Unit 1

Strategic Management and

Strategic Competitiveness in
the Global Market

1/18
Study Objectives

1. Strategy and Strategic Management Process

2. Vision, Mission, and Goals
3. External Analysis （ Industrial Organization Paradigm ）
4. Internal Analysis （ Resource-based View ）
5. SWOT Analysis Model
6. Stakeholders and Strategic Leaders
7. Globalization of Markets and Competition

2/23
OPENING CASE ： DELL INC.
 Company Profile
 Founded in 1984 （ Michael Dell with $1000)
 Employees ： 165.000 （ 2022 ）
 Revenue ： 101.6 billion （ 2022 ）
 From 2001 to 2010
 2001-2007: revenue and stock growth
 After 2007: decrease
 Competitive advantage
Profitability of U.S. Computer Companies 2001–2010
 Direct sell model
 Customized-service
 Supply chain management
 Losing competitive advantage
 2008 recession: demand decreases
 Lack of strategic change
 Selling through resellers

 Competitors’ innovation

The decline of Dell Earnings Per Share Growth of U.S. Computer Companies 2001–2010
3/23
 STRATEGY AND STRATEGIC MANAGEMENT PROCESS

 What is strategy ？
• Strategy ： is an integrated and coordinated set of commitments and
actions designed to exploit core competencies and gain a competitive
advantage.
• Competitive advantage ： when a firm implements a strategy that creates
superior value for customers and that its competitors are unable to
duplicate or find too costly to imitate.
• Risk: is an investor’s uncertainty about the economic gains or losses that
will result from a particular investment.
• Business model: is managers’ conception of how the set of strategies
their company pursues should work together as a congruent whole,
enabling the company to gain a competitive advantage and achieve
superior profitability and profit growth.

4/23
 STRATEGY AND STRATEGIC MANAGEMENT PROCESS

 The strategic management process

External
analysis Strategic planning and implementation

Strategic
Strategic planning
implementation
Corporate-level strategy
Vision Corporate governance Competitive
SWOT (Mergers and acquisition
Mission Structure and controls advantage
model International strategy
Goals Strategic leaderships &
Cooperative strategy)
Strategic profits
Business-level strategy
entrepreneurships
Functional-level strategy

Internal
analysis

Feedback

5/23
 STRATEGY AND STRATEGIC MANAGEMENT PROCESS

 The Context of Strategic Management

• Hypercompetition: is a condition where competitors engage in
intense rivalry, markets change quickly and often, and entry
barriers are low.
• Global economy : a global economy is one in which goods,
services, people, skills, and ideas move freely across
geographic borders.
• Technological changes: technology diffusion and disruptive
technologies, the information age, and increasing knowledge
intensity.
• Strategic flexibility: strategic flexibility is a set of capabilities
firms use to respond to various demands and opportunities
existing in today’s dynamic and uncertain competitive
environment 6/23
 VISION-MISSION-GOALS
 Vision
 Vision ： The vision of a company defines a desired future state
McDonald’s ： Our vision is to be the world’s best quick service restaurant.
Ford Motors ： To make the automobile accessible to every American.

 Mission
 Mission ： A company’s mission describes what the company does. It
specifies the businesses in which the firm intends to compete and the
customers it intends to serve.
Kodak ： Customers with the solutions
they need to capture, store, process,
What is our business ？ Customer output, and communicate images—
groups ？ anywhere, anytime.

DefineHow are customer needs

Customer needs ？Business
being satisfied ？
7/23
 VISION-MISSION-GOALS
 Goals （ Objective)
• Goals ： A goal is a precise and measurable desired future state that a
company attempts to realize.
 Performance
 Market
 Sales
 Productivity
 Human resource
 Characteristics of objective ：
 Measurable
 Challenging but realistic
 Address crucial issues
 Specific time period
 Balancing between short-term and long-term, economic and non-economic goals.
8/23
 EXTERNAL ANALYSIS—IO THEORY
 Industrial-organization paradigm (IO)
 Relationship between environment, strategy and performance

Structure Conduct Performance

 Basic assumptions ：
 External environments impose pressures and constraints on strategy and performance.

 Firms control similar strategically relevant resources and pursue similar strategies.

 Resources used to implement strategies are assumed to be highly mobile across firms.

 Managers are assumed to be rational and committed to acting in the firm’s best interests.

 Porter’s Five-forces model

 An industry’s profitability is a function of interactions among five forces:
suppliers, buyers, competitive rivalry among firms currently in the
industry, product substitutes, and potential entrants to the industry.

9/23
EXTERNAL ANALYSIS—STRATEGIC FOCUS
 Borders
Date 1971 2011 (bankrupted)
Borders book chains
No. Employees 35.000 19.500
No. Stores 1.300 674
Stock 35USD 0.23USD

 Reasons for failure ：

 Changes in consumer preference: e-books and e-readers

 Changes in selling channel: physical to online stores

 Intense competition:
 Amazon: Kindle fire and customized service

 Barnes & Noble ： Nook and online stores

Cannot adapt to environmental change

 Hands over online business to Amazon

 Invest more in physical business

 2008-2009 bought back stocks

Strategic Failure 10/23
INTERNAL ANALYSIS—RBV THEORY
 Resource-based view
 Relationship between resource, competitive advantage and performance

Core Competitive
Resource Capability Performance
competency advantage

 Basic assumptions ：
 Firms acquire different resources and develop unique capabilities
 Resources and capabilities are not highly mobile across firms.
 Competitive advantages are based on resources that are:
 Valuable
 Rare
 Costly to Imitate
 Non-substitutable
11/23
INTERNAL ANALYSIS—STRATEGIC FOCUS
Apple Inc.
 Introduction
 Established in 1976 by Steve Jobs and Stephen Wozniak
 Revenue ： 260.174 billion
 No. employees ： 123.000

 Strategic success
 R&D  Innovation
 Marketing Brand image
 Customer service

12/23
SWOT MODEL
 SWOT Model and strategic choice
Internal analysis External analysis

Strengths Opportunities

Weaknesses Threats

Resource-based view IO theory

(RBV) (SCP-Five forces model)

13/23
STRATEGIC PLANNING
 Strategic planning process ：
 Mission, vision and goals External analysis Internal analysis
Strategic Planning Strategic Implementation Feedback.

