CHAPTER 2: THE CONTEXT OF
MANAGING STRATEGICALLY
Strategic Management in Action by Mary Coulter
Describe the Different Perspectives on
Competitive Advantage
2
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Managing Strategically- formulating and
implementing strategies that allow an organization
to develop and maintain a competitive advantage.
Competitive Advantage- what sets and organization
apart or what is its competitive edge.
Competitive advantage is necessary for an
organization’s long term success and survival
3 Different Perspectives
3

Industrial Organization View (I/O View)
 Look

at impact of external factors
Resource Based View (RBV)
 Emphasizes
exploiting organizational resources in order
to develop and maintain a competitive advantage.

Guerrilla View
 More

contemporary
Table 2.1 in SM in Action
The Industry Organization View
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Developed by Michael Porter
 structural
forces within an industry
 the competitive environment of firms
 how these influence competitive advantage
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Emphasizes choosing the BEST industries
Analyze external forces and base strategic
decisions on the analysis
Competitive advantage relates to competitive
positioning in the industry
Resource Based View
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Resources are most important in getting and
keeping competitive advantage
Value- resource used to exploit external
circumstances
Rare-no competing firms possess resource
Hard to Imitate and Substitute- inability to
duplicate
Ability to exploit
Guerrilla View
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Competitive advantage is temporary
Why? The environment is characterized by continual
and often revolutionary changes.
Successful organizations must disrupt the current
situation and surprise competitors with strategic
actions designed to keep competitors off balance
Successful organizations create new competitive
advantages based on how the context is changing
Drivers of Business Environment
7
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The Information Revolution
 Information
has always been used in producing goods
and services, to design work tools, organizational
processed, management systems, and products, as
organizations searched for ways to be more efficient
and effective. Now, Information is the essential
resource of production.
Drivers of Business Environment
8
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Technology- using equipment, materials, knowledge,
and experience to perform tasks.

Innovation- turning a creative idea into a product or process
that can be used or sold


Bottom-up Capability- mass collaboration capability


Developing, making, and marketing a product to generate
revenue
Internet, personal messaging systems, and social networking is
shifting from industry to individual
Organizational Performance

Technology is a powerful tool to enhance the business, but not a
replacement for understanding the economics of their business
Drivers of Business Environment
9

Globalization
 Chapter
1 discussed how globalization and the global
economy are impacting strategic management.
 Transformed the business environment
 Influences strategic management in two ways
 Global
Markets
 Global Competitors
Implications of Driving Forces
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Continual Change

External/Internal Conditions

Transitions in structure

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Ex: Greeting Card-E Cards
Ex: Movie Rentals
Reduced Need for Physical Assets
Physical Assets=Power
 Intangibles-information, people, ideas, & knowledge


Vanishing Distance & Compressed Time
No Geographical limitations
 Instant Interactions-email, video conferencing


Vulnerability

Open to viruses and threats
Critical Success Factors
11
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Ability to Embrace Change
 Need
change agents
 Initiates

and oversees changes
Creativity & Innovation Capabilities
 Ability
to combine ideas in unique ways and make
associations

Being a World Class Organization
 Organizations
make strategic decisions to become the
best in the world at what it does.
Two Elements of Guidance
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Organizational Vision and Mission

Vision
Broad picture of what the leaders of an organization want to
become
 They must:
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Mission
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Build on organizations core value and beliefs
Elaborate a purpose for organization
Brief summary of what the organization does
Specify broad goals
Statement of what units do and what they hope to accomplish
Corporate Social Responsibility and Ethics

Restates vision and mission to reflect commitment to CSR
Summary of Chapter 2
13
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Perspectives of Competitive Advantage
 Industrial
Organization View, Resource Based View,
Guerilla View

Drivers of Business Environment
 Information,

Implications of Drivers
 Continual

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Technology, Globalization
Change
Critical Success Factors
Elements of Guidance