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Chapter 1: Strategic Management and Strategic Competitiveness

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Chapter 1

Strategic Management and Strategic Competitiveness

LEARNING OBJECTIVES

1. Define strategic competitiveness, strategy, competitive advantage, above-average returns,

and the strategic management process.

2. Describe the competitive landscape and explain how globalization and technological changes

shape it.

3. Use the industrial organization (I/O) model to explain how firms can earn above-average

returns.

4. Use the resource-based model to explain how firms can earn above average-returns.

5. Describe vision and mission and discuss their value.

6. Define stakeholders and describe their ability to influence organizations.

7. Describe the work of strategic leaders.

8. Explain the strategic management process.

LECTURE NOTES

OPENING CASE

The Global Impact of the Golden Arches

McDonald’s is a global company with broad market penetration and an extremely strong brand. It is larger and more successful than its rivals. As the case notes, however,

McDonald’s success makes it an easy target. Public reaction to a 2012 ad turned from positive to negative as criticism of its food and link to the obesity problem were spread via

social media. The company responded by offering healthy menu options and including

nutritional information on its packaging. It also has added Wi-Fi in its stores to attract

more customers (especially students). Even though the company is successful it must be

constantly aware of changing conditions that might impact its costs, demand, and ability to

perform.

1 Define strategic competitiveness, strategy, competitive advantage,

above-average returns, and the strategic management process.

Strategic competitiveness is achieved when a firm successfully formulates and implements a

value-creating strategy. By implementing a value-creating strategy that current and potential

competitors are not simultaneously implementing and that competitors are unable to

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duplicate, or find too costly to imitate, a firm achieves a competitive advantage.

Strategy can be defined as an integrated and coordinated set of commitments and actions

designed to exploit core competencies and gain a competitive advantage.

So long as a firm can sustain (or maintain) a competitive advantage, investors will earn

above-average returns. Above-average returns represent returns that exceed returns that

investors expect to earn from other investments with similar levels of risk (investor

uncertainty about the economic gains or losses that will result from a particular investment).

In other words, above average-returns exceed investors’ expected levels of return for given risk levels.

In smaller new venture firms, performance is sometimes measured in terms of the amount

and speed of growth rather than more traditional profitability measures—new ventures require time to earn acceptable returns.

A framework that can assist firms in their quest for strategic competitiveness is the strategic

management process, the full set of commitments, decisions and actions required for a firm

to systematically achieve strategic competitiveness and earn above-average returns. This

process is illustrated in Figure 1.1.

FIGURE 1.1

The Strategic Management Process

Figure 1.1 illustrates the dynamic, interrelated nature of the elements of the strategic

management process and provides an outline of where the different elements of the process

are covered in this text.

Feedback linkages among the three primary elements indicate the dynamic nature of the

strategic management process: strategic inputs, strategic actions, and strategic outcomes.

 Analysis, in the form of information gained by scrutinizing the internal environment and scanning the external environment, are used to develop the firm's vision and mission.

 Strategic actions are guided by the firm's vision and mission, and are represented by strategies that are formulated or developed and subsequently implemented or put into

action.

 Desired performance—strategic competitiveness and above-average returns—result when a firm is able to successfully formulate and implement value-creating strategies that others

are unable to duplicate.

 Feedback links the elements of the strategic management process together and helps firms

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continuously adjust or revise strategic inputs and strategic actions in order to achieve

desired strategic outcomes.

In addition to describing the impact of globalization and technological change on the current

business environment, this chapter also discusses two approaches to the strategic

management process. The first, the industrial organization model, suggests that the external

environment should be considered as the primary determinant of a firm’s strategic actions. The second is the resource-based model, which perceives the firm’s resources and capabilities (the internal environment) as critical links to strategic competitiveness.

Following the discussion in this chapter, as well as in Chapters 2 and 3, students should see

that these models must be integrated to achieve strategic competitiveness.

2 Describe the competitive landscape and explain how globalization

and technological changes shape it.

THE COMPETITIVE LANDSCAPE

The competitive landscape can be described as one in which the fundamental nature of

competition is changing in a number of the world’s industries. Further, the boundaries of industries are becoming blurred and more difficult to define.

Consider recent changes that have taken place in the telecommunication and TV industries— e.g., not only cable companies and satellite networks compete for entertainment revenue from

television, but telecommunication companies also are stepping into the entertainment

business through significant improvements in fiber-optic lines. Partnerships further blur

industry boundaries (e.g., MSNBC is co-owned by NBC, itself owned by General Electric

and Microsoft).

