Chapter 1: Strategic Management

An integrative management field that combines analysis, formulation and implementation in the quest for competitive advantage.

The set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.

A strategy is good when it enables a firm to achieve superior performance. It consists of three elements.

1. A diagnosis of the competitve challenge.

2. A guiding policy to address the competitive challenge

3. A set of coherent actions to implement a firm's guiding policy

A firm that achieves superior performance relative to other competitors in the same industry or the industry average has a competitive advantage

A firm that is able to outperform its competitors or the industry average over a prolonged period has a sustainable competitive advantage

If a firm underperforms its rivals or the industry average, it has a competitive disadvantage

Should two or more firms perform at the same level, they have competitive parity

1. Grandiose statements

2. A failure to face a competitive challenge

3. Operational effectiveness, competitive benchmarking, or other tactical tools

What do we want to accomplish ultimately?

How do we accomplish our goals?

what commitments do we make, and what guardrails do we put in place, to act both legally and ethically as we pursue our vision and mission?

A statement about what an organization ultimately wants to accomplish; it captures the company's aspiration

A stretch goal that pervades the organization with a sense of winning, which it aims to achieve by building the necessary resources and capabilities through continuous learning

Description of what an organization actually does - the products and services it plans to provide, and the markets in which it will compete

The enterprise undertakes credible actions which are costly, long-term and difficult to reverse.

Customer-oriented vision statements allow companies to adapt to changing environments whilst product-oriented vision statements limit that ability.

A product-oriented vision defines a business in terms of a good or service provided. It tends to force managers to take a more myopic view of the competitive landscape.

A customer-oriented vision defines a business in terms of providing solutions to customer needs. It identifies a critical need but leaves open the means of how to meet that need.

1. The visions are customer-oriented

2. Internal stakeholders are invested in defining the mission

3. Organizational structures such as compensation systems align with the firm's vision statement

Statement of principles to guide an organization as it works to achieve its vision and fulfill its mission, for both internal conduct and external interactions; it often includes explicit ethical considerations

Ethical standards and norms that govern the behavior of individuals within a firm or organization

A model that links three interdependent strategic management tasks - analyse, formulate, and implement - that together help managers plan and implement a strategy that can improve performance and result in competitive advantage