Strategic Management

(Strategic Business Management)

MODULE 1
Part 1
Strategic Management and Strategic
Competitiveness

FOR CLASS DISCUSSION PURPOSES ONLY

 Introduction
Globalization of economy has brought about
revolutionary changes in the policy framework of
both developed and underdeveloped countries. The
liberalization has removed artificial trade barriers
and businesses have, now truly become
international and the competition has become very
severe.

FOR CLASS DISCUSSION PURPOSES ONLY

 Introduction
These developments gave rise to new paradigms in
business policies and strategic thinking. Due to this
there are drastic changes in conventional concept of
business. The survival and success of the firm is
influenced significantly by superior strategies.

FOR CLASS DISCUSSION PURPOSES ONLY

 Introduction
Strategic management is the organized
development of the resources of the functional
areas: financial, manufacturing, marketing,
technological, manpower etc. in the pursuit of its
objectives. It is the use of all the entity’s resources.
It is a set of policies adopted by senior
management, which guides the scope and
direction of the entry. It takes to consider the
environment in which the company operates.
FOR CLASS DISCUSSION PURPOSES ONLY
 Strategic Management Process


Strategic Management 12edition by: Hitt, Ireland and Hoskisson

FOR CLASS DISCUSSION PURPOSES ONLY
 Strategic Management Process
Strategic competitiveness - is achieved when a firm
successfully formulates and implements a value-
creating strategy.
Strategy - is an integrated and coordinated set of
commitments and actions designed to exploit core
competencies and gain a competitive advantage.

Strategic Management 12edition by: Hitt, Ireland and Hoskisson

FOR CLASS DISCUSSION PURPOSES ONLY
 Strategic Management Process
Competitive Advantage - is when it implements a
strategy competitors are unable to duplicate or find
too costly to try to imitate.
Above-Average Returns - are returns in excess of
what an investor expects to earn from other
investments with a similar amount of risk.
Risk - is an investor’s uncertainty about the
economic gains or losses that will result from a
particular investment.
Strategic Management 12edition by: Hitt, Ireland and Hoskisson
FOR CLASS DISCUSSION PURPOSES ONLY
 Strategic Management Process
Average returns - are returns equal to those an
investor expects to earn from other investments with
a similar amount of risk.

Strategic management - process is the full set of

commitments, decisions, and actions required for a
firm to achieve strategic competitiveness and earn
above average returns.

Strategic Management 12edition by: Hitt, Ireland and Hoskisson

FOR CLASS DISCUSSION PURPOSES ONLY
 Competitive Landscape
Global economy - is one in which goods, services,
people, skills, and ideas move freely across
geographic borders.
Technology Diffusion - The rate of technology
diffusion—the speed at which new technologies
become available and are used—has increased
substantially over the past 15 to 20 years.

Strategic Management 12edition by: Hitt, Ireland and Hoskisson

FOR CLASS DISCUSSION PURPOSES ONLY
 Competitive Landscape
Perpetual innovation - is a term used to describe
how rapidly and consistently new, information-
intensive technologies replace older ones. The
shorter product life cycles resulting from these rapid
diffusions of new technologies place a competitive
premium on being able to quickly introduce new,
innovative goods and services into the marketplace.

Strategic Management 12edition by: Hitt, Ireland and Hoskisson

FOR CLASS DISCUSSION PURPOSES ONLY
 Competitive Landscape
Disruptive technologies—technologies that destroy
the value of an existing technology and create new
markets—surface frequently in today’s competitive
markets.
Information Age - Dramatic changes in information
technology occurred in recent years. Personal
computers, cellular phones, artificial intelligence,
virtual reality, and massive databases are a few
examples of how information is used differently as a
result of technological developments.
Strategic Management 12edition by: Hitt, Ireland and Hoskisson
FOR CLASS DISCUSSION PURPOSES ONLY
 Competitive Landscape
Increasing Knowledge Intensity - Knowledge
(information, intelligence, and expertise) is the basis of
technology and its application. In the competitive
landscape of the twenty-first century, knowledge is a
critical organizational resource and an increasingly
valuable source of competitive advantage
Strategic flexibility - is a set of capabilities used to
respond to various demands and opportunities existing in
a dynamic and uncertain competitive environment. Thus,
strategic flexibility involves coping with uncertainty and
its accompanying risks.12edition by: Hitt, Ireland and Hoskisson
Strategic Management
FOR CLASS DISCUSSION PURPOSES ONLY
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 capability is the capacity for a set of resources to
perform a task or an activity in an integrative manner.
Core competencies are capabilities that serve as a
source of competitive advantage for a fi rm over its
rivals.
Strategic Management 12edition by: Hitt, Ireland and Hoskisson
FOR CLASS DISCUSSION PURPOSES ONLY
 Vision and Mission
Vision - is a picture of what the firm wants to be
and, in broad terms, what it wants to ultimately
achieve.

Mission - specifies the business or businesses in

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

Strategic Management 12edition by: Hitt, Ireland and Hoskisson

FOR CLASS DISCUSSION PURPOSES ONLY