Competitive Advantage & Strategic Management: A Comprehensive Overview

This report, based on Trevor Hunter's work at King's University College, provides a comprehensive overview of strategy and strategic management. It defines strategy as a firm's theory on gaining competitive advantages and emphasizes the importance of strategic planning. The report details the strategic management process, including external and internal analysis, setting objectives, making strategic choices at both business and corporate levels, and strategy implementation. It also defines competitive advantage, distinguishing between preference-based and cost-based advantages, and discusses how to measure it. Furthermore, it explores the concepts of competitive parity and disadvantage, and the difference between intended and emergent strategies. The report concludes by highlighting the significance of strategy in both business and personal career development.

What is Strategy?
Trevor Hunter
King’s University College

Definition of Strategy
Strategy: A firm’s theory about how to gain
competitive advantages
Strategic planning is important:
• The better the plan, the better it will predict the
future and be prepared
It is difficult to predict the future and understand the
business environment and know your own business
2© Trevor Hunter

The Strategic Management Process
Objectives
External
Analysis
Internal
Analysis
Strategic
Choice
Strategy
Implementation
Competitive
Advantage
Mission
3
• The long term purpose of the firm
• Articulates the set of values and beliefs that inform day-to-day decision
making and gives focus and guidance
© Trevor Hunter

The Strategic Management Process
Objectives:
•Specific, measurable targets
•The things a firm needs to ‘do’ to
achieve its mission
•Should influence other elements in the
strategic management process
4© Trevor Hunter

The Strategic Management Process
External and Internal Analysis
External Analysis
Systematic Examination
of the Environment
Internal Analysis
• interest rates
• demographics
• social trends
• technology
• human resources
(knowledge)
• manufacturing
abilities
• technology
5© Trevor Hunter

The Strategic Management Process
Strategic Choice
External
Analysis
Internal
Analysis
Strategic
Choice
Business
Level
Corporate
Level
• positioning a
business
• which
businesses?
6
Mission Objectives
Choose a strategy that:
• Supports the mission
• Is consistent with objectives
• Uses strengths to capture opportunities
• Neutralizes threats and protects against
weaknesses
© Trevor Hunter

The Strategic Management Process
Strategy Implementation
• how strategies are carried out
• who will do what
• organizational structure and control
• who reports to whom
• how does the firm hire, promote, pay, etc.
7© Trevor Hunter

A Strategy Is Only As Good As Its Implementation
Strategy Implementation
The Strategic Management Process
• every strategic choice has strategy implementation
implications
• strategy implementation is just as important as
strategy formulation
8© Trevor Hunter

9
Mission Objectives
External
Analysis
Internal
Analysis
Strategic
Choice
Strategy
Implementation
Competitive
Advantage
The Strategic Management Process
NEED
CAN
WANT
© Trevor Hunter

The Strategic Management Process
Competitive Advantage
Definition: the ability to create more economic value
than competitors
• all elements of the strategic management
process are aimed at achieving competitive advantage
Mission Objectives
External
Analysis
Internal
Analysis
Strategic
Choice
Strategy
Implementation
Competitive
Advantage
10© Trevor Hunter

Competitive Advantage
The Ability to Create More Economic
Value Than Competitors
• there must be something different about a firm’s
offering vis-à-vis competitors’ offerings
• if all firms’ strategies were the same, no firm
would have a competitive advantage
• competitive advantage is the result of doing
something different and/or better than competitors
11© Trevor Hunter

Competitive Advantage
Two Types
1) Preference for the firm’s output
2) Cost advantage vis-à-vis competitors
• people choose the firm’s output over others’
• people are willing to pay a premium
• lower costs of production/distribution
Example: The Bay
Example: Wal-Mart
12© Trevor Hunter