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PART 1:

STRATEGIC
MANAGEMENT
INPUTS
CHAPTER 1:
STRATEGIC
MANAGEMENT &
STRATEGIC
COMPETITIVENESS

Authored by:
Marta Szabo White. Ph.D
Georgia State University
THE STRATEGIC MANAGEMENT
PROCESS
FIGURE 1.1

The Strategic
Management
Process

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KNOWLEDGE OBJECTIVES
● Define strategic competitiveness, strategy,
competitive advantage, above-average
returns, and the strategic management
process.

● Describe the competitive landscape and


explain how globalization and technological
changes shape it.

● Use the industrial organization (I/O) model


to explain how firms can earn above-average
returns.

● Use the resource-based model to explain


how firms can earn above-average returns.
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KNOWLEDGE OBJECTIVES

● Describe vision and mission and discuss


their value.

● Define stakeholders and describe their


ability to influence organizations.

● Describe the work of strategic leaders.

● Explain the strategic management process.

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IMPORTANT DEFINITIONS

● STRATEGIC COMPETITIVENESS - achieved


when a firm successfully formulates and implements
a value-creating strategy

● STRATEGY - an integrated and coordinated set of


commitments and actions designed to exploit core
competencies and gain a competitive advantage

● COMPETITIVE ADVANTAGE - when a firm


implements a strategy that creates superior value for
customers; competitors are unable to duplicate it or
find too costly to imitate it

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IMPORTANT DEFINITIONS

● RISK - an investor’s uncertainty about the


economic gains or losses that will result from a
particular investment

● 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 from other investments
with a similar amount of risk

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OPENING CASE
ONCE A “GIANT,” BORDERS BECAME A “WEAKLING” ON ITS KNEES

INABILITY TO EARN AVERAGE RETURNS


resulted first in decline and, eventually, failure

●Enjoyed considerable success early on


●Tried to enrich its traditional approach with more
marketing and more attractive stores, demonstrating
a lack of market understanding
●Declining book sales for large chain store retailers
●Should have been entrepreneurial, innovative, and
market-oriented
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THE STRATEGIC MANAGEMENT
PROCESS

External environment and internal organization


are analyzed to determine resources, capabilities, and core
competencies—the sources of “strategic inputs.”

Vision and mission are developed; strategies are


formulated.

Strategies are implemented with the goal of


achieving strategic competitiveness and above-average returns.

Continuously
changing markets and industry conditions must match evolving
strategic inputs.
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THE STRATEGIC MANAGEMENT
PROCESS

Rational: the approach firms use to achieve


strategic competitiveness and earn above-average
returns

FORMULATION and
IMPLEMENTATION:
the two types of strategic actions that must be
simultaneously integrated to successfully employ
the strategic management process

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THE STRATEGIC MANAGEMENT
PROCESS

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THE COMPETITIVE LANDSCAPE
emergence of a global
economy
rapid technological changes

computer networks and


telecommunications have blurred the boundaries of the
entertainment industry
MSNBC is co-owned by NBC Universal and Microsoft
General Electric owns 49 percent of NBC Universal and
Comcast owns the remaining 51 percent
effective use of
the strategic management process reduces the likelihood of
failure for firms as they encounter the conditions of today’s
competitive landscape
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THE COMPETITIVE LANDSCAPE

Market instability and change


Rapidly escalating competition
Aggressive challengers
Strategic maneuvering to establish first-
mover advantage
Technology industries

Strategic flexibility - important tool

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THE COMPETITIVE LANDSCAPE

Goods, services, people, skills, and


ideas move freely across geographic
borders

New opportunities and challenges


emerge

Competitive environments are broader


and increasingly more complex
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THE COMPETITIVE LANDSCAPE

The European Union has become one


of the world’s largest markets, with 700
million potential customers
China has become the second largest
economy in the world surpassing Japan
India, the world’s largest democracy,
has an economy that now ranks as the
fourth largest in the world
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THE COMPETITIVE LANDSCAPE

Huawei also needs Guanxi in the


United States

Strong relationships in which each party feels


obligated to help the other
Key element of doing business in China
Building strong relationships is an important
dimension of Chinese culture; Guanxi is also
important when conducting business in the
United States
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THE COMPETITIVE LANDSCAPE

