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Chapter 7

chapter 7 GMS.docx

Global Management Studies
Course Code
GMS 200
Shavin Malhotra

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Strategic management GMS chapter 7
Competitive advantage
- Competitive advantages are when firms operate with a combination of attributes that allow it to
perform better than their competitors. It is also the ability to utilize resources well so that
organizations perform better than the competition
Sources of of competitive advantage
- Cost and quality ( strategy places importance on operating efficiency and product or service
- Knowledge and speed ( strategy emphasizes the importance of innovation and speed of delivery
to market for new ideas
- Barriers to entry ( strategy that places importance on creating a market stronghold that is
protected from entry by others
- Financial resources ( strategies that place importance on investments or loss absorption that
rivals in the industry are not able to compete against
Back to competitive advantage
- As competitors will eventually be able to copy a firm’s competitive advantage, companies
should focus on establishing sustainable competitive advantages which are those that are
difficult or costly to copy or replicate
Strategy and strategic intent
- Strategies are what help firms obtain competitive advantages
- Strategies are a comprehensive action plan that identifies the long term direction for an
organization and guides resource utilization to achieve sustainable competitive advantage
- Strategies are a best guess concerning what must be done in order to benefit from it in the
future in the face of rivalry and changing conditions
- A strategy that helps make sure that resources are used with consistent strategic intent, which is
where all energies are directed toward accomplishing a long term target or goal
Levels of strategy
Corporate level strategy
- The level of corporate strategy directs the organization as a whole toward sustainable
competitive advantage. It descripes the scope of operations by answering the strategyic
question “ In what industries and markets should we compete?
- The purpose of corporate level strategy is to set direction and guide resource allocations for the
whole entire enterprise

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- In large complex organizations, corporate strategy identifies how the company plans to compete
across multiple industries and markets
Business level strategy
- This is the strategy for a single business unit or product line.
- The selection of strategy at the business level involves asking the question “ how are we going
to compete for customers in the industry and market?” Usual business strategy decisions
include choices about product and service mix, facilities locations and new technologies
Functional strategy
- Determines how organizational resources will be used to put into effect the company’s strategy,
this focuses on a specific functional area.
- The strategic question that must be answered when deciding which functional strategy to use is
“How can we best utilize resources within a function to implement our business strategy?
Answers to this question involve the selection of management practices in each function that
will improve operating efficiency, product or service quality, customer service or innovativeness
The strategic management process
- Strategic management is the process of creating and putting into action strategies to accomplish
long term goals and sustain competitive advantage
- The strategic management process begins with strategic analysis where during this step we
examine the organization, its environment, its competitive positioning and its current strategies
and evaluate us based on what we discovered
- Strategy formulation is the next step where we create a new or revised strategy with the goal of
sustainable competitive advantage
- The last step is strategy implementation where we use resources to put strategies into action,
and then evaluating results
Analysis of mission, values and objectives
- The strategic management process starts with the review and clarification of mission, values and
objectives. This set the foundation for assessing the organization’s resources and capabilities
and the competitive opportunities and threats in its external environment
Mission and stakeholders
- The mission of a company is the reason why it exists
- A clear idea of the mission from the perspective of managers help them keep organizations
focused and use resources with strategic intent
- A clear idea in respects to the mission help managers gather support and respect from a
company’s stakeholders

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- Stakeholders are both individuals and groups that are directly affected by the company and its
- A strategic constituencies analysis is a useful tool in the strategic management process.
- Strategic constituencies evaluates the interests of each stakeholder, along with the
organization’s record in responding to them
Core values
- The way people behave inside and outside of an organization are influenced by core values
which are the broad beliefs about what is or is not appropriate behavior
- The organizational culture is the main value system of the company as a whole
- In the strategic management process, core values and the organizational culture should be
evaluated to determine how well they align with and support the organization’s mission
- Strong core values helps build organizational identity, giving a sense of character to the
organization in the eyes of its employees and external stakeholders
- Core values support the mission by helping guide the behavior of organization members in
meaningful and consistent ways
- Operating objectives focus activities toward key performance areas, they turn a broad sense of
mission into specific performance targets
- Operating objectives include profitability where we want the firm to operate with a net profit,
financial health where we gain capital, earning positive returns, cost efficiency where we use
resources well to a point where we operate with low costs, customer service where we meet
the needs of the customer and maintain loyalty, product quality where we produce high quality
goods or services, market share where we gain a specific share of possible customers, human
talent where we recruit and maintain a high quality workforce, innovation where we develop
new products and processes, social responsibility where we make a positive contribution to
- The strategic management process should make sure that the operating objectives align with
and drive the organization towards its mission
SWOT analysis of organization and environment
- After assessing the mission, values and objectives, we analyze the organization and its
environment utilizing a SWOT analysis, this is an internal and external analysis of a company’s
internal strengths, weaknesses and their external opportunities and threats
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