Strategic Management: Competitiveness and Globalization

1
The Strategic Management Process
Chapter 2 The External Environment
Strategic Intent Strategic Mission
Strategic Inputs
Chapter 3 The Internal Environment
Strategy Implementation
Strategy Formulation
Chapter 11 Organizational Structure and Controls
Chapter 10 Corporate Governance
Chapter 6 Corporate- Level Strategy
Chapter 5 Competitive Rivalry and
Competitive Dynamics
Chapter 4 Business-Level Strategy
Strategic Actions
Chapter 12 Strategic Leadership
Chapter 13 Strategic Entrepreneurship
Chapter 9 Cooperative Strategy
Chapter 8 International Strategy
Chapter 7 Acquisition and Restructuring Strategies
Strategic Competitiveness Above-Average Returns
Strategic Outcomes
Feedback
2
Strategic Entrepreneurship

• Strategic entrepreneurship taking
  entrepreneurial actions using a strategic
  perspective
• engaging in simultaneous opportunity seeking and
  competitive advantage seeking behaviors
• designing and implementing entrepreneurial
  strategies to create wealth
• These actions can be taken by individuals or by
  corporations

3
Innovation

• Innovation is the process of creating a
  commercial product from an invention
• invention brings something new into being
• innovation brings something new into use
• Innovation is a key outcome firms seek through
  entrepreneurship and is often the source of
  competitive success
• Innovations produced in large established firms
  are often referred to as corporate
  entrepreneurship

4
Entrepreneurs

• Entrepreneurs are
• individuals acting independently or as part of an
  organization
• who create a new venture or develop an innovation
  and take risks entering them into the marketplace
• Entrepreneurs
• can be independent individuals
• can surface in an organization at any level

5
International Entrepreneurship

• Entrepreneurship can
• fuel economic growth
• create employment
• generate prosperity for citizens
• There is a strong positive relationship between
  the rate of entrepreneurial activity and economic
  development in a nation

6
International Entrepreneurship

• There must be a balance (in the culture)
  between
• individual initiative and
• the spirit of cooperation and group ownership
  of innovation
• Successful entrepreneurial firms
• provide appropriate autonomy
• incentives for individual initiative
• promote cooperation and group ownership of an
  innovation

7
Innovation Types
Incremental Innovation

• most innovations are incremental
• builds on existing knowledge bases
• provides small improvements in the current
  product lines

8
Innovation Types
Radical Innovation

• provides significant technological breakthroughs
• creates new knowledge
• is rare because of difficulty and risk
• requires substantial creativity
• radical innovations are often best developed in
  separate units that start internal ventures

9
Internal Corporate Venturing
10
Cross-Functional Product Development Teams

• facilitate efforts to integrate activities
  associated with different organizational
  functions
• design, manufacturing, marketing, etc.
• new product development processes can be
  completed more quickly
• products can be more easily commercialized when
  cross-functional teams work effectively

11
Cross-Functional Product Development Teams

• product development stages are grouped into
  parallel or overlapping processes
• this approach allows the firm to tailor its
  product development efforts
• unique core competencies
• needs of the market

12
Barriers to Cross-Functional Team Effectiveness

• Different orientations and perceptions
• individuals from separate functions have
  different orientations on issues
• perceive product development activities in
  different ways
• Organizational politics
• aggressive competition for resources among
  different organizational functions
• must achieve cross-functional integration with
  minimal political conflict

13
Creating Value Through Internal Innovation
Processes
14
Cooperative Strategies for Entrepreneurship and
Innovation

• Firms may need to cooperate and integrate
  knowledge and resources to successfully
  commercialize inventions
• entrepreneurial new venture firms may need
  investment capital and distribution capabilities
• more established companies may need new
  technological knowledge possessed by newer
  entrepreneurial firms
• To innovate through a cooperative relationship,
  firms must share their knowledge and skills

15
Acquisitions to Buy Innovation

• Acquisitions
• rapidly extend the product line
• increase the firms revenues
• A key risk of acquisitions is that a firm may
  substitute the ability to buy innovations for an
  ability to produce innovations internally
• firm may lose intensity in RD efforts
• firm may lose ability to produce patents

16
Loss of Innovative Capability Following Large
Acquisitions
Firm Minus Industry RD Intensity
Years Before and After Acquisitions
17
Loss of Innovative Capability Following Large
Acquisitions
Patent Intensity
Years Before and After Acquisitions
18
Capital for Entrepreneurial Ventures

• Venture capital firms
• seek high returns on their investment
• value competence of the entrepreneur or the human
  capital in the firm
• place weight on the expected scope of competitive
  rivalry the firm is likely to experience
• evaluate degree of instability in the market
  addressed

19
Capital for Entrepreneurial Ventures

• Initial public offerings (IPOs)
• new stock
• firm needs high potential in order to sell new
  stock
• often quite larger than the amounts obtained from
  venture capitalists
• investment bankers frequently play major roles in
  the development and offering of IPOs
• firms that have also received venture capital
  backing usually receive greater returns from IPOs