MNGT 475H
Environmental Forecasting
-Predicts change and plausible projections about -Direction of environmental change -Scope of environmental change -Speed of environmental change -Intensity of environmental change
Resource-Based View of the Firm
1. Internal analysis of phenomena within a company 2. An external analysis of the industry & its competitive environment Resources can lead to a competitive advantage: -If they are valuable, rare, hard to duplicate -Tangible resources, intangible resources, & organizational capabilities are combined
SWOT analysis
A basic technique for analyzing firm and industry conditions -Firm or internal conditions = strengths & weaknesses Environmental or external conditions = opportunities or threats Must consider both internal and external factors simultaneously
Strategy
A company's action plan for outperforming competitors and achieving profitability. (not the same as vision/mission/values)
Organizational capabilities
Competencies or skills that a firm employs to transform inputs into outputs. It is the capacity to combine tangible & intangible resources to attain desired ends. -Outstanding customer service -Excellent product development capabilities -Superb innovation processes & flexibility in. manufacturing processes -Ability to hire, motivate, & retain human capital
General Environment
Composed of factors that are both hard to predict and difficult to control -Demographic -Sociocultural -Political/legal -Technological -Economic -Global *PESTEL
Human Resource Management
Consists of activities involved in recruitment, hiring, training & development, & compensation of all types of personnel.
Competitive environment
Consists of factors in the task or industry environment that are particularly relevant to a firm's strategy -Competitors (existing or potential) -Customers (or buyers) -Suppliers (including those considering forward integration)
Causal ambiguity
Impossible to explain what caused a resource to exist or how to re-create it
Tacit Knowledge
In the minds of employees, based on their experiences and backgrounds Shared only with the consent and participation of the individual
Operations
Include all activities associated with transforming inputs into the final product form -Machining -Packaging & assembly -Testing or quality control -Printing -Facility operations Factors to consider: -Efficient plant operations & layout -Incorporation of appropriate process technology
Outbound logistics
Include collecting, storing, & distributing the product or service to buyers -Finished goods and warehousing -Material handling -Delivery vehicle operation -Order processing, scheduling & distribution Factors to consider: -Effective shipping processes -Minimizing shipping costs by grouping goods into large lot sizes
Service
Includes all actions associated with providing service to enhance or maintain the value of the product -Installation & repair -Training -Parts supply -Product adjustment
Interrelationships
Manager must not ignore the importance of relationships among value-chain activities. Relationship among activities within the firm and with other stakeholders such as customers and suppliers
Corporate governance
The relationship among various participants in determining the direction and performance of corporations. Primary participants: -Shareholders -Management (led by CEO) -The Board of Directors (BOD)
Data analytics
The science of examining raw data with the purpose of drawing conclusions about that information
In the five-forces model, ____________ is the possibility that the profits of established firms in the industry may be eroded by new competitors. A. the threat of new entrantS B. the bargaining power of suppliers C. the threat of substitute products D. the intensity of rivalry among competitors
The threat of new entrants
Perceptual acuity
To sense what is coming -Detecting early warning signals, keeping pace with changes in the external environment can sustain a competitive advantage
Environmental Monitoring
Tracks evolution of environmental trends -Sequences of measurable facts/events -Streams of activities or trends from outside the organization
Tangible Resources: Technological resources
Trade secrets, patents, copyrights, trademarks, innovative production processes
Intangible Resources: Human Resources
Trust, experience & capabilities of employees; managerial skills & effectiveness of work teams, firm specific practice & procedures
Added insight and cultural sensitivity, and heterogeneity in decision making and problem solving are some of the arguments supporting ________ in the workplace. A. role playing B. brainstorming C. diversity D. social network analysis
diversity
(1) Ambidexterity in a strategic context refers to the challenge for a manager to A. balance a personal, natural instinct to think short-term about the long-term sustainability of the firm. B. align resources to take advantage of existing products and explore new opportunities. C. create a synergy between personal and professional goals. D. balance the constraints of low cost with differentiation.
align resources to take advantage of existing products and explore new opportunities
In industries like consulting, advertising, and tax preparation, clients tend to be very loyal to individual professionals employed by a firm, instead of to the firm itself. This enhances employee A. exit costs. B. bargaining power C. replacement costs. D. long-term solvency.
bargaining power
The resource-based view of the firm suggests that the _________of the firm are due to its endowment of strategic resources that are valuable, rare, costly to imitate, and costly to substitute. A. positive SWOT analyses B. outstanding balanced scorecards C. stock prices D. competitive advantages
competitive advantages
Major airlines change hundreds of fares daily in response to competitor tactics, which is an example of using A. scenario analysis. B. switching costs. C. competitive intelligence D. corporate espionage.
competitive intelligence
The management of intellectual property involves all the following except A. patents. B. contracts with confidentiality and noncompete clauses. C. converting coded knowledge to tacit knowledge D. copyrights and trademark.
converting coded knowledge to tacit knowledge.
