Unit 3 GSM

BUS 6320, Global Strategic Management 1

Course Learning Outcomes for Unit III At the end of this unit, you should be able to:

1. Compare and contrast evolving global strategic business models. 1.1 Describe strategic planning models. 1.2 Describe competitive advantage. 1.3 Differentiate between analysis, formulation, and implementation of strategies using the

analysis, formulation, implementation (AFI) framework.

2. Analyze the processes for formulating sustainable corporate business strategies. 2.1 Summarize the evolving importance of sustainability in strategic planning processes. 2.2 Examine key models that organizations use to overcome challenges . 2.3 Examine how sustainable competitive advantage drives corporate business strategies.

3. Summarize the role of innovation in strategic business planning.

3.1 Examine how innovation can assist firms in driving competitive advantage. 3.2 Analyze the role of leadership in driving innovation.

Required Unit Resources Chapter 5: Shared Value and Competitive Advantage (ULOs 2.3 and 3.1) This chapter examines competitive advantage and stakeholder capitalism. Chapter 6: Business Strategy: Differentiation, Cost Leadership, and Blue Oceans (ULO 3.2) This chapter examines differentiation strategy and cost drivers. Unit Lesson Lesson: Analyzing the Firm and Its Environment (ULOs 2.3, 3.1, and 3.2) In Unit II, the concept of the Global Reporting Initiative may have been introduced in the live lecture as framework firms are increasingly adopting to use sustainability to build competitive advantage. This unit focuses on the importance of developing and maintaining competitive advantage as well as the importance of a strategy that differentiates the firm—including sustainability—from the competition.

Chapter 5 Case for Review: Patagonia As we begin this unit, read the Chapter 5 case Patagonia: A Pioneer in Creating Shared Value as it highlights the importance of shared values in a firm. Consider the following questions as you read the case: Why do you see the concept of shared values important in business? How has Patagonia built a firm that is known for its focus on sustainability and the environment? As a private firm, Patagonia has pursued a stakeholder strategy that is noted for its focus on the environmental, social, and governance (ESG) elements. Rothaermel (2024) defines ESG as “a set of standards beyond mere financial results on which companies are evaluated” (p. 171).

UNIT III STUDY GUIDE Developing Competitive Advantage

BUS 6320, Global Strategic Management 2

UNIT x STUDY GUIDE Title

Market Conditions Market conditions in a business environment can influence an organization’s strategy to a great extent. For example, a highly competitive market can force organizations to launch a new product or service every quarter or at least once every year. This strategy allows them to go head-to-head with competitors and attract new customers. However, if these organizations do not perform thorough research before launching their products or services, they may incur significant losses. In some cases, these organizations may be forced out of the market because of poor performance. It is vital for organizations to study the market where they are competing and correctly identify their competition. As presented in Unit II, performing a proper analysis of a company’s internal and external environments helps in the identification of strengths and weaknesses. Based on this analysis, organizations must create a competitive strategy. This strategy will enable them to outmatch the products or services of the competitors in the market. It will also allow them to stay ahead of rival organizations for a longer period. Such analysis and development of subsequent strategies give companies a competitive advantage over their rivals in the market.

Competitive Advantage Rothaermel (2024) notes that “the goal of a strategy is to gain and sustain a competitive advantage” (p.181). In Exhibit 5.2: From Corporate Social Responsibility (CSR) to Creating Shared Value, changes are noted in the perspectives of many firms as they evolved in the past few decades from CSR to creating shared value (CSV). It is important to recognize that a firm has economic advantage when it creates more value than its competitors. Economic value is the difference between value (V) and costs (C) or (V – C) (Rothaermel, 2024). How do you see the CSV framework improving the competitive advantage of a firm?

Balanced Scorecard The balanced scorecard (BSC) is a management tool. Essentially, the BSC is a series of strategic measures and traditional financial measures that are used to get a holistic view of how an organization is performing (Balanced Scorecard Institute, n.d.). Historically, the measure of business performance was related to profit. The BSC is a more holistic approach that suggests that four areas or perspectives provides a more appropriate picture of a firm. These four perspectives are (1) learning and growth, (2) business processes, (3) customer perspectives, and (4) financial data. Often, the BSC is used in firms as a framework to drive continuous improvement and a key part of improvement efforts often includes using key performance indicators (KPIs). These KPIs can form a dashboard of performance metrics to include the most important measures as identified by the organization. These KPIs include specific, measurable goals that may cascade from high-level corporate goals to business unit goals to individual performance plans.

