Strategic Management and Strategic Competitiveness Choose a public corporation, with which you are familiar, from one of the following in
Strategic Management and Strategic Competitiveness
Choose a public corporation, with which you are familiar, from one of the following industries:
1. Travel.
2. Technology.
3. Food.
Research the company on its own website, public filings on the Securities and Exchange Commission's
( SEC.gov | Filings & Forms ), and any other sources you can find. The annual report will often provide insights that can help address some of these questions. USE the link I attached to ensure that you meet the requirements.
Write a 4-6 pg paper in which you address the following:
· Assess how globalization and technology changes have impacted the corporation you researched.
· Apply the industrial organization model and the resource-based model to determine how your corporation could earn above-average returns.
· Assess how the vision statement and mission statement of the corporation influence its overall success.
· Evaluate how each category of stakeholder impacts the overall success of this corporation.
· Use the Internet to locate and include at least three quality references
The specific course learning outcome associated with this assignment is the following:
· Determine the impact of globalization and technology changes, strategic models, vision and mission statements, and stakeholders on a corporation's success.
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Template Instructions (delete this page before submitting)
This template is provided to help you meet the assignment requirements.
This page should NOT be submitted with your assignment, as it is not part of an academically written paper. Note the “Clarity, writing mechanics, and formatting requirements” section of the grading rubric.
HOW TO USE THIS TEMPLATE
· Read the explanations provided in the template for each section of your paper.
· The explanations are in blue font below.
· You should have already read the assignment instructions in Blackboard.
· Type your response to each of the assignment requirements within the designated sections.
· Each assignment requirement is identified using a section Heading that is in black font
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· Everything in blue font below should be deleted and replaced with your responses.
· DELETE this entire page before you submit your assignment to avoid losing points.
REMINDERS
· The assignment is due in week 3.
· Include at least 4 full and complete academically written pages that address the requirements. The title page, this instruction page, and the source page do not count.
· Use at least 3 quality sources.
Week 3 Strategic Management and Strategic Competitiveness Assignment
Write your introduction here. Include one (1) paragraph (not more than 6 lines of text) that explains what your paper will discuss. Much of your introduction may be taken from the assignment instructions (in your own words). Read all assignment resources to understand what should be included in your paper. Do not exceed 6 lines of text in this introduction. There should be no direct quotes in this section. After reading these instructions, replace this blue text with your introduction and change the font color to black.
Globalization
Thoroughly assess how globalization has impacted the public corporation you researched. Provide a thoughtful and well researched response. Consider for example, how your chosen company has been involved in expanding globally, how it has been impacted by global competition, and the global economy. Do not simply define the term globalization. If your company has locations in other countries, do not just state that your corporation has locations in other countries or simply list the various countries in which the company does business. You need to assess the impact globalization has had on your selected corporation.
Your assessment should demonstrate that you have read, understand, and can apply the globalization concepts covered in the textbook and course resources. You must consider the various aspects of globalization discussed in the course and make judgments about their impacts to your selected corporation. Do not write about globalization in general terms. Your assessment should be directly related to your selected corporation. Your writing here should thoroughly assess how globalization has impacted your chosen corporation. Do not Google “globalization”. You must display an understanding based on what is studied in this course and demonstrate an ability to apply the concepts in a real-world assessment of a corporation. Your textbook must be a source along with other credible sources that support the globalization concepts covered in this course. Read chapters 1-3 in the course textbook as each chapter provides a solid background on Globalization that applies to this section. Review the Week 1 & 2 Learn Readings for supporting content. Properly cite your sources and avoid the use of direct quotes. After reading these instructions, replace this blue text with your assessment and change the font color to black.
Technology
Thoroughly assess how technological changes have impacted the public corporation you researched. Provide a thoughtful and well researched response. Consider for example, how the company has been impacted by cloud computing, social media, crowdfunding, program apps, email, texting, websites, mobile, automation, robotics, IOT (Internet of Things), AI (Artificial Intelligence), e-commerce, data and analytics, etc. Research how the company may have been impacted by diffusion and disruptive technologies as explained in the textbook. Do not simply define the term technology. You will need to assess the impact changes in technology have had on your selected corporation.