The contemporary competitive landscape thus implies that traditional sources of competitive

advantage—economies of scale and large advertising budgets—may not be as important in the future as they were in the past. The rapid and unpredictable technological change that

characterizes this new competitive landscape implies that managers must adopt new ways of

thinking. The new competitive mind-set must value flexibility, speed, innovation, integration,

and the challenges that evolve from constantly changing conditions.

A term often used to describe the new realities of competition is hypercompetition, a

condition that results from the dynamics of strategic moves and countermoves among

innovative, global firms: a condition of rapidly escalating competition that is based on price-

quality positioning, efforts to create new know-how and achieve first-mover advantage, and

battles to protect or to invade established product or geographic markets (discussed in more

detail in Chapter 5).

The Global Economy

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A global economy is one in which goods, services, people, skills, and ideas move freely

across geographic borders.

The emergence of this global economy results in a number of challenges and opportunities.

For instance, Europe is now the world’s largest single market (despite the difficulties of adapting to multiple national cultures and the lack of a single currency. The European Union

has become one of the world’s largest markets, with 700 million potential customers.

Today, China is seen as an extremely competitive market in which local market-seeking

MNCs (multinational corporations) fiercely compete against other MNCs and local low-cost

producers. China has long been viewed as a low-cost producer of goods, but here’s an interesting twist. China is now an exporter of local management talent. Procter & Gamble

actually exports Chinese management talent; it has been dispatching more Chinese abroad

than it has been importing expatriates to China.

STRATEGIC FOCUS

Starbucks is a New Economy Multinational

Starbucks is a large and innovative multinational firm with growth expectations in both its

domestic and international markets. It plans to significantly increase its presence in Asian

markets and has tailored its strategy to local conditions to position itself for growth (store

size, flavors, and teas). In fact, Starbucks expects China to become its second largest market

in the very near future. Vietnam and India are additional markets the company is targeting.

On the other hand, the company’s experience in Europe has been mixed. The European ‘coffee culture,’ built around the café experience, was difficult for the company to penetrate with its traditional business model. To grow in Europe, Starbucks is now building larger

stores to improve seating and encourage customers to linger, and developed products to

appeal to local (country) cultures and tastes. In addition, the company has set its sights on

other markets (instant coffee, single-serving coffee, tea, juice, and bakery).

The March of Globalization

Globalization is the increasing economic interdependence among countries as reflected in the

flow of goods and services, financial capital, and knowledge across country borders. This is

illustrated by the following:

 Financial capital might be obtained in one national market and used to buy raw materials in another one.

 Manufacturing equipment bought from another market produces products sold in yet another market.

 Globalization enhances the available range of opportunities for firms.

Global competition has increased performance standards in many dimensions, including

quality, cost, productivity, product introduction time, and operational efficiency. Moreover,

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these standards are not static; they are exacting, requiring continuous improvement from a

firm and its employees. Thus, companies must improve their capabilities and individual

workers need to sharpen their skills. In the twenty-first century competitive landscape, only

firms that meet, and perhaps exceed, global standards are likely to earn strategic

competitiveness.

Although globalization seems an attractive strategy for competing in the current competitive

landscape, there are risks as well. These include such factors as:

 The “liability of foreignness” (i.e., the risk of competing internationally)  Overdiversification beyond the firm’s ability to successfully manage operations in multiple

foreign markets

A point to emphasize: entry into international markets requires proper use of the strategic

management process.

Though global markets are attractive strategic options for some companies, they are not the

only source of strategic competitiveness. In fact, for most companies, even for those capable

of competing successfully in global markets, it is critical to remain committed to and

strategically competitive in the domestic market. And domestic markets can be testing

grounds for possibly entering an international market at some point in the future.

Technology and Technological Changes

Three technological trends and conditions are significantly altering the nature of competition:

 Increasing rate of technological change and diffusion  The information age  Increasing knowledge intensity

Technologic Diffusion and Disruptive Technologies

Both the rate of change and the introduction of new technologies have increased greatly over

the last 15 to 20 years.

A term that is used to describe rapid and consistent replacement of current technologies by

new, information-intensive technologies is perpetual innovation. This implies that

innovation—discussed in more detail in Chapter 13—must be continuous and carry a high priority for all organizations.