Triple Bottom Line Another important framework related to understanding the competitive advantage concept is the triple bottom line. This includes the dimensions of profits, people, and planet. Rothaermel (2024) notes that a focus on the 3 Ps “can lead to a sustainable strategy” (p. 197). As firms are developing their strategies, they are looking for ways to differentiate themselves from the competition.

Business-Level Strategies Strategic leaders must recognize that competitive advantage is reflected in superior firm performance. Review the Exhibit 5.11: How to Measure and Assess Competitive Advantage in your textbook. Having a business level strategy can assist in building competitive advantage. According to Rothaermel (2024), the business level strategy asks the following questions:

• “Who are the customer segments we will serve? • What customer needs, wishes, and desires will we satisfy? • Why do we want to satisfy them? • How will we satisfy them?” (p. 211)

BUS 6320, Global Strategic Management 3

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Chapter 6 illustrates four generic business strategies in Exhibit 6.2: Strategic Position and Competitive Scope Generic Business Strategies. They include cost leadership, differentiation, focused cost leadership, and focused differentiation. One concept introduced that reflects adding value to the operations of a firm is related to the learning curve. Rothaermel (2024) notes that the learning curve can be described as “learning by doing drives down cost” (p. 223).

Blue Ocean Strategy The blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant.

PwC Survey PwC is a global consulting firm that annually surveys corporate CEOs. In 2023, a key finding of the PwC survey is the need for firms to adapt to changing circumstances. The PwC (2023) survey suggests that fully 40% of respondents do not see their firms as economically viable in 10 years unless there is substantial change in their organizations. This finding supports the importance of strategic management.

Summary In summary, one aspect of developing a strategic plan is to look at the competition with a view to building a comparative, competitive advantage. Increasingly, firms are seeing value and importance of advancing sustainability as a factor that must be included in the strategic planning processes of a firm. In that regard, it may be valuable to consider business level strategies to focus organizational efforts on developing competitive advantage. Tools such as the BSC can assist by providing a measurement-based focus on critical areas of the firm. Using BSC measures can assist in guiding the competitive advantage components of the firm.

References Balanced Scorecard Institute. (n.d.). Balanced scorecard basics. https://balancedscorecard.org/bsc-basics-

overview/ PwC. (2023). PwC’s 26th annual global CEO survey: Winning today’s race while running tomorrow’s.

https://www.pwc.com/gx/en/issues/c-suite-insights/ceo-survey-2023.html Rawpixel. (n.d.). Character illustration of people with global network concept [Image]. Freepik.

https://www.freepik.com/free-vector/character-illustration-people-with-global-network- concept_3585190.htm#query=strategy%20global%20business%20planning&position=2&from_view= search&track=ais&uuid=eab5dd3f-267d-4ae8-9a3a-5381e987b5ac

Rothaermel, F. T. (2024). Strategic management (6th ed.). McGraw Hill.

https://online.vitalsource.com/#/books/9781265954574 Vector4stock. (n.d.). Business process illustration infographic of business structure from idea to successful

business [Image]. Freepik. https://www.freepik.com/free-vector/business-process-illustration-infographic-business-structure-from- idea-successful-business- project_26195295.htm#query=strategy%20global%20business%20planning&position=34&from_view =search&track=ais&uuid=eab5dd3f-267d-4ae8-9a3a-5381e987b5ac

BUS 6320, Global Strategic Management 4

UNIT x STUDY GUIDE Title

Learning Activities (Nongraded) Nongraded Learning Activities are provided to aid you in your course of study. You do not have to submit them. If you have questions, contact your instructor for further guidance and information. Activity: Case Study (Optional) To understand the importance of differentiating a firm from the competition, read the Chapter Case 6 Part I, the case of JetBlue Airways: En Route to the New Blue Ocean? As the case identifies, JetBlue Airways used a high touch and high-tech approach that was designed to differentiate itself from other airlines. Note your thoughts about this case in a personal journal. Activity: Strategy Highlight (Optional) Read the Chapter 6 Strategy Highlight 6.2: How JCPenney Sailed into a Red Ocean. In a personal journal, note your thoughts on why and how this initiative failed.