Deck 1: Strategic Management and Strategic Competitiveness

Question 1

What are strategic competitiveness, strategy, competitive advantage, above-average returns, and the strategic management process?

Answer 1

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.
A competitive advantage is achieved when a firm's current and potential competitors either are not able to simultaneously formulate and implement its value-creating strategy, are unable to duplicate the benefits of the strategy, or find the strategy too costly to imitate.
Above-average returns are returns that are in excess of what an investor expects to earn from other investments with a similar level or amount of risk.
The strategic management process (see Figure 1.1) is the full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns.

Question 2

What are the characteristics of the current competitive landscape? What two factors are the primary drivers of this landscape?

Answer 2

In the current competitive landscape, the nature of competition has changed. As a result, managers making strategic decisions must adopt a new mindset that is global in orientation. Firms must learn to compete in highly chaotic environments that produce disorder and a great deal of uncertainty.
The two primary factors that have created the current competitive landscape are globalization of industries and markets and rapid and significant technological change. The implication for business firms is that to be successful, they must be able to meet or exceed global performance standards (in terms of such factors as quality, price, product features, speed to market) and be able to keep up with both the rapid pace of technological change as well as the rapid diffusion of innovation.

Question 3

According to the I/O model, what should a firm do to earn above-average returns?

Answer 3

The I/O model suggests that conditions and characteristics of the external environment (the general, industry, and competitive environments) are the primary inputs to and determinants of strategies that firms should formulate and implement to earn above-average returns. Assumptions of the I/O model are that: (1) the external environment imposes pressures and constraints that determine which strategies will result in superior profitability, (2) most firms competing in an industry (or industry segment) control similar strategically relevant resources and pursue similar strategies in light of resource similarity, (3) resources used to implement strategies are highly mobile across firms, and (4) decision makers are assumed to be rational and committed to acting in the firm's best interests.
The I/O model thus challenges firms to seek out the industry (or industry segment) with the greatest profit potential and then learn how to use their resources to implement value-creating strategies given the structural characteristics of the industry.

Question 4

What does the resource-based model suggest a firm should do to earn above-average returns?

Question 5

What are vision and mission? What is their value for the strategic management process?

Question 6

What are stakeholders? How do the three primary stakeholder groups influence organizations?

Question 7

How would you describe the work of strategic leaders?

Question 8

What are the elements of the strategic management process? How are they interrelated?

Question 9

Mini Case
Starbucks Is Juicing its Earnings per Store Through Technological Innovations
Note: each chapter Mini-Case is prepared as an auto-graded Guided Case Analysis activity in MindTap™. More information below.
In 2015, Kevin Johnson, a former chief executive of Juniper Networks and 16-year veteran of Microsoft, took over as CEO of Starbucks, succeeding Howard Schultz. Since then, Johnson has engaged with the company's digital operations and supervised information technology and supply chain operations. In the fourth quarter of 2014, Starbucks sales store operations rose 5 percent; this gain in revenue came from increased traffic (2 percent from growth in sales and 3 percent in increased ticket size). The application of more sophisticated technology is credited for driving this increase in revenues. To continue this trend, Starbucks has been ramping up its digital tools, such as mobile-payment platforms.
-What competitive advantage or competitive advantages do you believe Starbucks seeks to establish? What are the main challenges the firm faces as it tries to maintain the advantage or advantages you identified?

Question 10

Mini Case
Starbucks Is Juicing its Earnings per Store Through Technological Innovations
Note: each chapter Mini-Case is prepared as an auto-graded Guided Case Analysis activity in MindTap™. More information below.
In 2015, Kevin Johnson, a former chief executive of Juniper Networks and 16-year veteran of Microsoft, took over as CEO of Starbucks, succeeding Howard Schultz. Since then, Johnson has engaged with the company's digital operations and supervised information technology and supply chain operations. In the fourth quarter of 2014, Starbucks sales store operations rose 5 percent; this gain in revenue came from increased traffic (2 percent from growth in sales and 3 percent in increased ticket size). The application of more sophisticated technology is credited for driving this increase in revenues. To continue this trend, Starbucks has been ramping up its digital tools, such as mobile-payment platforms.
-Identify three or four capabilities you believe Starbucks possesses. Of these, are any a core competence? If so, explain your reasoning.