The shorter product life cycles that result from rapid diffusion of innovation often means

that products may be replicated within very short time periods, placing a competitive

premium on a firm’s ability to rapidly introduce new products into the marketplace. In fact, speed-to-market may become the sole source of competitive advantage. In the computer

industry during the early 1980s, hard disk drives would typically remain current for four to

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six years, after which a new and better product became available. By the late 1980s, the

expected life had fallen to two to three years. By the 1990s, it was just six to nine months.

The rapid diffusion of innovation may have made patents a source of competitive advantage

only in the pharmaceutical and chemical industries. Many firms do not file patent

applications to safeguard (for at least a time) the technical knowledge that would be disclosed

explicitly in a patent application.

Disruptive technologies (in line with the Schumpeterian notion of “creative destruction”) can destroy the value of existing technologies by replacing them with new ones. Current

examples include the success of iPods, PDAs, and WiFi.

The Information Age

Changes in information technology have made rapid access to information available to firms

all over the world, regardless of size. Consider the rapid growth in the following

technologies: personal computers (PCs), cellular phones, computers, personal digital

assistants (PDAs), artificial intelligence, virtual reality, and massive databases. These

examples show how information is used differently as a result of new technologies. The

ability to access and use information has become an important source of competitive

advantage in almost every industry.

 There have been dramatic changes in information technology in recent years.  The number of PCs is expected to grow to 2.3 billion by 2015.  The declining cost of information technology.  The Internet provides an information-carrying infrastructure available to individuals and

firms worldwide.

The ability to access a high level of relatively inexpensive information has created strategic

opportunities for many information-intensive businesses. For example, retailers now can use

the Internet to provide shopping to customers virtually anywhere.

Increasing Knowledge Intensity

It is becoming increasingly apparent that knowledge—information, intelligence, and expertise—is a critical organizational resource, and increasingly, a source of competitive advantage. As a result,

 Many companies are working to convert the accumulated knowledge of employees into a corporate asset;

 Shareholder value is increasingly influenced by the value of a firm’s intangible assets, such as knowledge;

 There is a strong link between knowledge and innovation.

Note: Intangible assets are discussed more fully in Chapter 3.

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The implication of this discussion is that to achieve strategic competitiveness and earn above-

average returns, firms must develop the ability to adapt rapidly to change or achieve strategic

flexibility.

Strategic flexibility represents the set of capabilities—in all areas of their operations—that firms use to respond to the various demands and opportunities that are found in dynamic,

uncertain environments. This implies that firms must develop certain capabilities,

including the capacity to learn continuously, that will provide the firm with new skill sets.

However, those working within firms to develop strategic flexibility should understand

that the task is not an easy one, largely because of inertia that can build up over time. A

firm’s focus and past core competencies may actually slow change and strategic flexibility.

Two models describing key strategic inputs to a firm's strategic actions are discussed next: the

Industrial Organization (or externally focused) model and the Resource-Based (or internally

focused) model.

3 Use the industrial organization (I/O) model to explain how firms

can earn above-average returns.

THE I/O MODEL OF ABOVE AVERAGE RETURNS

The I/O or Industrial Organization model adopts an external perspective to explain that forces

outside of the organization represent the dominant influences on a firm's strategic actions. In

other words, this model presumes that the characteristics of and conditions present in the

external environment determine the appropriateness of strategies that are formulated and

implemented in order for a firm to earn above-average returns. In short, the I/O model

specifies that the choice of industries in which to compete has more influence on firm

performance than the decisions made by managers inside their firm.

The I/O model is based on the following four assumptions:

1. The external environment—the general, industry, and competitive environments impose pressures and constraints on firms and determine strategies that will result in superior

returns. In other words, the external environment pressures the firm to adopt strategies to

meet that pressure while simultaneously constraining or limiting the scope of strategies

that might be appropriate and eventually successful.

2. Most firms competing in an industry or in an industry segment control similar sets of

strategically relevant resources and thus pursue similar strategies. This assumption

presumes that, given a similar availability of resources, most firms competing in a specific

industry (or industry segment) have similar capabilities and thus follow strategies that are

similar. In other words, there are few significant differences among firms in an industry.

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3. Resources used to implement strategies are highly mobile across firms. Significant

differences in strategically relevant resources among firms in an industry tend to disappear

because of resource mobility. Thus, any resource differences soon disappear as they are

observed and acquired or learned by other firms in the industry.

4. Organizational decision-makers are assumed to be rational and committed to acting only in

the best interests of the firm. The implication of this assumption is that organizational

decision-makers will consistently exhibit profit-maximizing behaviors.

