The Context of Managing Strategically
Katie KlingeleJohn StewartHeather Hignojos
The differentperspectives on competitive advantageThe driving forces, implications, and critical success factors of the business environmentTwo organizational elements that guide strategic decision makers in managing strategically in today’s context
What is a Competitive Advantage?
This is what sets an organization apart or what is its competitive edge.Managingstrategically- formulatingand implementing strategies that allow an organization to develop and maintain acompetitive advantage.A key concept in strategic management,competitive advantageis necessary for an organization’s long-term success and survival.
Perspectives on Competitive Advantage
Industrial Organization View (I/O)Suggestsorganizations look at the impact of external factors.Coca-Cola regionalizes their recipes for different areas.Resource-based View (RBV)Emphasizes exploiting organizational resources in order to develop and maintain competitive advantage.GuerrillaViewIt proposes that an organization's competitive advantage is temporary and can be gained only by peppering the competitive marketplace with rapid radical surprises.
Comparing the I/O, RBV, and Guerilla View
The Business Environment
What forces are driving it?1. The Information Revolution2. Technology3. GlobalizationWhat are the implications?1. Continual Change2. Reduced need for physical assets3. Vanishing Distance and Compressed Time4. Increased VulnerabilityWhat are the critical success factors?1. Ability to embrace change2. Creativity and innovation capabilities3. Being a world-class organization
Drivers of the Business Environment
The Information RevolutionThe instant availability of information has radically changed the nature of the business environment, which, in turn, affects the context of strategic management.TechnologyTechnology continues to have far-reaching effects on how organizations do their work. We can see this in three areas: innovation, bottom-up capability and organizational performance.GlobalizationGlobalization has transformed and continues to transform the business environment. Globalizationinfluences strategic management in two ways: (1) global markets and (2) global competitors.
ContinualChangeChangeis the order of business in today’s context as all organizations deal with changing conditions.Reduced Need for PhysicalAssetsPhysical assets areno longer the main power companies have, it’s also value in intangible factors such as information, people, ideas, and knowledgeVanishing Distance and Compressed TimeThe limitations of physical distance and time have disappeared.VulnerabilityOrganizations face increased vulnerability from being more connected and open.
Critical Success Factors
Ability to EmbraceChangeBeing successful in a business environment means not only being tolerant of change but seeking it out and embracing it.Creativity and InnovationCapabilities“Createand innovate or fail”.Being a World-ClassOrganizationStrategicdecision makers take actions to help it’s organization be the best in the world at what it does.
Two Organizational Elements in Managing Strategically
Organizational Vision and MissionOrganizational vision is a broad comprehensive picture of what a leader wants an organization to becomeMission statement is a statement of what specific organizational units do and what they hope toaccomplishCorporate Social Responsibility (CSR) and Ethics.CSR is the obligation of organizational decision makers to make decisions and act in ways that recognize the interrelatedness of business and society.Ethics involves the principles that define right and wrong decisions and behavior
Organizational Vision and Mission
An effective organizational vision should include 4components:(1) Bebuilt on a foundation of the organization’scorevalues and beliefs(2) Elaboratea purpose for the organization(3) Includea brief summary of what theorganizationdoes(4) Specifybroad goalsA mission statement provides a focus for employees as they make and implement strategic decisions.
Corp. Social Responsibility and Ethics
CSR recognizes the organization’s various stakeholders and how they’re dealt with.Whatthis means for managing strategically is making decisions in ways that will enhance the various stakeholder relationships.Ethical considerations should play a role in managing strategically. Some individuals believe ethics is both a personal and an organizational issue and should be part of the strategic management process.
Many organizations believe that strong and socially responsible stakeholder relationships make them more competitive. The figure below identifies potential stakeholders with whom the Coca-Cola Company may have to contend.
Competitive AdvantageNecessary for a company’s long-term success and survivalDrivingForces of the Business EnvironmentInformation revolution, Technology, GlobalizationOrganizational Vision and MissionEssentialfor long-term growth and directionCSR/EthicsKeeps companies accountable, and builds positive image