Hypercompetitive business environment challenges


firms to reconsider which markets to compete in; this
positioning is more critical than ever

GE - headquartered in the U.S., yet up to 60% of its


revenue growth through 2015 will be generated from
rapidly developing economies such as China and India
Jeffrey Immelt - suggests that we have entered a new
economic era in which the global economy will be more
volatile and emerging economies such as Brazil, China,
and India will be the major drivers of growth

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THE COMPETITIVE LANDSCAPE
THE MARCH OF GLOBALIZATION

Globalization is
increasing economic Highly globalized firms
Globalization is the
interdependence must anticipate ever-
product of a large
among countries and increasing complexities
number of firms
their organizations as in their operations as
competing against
reflected in the flow of goods, services,
one another in an
goods and services, people, etc. move
increasing number of
financial capital, and freely across
global economies.
knowledge across geographic borders.
country borders.

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THE COMPETITIVE LANDSCAPE
THE MARCH OF GLOBALIZATION

Free flow of resources


Globalization has led to
among global Firms must learn that
higher performance
economies, global in this twenty-first
standards in quality,
sourcing for firms, century competitive
cost, productivity,
global purchasing for landscape, only firms
product introduction
customers, and a capable of meeting, if
time, and operational
global forum for not exceeding, global
efficiency. These
workers all serve as a standards, have the
standards translate
key source of capability to earn
and impact domestic-
competitive advantage above-average returns.
only firms as well.
for firms.

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THE COMPETITIVE LANDSCAPE
THE RISKS OF GLOBALIZATION

With globalization, It is critical for firms


Significant time is
firms may over-diversify competing globally to
required for firms to
internationally, which remain strategically
learn how to compete
can have strong committed to and
in new markets, and
negative effects on a competitive in both
performance may
firm’s overall domestic and
suffer during this time.
performance. international markets.

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THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL CHANGES

Technology is significantly altering the nature of


competition and enabling unstable competitive
environments
Technology Diffusion & Disruptive Technologies
Information Age
Increasing Knowledge Intensity

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THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL CHANGES

Technology Diffusion - Category 1


the speed at which new
technologies become available and are used; has
increased substantially over the past 15 to 20 year.
of technology diffusion: How long it took to
get the following into 25 percent of U.S. homes:
● Telephone — 35 years
● TV — 26 years
● Radio — 22 years
● PCs — 16 years
● Internet — 7 years
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THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL CHANGES

Technology Diffusion - Category 1


Perpetual Innovation
describes how rapidly and
consistently new, information-intensive technologies
replace older ones
the shorter product life cycles
resulting from rapid diffusions of new technologies place
a competitive premium on being able to quickly introduce
new, innovative goods and services
speed to market with
innovative products is a primary source of competitive
advantage
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THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL CHANGES

Technology Diffusion - Category 1


Perpetual Innovation
must be derived from an understanding of
global standards and global expectations in terms of
product functionality
an excellent example of radical innovation by a
large established firm
to diffuse the technology and
enhance the innovation value, firms need to be innovative
in incorporating the new technology into their product

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THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL CHANGES

Technology Diffusion - Category 1


Perpetual Innovation
now may take only 12 to 18
months for firms to gather information about research and
development and product decisions for their competitors
may be an effective protection of proprietary
technology in a small number of industries, e.g.,
pharmaceuticals
many firms often do not apply for
patents to prevent competitors from gaining access to the
technological knowledge included in the patent application,
e.g., the electronics industry
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THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL CHANGES

Technology Diffusion - Category 1


Disruptive Technologies
technologies that destroy the
value of an existing technology and create new markets,
many times representing radical or breakthrough innovation
iPods, iPads, WiFi, and the browser
a disruptive
or radical technology creates a new industry, thereby
destroying the existing industry; with superior resources,
experience, and access to the new technology, some
incumbents may be able to adapt
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THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL CHANGES

Technology Diffusion - Category 1


Technology and Innovation
“legendary” market power, phenomenal growth
rate, and impressive financial performance stem from its
new technology development and innovation
Apple is expected to retain at least 80% of the
tablet computer market even with the many imitative
products on the market
Apple’s stores in China handle 40,000
people daily, four times the average flow of U.S. customers

