Chapter 1

Strategic Management and

Strategic Competitiveness

Michael A. Hitt
R. Duane Ireland
Robert E. Hoskisson

©2003 South-Western Publishing Company 1

Strategic Inputs
Chapter 2
The External
The Strategic
Environment
Strategic Intent
Strategic Mission
Management
Chapter 3
The Internal
Environment
Process
Strategy Formulation Strategy Implementation
Chapter 5 Chapter 11
Chapter 4 Chapter 6 Chapter 10
Competitive Rivalry Organizational
Strategic Actions

Business-Level Corporate- Corporate

and Competitive Structure and
Strategy Level Strategy Governance
Dynamics Controls

Chapter 7
Chapter 8 Chapter 9 Chapter 12 Chapter 13
Acquisition and
International Cooperative Strategic Strategic
Restructuring
Strategy Strategy Leadership Entrepreneurship
Strategies
Strategic Outcomes

Strategic
Competitiveness
Above-Average
Returns
2
Feedback
Important Definitions
Strategic Management Process
The full set of commitments, decisions,
and actions required for a firm to achieve
strategic competitiveness and earn
above-average returns

3
Important Definitions
Strategic Competitiveness
Achieved when a firm successfully formulates
and implements a value-creating strategy

Above-Average Returns
Occurs when a firm develops a strategy that
competitors are not simultaneously
implementing
Provides benefits which current and potential
competitors are unable to duplicate

4
Strategic Flexibility
Organizational
slack

Strategic Strategic
reorientation Flexibility
flexibility

Capacity to
learn
5
I/O Model of Above-Average Returns
1. External Environments
General 1. Strategy dictated by the
Global external environments of
the firm (what
Industry
opportunities exist in
Environment
these environments?)
2. Firm develops internal
skills required by
Competitor external environment
Environment (what can the firm do
Technological about the opportunities?)
6
Environment
 I/O Model of Above-Average Returns
Industrial Organization
Model
The External Environment

An Attractive Industry

Strategy Formulation

Assets and Skills Superior returns: earning

of above-average returns
Strategy Implementation

Superior Returns
7
 Four Attributes of Resources and
Capabilities (Competitive Advantage)
Valuable allow the firm to exploit opportunities or
neutralize threats in its external

Resources and Capabilities

environment

Rare possessed by few, if any, current and

potential competitors

Costly to imitate when other firms cannot obtain them or

must obtain them at a much higher cost

Nonsubstitutable the firm is organized appropriately to

obtain the full benefits of the resources in
order to realize a competitive advantage
8
 Resources and capabilities that meet
these four criteria become a source of:

Valuable

Resources and Capabilities

Rare
Core Competencies
Costly to imitate

Nonsubstitutable

9
Core Competencies are the basis for a
firm’s

Competitive
advantage

Strategic
competitiveness Core Competencies
Ability to earn
above-average
returns

10
Resource-based Model of Above Average
Returns
Resource-based
Model
Resources

Capability

Competitive Advantage

An Attractive Industry Superior returns: earning

of above-average returns
Strategy Form/Impl

Superior Returns
11
The Firm and Its Stakeholders
Stakeholders

Capital Market Stakeholders

Product Market Stakeholders

Employees
Organizational Stakeholders Managers
Nonmanagers
12