Social network analysis
depicts the pattern of interactions among individuals and helps to diagnose effective and ineffective patterns. Social ties can link individuals so they can •Convey needed resources. •Exchange information & support .•Treat each other in positive ways. •Develop trusting relationships to improve the groups' effectiveness.
Because ________ often make it possible for young firms to provide services that are equivalent or superior to an incumbent, a new entrant may be able to serve a market more effectively, with more personalized services and greater attention to product details. A. backward and forward integration B. entry barriers C. digital technologies D. strategic groups
digital technologies
Strategy Formulation
the process of choosing among different strategies and altering them to best fit the organization's needs Business-level strategy- how to compete in a given business to attain competitive advantages Corporate-level strategy- what businesses to compete in; how businesses can be managed to achieve synergy International Strategy-what strategies are needed as the business ventures beyond its national boundaries Entrepreneurial initiative-how can businesses create new value
At what level in the organization should the strategic management perspective be emphasized? A. at the top of the organization B. at the middle of the organization C. from the bottom up in an organization D. throughout the organization
throughout the organization
(1) The three components of the __________ approach to corporate accounting include financial, environmental, and social performance measures. A.triple bottom line B. stakeholder C. triple dimension D. triple efficiency
triple bottom line
Resource-based view of the firm
useful in determining when firms will create competitive advantages and enjoy high levels of profitability Four factors help explain the extent to which employees and managers might be able to obtain a proportionately high level of the profits that they generate 1.Employee bargaining power 2.Employee replacement cost 3.Employee exit costs 4.Manager bargaining power
knowledge economy
wealth is increasingly created by effective management of knowledge workers instead of by the efficient control of physical & financial assets.
When is the bargaining power of the buyer greater than that of the supplier? A. when the threat of backward integration by buyers is low B. when the buyer's profit margin is low C. when cost savings from the supplier's product are minimal D. when the volume of purchase is low
when the buyer's profit margin is low
Under which conditions, according to the Porter five-forces model, can a supplier group gain power? A. when there is low differentiation by the supplier B. when there is a lack of importance of the buyer to the supplier group C. when there is not a dominance by a few suppliers D. when the supplier group does not pose a threat of forward integration
when there is a lack of importance of the buyer to the supplier group
Intellectual property rights
more difficult to define and protect than property rights for physical assets. Unlike physical assets, intellectual property can be stolen. If intellectual property rights are not reliably protected by the state, there will be no incentive to develop new products and services.
Social capital
The network of relationships that individuals have throughout the organization.
Strategic Management
Analysis -Strategic goals (vision, mission, strategic objectives) -Internal and external environment Decisions-Formulation -What industries should we compete in -How should we compete in those industries Actions-Implementation of strategy -Allocate necessary resources -Design the organization to bring intended strategies to reality
Explicit Knowledge
Codified document, easily reproduced, and widely distributed. Can be reused many times at low cost
Strategic objectives
- Used to operationalize the mission statement - Provide guidance on how to fulfill mission & vision - Are measurable, specific, appropriate, realistic & timely - Can be short-term "action plans" - Can be both financial and nonfinancial - Should be challenging, yet help resolve conflicts - Provide a yardstick for rewards & incentives
Competitive Intelligence
Helps firm define and understand their industry Identifies rivals' strengths & weaknesses -Collect data on competitors -Interpret intelligence data Helps firm avoid surprises -Anticipate competitors' moves -Decrease response time Potential for unethical behavior while gathering intelligence
Intended Strategy
-organizational decisions are determined only by analysis -intended strategies rarely survive in the original form
Strategy Analysis
- Starting point in the strategic management process - Precedes effective formulation and implementation of strategies - Involves careful analysis of the overarching goals of the organization - Requires a thorough analysis of the organization's external and internal environment
Firm Resources and Sustainable Competitive Advantages: Strategic resources have 4 attributes:
1. Valuable- in formulating & implementing strategies to improve efficiency or effectiveness 2. Rare or uncommon; difficult to exploit 3. Difficult to imitate or copy due to physical uniqueness, path dependency, causal ambiguity, or social complexity 4. Difficult to substitute with strategically equivalent resources or capabilities
Industry
A group of companies that are related based on their primary business activities
Romantic view
A leader is the key force in the organization's success (ex: Steve Jobs)
Balanced Scorecard Analysis
A meaningful integration of many issues that come into evaluating performance Four key perspectives: 1.How do customers see us? (customer perspective) 2.What must we excel at? (internal perspective) 3.Can we continue to improve and create value? (innovation & learning perspective) 4.How do we look to shareholders? (financial perspective)
Intellectual capital
A measure of the value of a firm's intangible assets-the difference between a firm's market value & book value. -Reputation -Employee loyalty & commitment -Customer relationships -Company values -Brand names -Experience & skills of employees
Porter's Five Forces Model
A model for analyzing the competitive forces within the environment in which a company operates, to assess the potential for profitability in an industry.