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THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL CHANGES

Technology Diffusion - Category 1


Technology and Innovation
Apple provides an example of technological
entrepreneurship across multiple industries

● Innovation and industry transformation, e.g., iPod,


iPad, and the iPhone
● iPod and the complementary iTunes have
revolutionized how music is sold and used by consumers
● iPad, in conjunction with Amazon’s Kindle, is
changing the publishing industry; moving to electronic books
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THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL CHANGES

The Information Age - Category 2


in information technology have occurred
in recent years, e.g., personal computers, cellular phones,
artificial intelligence, virtual reality, massive databases, and
multiple social networking sites
the ability to effectively and
efficiently access and use information has become an
important source of competitive advantage in virtually all
industries
enables small firms to be flexible
and competitive in the global arena

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THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL CHANGES

The Information Age - Category 2


both the pace of change in information
technology and its diffusion will continue to increase
the declining costs of information technologies
and the increased accessibility to them are evident in the
current competitive landscape
contributing factor to hypercompetition
the global proliferation of
computers increases the speed and diffusion of
information technologies and enables a level playing field
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THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL CHANGES

Increasing Knowledge Intensity -


Category 3
information, intelligence, and expertise are
the basis of technology and its application
in the 1980s, the basis of
competition shifted from hard assets to intangible resources;
knowledge is a critical organizational resource and an
increasingly valuable source of competitive advantage
knowledge gained through
experience, observation, and inference is an intangible
resource; the value of intangible resources is growing as a
proportion of total shareholder value
.
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THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL CHANGES

Increasing Knowledge Intensity -


Category 3
enhanced for the firm that
develops the ability to capture intelligence, transform it
into usable knowledge, and diffuse it rapidly throughout
the firm
firms must develop (e.g.,
through training programs) and acquire (e.g., by hiring
educated and experienced employees) knowledge,
integrate it into the organization to create capabilities,
and then apply it to gain a competitive advantage
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THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL CHANGES

Increasing Knowledge Intensity -


Category 3
knowledge falls into competitor’s
hands, e.g., hiring of professional staff/managers by
competitors
because of the potential for
spillovers, firms must act quickly to use their knowledge in
productive ways
facilitates knowledge diffusion to
where it has value
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THE COMPETITIVE LANDSCAPE
TECHNOLOGY AND TECHNOLOGICAL CHANGES

Increasing Knowledge Intensity -


Category 3
Set of capabilities used to respond to various demands
and opportunities existing in a dynamic and uncertain
competitive environment
Enables the capacity to learn
Facilitates coping with hypercompetition, uncertainty,
and risk
Firms should try to develop strategic flexibility in all
areas of operations
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TWO MODELS OF STRATEGIC
DECISION MAKING
Firms use two major models to help develop their vision
and mission and then choose one or more strategies in
pursuit of strategic competitiveness and above-average
returns.

EXTERNAL INTERNAL

I/O RESOURCE-
BASED
MODEL MODEL
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THE I/O MODEL OF ABOVE-AVERAGE
RETURNS

Grounded in economics, the I/O model has


Four Underlying Assumptions
First, the external environment is assumed to impose
pressures and constraints that determine the
strategies that would result in above-average returns.

Second, most firms competing within an industry or


within a segment of that industry are assumed to
control similar strategically relevant resources and to
pursue similar strategies in light of those resources.

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THE I/O MODEL of ABOVE-AVERAGE
RETURNS
Third, resources used to implement strategies are
assumed to be highly mobile across firms, so any
resource differences that might develop between
firms will be short-lived.

Fourth, organizational decision-makers are assumed


to be rational and committed to acting in the firm’s
best interests, as shown by their profit-maximizing
behavior.
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THE I/O MODEL of ABOVE-
AVERAGE RETURNS
The Five Forces Model of competition is an
analytical tool used to help firms find the industry
that is the most attractive, as measured by its
profitability potential.

The Five Forces Model suggests that an


industry’s profitability (i.e., its rate of return on
invested capital relative to its cost of capital) is a
function of interactions among the Five Forces:
suppliers, buyers, rivalry, product substitutes, and
potential entrants to the industry.