According to the I/O model, which was a dominant paradigm from the 1960s through the

1980s, firms must pay careful attention to the structured characteristics of the industry in

which they choose to compete, searching for one that is the most attractive to the firm, given

the firm's strategically relevant resources. Then, the firm must be able to successfully

implement strategies required by the industry's characteristics to be able to increase their level

of competitiveness. The five forces model is an analytical tool used to address and describe

these industry characteristics.

FIGURE 1.2

The I/O Model of Above-Average Returns

Based on its four underlying assumptions, the I/O model prescribes a five-step process for

firms to achieve above-average returns:

1. Study the external environment—general, industry, and competitive—to determine the characteristics of the external environment that will both determine and constrain the

firm's strategic alternatives.

2. Locate an industry (or industries) with a high potential for returns based on the structural

characteristics of the industry. A model for assessing these characteristics, the Five Forces

Model of Competition, is discussed in Chapter 2.

3. Based on the characteristics of the industry in which the firm chooses to compete,

strategies that are linked with above-average returns should be selected. A model or

framework that can be used to assess the requirements and risks of these strategies (the

generic strategies called cost leadership & differentiation) are discussed in detail in

Chapter 4.

4. Acquire or develop the critical resources—skills and assets—needed to successfully implement the strategy that has been selected. A process for scrutinizing the internal

environment to identify the presence or absence of critical skills is discussed in Chapter 3.

Skill-enhancement strategies, including training and development, are discussed in

Chapter 11.

5. The I/O model indicates that above-average returns will accrue to firms that successfully

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implement relevant strategic actions that enable the firm to leverage its strengths (skills

and resources) to meet the demands or pressures and constraints of the industry in which

it has elected to compete. The implementation process is described in Chapters 10

through 13.

The I/O model has been supported by research indicating:

 20% of firm profitability can be explained by industry characteristics  36% of firm profitability can be attributed to firm characteristics and the actions taken by

the firm

 Overall, this indicates a reciprocal relationship—or even an interrelationship—between industry characteristics (attractiveness) and firm strategies that result in firm performance

STRATEGIC FOCUS

The Airlines Industry Exemplifies the I/O Model – Imitation and Poor Performance

The airline industry is a real-world example of the I/O model. Airlines are very similar with

respect to services, routes, and performance since the industry was deregulated. When an

airline does adapt something new, it is commonly imitated very quickly. A major

characteristic of the industry, both in the U.S. and Europe, is consolidation. This does little to

spur differentiation among competitors. The primary source of competitive advantage comes

from making fewer mistakes such as lost bags, flight cancellations, and delays. In the current

environment, most airlines are trying to cut costs (sometimes through scale), and generate

revenue by charging for amenities that used to be provided at no cost to travelers. In the

Strategic Focus, Southwest Airlines is noted as a strong performer due to the fact that it is

both efficient and has developed resources and capabilities over time that its more traditional

rivals have not.

4 Use the resource-based model to explain how firms can earn

above average-returns.

THE RESOURCE-BASED MODEL OF ABOVE-AVERAGE RETURNS

The resource-based model adopts an internal perspective to explain how a firm's unique

bundle or collection of internal resources and capabilities represent the foundation on which

value-creating strategies should be built.

Resources are inputs into a firm's production process, such as capital equipment, individual

employee's skills, patents, brand names, finance, and talented managers. These resources can

be tangible or intangible.

Capabilities are the capacity for a set of resources to perform—integratively or in combination—a task or activity.

Core competencies are resources and capabilities that serve as a source of competitive

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advantage for a firm. Often related to functional skills (e.g., marketing at Philip Morris), core

competencies—when developed, nurtured, and applied throughout a firm—may result in strategic competitiveness.

FIGURE 1.3

The Resource-Based Model of Above-Average Returns

The resource-based model of above-average returns is grounded in the uniqueness of a firm's

internal resources and capabilities. The five-step model describes the linkages between

resource identification and strategy selection that will lead to above-average returns.

1. Firms should identify their internal resources and assess their strengths and weaknesses.

The strengths and weaknesses of firm resources should be assessed relative to

competitors.

2. Firms should identify the set of resources that provide the firm with capabilities that are

unique to the firm, relative to its competitors. The firm should identify those capabilities

that enable the firm to perform a task or activity better than its competitors.

3. Firms should determine the potential for their unique sets of resources and capabilities to

outperform rivals in terms of returns. Determine how a firm’s resources and capabilities can be used to gain competitive advantage.

