Professional Documents
Culture Documents
Robert E. Hoskisson
Michael A. Hitt
R. Duane Ireland
The PowerPoint slides for this textbook were prepared by:
R. Dennis Middlemist
Professor of Management
Colorado State University
If you have any concerns, contact me directly at
Dennis@Middlemist.com
Introduction to
Strategic Management
Robert E. Hoskisson
Michael A. Hitt
R. Duane Ireland
Chapter 5 Chapter 6
Chapter 7
Business-Level Competitive Rivalry and
Creating Strategy Competitive Dynamics
Corporate-Level Strategy
Competitive
Advantage Chapter 8
Chapter 9 Chapter 10
Acquisition and
International Strategy Cooperative Strategy
Restructuring Strategies
Monitoring
And Creating Chapter 11 Chapter 12
Entrepreneurial Corporate Governance Strategic Entrepreneurship
3
Opportunities
Definitions
Strategic Management Process
The full set of commitments, decisions,
and actions required for a firm to create
value and earn above-average returns
Value Creation
What is achieved when a firm
successfully formulates and implements a
strategy that other companies are unable
to duplicate or find too costly to imitate.
4
Definitions
Average Returns
Returns that are equal to those an investor
expects to earn from other investments with
a similar amount of risk
Above-Average Returns
Returns that are in excess of what an investor
expects to earn from other investments with a
similar amount of risk
5
Definitions
Risk
An investor’s uncertainty about the
economic gains or losses that will result
from a particular investment
6
Competitive Landscape
Dynamics of strategic
maneuvering among
global and innovative
combatants
Price-quality
positioning, new know-
how, first mover
Hypercompetitive Protect or invade
environments established product or
Fundamental nature of geographic markets
competition is changing 7
Competitive Landscape
Goods, services, people,
Emergence of skills, and ideas move
global economy freely across geographic
borders
Spread of economic
innovations around the
world
Hypercompetitive Political and cultural
environments adjustments are
Fundamental nature of required
competition is changing 8
Competitive Landscape
Increasing rate of
Emergence of technological change and
global economy diffusion
Rapid technological The information age
change
Increasing knowledge
intensity
Hypercompetitive
environments
Fundamental nature of
competition is changing 9
Strategic Flexibility
A set of capabilities used to respond to
various demands and opportunities
existing in a dynamic and uncertain
competitive environment
It involves coping with uncertainty and the
accompanying risks
10
Strategic Flexibility
Organizational
slack
Strategic Strategic
reorientation Flexibility
flexibility
Capacity to
learn
11
I/O Model of Above-Average Returns
1. External Environments
General 1. Strategy dictated by the
Global external environment of
the firm (what
Industry
opportunities exist in
Environment
these environments?)
2. Firm develops internal
skills required by
Competitor external environment
Environment (what can the firm do
Technological about the opportunities?)
12
Environment
Four Assumptions of the I/O Model
1. The external environment is assumed to
possess pressures and constraints that
determine the strategies that would result
in above-average returns
2. Most firms competing within a particular
industry or within a certain segment of it
are assumed to control similar
strategically relevant resources and to
pursue similar strategies in light of those
resources
13
Four Assumptions of the I/O Model
3. Resources used to implement strategies
are highly mobile across firms
4. Organizational decision makers are
assumed to be rational and committed to
acting in the firm’s best interests, as
shown by their profit-maximizing
behaviors
14
I/O Model of Above-Average Returns
Industrial Organization 1. Study the external
Model environment, especially the
industry environment
The External Environment • economies of scale
• barriers to market entry
• diversification
• product differentiation
• degree of concentration of
firms in the industry
15
I/O Model of Above-Average Returns
Industrial Organization 2. Locate an attractive industry
Model with a high potential for
above-average returns
The External Environment
16
I/O Model of Above-Average Returns
Industrial Organization 3. Identify the strategy called
Model for by the attractive industry
to earn above-average returns
The External Environment
An Attractive Industry
17
I/O Model of Above-Average Returns
Industrial Organization 4. Develop or acquire assets and
Model skills needed to implement
the strategy
The External Environment
An Attractive Industry
Strategy Formulation
18
I/O Model of Above-Average Returns
Industrial Organization 5. Use the firm’s strengths (its
Model developed or acquired assets
and skills) to implement the
The External Environment strategy
An Attractive Industry
Strategy Formulation
An Attractive Industry
Strategy Formulation
Superior Returns
20
Resource-based Model of Above Average
Returns
21
Resource-based Model of Above Average
Returns
Resource-based 1. Identify the firm’s resources--
Model strengths and weaknesses
compared with competitors
Resources
Resources: inputs into a firm’s
production process
22
Resource-based Model of Above Average
Returns
Resource-based 2. Determine the firm’s
Model capabilities--what it can do
better than its competitors
Resources
23
Four Attributes of Resources and
Capabilities (Competitive Advantage)
Valuable allow the firm to exploit opportunities or
neutralize threats in its external
Valuable
Nonsubstitutable
25
Core Competencies are the basis for a
firm’s
Competitive
advantage
Value Creation
Core Competencies
Ability to earn
above-average
returns
26
Resource-based Model of Above Average
Returns
Resource-based 3. Determine the potential of the
Model firm’s resources and
capabilities in terms of a
Resources competitive advantage
Capability
27
Resource-based Model of Above Average
Returns
Resource-based 4. Locate an attractive industry
Model
Resources
Capability
Competitive Advantage
Competitive Advantage
An Attractive Industry
Strategy formulation and
Strategy Form/Impl implementation: strategic
actions taken to earn above
average returns 29
Resource-based Model of Above Average
Returns
Resource-based
Model
Resources
Capability
Competitive Advantage
Superior Returns
30
Strategic Intent & Mission
Strategic Intent
Winning competitive battles by leveraging the
firm’s resources, capabilities, and core
competencies
Strategic Mission
An application of strategic intent in terms of
products to be offered and markets to be
served
31
The Firm and Its Stakeholders
Stakeholders
Groups
The firmwho
mustaremaintain
affected by a
firm’s performance
performance and who
at an adequate
have
level claims
in orderontoits
retain
wealth
the
participation of key
stakeholders
32
The Firm and Its Stakeholders
Stakeholders
Shareholders
Capital Market Stakeholders Major suppliers of capital
•Banks
•Private lenders
•Venture capitalists
33
The Firm and Its Stakeholders
Stakeholders
Primary customers
Product Market Stakeholders Suppliers
Host communities
Unions
34
The Firm and Its Stakeholders
Stakeholders
Employees
Organizational Stakeholders Managers
Nonmanagers
35
Stakeholder Involvement
36
Stakeholder Involvement
37
Organizational Strategists
Serve as a major source of
competitive advantage
Are held responsible by stakeholders
Make decisions regarding
development, acquisition, cost and
use of resources
Assess risks of strategic actions
38