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THE I/O MODEL of ABOVE-AVERAGE
RETURNS
FIRMS CAN EARN ABOVE-AVERAGE RETURNS:
● Cost Leadership Strategy – producing standardized
goods or services at costs below those of competitors

● Differentiation Strategy - producing differentiated


goods or services for which customers are willing to pay a
price premium

The I/O model suggests that above-average returns are


earned when firms are able to effectively study the
external environment as the foundation for identifying an
attractive industry and implementing the appropriate
strategy.
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THE I/O MODEL OF ABOVE-AVERAGE
RETURNS

Research findings support the I/O model, in that


approximately 20% of a firm’s profitability is
explained by the industry in which it chooses to
compete.

However, this research also shows that 36% of the


variance in firm profitability can be attributed to
the firm’s characteristics and actions.

These findings suggest that the External AND


Internal environments influence the company’s
ability to achieve strategic competitiveness and
earn above-average returns.
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THE I/O MODEL OF ABOVE-AVERAGE
RETURNS
FIGURE 1.2

The I/O Model


of Above
Average
Returns

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
THE RESOURCE-BASED MODEL
OF ABOVE-AVERAGE RETURNS
The resource-based model assumes that each
organization is a collection of unique resources and
capabilities.

The uniqueness of its resources and capabilities is


the basis of a firm’s strategy and its ability to earn
above-average returns.

The core assumption of the resource-based model is


that the firm’s unique resources, capabilities, and
core competencies have more influence on selecting
and using strategies than does the firm’s external
environment.
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THE RESOURCE-BASED MODEL
OF ABOVE-AVERAGE RETURNS
There are FOUR components to the Resource-
Based Model:
● Resources
● Capabilities
● Core Competencies
● Competitive Advantage
There are FOUR criteria that if resources and
capabilities fulfill, then they become Core
Competencies:
● Valuable
● Rare
● Costly to Imitate
● Nonsubstitutable
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THE RESOURCE-BASED MODEL
OF ABOVE-AVERAGE RETURNS
•Resources are inputs into a firm’s production
process, such as capital equipment, the skills of
individual employees, patents, finances, and
talented managers.

•A firm’s resources are either tangible or intangible


and are classified into three categories: physical,
human, and organizational capital.

•Resources alone may not yield a competitive


advantage. Many resources can either be imitated
or substituted over time, therefore, it is difficult to
achieve and sustain a competitive advantage based
on resources alone.
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THE RESOURCE-BASED MODEL
of ABOVE-AVERAGE RETURNS
A capability is the capacity for a set of resources to
perform a task or an activity in an integrative manner.

KEY WORD: INTEGRATIVE


Capabilities evolve over time and must be managed
dynamically in pursuit of above-average returns.

Core competencies are resources and capabilities


that serve as a source of competitive advantage.

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THE RESOURCE-BASED MODEL
OF ABOVE-AVERAGE RETURNS
When these four criteria are met, resources and
capabilities become core competencies:
•They are valuable when they allow a firm to
VALUABLE take advantage of opportunities or
neutralize threats.

•They are rare when possessed by few, if any,


RARE current and potential competitors.

COSTLY TO •Resources are costly to imitate when other


firms cannot obtain them or are at a cost
IMITATE disadvantage.

NON- •They are nonsubstitutable when they have no


SUBSTITUTABLE structural equivalents.

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THE RESOURCE-BASED MODEL
OF ABOVE-AVERAGE RETURNS

Four Underlying Assumptions

First, differences in firms’ performances across time


are due primarily to their unique resources and
capabilities rather than the industry’s structural
characteristics.

Second, firms acquire different resources and


develop unique capabilities based on how they
combine and use the resources.

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THE RESOURCE-BASED MODEL
of ABOVE-AVERAGE RETURNS

Third, that resources and capabilities are NOT


highly mobile across firms.
Fourth, that the differences in resources and
capabilities are the basis of competitive advantages.

Above-average returns are earned


when the firm uses its valuable,
rare, costly-to-imitate, and non-
substitutable resources and
capabilities to compete against its
rivals in one or more industries.
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THE RESOURCE-BASED MODEL
OF ABOVE-AVERAGE RETURNS
FIGURE 1.3

The Resource-
Based Model
of Above
Average
Returns

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
TWO MODELS OF STRATEGIC
DECISION MAKING
Evidence indicates that both models yield insights
that are linked to successfully selecting and using
strategies.

