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| Strategic Management Vision Strategy Mission External Environment Internal Organization Strengths resources capabilities core competencies distinctive competencies developing the vision for the firm, designing strategic actions to strategic leadership achieve this vision, and empowering others to carry out those strategic actions the group of managers charged with top management team the responsibility of developing and implementing the firms strategies . includes the knowledge and skills of human capital those working for the firm includes all internal and external ; ; relationships that help the firm social capital : provide value to customers and ultimately to its other stakeholders : encourages employees to identify entrepreneurial culture . - and exploit new opportunities related-party transactions paying a person who has a relationship with the firm extra money for reasons other than his or her normal activities on the firms behalf financial controls strategic controls balanced scorecard general environment demographic trends economic trends politicallegal trends controls that focus on short term financial outcomes focus on the content of strategic actions rather than on their outcomes provides a framework for evaluating the simultaneous use of financial and strategic controls the trends in the broader society that influence an industry and the firms in it changes in population size, age structure, geographic distribution, ethnic mix, and income distribution the direction of the economy in which a firm competes or may choose to compete the changes in organizations and interest groups that compete for a voice in developing and implementing the body of laws and the improvements in efficiency from economies of scale incremental increases in the size of a firms operations the one time costs customers incur switching costs when they decide to buy a product from a different supplier goods or services that perform substitute products functions similar to an existing product the set of actions and reactions fitive rival between competitors as they competitive rival P ” compete for an advantageous market position the firms motivation to leverage its strategic intent resources and capabilities to reach its vision the network of companies that sell goods or services that are complementors : ; complimentary to another firms goods or services weaknesses tangible resources intangible resources value value chain benchmarking resource and capability deficiencies that make it difficult for the firm to complete important tasks valuable assets that can be seen or quantified, such as manufacturing equipment and financial capital assets that contribute to creating value for customers but are not physically identifiable the satisfaction a product creates for customers is measured by the price customers are willing to pay to buy that product the structure of activities the firm uses to implement its business level strategy the process of identifying the best practices of competitors and other customers perceive as being unique in ways that are important to them an action plan the firm develops to focus strategy produce goods or services that serve the needs of a specific target market an action plan the firm develops to . produce goods or services for a focused cost leadership strategy narrow market segment at the lowest cost an action plan the firm develops to produce goods or services that a focused differentiation strategy narrow group of customers perceives as being unique in ways that are important to them integrated cost leadership strategy $/14 an action plan the firm develops to produce goods or services, with a strong emphasis on both differentiation and low cost organizational structure simple structure functional structure Corporate-level core competencies Why strategic alliances represent a common means of entering international markets specifies the firms formal reporting relationships, procedures, controls, and authority and decision making processes an organizational structure in which the owner/manager makes all of the major decisions and oversees all of the staff's activities an organizational structure consisting of a CEO and a small corporate staff are complex sets of resources and capabilities that link different businesses Because some countries require that firms form joint ventures with local firms in order to enter their markets.- Foreign firms need knowledge and perhaps other resources to understand and compete effectively in the newly entered markets.- They can use alliances to learn about the different culture and characteristics Single Business MultiProduct Strategy Synergy by alliance Very High Levels Acquisitions Learn to build capabilities- Manage risk and other financial objectives firm generates at least 95 percent of its sales revenues from sales generated within a single business. What kind of strategy is it? Strategic alliances at the corporate level between firms can be used to create synergy. Synergy is created when partners share resources or integrate complementary capabilities to build economies of scope. Unrelated transaction in which a firm buys a controlling interest in another firm with the intention of either making it a subsidiary business or combining it with its current business or businesses acquisition strategy competitive M-form Cooperative M-form ties --> supports the related constrained strategy Corporate relatedness an action plan that the firm develops to successfully acquire other companies organizational structure in which there is complete independence between the firm's divisions --> supports the unrelated strategy organizational structure in which horizontal integration is used so that divisions can share resources and activi- is achieved when corporate-level core competencies are successfully transferred into some of the firm's businesses between its businesses or transfers corporate-level competencies into its business through operational relatedness when the firm successfully shares primarily tangible resources ora How are economics of scope support activity is successfully created? used in more than one of its businesses Example of a single business? Kohl's Why firms develop strategic alliances 8/14 o Access to a restricted market o Develop new goods or services o Facilitate new market entry o Share significant R&D investments o Share risks and buffer against uncertainty o Develop market power o Gain access to complementary resources o Build economies of scale o Meet competitive challenges o Learn new skills and capabilities o Outsource for lower costs and higher-quality output Exporting Financial economies Firm-specific resource advantages the process of sending goods and services from one country to another for distribution, sale, and service cost savings or higher returns generated when the firm effectively allocates its financial resources based on investments outside or inside the firm - are the core competencies that providea competitive advantage over a firm's rivals.o Therefore, a joint venture, an acquisition, and a greenfield venture representthe best entry mode choices in thesecases Global mind-set Global Strategy Horizontal strategic alliances requirements in the global marketplace. cognitive model that motivates a manager to search for opportunities in foreign markets; to develop strategies that exploit those opportunities; and to coordinate unit, tasks, and people in multiple geographic locations throughout the world action plan that the firm develops to produce and sell standardized products in different markets. an alliance that involves cooperative partnerships in which firms at the same stage of the value chain share resources and capabilities. Horizontal alliances are often intended to enhance the capabilities of the partners to compete in their markets. Firms sometimes develop horizontal alliances to respond to Major risks of strategic alliances International Acquisition International Coordination International Strategic alliances competitors’ actions or to reduce the competition they face. - The failure of alliances is an important issue because often value creation and up tto a third of revenues for many companies come through alliances, which can account up to 25 percent of annual growth in revenues. The final FDI entry mode is one in which a firm acquires an existing host country firm. desirable for a firm to produce the good or service rather than contracting with another firm to produce or distribute it. o Cross-border strategic alliances have become the most prominent means of of entering foreign 