4. Locate an attractive industry. Determine the industry that provides the best fit between the

characteristics of the industry and the firm’s resources and capabilities.

5. To attain a sustainable competitive advantage and earn above-average returns, firms

should formulate and implement strategies that enable them to exploit their resources and

capabilities to take advantage of opportunities in the external environment better than

their competitors.

Resources and capabilities can lead to a competitive advantage when they are valuable, rare,

costly to imitate, and non-substitutable.

 Resources are valuable when they support taking advantage of opportunities or neutralizing external threats.

 Resources are rare when possessed by few, if any, competitors.  Resources are costly to imitate when other firms cannot obtain them inexpensively

(relative to other firms).

 Resources are non-substitutable when they have no structural equivalents.

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5 Describe vision and mission and discuss their value.

VISION AND MISSION

Vision

Vision is a picture of what the firm wants to be, and in broad terms, what it wants to

ultimately achieve. Vision is “big picture” thinking with passion that helps people feel what they are supposed to be doing.

Vision statements:

 Reflect a firm’s values and aspirations  Are intended to capture the heart and mind of each employee (and hopefully, many of its

other stakeholders)

 Tend to be enduring, whereas its mission can change in light of changing environmental conditions

 Tend to be relatively short and concise, easily remembered  Rely on input from multiple key stakeholders

Examples of vision statements:

 Our vision is to be the world’s best quick service restaurant. (McDonald’s)  To make the automobile accessible to every American (Ford’s vision when established by

Henry Ford)

The CEO is responsible for working with others to form the firm’s vision. However, experience shows that the most effective vision statement results when the CEO involves a

host of people to develop it.

A vision statement should be clearly tied to the conditions in the firm’s external and internal environments and it must be achievable. Moreover, the decisions and actions of those

involved with developing the vision must be consistent with that vision.

Mission

A firm's mission is an externally focused application of its vision that states the firm's unique

purpose and the scope of its operations in product and market terms.

As with the vision, the final responsibility for forming the firm’s mission rests with the CEO, though the CEO and other top-level managers tend to involve a larger number of people in

forming the mission. This is because middle- and first-level managers and other employees

have more direct contact with customers and their markets.

A firm's vision and mission must provide the guidance that enables the firm to achieve the

desired strategic outcomes—strategic competitiveness and above-average returns—illustrated

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in Figure 1.1 that enable the firm to satisfy the demands of those parties having an interest in

the firm's success: organizational stakeholders.

Earning above-average returns often is not mentioned in mission statements. The reasons for

this are that all firms want to earn above-average returns and that desired financial outcomes

result from properly serving certain customers while trying to achieve the firm’s intended future. In fact, research has shown that having an effectively formed vision and mission has a

positive effect on performance (growth in sales, profits, employment, and net worth).

6 Define stakeholders and describe their ability to influence organizations.

STAKEHOLDERS

Stakeholders are the individuals and groups who can affect and are affected by the strategic

outcomes achieved and who have enforceable claims on a firm's performance.

Classification of Stakeholders

The stakeholder concept reflects that individuals and groups have a "stake" in the strategic

outcomes of the firm because they can be either positively or negatively affected by those

outcomes and because achieving the strategic outcomes may be dependent on the support or

active participation of certain stakeholder groups.

FIGURE 1.4

The Three Stakeholder Groups

Figure 1.4 provides a definition of a stakeholder and illustrates the three general

classifications and members of each stakeholder group:

 Capital market stakeholders  Product market stakeholders  Organizational stakeholders

Note: Students can use Figure 1.4 while you discuss the challenges of meeting conflicting

stakeholder expectations.

Stakeholder Groups, Membership and Primary Expectation or Demand

Stakeholder group Membership Primary expectation/demand

Capital market Shareholders Wealth enhancement

Lenders Wealth preservation

Product market Customers Product reliability at lowest possible price

Suppliers Receive highest sustainable prices

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Host communities Long-term employment, tax revenues,

minimum use of public support services

Unions Ideal working conditions and job security for

membership

Organizational Employees Secure, dynamic, stimulating, and rewarding

work environment

If the firm is strategically competitive and earns above-average returns, it can afford to

simultaneously satisfy all stakeholders. When earning average or below-average returns,

tradeoffs must be made. At the level of average returns, firms must at least minimally satisfy

all stakeholders. When returns are below average, some stakeholders can be minimally

satisfied, while others may be dissatisfied.