EXTERNAL INTERNAL

I/O RESOURCE-
BASED
MODEL MODEL

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VISION

• Vision is a picture of what the firm wants to be


and, in broad terms, what it wants to ultimately
achieve.

• A vision statement is short and concise, making it


easy to remember.

• It articulates the ideal description of the


organization and gives shape to its intended future.

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VISION

• A firm’s vision tends to be enduring, whereas its


mission can change in light of changing
environmental conditions.

• vision statements reflect a firm’s values and


aspirations and are intended to capture the heart
and mind of each stakeholder.

• Executives and top-level managers must formulate


and implement strategies consistent with the vision.

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VISION

Examples:
Our vision is to be the world’s best quick service
restaurant. (McDonald’s)

To make the automobile accessible to every


American.
(Ford Motor Company’s vision when established by
Henry Ford)

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MISSION

• The vision is the foundation for the firm’s


mission.

• The firm’s mission is more concrete than its


vision.

• A mission specifies the business or businesses


in which the firm intends to compete and the
customers it intends to serve.

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MISSION
Examples:
Be the best employer for our people in each
community around the world and deliver
operational excellence to our customers in each of
our restaurants. (McDonald’s)

Our mission is to be recognized by our customers


as the leader in applications engineering. We
always focus on the activities customers desire;
we are highly motivated and strive to advance our
technical knowledge in the areas of material, part
design, and fabrication technology. (LNP, a GE
Plastics Company)
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MISSION

• Similar to the vision, a mission should


establish a firm’s individuality and should be
inspirational to all stakeholders.

• A firm’s vision and mission are critical aspects


of the strategic inputs required to engage in
strategic actions that help achieve strategic
competitiveness and earn above-average returns.

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VISION, MISSION AND ETHICS

The probability of forming an effective mission increases


when employees have a strong sense of the ethical
standards that guide their behaviors.

Business
ethics ●VISION •Deciding what a firm wants to
become
are a
vital
•Deciding who it intends to
part
of:
●MISSION serve and how it wants to
serve those individuals and
groups

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STAKEHOLDERS

Are there individuals, groups, and organizations who


have a stake in the organization
● Who can affect the firm’s vision and mission?
● Are affected by the strategic outcomes achieved?
● Have enforceable claims on the firm’s
performance?

Competitive Advantage
Firms effectively managing stakeholder relationships
outperform those that do not.

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STAKEHOLDERS
• Organizations are not equally dependent on
all stakeholders, so not every stakeholder has
the same level of influence.

• The more critical and valued a stakeholder’s


participation, the greater a firm’s dependence
on it, which gives the stakeholder more
potential influence over the firm.

• Managers must find ways to accommodate


or insulate the organization from the
demands of stakeholders controlling critical
resources.
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CLASSIFICATION OF STAKEHOLDERS

Three groups of stakeholders:


Capital market stakeholders
C

● Shareholders and the major suppliers of a firm’s


capital
Product market stakeholders
● A firm’s primary customers, suppliers, host
communities, and unions representing the
workforce
Organizational stakeholders
● Firm’s employees, including both non-managerial
and managerial personnel
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CLASSIFICATION OF STAKEHOLDERS

FIGURE 1.4

The Three
Stakeholder
Groups

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CLASSIFICATION OF STAKEHOLDERS

Trade-offs must be made in situations where the


objectives of various stakeholder groups differ or conflict.
Conflict examples:
● Shareholders – individuals and groups who have
invested capital in a firm in the expectation of earning
a positive return on their investments. These
stakeholders’ rights are grounded in laws governing
private property and private enterprise.
● Consumers – interests are maximized when the
quality and reliability of a firm’s products are
improved, but without high prices.
● High returns to customers might come at the
expense of lower returns for capital market
stakeholders and vice-versa.
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MANAGING STAKEHOLDER CONFLICT

• First, a firm must thoroughly identify and


understand all important stakeholders.
• Second, it must prioritize them, in case it
cannot satisfy all of them.
• Power is the most critical criterion in
prioritizing stakeholders.
• Other criteria might include the urgency of
satisfying each particular stakeholder group
and the degree of importance of each to the
firm’s above-average returns.
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MANAGING STAKEHOLDER CONFLICT

POWER

URGENCY

IMPORTANCE

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MANAGING STAKEHOLDER CONFLICT

CHALLENGES:
When earning above-average returns, a firm can more
easily satisfy multiple stakeholders simultaneously.

