earn above-average
returns by locating an attractive industry or part of an attractive industry and then
implementing the strategy dictated by that industry’s characteristics successfully.
- The core assumption of the resource-based model is that the firm’s unique resources,
capabilities and core competencies have more of an influence on selecting and using
strategies than does the firm’s external environment. When firms use their valuable, rare,
costly to imitate, and non-substitutable resources and capabilities effectively when
competing against rivals in one or more industries, they earn above-average returns.
Evidence indicates that both models’ insights help firms as they select and implement
strategies. Thus, firms want to use their unique resources, capabilities and core-
competencies as the foundation to engage in one or more strategies that allow them to
compete effectively against rivals.
- The firm’s vision and mission guide its selection of strategies based on the information form
analyses of its external environment and internal organization. Vision is a picture of what the
firm wants to be and what it wants to achieve ultimately. Flowing form the vision, the
mission specifies the business or businesses in which the firm intends to compete and the
customers it intends to serve. Vision and mission provide direction to the firm and signal
important descriptive information to stakeholders.
- Stakeholders are those who can affect, and are affected by, a firm’s performance. Because a
firm is dependent on the continuing support of stakeholders, they have enforceable claims
on the company’s performance. When earning above-average returns, a firm generally has
the resources it needs to satisfy the interests of all stakeholders. However, when earning
only average returns, the firm must manage its stakeholders carefully to retain their support.
A firm earning below-average returns must minimize the amount of support it loses form
unsatisfied stakeholders.
- Strategic leasers are people located in different areas and levels of the firm using the
strategic management process to help the firm achieve its vision and fulfill its mission. In
general, CEOs are responsible for making certain that their firms use the strategic
management process properly. The effectiveness of the strategic management process
increases when grounded in ethical intentions and behaviors. The strategic leader’s work
demands decision trade-offs, often among attractive alternatives. It is important for all
strategic leaders, especially the CEO and other members of the top management team, to
conduct thorough analyses of condition facing the firm, be brutally and consistently honest,
and work collaboratively with others to select and implement strategies.
Resources are valuable when they allow a firm to take advantage of opportunities or neutralize
threats in its external environment.
, Resources are rare when possessed by few, if any, current and potential competitors.
Resources are costly to imitate when other firms either cannot obtain them or are at a cost
disadvantage in obtaining them compared with the firm that already possesses them.
Resources are non-substitutable when they have no structural equivalents.
Strategy an integrated and coordinated set of commitments and actions designed to exploit core
competencies and gain a competitive advantage.
Competitive advantage a firm has this when by implementing a chosen strategy, it creates
superior value for customers and when competitors are not able to imitate the value the firm’s
products create or find it too expensive to attempt imitation.
Above average returns returns in excess of what an investor expects to earn from other
investments with a similar amount of risk.
Average returns returns equal to those an investor expects to earn form other investments
possessing a similar amount of risk.
Strategic management process the full set of commitments, decisions, and actions firms take to
achieve strategic competitiveness and earn above average returns.
Hypercompetition a condition where competitors engage in intense rivalry, markets change
quickly and often, and entry barriers are low.
Global economy one in which goods, services, people, skills and ideas move freely across
geographic borders.
Strategic flexibility a set of capabilities firms use to respond to various demands and
opportunities existing in today’s dynamic and uncertain competitive environment.
Recourses inputs into a firm’s production process, such as capital equipment, the skills of
individual employees, patents, finances and talented managers.
Capability the capacity for a set of resources to perform a task or an activity in an integrative
manner.
Core competencies capabilities that serve as a source of competitive advantage for a firm over its
rivals.
Vision a picture of what the firm wants to be and, in broad terms, what it wants to achieve.
Mission specifies the business in which the firm intends to compete and the customers it intends
to serve.
Stakeholders individuals, groups and organizations that can affect the firm’s vision and mission,
are affected by the strategic outcomes achieved and have enforceable claims on the firm’s
performance.