Your assessment should demonstrate that you have read, understand, and can apply the technology concepts covered in the textbook and course resources. You must consider the various aspects of technological changes discussed in the course and make judgments about their impacts to your selected corporation. Do not write about technology in general terms. Your assessment should be directly related to your selected public corporation. If your company is technologically advanced, do not simply list the various technologies they possess but rather assess how changes in technology have impacted the corporation. You must display an understanding based on what is studied in this course and demonstrate an ability to apply the concepts in a real-world assessment of a corporation. Do not Google “technology”. Your writing here should thoroughly assess how changes in technology have impacted your chosen corporation.
Your textbook must be a source along with other credible sources that support the technology concepts covered in this course. You must display an understanding based on what is studied in this course. Read chapters 1-3 in the course textbook as each chapter provides a solid background on Technology that applies to this section. Review the Week 1 & 2 Learn Readings for supporting content. Cite your sources and avoid the use of direct quotes. After reading these instructions, replace this blue text with your assessment and change the font color to black.
Industrial Organization Model
Resource-Based Model
Thoroughly apply the resource-based model to determine how your corporation could earn above-average returns (i.e. revenue). Consider the corporation’s unique resources (corporate culture, land, location, equipment, brand, reputation, trademarks, patents, etc.) and capabilities (skills, experience, etc.) that set it apart from its competition. Your application should walk through the components the model suggests are needed to earn superior returns. Hint: See Figure 1.3 in the textbook. Do not Google “Resource-Based Model” or simply provide a definition or write in general terms. Your writing here should apply the components of the model, as described in the course material, to your specific corporation, demonstrate your understanding of the concepts, as described in this course, and demonstrate your ability to apply those concepts to a real-world corporation. Read chapter 1 as it provides a solid background on this model. Review the Week 1 Learn Readings for supporting content. Cite your sources and avoid the use of direct quotes. After reading these instructions, replace this blue text with your application and change the font color to black.
Vision
Thoroughly assess how the vision statement of the corporation influences its overall success. Include the actual vision statement for your chosen company (be sure to quote and cite your source). Consider the key concepts discussed in chapter 1 regarding vision in your assessment of your selected corporation’s vision statement. Do not simply provide a definition of vision or make general statements. Do not simply copy and paste the vision statement. In addition to the actual vision statement for your corporation, your writing must demonstrate that you understand the concept of vision, as discussed in this course, and can assess the impact your corporation’s vision statement has on its overall success. You must consider the various aspects of vision statements discussed in the course and make judgments about their impacts to your selected corporation. The assessment is critical to this assignment requirement. Without an assessment you have not met the requirements. Read chapter 1 as it provides a solid background on vision. Review the Week 1 Learn Reading for supporting content. Cite your sources. After reading these instructions, replace this blue text with your assessment and change the font color to black.
Mission
Thoroughly assess how the mission statement of the corporation influences its overall success. Include the actual mission statement for your chosen company (be sure to quote and cite your source). Consider the key concepts discussed in chapter 1 regarding mission in your assessment of your selected corporation’s mission statement. Do not simply provide a definition of mission or make general statements. Do not simply copy and paste the mission statement. In addition to the actual mission statement of your selected corporation, your writing must demonstrate that you understand the concept of mission, as discussed in this course, and can assess the impact your corporation’s mission statement has on its overall success. You must consider the various aspects of mission statements discussed in the course and make judgments about their impacts to your selected corporation. The assessment is critical to this assignment requirement. Without an assessment you have not met the requirements. Read chapter 1 as it provides a solid background on missions. Review the Week 1 Learn Reading for supporting content. Cite your sources. After reading these instructions, replace this blue text with your assessment and change the font color to black.
Stakeholders
Thoroughly evaluate how each category of stakeholder, described in the textbook, impacts the overall success of your selected corporation. Do not Google “stakeholders” or simply provide a definition or list of stakeholders. You must provide an evaluation that demonstrates your understanding of each classification of stakeholders, as described in this course. Hint: See Figure 1.4. Do not write in general terms about stakeholders. Your evaluation must thoroughly and specifically describe how each classification of stakeholders impacts your selected corporation’s success. It is critical that you display your understanding of stakeholder classifications. Without the identification and evaluation of each of the stakeholder classifications, discussed in the course, you have not met the requirements. Read chapter 1 for additional background on Stakeholders and the Classifications, as it provides a solid background that applies to this section. Review the Week 1 Learn Reading for supporting content. Cite your sources and avoid the use of direct quotes. After reading these instructions, replace this blue text with your evaluation and change the font color to black.
