Strategic Management: Competitiveness and Globalisation 7th ASIA Pacific Edition by Hanson Test ban

management of the business’s global operations.
57. What are some of the effects that disruptive technologies have on the competitive landscape?
ANSWER: Disruptive technologies represent a contrast to predictable technology diffusion because they don’t follow a
predictable pattern of emergence and evolution from expected sources of development. Disruptive
technologies are so called because they disrupt the expected pattern of industry development with value-
destroying technologies. These technologies create new markets and present radical innovations, which cause
a departure from the established patterns of competition and advantage.
58. Describe the industrial organisation (I/O) model of strategy.
ANSWER: The I/O model is grounded in economics and argues that the external environment is the primary determinant
of a firm’s success. The model has four underlying assumptions. First, the external environment is assumed to
impose pressures and constraints that determine the strategies that will result in superior performance. Second,
most firms competing within a particular industry, or in a certain segment of the industry, are assumed to
control similar strategically relevant resources and to pursue similar strategies in light of those resources.
Third, resources used to implement strategies are mobile across firms, which results in resource differences
between firms being short lived. Fourth, organisational decision makers are assumed to be rational and
committed to acting in the firm’s best interests, as shown by their profit-maximising behaviours. The
challenge for firms within the I/O model is to find the best industries in which to compete.
59. Describe and discuss the resource-based model of above-average returns.
ANSWER: According to the resource-based model, differences in an organisation’s performances
across time are due primarily to its unique resources and capabilities. Thus, the resource-based model focuses
on the internal resources and capabilities of a firm as a source of competitive advantage. The model assumes
that each firm is a collection of unique resources and capabilities, which should be the basis of the
organisation’s strategy and its ability to earn above-average returns. Resources are not highly mobile across
firms. All firms within a particular industry may not possess the same strategically relevant resources and
capabilities. Not all of an organisation’s resources and capabilities have the potential to be the foundation for a
competitive advantage. This potential is realised when resources and capabilities are valuable, rare, costly to
imitate and non-substitutable.
60. How does knowledge contribute to the competitive standing of an organisation? Is knowledge a tangible or intangible
resource of the organisation?
ANSWER: Knowledge (information, intelligence and expertise) is the basis of technology and its application. In the
competitive landscape of the twenty-first century, knowledge is a critical organisational resource and an
increasingly valuable source of competitive advantage. Organisational knowledge is gained through
experience, observation and inference; it is an intangible resource. The value of intangible resources, such as
knowledge, is increasing as a proportion of total shareholder value in today’s competitive environment. The
probability of achieving strategic competitiveness is enhanced for firms that develop the ability to capture
intelligence, transform it into useable knowledge, and diffuse it rapidly throughout the company.
Organisations must develop and acquire knowledge, integrate it into the organisation to create capabilities and
then apply it to gain a competitive advantage. Continuous learning provides the firm with new and up-to-date
skill sets, which allow it to adapt to its environment as it encounters changes. Firms capable of rapidly and
broadly applying what they have learnt exhibit the strategic flexibility and capacity to change in ways that will
increase the probability of successfully dealing with uncertain, hypercompetitive environments.
61. Describe and discuss the roles of a firm’s vision and mission as strategic inputs.
ANSWER: Strategic vision is a picture of what the firm wants to be and, in broad terms, what it wants to ultimately
achieve. A vision statement articulates the ideal description of the organisation and gives shape to its intended
future. It points the firm in the direction of where it would eventually like to be in the years to come. A vision
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Chapter 1 – Strategic management and strategic competitiveness
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stretches and challenges people and evokes emotions and dreams. The vision is the foundation for the firm’s