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Instructor's Manual - Strategic Management Concepts and Cases Competitiveness and Globalization,Hitt,
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Textbook Manual 1Ch. 1
Strategic Management an’d Strategic Competitiveness
OBJS:
1. Define strategic competitiveness, strategy, competitive advantage, above-average
returns, an’d the’ strategic management process.
Describe the’ competitive lan’d scape an’d explain how globalization an’d
technological changes shape it.
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 an’d mission an’d discuss the’ ir value.
6. Define stakeholders an’d describe the’ ir ability to_ influence organizations.
7. Describe the’ work of strategic leaders.
8. Explain the’ strategic management process.
CH. OUTLINES
Opening Case: Alibaba - An Online Colossus in China Goes Global
THE’ COMPETITIVE LAN’D SCAPE
The’ Global Economy
Technology an’d Technological Changes
Strategic Focus: Starbucks - “Juicing” its Earnings per Sto_re through technology
Innovations
THE’ I/O MODEL OF ABOVE-AVERAGE RETURNS
THE’ RESOURCE-BASED MODEL OF ABOVE-AVERAGE RETURNS
VISION AN’D MISSION
Vision
Mission
STAKEHOLDERS
Classifications of Stakeholders
Strategic Focus: The’ Failure of BlackBerry to_ Develop an Ecosystem of Stakeholders
STRATEGIC LEADERS
The’ Work of Effective Strategic Leaders
Predicting Outcomes of Strategic Decisions: Profit Pools
THE’ STRATEGIC MANAGEMENT PROCESS
SUMMARY
REVIEW QUESTIONS
ADD’T QUESTIONS AN’D EXERCISES
MINDTAP RESOURCES
,Textbook Manual 2
NOTE:S
Ch. Introduction: You may want to_ begin this lecture with’’ a general comment that
Ch. 1 provides an overview of the’ strategic management process. This ch. introduces a
number of key terms an’d models that students will study in more detail in Ch. s 2
through 13. Stress the’ importance of students paying careful attention to_ the’ concepts
introduced in this ch. so that the’ y are well-grounded in strategic management concepts
befor_ e proceeding furthe’ r.
OPEN_CASE
Alibaba: An Online Colossus in China Goes Global
China now has world's largest number of internet users an’d Alibaba is’’ China’s largest
ecommerce company (23 percent owned by Yahoo an’d 36 percent by Japan’s
SoftBank). In 2014, when Alibaba completed its initial public offering (IPO) on the’
New York Sto_ck Exchange, it immediately became worth more than Amazon an’d eBay
combined, an’d has a larger market capitalization than Wal-Mart. Transactions of goods
on Alibaba’s websites account for_ more than two percent of China’s GDP in 2012.
TEACH TIP
To_ initiate discussion, ask how Alibaba has achieved strategic competitiveness as
described in this ch. . In addition, ask students how Alibaba to_p management has used
the’ strategic management process as the’ foundation for_ the’ commitments,
decisions, an’d the’ actions the’ y to_ok to_ pursue strategic competitiveness an’d
above-average returns.
1
Define strategic competitiveness, strategy, competitive advantage, above-average returns,
an’d the’ strategic management process.
DEFINING STRATEGY
Strategic competitiveness is’’ achieved when a firm successfully for_ mulates an’d
implements a value-creating strategy. By implementing a value-creating strategy that
current an’d potential competito_rs are not simultaneously implementing an’d that
competito_rs are unable to_ duplicate, or find to_o costly to_ imitate, a firm achieves a
competitive advantage.
Strategy can be defined as an integrated an’d coordinated set of commitments an’d
actions designed to_ exploit core competencies an’d gain a competitive advantage.
So long as a firm can sustain (or maintain) a competitive advantage, investo_rs will earn
above-average returns. Above-average returns represent returns that exceed returns that
,Textbook Manual 3
investo_rs expect to_ earn from othe’ r investments with’’ similar levels of risk
(investo_r uncertainty about the’ economic gains or losses that will result from a
particular investment). In othe’ r words, above average-returns exceed investo_rs’
expected levels of return for_ given risk levels.
Teaching Note
Point out that in the’ long run, firms must earn at least average returns an’d provide
investo_rs with’’ average returns if the’ y are to_ survive. If a firm earns below-
average returns an’d provides investo_rs with’’ below-average returns, investo_rs
will with’’ draw the’ ir funds an’d place the’ m in investments that earn at least
average returns. At this point it may be useful to_ highlight the’ role institutional
investo_rs’ play in regulating above average perfor_ mances.
In smaller new venture firms, perfor_ mance is’’ sometimes measured in terms of the’
amount an’d speed of growth rathe’ r than more traditional profitability measures - new
ventures require time to_ earn acceptable returns.
A framework that can assist firms in the’ ir quest for_ strategic competitiveness is’’ the’
strategic management process, the’ full set of commitments, decisions an’d actions
required for_ a firm to_ systematically achieve strategic competitiveness an’d earn
above-average returns. This process is’’ illustrated in FIG: 1.1.
FIG: 1.1
The’ Strategic Management Process
FIG: 1.1 illustrates the’ dynamic, interrelated nature of the’ elements of the’ strategic
management process an’d provides an OUTLINEs 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, an’d strategic
outcomes.
Analysis, in the’ for_ m of infor_ mation gained by scrutinizing the’ internal
environment an’d scanning the’ external environment, are used to_ develop the’
firm's vision an’d mission.
Strategic actions are guided by the’ firm's vision an’d mission, an’d are represented
by strategies that are for_ mulated or developed an’d subsequently implemented or
put into_ action.
Desired perfor_ mance - strategic competitiveness an’d above-average returns -
result when a firm is’’ able to_ successfully for_ mulate an’d implement value-
creating strategies that othe’ rs are unable to_ duplicate.
, Textbook Manual 4
Feedback links the’ elements of the’ strategic management process to_gethe’ r an’d
helps firms continuously adjust or revise strategic inputs an’d strategic actions in
order to_ achieve desired strategic outcomes.
In addition to_ describing the’ impact of globalization an’d technological change on the’
current business environment, this ch. 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 an’d capabilities (the’ internal environment) as critical links to_
strategic competitiveness. Following the’ discussion in this ch. , as well as in Ch. s 2
an’d 3, students should see that the’ se models must be integrated to_ achieve strategic
competitiveness.
2
Describe the’ competitive lan’d scape an’d explain how
globalization an’d technological changes shape it.
THE’ COMPETITIVE LAN’D SCAPE
The’ competitive lan’d scape can be described as one in which the’ fundamental nature
of competition is’’ changing in a number of the’ world’s industries. Furthe’ r, the’
boundaries of industries are becoming blurred an’d more difficult to_ define.
Consider recent changes that have taken place in the’ telecommunication an’d TV
industries - e.g., not only cable companies an’d 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 furthe’ r blur industry boundaries (e.g., MSNBC is’’ co-owned
by NBC, which itself is’’ owned by General Electric an’d Microsoft).
The’ contemporary competitive lan’d scape thus implies that traditional sources of
competitive advantage - economies of scale an’d large advertising budgets - may not be
as important in the’ future as the’ y were in the’ past. The’ rapid an’d unpredictable
technological change that characterizes this new competitive lan’d scape implies that
managers must adopt new ways of thinking. The’ new competitive mind-set must value
flexibility, speed, innovation, integration, an’d 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 an’d countermoves among
innovative, global firms: a condition of rapidly escalating competition that is’’ based on
price-quality positioning, effor_ ts to_ create new know-how an’d achieve first-mover
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