Sources
1. Michael A. Hitt. 2020. Strategic Management: Concepts and Cases: Competitiveness and Globalization 13th ed. Cengage Learning.
2. Author. Publication Date. Title. Page # (written as p. #). How to Find (e.g. web address)
3. Author. Publication Date. Title. Page # (written as p. #). How to Find (e.g. web address)
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3 The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages
Studying this chapter should provide you with the strategic management knowledge needed to:
3-1 Explain why firms need to study and understand their internal organization.
3-2 Define value and discuss its importance.
3-3 Describe the differences between tangible and intangible resources.
3-4 Define capabilities and discuss their development.
3-5 Describe four criteria used to determine if resources and capabilities are core competencies.
3-6 Explain how firms analyze their value chain to determine where they are able to create value when using their resources, capabilities, and core competencies.
3-7 Define outsourcing and discuss reasons for its use.
3-8 Discuss the importance of identifying internal strengths and weaknesses.
3-9 Describe the importance of avoiding core rigidities.
Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Copyright 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part without explicit permission. November 2019. WCN 03-300-273
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To date, and perhaps surprisingly, the idea of using data strategically remains somewhat novel in some organizations. However, the reality of “big data” and “big data analytics” (which is “the process of examining big data to uncover hidden patterns, unknown correlations, and other useful information that can be used to make better decisions”) is becoming increasingly popular in business. Indeed, in the current competitive landscape, most businesses must use big data analytics (BDA) across all customer channels (mobile, Web, e-mail, and physical stores) throughout their supply chain to help them become more innovative.
This is the situation for large pharmaceutical companies (the firms often called “big pharma”) in that many have been working to develop a core competence in BDA. (We define and discuss core competencies in this chapter.) There are several reasons they are doing this. In addition to the vast increases in the amounts of data that must be studied and interpreted for competitive purposes, “health care reform and the changing landscape of health care delivery” systems throughout the world are influencing these firms to think about developing BDA as a core competence.
Many benefits can accrue to big pharma firms that develop BDA as a core competence. For example, having BDA as a core competence can help a firm quickly identify trial candidates and accelerate their recruitment, develop improved inclusion and exclusion criteria to use in clinical trials, and uncover unintended uses and indications for prod- ucts. In terms of customer functionality, superior products can be provided at a faster pace as a foundation for helping patients live better and healthier lives.
In developing their BDA capabilities, many of the big pharma companies are investing in ar- tificial intelligence (AI). AI provides the capability to analyze many different sets of information. For example, AI can help analyze data on clinical trials, health records, genetic profiles, and preclinical studies. AI can analyze and integrate these data to identify patterns in the data and suggest hypotheses about relationships. A new drug generally requires a decade of research and $2.6 billion of investment. And only about 5 percent of the drugs that enter experimental research make it to the market and are successful. Eventually, it is expected that the use of AI could reduce the early research development time from 4-6 years to 1 year, not only greatly reducing the time of development but also the costs.
As we discuss in this chapter, capabilities are the foundation for developing core com- petencies. There are several capabilities big pharma companies need for BDA to be a core competence. Supportive architecture, the proper mix of data scientists, and “technology that integrates and manages new types and sources of data flexibility and scalability while main- taining the highest standards of data governance, data quality, and data security” are examples
LARGE PHARMACEUTICAL COMPANIES, BIG DATA ANALYTICS, ARTIFICIAL INTELLIGENCE AND CORE COMPETENCIES: A BRAVE NEW WORLD
AI can help analyze data on clinical trials, health records, genetic profiles, and preclinical studies. China has a goal to become the world leader in AI.
Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Copyright 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part without explicit permission. November 2019. WCN 03-300-273
76
As discussed in the first two chapters, several factors in the global economy, including the rapid development of the Internet’s capabilities and globalization in general, are making it difficult for firms to develop competitive advantages.1 Increasingly, innovation appears to be a vital path to efforts to develop competitive advantages, particularly sus- tainable ones.2 Innovative actions are required by big pharma companies, and they need to develop new drugs more quickly and at lower costs while improving the success of the drugs that they develop. As the Opening Case shows, they are trying to use artificial intelligence to help develop capabilities in big data analytics that hopefully can become a core competence.
As is the case for big pharma companies, innovation is critical to most firms’ suc- cess. This means that many firms seek to develop innovation as a core competence. We define and discuss core competencies in this chapter and explain how firms use their resources and capabilities to form them. As a core competence, innovation has long been critical to Boeing’s success, too. Today, however, the firm is focusing on incre- mental innovations as well as developing new technologies that are linked to major innovations and the projects they spawn, such as the 787 Dreamliner. The first delivery of the 787-10 Dreamliner was made to Singapore Airlines on March 26, 2018. Boeing believes its incremental innovations enable the firm to deliver reliable products to cus- tomers more quickly and at a lower cost.3 As we discuss in this chapter, firms and organizations—such as those we mention here—achieve strategic competitiveness and earn above-average returns by acquiring, bundling, and leveraging their resources for the purpose of taking advantage of opportunities in the external environment in ways that create value for customers.4
Even if the firm develops and manages resources in ways that create core compe- tencies and competitive advantages, competitors will eventually learn how to duplicate the benefits of any firm’s value-creating strategy; thus, all competitive advantages have
of capabilities that big pharma need if they wish to develop BDA as a core competence. Of course, using artificial intelligence provides strong support for the application of BDA.
Having a strong BDA competence could be critical for pharmaceutical firms in the future. Most Chinese pharmaceutical firms are medium-sized and sell generic drugs and therapeutic medicines, investing in R&D at only about 25% of the amount invested by big pharma in devel- oped countries. However, China has a plan to develop large, competitive pharmaceutical firms by 2025. In 2017, for example, China’s second largest class of investments was biopharma. Interestingly, the largest Chinese investment that year was in information systems, including AI. China has a goal to become the world leader in AI.
In recent years, big pharma has been earning mediocre returns of about 3 percent ROI, down from 10 percent a decade earlier. Thus, big pharma executives feel pressure especially with the initial costs of developing BDA and AI. Hopefully, they soon will be able to reduce their costs and experience higher rates of success in the development of new drugs. Until then, however, analysts are predicting record numbers of mergers and acquisitions in the pharmaceutical industry, with big pharma acquiring successful medium-sized pharmaceuticals and biotechnology firms.
Sources: S. Mukherjee, 2018, How big pharma is using AI to make better drugs, Fortune, fortune.com, March 19: Z. Torrey, 2018, China prepares for big pharma, thediplomat.com, March 14; E. Corbett, 2018, European mid-sized pharma companies-biotechs and big pharma? The Pharmaletter, www.thepharmaletter.com, March 9; M. Jewel, 2018, Signs that 2018 will be a record year for pharma M&A, The Pharmaletter, www.thepharmaletter.com, March1; B. Nelson, 2018, Why big pharma and biotech are betting big on AI, NBC News, www.nbc.news, March 1; Big data analytics: What it is & why it matters, 2015, SAS, www .sas.com, April 2; Big data for the pharmaceutical industry, Informatica, www.informatica.com, March 17; B. Atkins, 2015, Big data and the board, Wall Street Journal Online, www.wsj.com, April 16; S. F. DeAngelis, 2014, Pharmaceutical big data analytics promises a healthier future, Enterrasolutions, www.enterrasolutions.com, June 5; T. Wolfram, 2014, Data analytics has big pharma rethinking its core competencies, Forbes Online, www.forbes.com, December 22.
Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Copyright 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part without explicit permission. November 2019. WCN 03-300-273
Chapter 3: The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages 77
a limited life.5 Because of this, the question of duplication of a competitive advantage is not if it will happen, but when. In general, a competitive advantage’s sustainability is a function of three factors:
1. The rate of core competence obsolescence because of environmental changes 2. The availability of substitutes for the core competence 3. The imitability of the core competence6
For all firms, the challenge is to effectively manage current core competencies while simultaneously developing new ones.7 Only when firms are able to do this can they expect to achieve strategic competitiveness, earn above-average returns, and remain ahead of competitors in both the short and long term.