Electronic Teams (E-Teams)
Accelerate product development •Advantages: few geographic constraints; access to multiple social contacts •Challenges: failure to identify team members with the most appropriate knowledge and resources; low cohesion, low trust, lack of shared understanding creates "process loss"
Tangible Resources
Assets that are relatively easy to identify
Physical uniqueness
Assets that physically unique, therefore impossible to duplicate
Intangible Resources: Reputation resources
Brand names, reputation for fairness with suppliers, non-zero sum relationships; reputation for reliability & product quality with customers
Bargaining Power of Buyers
Buyers have bargaining power Buyers can force down prices, bargain for higher quality or more service, or play competitors against each other Buyer groups are powerful -Purchasing standard products are in large quantities -Profits are low & switching costs are few -Backward integration is possible -Buyer's product quality is not affected by industry product.
Tangible Resources: Financial assets
Cash & cash equivalents, borrowing capacity, capacity to raise equity
Strategic Groups
Cluster of firms that share similar strategies -Breadth of product & geographic scope -Price/quality -Degree of vertical integration -Type of distribution EX: Toyota, Ford, GM, Chrysler, Honda, Nissan
Primary activities
Contribute to the physical creation of the product or service; the sale & transfer to the buyer; and after the sale. -Inbound logistics -Operations -Outbound logistics -Marketing & sales -Service
Realized Strategy
Decisions are determined by both analysis (deliberate) and unforeseen environmental developments, unanticipated resource constraints, and/or changes in managerial preferences (emergent).
General Environment: Technological
Developments lead to new products and services. -Genetic engineering -3D printing -Wireless communications -Big data/data analysis
Intangible Resources
Difficult for competitors to account for or imitate. They are embedded in unique routines & practices.
Tangible Resources: Organizational resources
Effective planning processes, evaluation & control systems
General Administration
Effective planning systems to attain overall goals and objectives Excellent relations with diverse stakeholder groups Effective information technology to coordinate & integrate value-creating activities across the value chain Ability of top management to anticipate & act on key environmental trends & events, create strong values, culture & reputation
Support activities
Either add value or themselves or add value through important relationships with both primary activities & other support activities -Procurement -Technology development -Human Resource management -General administration
________ teams complete tasks primarily through email communication. A. Email B. Online C. Networked D. Electronic
Electronic
External control perspective
External forces determine the organization's success
Financial Ratio Analysis
Five types of financial ratios: 1.Short-term solvency or liquidity 2.Long-term solvency measures 3.Asset management or turnover 4.Profitability 5.Market value Meaningful ratio analysis must include: •Analysis of how ratios change over time •Comparison with industry norms •Comparison with key competitors (Ex: Balance sheet, Income statement)
Mission Statement
Focuses on "who we are, what we do, and why we are here." Describes the firm's present business: -Products or service -Buyer needs being served -Customer groups it sells to -Scope of operations and technologies
Strategic Vision
Focuses on a firm's strategic course-"the direction we are headed." Describes the firm's intended future business makeup: customers, markets, technologies
General Environment: Environmental
Focuses on the natural environment -Decline of raw materials -Pollution and green house gas -Natural disasters -Climate and weather
General Environment: Economic
Forces affect all industries -Interest rates -Unemployment -Consumer Price Index -Trends in GDP & net disposable income -Changes in stock market valuations
General Environment: Sociocultural
Forces influence the values, beliefs, and lifestyles of a society -More women in the workforce -Greater concern for the environment -Greater concern for healthy diets and physical fitness (increasing obesity)
General Environment: Global
Forces offer both opportunities & risks -Increasing global trade -Currency exchange rates -Trade agreements among (NAFTA, EU, ASEAN) -Creation of the WTO -Increased risks associated with terrorism
Environmental __________ involves developing plausible projections about the direction, scope, and speed of environmental change. A. prediction B. modeling C. forecastingCorrect D. projection
Forecasting
Path dependency
Hard to duplicate because of all that has happened along the path followed in the development and/or accumulation of resources
________ capital can be defined as the difference between the market value and book value of a firm, or a measure of its intangible assets. A. Human B. Intellectual C. Social D. Personal
Intellectual
Marketing and sales activities
Involve purchases of products & services by end users and includes how to induce buyers to make those purchases. -Advertising and promotion -Sales force management -Pricing & price quoting -Channel selection & channel relations
Dynamic capabilities
Involve the capacity to build and protect a competitive advantage. •Requires knowledge, assets, competencies, and complementary assets & technologies •Requires the ability to sense & seize new opportunities, generate new knowledge, and reconfigure existing assets & capabilities •Include internal processes & routines that enable product development, strategic decision making, alliances, or acquisitions
Procurement
Involves how the firm purchases inputs used in its value chain Procurement of raw material inputs -optimizing quality & speed -minimizing associated costs Development of collaborative win-win relationships with suppliers Analysis & selection of alternative sources of inputs to minimize dependence on one supplier.