When earning only average returns, a firm is unable to


maximize the interests of all stakeholders, thus
stakeholders should be at least minimally satisfied.

Cultural differences and societal values also influence


stakeholder priorities.

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CAPITAL MARKET STAKEHOLDERS

BALANCING CONFLICTING
SHAREHOLDER GOALS
The returns that shareholders expect are
commensurate with the degree of risk accepted with
those investments.
CHALLENGING FOR MANAGERS:
● Some shareholders want short-term
increases in returns
● Others desire building long-term
competitiveness
Often large shareholders prefer that the firm minimize
its use of debt because of the risk of debt, its cost, and
the possibility that debt holders have first call over
shareholders on the firm’s assets in case of default.
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PRODUCT MARKET STAKEHOLDERS

• Though all product market stakeholders are


important, without customers, the other product
market stakeholders are of little value.

• Customers demand reliable products at the


lowest possible prices.

• Host communities want companies willing to be


long-term employers and providers of tax revenue
without placing excessive demands on public
support services.

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PRODUCT MARKET STAKEHOLDERS

• Suppliers seek loyal customers who are willing to


pay the highest sustainable prices for the goods and
services they receive.

• Union officials are interested in secure jobs, under


highly desirable working conditions, for the
employees they represent.

• Product market stakeholders are generally


satisfied when a firm’s profit margin reflects at least
a balance between the returns to capital market
stakeholders and goals of product market
stakeholders.
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ORGANIZATIONAL STAKEHOLDERS

• Employees expect the firm to provide a


dynamic, stimulating, and rewarding work
environment.
• Employees are usually satisfied working for
a company that is:
● Growing
● Actively developing their skills to be
effective team members
● Meeting or exceeding global work
standards
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ORGANIZATIONAL STAKEHOLDERS

• International assignments help cultivate


employee skills for the global competitive
landscape.
• The process of managing expatriate
employees and helping them build
knowledge can have significant effects on a
firm’s global competence.
• To be successful, strategic leaders must
effectively leverage a firm’s human capital.

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STRATEGIC LEADERS

• Strategic leaders are people located in


different areas and levels of the firm using
the strategic management process to select
strategic actions that help the firm achieve
its vision and fulfill its mission.

• Successful strategic leaders are decisive,


committed to nurturing those around them,
and are committed to helping the firm
create value for all stakeholder groups.

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STRATEGIC LEADERS
Increasingly, CEOs delegate
strategic responsibilities to
include decision-makers
closest to the action due to
the changing competitive • Globalization
landscape: • Rapid technological
change
• Increasing
importance of
The global knowledge
economy • People as sources
of competitive
advantage

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STRATEGIC LEADERS AND
ORGANIZATIONAL CULTURE

• Visionary Strategic Leaders emphasize not only


maximizing shareholder wealth, but maximizing the
interests of all stakeholders, underscoring a civic
and personal commitment to corporate citizenship.

• Organizational culture affects strategic leaders and


their work. In turn, strategic leaders’ decisions and
actions shape a firm’s culture.

• Organizational culture is the social energy that


drives—or fails to drive—the organization, the
ideologies, symbols, and shared core values.
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THE WORK OF EFFECTIVE STRATEGIC
LEADERS

SUCCESSFUL STRATEGIC LEADERSHIP CHARACTERISTICS


• Hard working
● Embraces dynamic competitive landscape
• Brutally honest
• Tenacious
• Penchant for wanting the firm and its people to
accomplish more
• Strong strategic orientation
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THE WORK OF EFFECTIVE STRATEGIC
LEADERS

SUCCESSFUL STRATEGIC LEADERSHIP CHARACTERISTICS


• Innovative thinker
• Exploratory learning of new and unique forms of
knowledge
• Exploitative learning, which adds incremental
knowledge to existing knowledge bases
• Global mindset
• Dreams that challenges and energizes a
company, i.e., vision
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