External
analysis Strategic planning and implementation
Strategic planning
Strategic
implementation
Corporate-level
strategy
Vision Corporate governance Competitive
SWOT (Mergers and acquisition
Mission Structure and controls advantage
model International strategy
Goals Strategic leaderships &
Cooperative strategy)
Strategic profits
Business-level strategy
entrepreneurships
Functional-level
strategy
Internal
analysis

Feedback 14/23
STAKEHOLDERS AND STRATEGIC LEADERS
 Stakeholders
 Stakeholders ： are the individuals, groups, and organizations that
can affect the firm’s vision and mission, are affected by firms.
 Classifications of stakeholders ：
Stakeholders have different objectives
Capital Market Stakeholders
• Shareholders
How firms balance stakeholders’ interests ？
• Major suppliers of capitals

Product Market Stakeholders

• Primary customers
• Suppliers
• Host communities
• Unions

Organization Stakeholder
• Employees
• Managers
• Nonmanagers

15/23
STAKEHOLDERS AND STRATEGIC LEADERS
 Strategic leaders
 Strategic leaders ： are the linchpin in the strategy-making process.
who must take responsibility for formulating strategies to attain a
competitive advantage and for putting those strategies into effect.
 Levels of strategic management ：

Head
Corporate level
CEO ， board of Office
directors

Business level
Divisional Division A Division B Division C
managers and
staff

Functional level Business Business Business

Functional functions functions functions
managers

Market A Market B Market C 16/23

STAKEHOLDERS AND STRATEGIC LEADERS

 Characteristics of excellent strategic

leaders ：
 Vision, Commitment, and Consistency
 Eloquence （口才 )
 Being Well Informed
 Willingness to Delegate and Empower
 The Use of Power
 Emotional Intelligence
…
 Upper echelon theory
 Agency theory
17/23
 GLOBALIZATION OF MARKETS AND COMPETITION

Are we living in a local or global marketplace?

18/23
 GLOBALIZATION OF MARKETS AND COMPETITION

 Some global definitions

• Globalization : is the process by which people,
products, information and money can move freely
across borders.
• Multinational companies : are the companies that
operate in various countries outside their countries
of origin.
• Global companies: are multinational companies that
operate in the main markets of the world in an
integrated and coordinated way. For example,
Apple, Samsung, and Toyota are global companies.

19/23
 GLOBALIZATION OF MARKETS AND COMPETITION

 WHAT ARE THE FACTORS THAT PUSH FOR

GLOBALIZATION?
Political factors
• GATT/WTO
• EU
• Deregulation of FDI
• Regional trade agreements
Reduce trade and investment
Technology factors barriers Social factors
• Transportation
• Convergences of
• Telecommunication
customers’ needs
• Internet
• Emails, Social
• Education
networks, Videos
• Science
online
• Production
• Movies, series
technology
Favor product
Reduce costs
standardization and
Increase economies of
global brands
scales
Competitive factors
• New global players
• Multinational customers
• Economies of scales
Induce integration and coordination
20/23
 GLOBALIZATION OF MARKETS AND COMPETITION

 WHAT ARE THE FACTORS THAT WORK AGAINST

GLOBALIZATION?
Cultural factors
• Attitudes, Tastes
• Behavior
• Social codes
• Regional trade agreements
Reduce the benefits of
standardization
Technology factors Commercial
• Standards factors
• Transportation • Distribution
• Spatial presence networks
• Language • Customization
Reduce the benefits of • Responsiveness
economies of scale, Require differentiated
centralization and approaches to sales
standardization and marketing

Legal factors
• Regulation
• National security
Limit free flow of people, goods,
data, cash ;Impose localization
constraints
21/23
 GLOBALIZATION OF MARKETS AND COMPETITION

 PRO AND CONS OF GLOBALIZATION?

血汗工厂

腐败

22/23
 GLOBALIZATION OF MARKETS AND COMPETITION

 The Benefits and Pitfalls of Globalization for

Business
• Cost benefits: economies of scales.
• Timing benefits: time of product adoption in the
stages of product life cycle.
• Learning benefits: information, knowledge, and
experience.
• Arbitrage benefits: the advantages that a company
can gain by using the resources in one country for the
benefit of its subsidiary in another country.

23/23
 CLOSING CASE Seiko Epson
• Introduction:
- Established in 1942
- No. employees ： 21,570
• Traditional business model:
- Selling cheap hardware, Making money by selling
supplies
• Threats Ink tanks
- Economic recession in 2008
- Competition: laptop, iPad, digital devices…
- Continuous ink supply reformer
- lost 1113 billion Yen in 2009.
• Dui Jing Nian (2008) and new business model:
- Listen to customers’ voice
- Changes business model ： Continuous ink supply Ink cartridge
printers
- Increase price: increase efficiency (7 times) and reduce Epson Robot Manufacturing
cost (1/15 costs)
- In 2016 ： benefit=1127 billion Yen, stock=2195 Yen, Epson Advertising
23/23
market share =40% global.
HARVARD BUSINESS REVIEW

What Makes a Great Leader?

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