For example, reducing the level of research and development expenditures (to increase short-

term profits) enables the firm to pay out the additional short-term profits to shareholders as

dividends. However, if reducing R&D expenditures results in a decline in the long-term

strategic competitiveness of the firm's products or services, it is possible that employees will

not enjoy a secure or rewarding career environment (which violates a primary union

expectation or demand for job security for its membership). At the same time, customers may

be offered products that are less reliable at unattractive prices, relative to those offered by

firms that did not reduce R&D expenditures.

Thus, the stakeholder management process may involve a series of tradeoffs that is dependent

on the extent to which the firm is dependent on the support of each affected stakeholder and

the firm's ability to earn above-average returns.

7 Describe the work of strategic leaders.

STRATEGIC LEADERS

Who are strategic leaders?

Although it depends on the size of the organization, all organizations have a CEO or top

manager and this individual is the primary organizational strategist in every organization.

Small organizations may have a single strategist: the CEO or owner. Large organizations may

have few or several top-level managers, executives, or a top management team. All of these

individuals are organizational strategists.

What are the responsibilities of strategic leaders?

Top managers play decisive roles in firms’ efforts to achieve their desired strategic outcomes. As organizational strategists, top managers are responsible for deciding how resources will be

developed or acquired, at what cost, and how they will be used or allocated throughout the

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organization. Strategists also must consider the risks of actions under consideration, along

with the firm’s vision and managers’ strategic orientations.

Organizational strategists also are responsible for determining how the organization does

business. This responsibility is reflected in the organizational culture, which refers to the

complex set of ideologies, symbols, and core values shared throughout the firm and that

influences the way it conducts business. The organization’s culture is the social energy that drives—or fails to drive—the organization.

The Work of Effective Strategic Leaders

Though it seems simplistic, performing their role effectively requires strategists to work hard,

perform thorough analyses of available information, be brutally honest, desire high

performance, exercise common sense, think clearly, and ask questions and listen. In addition,

strategic leaders must be able to “think seriously and deeply … about the purposes of the organizations they head or functions they perform, about the strategies, tactics, technologies,

systems, and people necessary to attain these purposes and about the important questions that

always need to be asked.” Additionally, effective strategic leaders work to set an ethical tone in their firms.

Strategists work long hours and face ambiguous decision situations, but they also have

opportunities to dream and act in concert with a compelling vision that motivates others in

creating competitive advantage.

Predicting Outcomes of Strategic Decisions: Profit Pools

Top-level managers try to predict the outcomes of their strategic decisions before they are

implemented, but this is sometimes very difficult to do. Those firms that do a better job of

anticipating the outcomes of strategic moves will obviously be in a better position to succeed.

One way to do this is by mapping out the profit pools of an industry. Profit pools are the total

profits earned in an industry at all points along the value chain. Four steps are involved:

1. Define the pool’s boundaries 2. Estimate the pool’s overall size 3. Estimate the size of the value-chain activity in the pool

4. Reconcile the calculations

8 Explain the strategic management process.

THE STRATEGIC MANAGEMENT PROCESS

Chapters 2 and 3 provide more detail regarding the strategic inputs to the strategic

management process: analysis of the firm's external and internal environments that must be

performed so that sufficient knowledge is developed regarding external opportunities and

internal capabilities. This enables the development of the firm's vision and mission.

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Chapters 4 through 9 discuss the strategy formulation stage of the process. Topics covered

include:

 Deciding on business-level strategy, or how to compete in a given business (Chapter 4)  Understanding competitive dynamics, in that strategies are not formulated and

implemented in isolation but require understanding and responding to competitors' actions

(Chapter 5)

 Setting corporate-level strategy, or deciding in which industries or businesses the firm will compete, how resources will be allocated, and how the different business units will be

managed (Chapter 6)

 The acquisition of business units and the restructuring of the firm’s portfolio of businesses (Chapter 7)

 Selecting appropriate international strategies that are consistent with the firm's resources, capabilities and core competencies, and external opportunities (Chapter 8)

 Developing cooperative strategies with other firms to gain competitive advantage (Chapter 9)

The final section of the text, Chapters 10–13, examines actions necessary to effectively implement strategies. Effective implementation has a significant impact on firm

performance. Topics covered include:

 Methods for governing to ensure satisfaction of stakeholder demands and attainment of strategic outcomes (Chapter 10)

 Structures that are used and actions taken to control a firm's operations (Chapter 11)  Patterns of strategic leadership that are most appropriate given the competitive

environment (Chapter 12)

 Linkages among corporate entrepreneurship, innovation, and strategic competitiveness (Chapter 13)