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2.1 Perspectives of Competitive Advantage

2.1 Perspectives of Competitive Advantage. Managing Strategically – formulating and implementing strategies that allow an organization to develop and maintain a Competitive Advantage. 1 . Industrial Organization 2. Resource Based View 3. Guerilla View. Industrial Organization.

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2.1 Perspectives of Competitive Advantage

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  1. 2.1 Perspectives of Competitive Advantage • Managing Strategically – formulating and implementing strategies that allow an organization to develop and maintain a Competitive Advantage. • 1. Industrial Organization • 2. Resource Based View • 3. Guerilla View

  2. Industrial Organization • I/O View focuses on the structural forces within an industry, the competitive environment of firms, and how these influence competitive advantage.

  3. Resource Based View A firms resources are most important in getting and sustaining a competitive advantage. • Financial- Banks • Physical – GM • Human – Southwest Airlines • Intangible – Coca Cola • Cultural – Walmart

  4. Resource Based View contd.

  5. Guerilla View • The view that organizations competitive advantage is temporary

  6. Old VS. New Business Environment • Old Drivers Labor Force Production Resources Funding • New Drivers Information Revolution Technology Globalization

  7. Information Revolution • The amount of digital information is 3 million times all the books ever written • Information saved in a single year could fill half a million libraries size of the Library in Congress • Growing at a rate of 57% a year

  8. Information Revolution Cont. • Information is now the essential resource of production with a supporting cast of Labor, Land and Capitol • Information provides a sustainable competitive advantage when used correctly with traditional factors of production.

  9. Technology • What is Technology? • One impact of technology is called “Bottom Up” where the power has shifted from the institutions to individuals • Technology impacts innovation, which we define as turning creative idea into a product or process that can be sold

  10. Technology in Innovation • How important is innovation? • IBM’s CEO Sam Palmisano says, “The way you will thrive in this environment is by innovating – innovating in technologies, innovating in strategies, innovating in business models”

  11. Globalization • The days where the U.S. produce all consumer products are gone • Globalization influences strategic management in two ways… • GLOBAL MARKETS • GLOBAL COMPETITORS

  12. Globalization Cont. • To sustain a competitive advantage you must look globally for customers as long with resources from different locations • Some cases to make the most effective strategy is to partner with a competitor to create or market products

  13. Four Implications of Driving Forces • 1. Organization/Continual change - can be external or internal and defined as structured transition in what an organization does or how it does it • 2. Reduced need for physical assets – Large Corporations are finding value in intangible factors such as ideas, employee knowledge sharing, customer databases, product innovation and online ordering systems

  14. Implications Cont. • 3. Vanishing Distance & Compressed Time – Limitations of physical distance have disappeared along with time constraints • 4. Vulnerability – Threats of computer viruses, terrorist attacks, and biological attacks illustrate the increased vulnerability that organizations face from interconnectedness and openness

  15. Critical Success Factors • 1. Ability to Embrace Change – Change can bring new opportunity and exploit challenges dealing with change. • 2. Creativity and Innovation Capabilities – “Create and innovate or fail” • 3. Being a World Class Organization – Strategic decision makers take actions to help it be the best in the world at what it does

  16. 2.3 Organizational Elements that Guide Strategic Decision Makers • Organizational vision and mission • CSR and Ethics

  17. Vision • Four components of vision • 1. Vision must be “Built on a foundation of the organizations core values and beliefs” • 2. Vision should “Elaborate a purpose for the organization” • 3. Vision should “Include a brief summary of what the organization does” • 4. Visions “Specify broad goals”

  18. Mission Statement • Statement of what specific organizational units do, and what they hope to accomplish • Can be mission statements for several different departments of the firm. (divisional, group projects, etc.) • Starbucks mission statement “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time..”

  19. Corporate Social Responsibility and Ethics • CSR – The obligation of the organizational decision makers to make decisions and act in ways that recognize the interrelatedness of business and society. • Formerly – what is in the best interest of the stockholder • Today – what is in the best interest of the stakeholders, or possible future stakeholders.

  20. CSR Potential Stakeholder Target Market

  21. CSR & Ethics • Ethics – Ethics involves the principles that define right and wrong decisions and behavior. • being able to decipher in given situations what most would consider “right or wrong.” Ethical decisions are involved a great deal in managing strategically.

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