Strategy and Organizations
What is STRATEGY?
💡 Core competencies (unique compare to the other firms) to gain
competitive advantage in order to achieve above-average returns
Leadership - Strategy - Competitive advantage/disadvantage - Performance
Goal is to minimize transaction costs
A firm is able to coordinate transactions among specialised agents in more efficient
way than markets
2 models to select/implement strategy:
1. I/O MODEL
Strategic determination by the
external environment
similarity among the firms'
strategy in the given industry
Resources are highly mobile
across firms
Goal= profit maximizing
outside focus
2. Resource based model:
each organization is a collection
of unique resources and
Strategy and Organizations 1
, capabilities
Core competencies serve as
the source of competitive
advantage for a firm
inside focus
Vision-what the firm wants to be
Mission-who and how to serve
Stakeholders: can affect vision and mission
1. capital market stakeholders, aka shareholders&suppliers
2. product market stakeholders: primary customers, suppliers and host
communities
3. organizational stakeholders: employees, managers...
External environment analysis
Strategy and Organizations 2
, 1. Demographic segment
a. Population size, age structure, geographic distribution, ethnic mix, income
distribution
2. Economic segment
a. Inflation rates, interest rates, exchange rates, unemployment, cost of labor,
surpluses, GDP
3. Political/Legal segment
a. Taxation laws, regulations, stability, gov. policies, labor training laws, trading
agreements
4. Sociocultural segment
a. workforce diversity, work ethic, attitudes toward consumerism and
environmentalism, career preferences
5. Technological segment
a. product innovation, application of knowledge,
6. Global segment
a. new global markets, existing markets that are changing, critical cultural and
institutional characteristic of global markets
7. Physical environment segment
Strategy and Organizations 3
What is STRATEGY?
💡 Core competencies (unique compare to the other firms) to gain
competitive advantage in order to achieve above-average returns
Leadership - Strategy - Competitive advantage/disadvantage - Performance
Goal is to minimize transaction costs
A firm is able to coordinate transactions among specialised agents in more efficient
way than markets
2 models to select/implement strategy:
1. I/O MODEL
Strategic determination by the
external environment
similarity among the firms'
strategy in the given industry
Resources are highly mobile
across firms
Goal= profit maximizing
outside focus
2. Resource based model:
each organization is a collection
of unique resources and
Strategy and Organizations 1
, capabilities
Core competencies serve as
the source of competitive
advantage for a firm
inside focus
Vision-what the firm wants to be
Mission-who and how to serve
Stakeholders: can affect vision and mission
1. capital market stakeholders, aka shareholders&suppliers
2. product market stakeholders: primary customers, suppliers and host
communities
3. organizational stakeholders: employees, managers...
External environment analysis
Strategy and Organizations 2
, 1. Demographic segment
a. Population size, age structure, geographic distribution, ethnic mix, income
distribution
2. Economic segment
a. Inflation rates, interest rates, exchange rates, unemployment, cost of labor,
surpluses, GDP
3. Political/Legal segment
a. Taxation laws, regulations, stability, gov. policies, labor training laws, trading
agreements
4. Sociocultural segment
a. workforce diversity, work ethic, attitudes toward consumerism and
environmentalism, career preferences
5. Technological segment
a. product innovation, application of knowledge,
6. Global segment
a. new global markets, existing markets that are changing, critical cultural and
institutional characteristic of global markets
7. Physical environment segment
Strategy and Organizations 3
