Strategy Management – Doing The RIGHT Job
Competitiveness - The fundamental nature of competition in many of the world’s industries is changing. The reality is that financial capital is scarce and markets are increasingly volatile. Because of this, the pace of change is relentless and ever-increasing. Even determining the boundaries of an industry has become challenging. Consider, for example, how advances in interactive computer networks and telecommunications have blurred the boundaries of the entertainment industry.
Today, not only do cable companies and satellite networks compete for entertainment revenue from television, but telecommunication companies are moving into the entertainment business through significant improvements in fiber-optic lines. Partnerships among firms in different segments of the entertainment industry further blur industry boundaries.
Other characteristics of the current competitive landscape are noteworthy. Conventional sources of competitive advantage such as economies of scale and huge advertising budgets are not as effective as they once were in terms of helping firms earn above-average returns. Moreover, the traditional managerial mindset is unlikely to lead a firm to strategic competitiveness. Managers must adopt a new mindset that values flexibility, speed, innovation, integration, and the challenges that evolve from constantly changing conditions. The conditions of the competitive landscape result in a perilous business world, one where the investments that are required to compete on a global scale are enormous and the consequences of failure are severe. Effective use of the strategic management process reduces the likelihood of failure for firms as they encounter the conditions of today’s competitive landscape.
Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment, or a new social, financial, or political environment.
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. When choosing a strategy, firms make choices among competing alternatives as the pathway for deciding how they will pursue strategic competitiveness.1 In this sense, the chosen strategy indicates what the firm will do as well as what the firm will not do.