Which of the following is required for a firm to achieve strategic competitiveness and earn above

journal article

The Academy of Management Executive (1993-2005)

Vol. 19, No. 4, Classic Articles from AME (Nov., 2005)

, pp. 63-77 (15 pages)

Published By: Academy of Management

https://www.jstor.org/stable/4166206

Read and download

Log in through your school or library

Alternate access options

For independent researchers

Read Online

Read 100 articles/month free

Subscribe to JPASS

Unlimited reading + 10 downloads

Purchase article

$29.00 - Download now and later

With a personal account, you can read up to 100 articles each month for free.

Already have an account? Log in

Monthly Plan

• Access everything in the JPASS collection
• Read the full-text of every article
• Download up to 10 article PDFs to save and keep

Yearly Plan

• Access everything in the JPASS collection
• Read the full-text of every article
• Download up to 120 article PDFs to save and keep

Purchase a PDF

Purchase this article for $29.00 USD.

How does it work?

1. Select the purchase option.
2. Check out using a credit card or bank account with PayPal.
3. Read your article online and download the PDF from your email or your account.

Abstract

Competition in the 21st century's global economy will be complex, challenging, and filled with competitive opportunities and threats. Effective strategic leadership practices can help firms enhance performance while competing in turbulent and unpredictable environments. The purpose of this paper is to describe six components of effective strategic leadership. When the activities called for by these components are completed successfully, the firm's strategic leadership practices can become a source of competitive advantage. In turn, use of this advantage can contribute significantly to achieving strategic competitiveness and earning above-average returns in the next century.

Journal Information

Effective with the February, 2006 issue the Academy of Management Executive has changed its name to the Academy of Management Perspectives. The overall goal of the Academy of Management journals is to serve the interests of the Academy's members, and the specific goal of the new Academy of Management Perspectives (AMP) is to publish accessible articles about important issues concerning management and business. AMP articles are aimed at the non-specialist academic reader, and should also be useful for teaching. Serving both these goals more effectively requires a change in strategy and direction for the journal. Going forward, Perspectives will concentrate on two types of articles aimed at this thought leader audience. The first are accessible surveys and reviews of contemporary knowledge about management and business issues. The goal would be to make information about empirical research in management accessible to the non-expert, including students, and the focus of the reviews would have to be on the phenomena of business and management, not the development of the academic literature.

Publisher Information

The Academy of Management (the Academy; AOM) is a leading professional association for scholars dedicated to creating and disseminating knowledge about management and organizations. The Academy's central mission is to enhance the profession of management by advancing the scholarship of management and enriching the professional development of its members. The Academy is also committed to shaping the future of management research and education. Founded in 1936, the Academy of Management is the oldest and largest scholarly management association in the world. Today, the Academy is the professional home for more than 18290 members from 103 nations. Membership in the Academy is open to all individuals who find value in belonging.

Rights & Usage

This item is part of a JSTOR Collection.
For terms and use, please refer to our Terms and Conditions
The Academy of Management Executive (1993-2005) © 2005 Academy of Management
Request Permissions

A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average. The fundamental basis of above average profitability in the long run is sustainable competitive advantage. There are two basic types of competitive advantage a firm can possess: low cost or differentiation. The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus. The focus strategy has two variants, cost focus and differentiation focus.

1. Cost Leadership

In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of cost advantage are varied and depend on the structure of the industry. They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors. A low cost producer must find and exploit all sources of cost advantage. if a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry average.

2. Differentiation

In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price.

3. Focus

The generic strategy of focus rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others.

The focus strategy has two variants.

(a) In cost focus a firm seeks a cost advantage in its target segment, while in (b) differentiation focus a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on differences between a focuser's target segment and other segments in the industry. The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments. Cost focus exploits differences in cost behaviour in some segments, while differentiation focus exploits the special needs of buyers in certain segments.

References

• Porter, Michael E., "Competitive Advantage". 1985, Ch. 1, pp 11-15. The Free Press. New York.

Find us on

Which of the following are required for a firm to achieve strategic competitiveness and earn above

How do firms achieve strategic competitiveness?

When a company successfully formulates and implements a value

Which of the following are elements of the strategic management process required for a business to achieve strategic competitiveness and earn above