We studied the general, industry, and competitor environments in Chapter 2. Armed with knowledge about the realities and conditions of their external environment, firms have a better understanding of marketplace opportunities and the characteristics of the competitive environment in which those opportunities exist. In this chapter, we focus on the firm. By analyzing its internal organization, a firm determines what it can do. Matching what a firm can do (a function of its resources, capabilities, and core competen- cies in the internal organization) with what it might do (a function of opportunities and threats in the external environment) yields insights for the firm to select strategies from among those we discuss in Chapters 4 through 9.
We begin this chapter by briefly describing conditions associated with analyzing the firm’s internal organization. We then discuss the roles of resources and capabilities in developing core competencies, which are the sources of the firm’s competitive advantages. Included in this discussion are the techniques firms use to identify and evaluate resources and capabilities and the criteria for identifying core competencies from among them. Resources alone typically do not provide competitive advantages. Instead, resources cre- ate value when the firm uses them to form capabilities, some of which become core competencies, and hopefully competitive advantages. Because of the relationship among resources, capabilities, and core competencies, we also discuss the value chain and exam- ine four criteria that firms use to determine if their capabilities are core competencies and, as such, sources of competitive advantage.8 The chapter closes with comments about outsourcing as well as the need for firms to prevent their core competencies from becom- ing core rigidities. The existence of core rigidities indicates that the firm is too anchored to its past, a situation that prevents it from continuously developing new capabilities and core competencies.
3-1 Analyzing the Internal Organization 3-1a The Context of Internal Analysis One of the conditions associated with analyzing a firm’s internal organization is the real- ity that in today’s global economy, some of the resources that were traditionally crit- ical to firms’ efforts to produce, sell, and distribute their goods or services—such as labor costs, access to financial resources and raw materials, and protected or regulated markets—although still important, are now less likely to be the source of competitive advantages.9 An important reason for this is that an increasing number of firms are using their resources to form core competencies through which they successfully implement an international strategy (discussed in Chapter 8) as a means of overcoming the advantages created by more traditional resources.
Given the increasing importance of the global economy, those analyzing their firm’s internal organization should use a global mind-set to do so. A global mind-set is the
A global mind-set is the ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context.
Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Copyright 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part without explicit permission. November 2019. WCN 03-300-273
Part 1: Strategic Management Inputs78
ability to analyze, understand, and manage an internal organization in ways that are not dependent on the assumptions of a single country, culture, or context.10 Because they are able to span artificial boundaries, those with a global mind-set recognize that their firms must possess resources and capabilities that allow understanding of and appropriate responses to competitive situations that are influenced by country-specific factors and unique cultures. Using a global mind-set to analyze the internal organization has the potential to significantly help the firm in its efforts to outperform rivals.11
Finally, analyzing the firm’s internal organization requires that evaluators examine the firm’s entire portfolio of resources and capabilities. This perspective suggests that individual firms possess at least some resources and capabilities that other companies do not—at least not in the same combination. Resources are the source of capabilities, some of which lead to the development of core competencies; in turn, some core competencies may lead to a competitive advantage for the firm.12 Understanding how to leverage the firm’s unique bundle of resources and capabilities is a key outcome decision makers seek when analyzing the internal organization.13 Figure 3.1 illustrates the relationships among resources, capabilities, core competencies, and competitive advantages and shows how their integrated use can lead to strategic competitiveness. As we discuss next, firms use the resources in their internal organization to create value for customers.
3-1b Creating Value Firms use their resources as the foundation for producing goods or services that will create value for customers.14 Value is measured by a product’s performance characteristics and by its attributes for which customers are willing to pay. Firms create value by innova- tively bundling and leveraging their resources to form capabilities and core competencies.15 Firms with a competitive advantage create more value for customers than do competitors.16 Walmart uses its “every day low price” approach to doing business (an approach that is grounded in the firm’s core competencies, such as information technology and distribution
Core Competencies
Discovering Core
Competencies
• Outsource
Capabilities
Resources • Tangible • Intangible
Competitive
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