Podcast
Questions and Answers
What is the primary focus of the I/O model of above-average returns?
What is the primary focus of the I/O model of above-average returns?
According to the I/O model, what is the primary determinant of a firm's performance?
According to the I/O model, what is the primary determinant of a firm's performance?
What is the assumption underlying the I/O model about the mobility of resources across firms?
What is the assumption underlying the I/O model about the mobility of resources across firms?
What is the primary goal of organizational decision makers in the I/O model?
What is the primary goal of organizational decision makers in the I/O model?
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What is the implication of the I/O model for firms seeking to improve their performance?
What is the implication of the I/O model for firms seeking to improve their performance?
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What is the relationship between the external environment and a firm's strategies in the I/O model?
What is the relationship between the external environment and a firm's strategies in the I/O model?
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What is the assumption underlying the I/O model about the control of strategically relevant resources among firms?
What is the assumption underlying the I/O model about the control of strategically relevant resources among firms?
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What is the primary challenge that firms face in the I/O model?
What is the primary challenge that firms face in the I/O model?
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What is the implication of the I/O model for the role of managers in determining firm performance?
What is the implication of the I/O model for the role of managers in determining firm performance?
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What is the underlying assumption of the I/O model about the relationship between industry properties and firm performance?
What is the underlying assumption of the I/O model about the relationship between industry properties and firm performance?
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Study Notes
Strategic Management Overview
- Strategic competitiveness is achieved when a firm successfully formulates and implements a value-creating strategy.
- A strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage.
- Competitive advantage is 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.
Competitive Advantage and Above-Average Returns
- Above-average returns are returns in excess of what an investor expects to earn from other investments with a similar amount of risk.
- Understanding how to exploit a competitive advantage is important for firms seeking to earn above-average returns.
- Firms without a competitive advantage or that are not competing in an attractive industry earn, at best, average returns.
The Strategic Management Process
- The strategic management process is the full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns.
- The process involves analysis, strategy, and performance (the A-S-P model).
- The firm's first step in the process is to analyze its external environment and internal organization to determine its resources, capabilities, and core competencies.
The Competitive Landscape
- The competitive landscape is characterized by hypercompetition, which is excessive competition that creates inherent instability and necessitates constant disruptive change for firms.
- Managers must adopt a new mindset that values flexibility, speed, innovation, integration, and the challenges that evolve from constantly changing conditions.
Technology and Technological Changes
- Increasing knowledge intensity is a critical element of the competitive landscape, and knowledge is a critical organizational resource and an increasingly valuable source of competitive advantage.
- Firms must develop and acquire knowledge, integrate it into the organization to create capabilities, and then apply it to gain a competitive advantage.
The I/O Model of Above-Average Returns
- The I/O model explains the external environment's dominant influence on a firm's strategic actions.
- The model specifies that the industry or segment of an industry in which a company chooses to compete has a stronger influence on performance than do the choices managers make inside their organizations.
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Description
Learn about the importance of strategic competitiveness, strategy, competitive advantage, and the strategic management process. Understand how firms achieve strategic competitiveness through value-creating strategies.