Question 11

Mini Case
Starbucks Is Juicing its Earnings per Store Through Technological Innovations
Note: each chapter Mini-Case is prepared as an auto-graded Guided Case Analysis activity in MindTap™. More information below.
In 2015, Kevin Johnson, a former chief executive of Juniper Networks and 16-year veteran of Microsoft, took over as CEO of Starbucks, succeeding Howard Schultz. Since then, Johnson has engaged with the company's digital operations and supervised information technology and supply chain operations. In the fourth quarter of 2014, Starbucks sales store operations rose 5 percent; this gain in revenue came from increased traffic (2 percent from growth in sales and 3 percent in increased ticket size). The application of more sophisticated technology is credited for driving this increase in revenues. To continue this trend, Starbucks has been ramping up its digital tools, such as mobile-payment platforms.
-Starbucks's mission is "To inspire and nurture the human spirit-one person, one cup and one neighborhood at a time." What actions do you recommend the firm take to reach this mission?

Question 12

Mini Case
Starbucks Is Juicing its Earnings per Store Through Technological Innovations
Note: each chapter Mini-Case is prepared as an auto-graded Guided Case Analysis activity in MindTap™. More information below.
In 2015, Kevin Johnson, a former chief executive of Juniper Networks and 16-year veteran of Microsoft, took over as CEO of Starbucks, succeeding Howard Schultz. Since then, Johnson has engaged with the company's digital operations and supervised information technology and supply chain operations. In the fourth quarter of 2014, Starbucks sales store operations rose 5 percent; this gain in revenue came from increased traffic (2 percent from growth in sales and 3 percent in increased ticket size). The application of more sophisticated technology is credited for driving this increase in revenues. To continue this trend, Starbucks has been ramping up its digital tools, such as mobile-payment platforms.
-As Starbucks's new chief executive officer and strategic leader, what key challenges does Kevin Johnson and his firm face?

Question 13

Business success is often tied to effectively managed strategies. Using the Internet, study Starbuck's current performance. Based on analysis, do you judge Starbucks to be a success? Why or why not?

Question 14

Choose several firms in your local community with which you are familiar. Describe the twenty-first-century competitive landscape to them, and ask for their feedback about how they anticipate the landscape will affect their operations during the next five years.

Question 15

Select an organization (e.g., school, club, or church) that is important to you. Who are the organization's stakeholders? What degree of influence do you believe each has over the organization and why?

Question 16

Are you a stakeholder at your university or college? If so, of what stakeholder group or groups are you a part?

Question 17

Think of an industry in which you want to work. In your opinion, which of the three primary stakeholder groups is the most powerful in that industry today? Why? Which do you expect to be the most powerful group in five years? Why?

Question 18

Do you agree or disagree with the following statement? "I think managers have little responsibility for the failure of business firms." Justify your view.

Question 19

Do vision and mission have any meaning in your personal life? If so, describe it. Are your current actions being guided by a vision and mission? If not, why not?

Question 20

Can a firm achieve a competitive advantage and, thereby, strategic competitiveness without acting ethically? Explain.

Question 21

What are a firm's ethical responsibilities if it earns above-average returns?

Question 22

What are some of the critical ethical challenges to firms competing in the global economy?

Question 23

How should ethical considerations be included in analyses of a firm's internal and external environments?

Question 24

Can ethical issues be integrated into a firm's vision and mission? Explain.

Question 25

What is the relationship between ethics and stakeholders?

Question 26

What is the importance of ethics for organizational strategists?

Question 27

VIDEO QUIZ: Lululemon
The media quiz offers additional opportunities for students to apply the concepts in the chapter to a real-world scenario as it is described in news reports.
Title: Lululemon
RT: 2:10
Topic Key: Strategic Competitiveness, Strategy, Strategic Leaders
Laurent Potdevin, chief executive officer at Lululemon Athletica Inc., talks about the strength of his company's brand and its ability to connect products with customers. He describes the firm's competitive advantage as its unique position "at the intersection of function and fashion." The quiz will reinforce topics learned in this chapter, including strategy, competitive advantage, and mission while relating these concepts to a real-world situation.
-What are the two types of competitors Potdevin describes, and how does Lululemon have a unique competitive advantage over both of them?

Question 28

VIDEO QUIZ: Lululemon
The media quiz offers additional opportunities for students to apply the concepts in the chapter to a real-world scenario as it is described in news reports.
Title: Lululemon
RT: 2:10
Topic Key: Strategic Competitiveness, Strategy, Strategic Leaders
Laurent Potdevin, chief executive officer at Lululemon Athletica Inc., talks about the strength of his company's brand and its ability to connect products with customers. He describes the firm's competitive advantage as its unique position "at the intersection of function and fashion." The quiz will reinforce topics learned in this chapter, including strategy, competitive advantage, and mission while relating these concepts to a real-world situation.
-Potdevin also touches upon one of Lululemon's important strategies, which is the "vertical model" by which he means that the company sells direct to consumers through branded stores. What advantages does this strategy offer?