Hill and Jones Strategic Management Chaper 1

7/22/2019 Hill and Jones Strategic Management Chaper 1

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Chapter 1: Strategic Leadership:Managing the Strategy Making Process

for Competitive Advantage


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Business Organizations

An organization is a

collection of functions or

departments working

together to bring aproduct or service to

market.


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Types of Organizations

Sole Proprietorship

owner/operator.

Partnershipthe business is

owned by two or morepeople.

Corporationa business

entity that issues shares of

ownershipcan be public

or private


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Strategy

1. Defined as a set of actions that are related,used by managers to increase organizationalperformance

2. Strategic leadershiphow to manage anorganizations strategy making process toimprove organizational performance

a. Strategy making processthe selection andimplementation of a choice of processesdesigned to advance organizational goals

b. Strategy formulationthe task and process ofselecting organizational strategies

c. Strategy implementationtranslating the

selected strategy into actioni. Designing, delivering, and supporting productsii. Improving the efficiency and effectiveness of an

organization

iii. Designing an organizations structure, controlsystems, and culture


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Maximizing Organizational Value

1. Profitabilitythe ability of an organizationto generate financial returns for its investors

a. Return on invested capitalearnings generatedfrom money used to start and operate a businessmeasured as net income after taxes/(capital anddebt)

b. Measures the efficiency and effectiveness of theuse of a firms capital

c. Profit growththe increase in an organizationsnet profit over time

2. Shareholder Valuethe reason whyinvestors purchase shares of a corporation

a. Includes anticipated share price appreciationan increase in stock price

b. Includes anticipated dividendsfunds generatedby an organization that are paid to shareholders


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Competitive Advantage

1. A competitive advantage iswhere an organization obtainsgreater profitability than theaverage profitability of other

organizations competing for thesame set of customers

2. Sustained competitive advantagewhen an organizations

strategies allow it to maintainabove average profits for anumber of years


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Business Model

A business model is

managements conception

of how a set of strategies can

be used in a coherentmanner to enable an

organization to obtain a

competitive advantage,

achieve superior profitability,and provide above average

profit growth


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Business Model (Continued)

A business model specifies how acompany will:

1. Select its customers

2. Define and differentiate its product

offerings3. Create value for its customers

4. Acquire and keep customers

5. Produce goods and services

6. Deliver goods and services to the

market7. Organize the firms activities

8. Configure the organizations resources

9. Achieve and sustain profitability, and

10. Grow the business over time


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Variations in Performance by Industry


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Types of Managers

1. General Managersbear overallresponsibility for the organization orone of its major self-contained units

2. Functional Managerssupervise a

particular task, activity, or operation


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Hill and Jones Strategic Management Chaper 1

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