Environmental Scanning
Involves the surveillance of a firm's external environment -Predicts environmental changes to come -Detects changes already under way -Allows firm to be proactive
Which of the following is not a reason that a manager should be familiar with the Porter Five-Forces model? A. It clarifies whether your firm should remain in or exit an industry. B. It helps justify changes in resource allocation. C. It suggests methods for discouraging new rivals from competing against your firm. D. It identifies which demographic trends will be most important in the short term.
It identifies which demographic trends will be most important in the short term.
Substitute Products & Services
Limit the potential returns of an industry -Substitute come from another industry -They can perform the same function as the industry's offerings -Substitutes place a ceiling on prices that firms in an industry can profitably charge -The more attractive the price/performance ratio, the more the substitute erodes industry profits *Substitution of soft drink industry: coffee, water,
Value-Chain Analysis
Looks at the sequential process of value creating activities
General Environment: Demographic segment
Observable characteristics of a population, including the levels and growth of age, density, sex, race, ethnicity, education, geographic region, and income
Tangible Resources: Physical assets
Plant & facilities, location, machinery & equipment
Threat of new entrant
Possibility that the profits of established firms in the industry may be eroded by new competitors Depending on existing barriers to entry: -Economies of scale -Product differentiation -Capital requirements -Switching costs -Access to distribution channels -Cost disadvantages independent of scale
Inbound logistics
Primarily associated with receiving storing & distributing input to the product -Material handling -Warehousing -Inventory control -Vehicle scheduling -Returns to suppliers Factors to consider: -Location of distribution facilities -Warehouse layout
General Environment: Political/Legal
Processes & legislation influence environmental regulations which industries must comply -Tort reform -Taxation -Increase in minimum wages
Triple Bottom Line
Recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth *firms can measure by assessing financial, social, and environmental performance
Technology development
Related to a wide range of activities -Effective R&D activities for process & product initiatives -Collaborative relationship between R&D and other departments -State-of-the-art facilities & equipment -Excellent professional qualifications of personnel -Use of data analytics
Bridging Relationships
Relationships in a social network that connect otherwise disconnected people
Bargaining Power of Suppliers
Supplier can exert bargaining power by threatening to raise prices or reduce the quality of purchased goods and services Supplier groups are powerful: -Only a few firms dominate the industry -There is no competition from substitute products -Suppliers sell to several industries -Buyer quality is affected by industry product -Products are differentiated & have switching costs -Forward integration is possible
Rivalry
Tactics include price competition, advertising battles, new product introductions, increased customer service or warranties. Interacting factors lead to intense rivalry -Numerous or equally balanced competitors -Slow industry growth -High fixed or shortage costs -Lack of differentiation or switching costs -Capacity augmented in large increments -High exit barriers
Intangible Resources: Innovation Resources
Technical & scientific expertise & ideas; innovation capabilities
Closure relationship
The degree to which all members of the social network have relationships with other group members
Social Responsibility
The expectation that businesses or individuals will strive to improve the overall welfare of society.
Social capital
The friendships and working relationships among talented individuals - helps tie knowledge workers to a given firm. Interaction, sharing, and collaboration will help develop firm-specific ties, with a higher probability of retaining key knowledge workers.
Human Capital
The individual capabilities, knowledge, skills, and experience of the company's employees and managers. -Attracting human capital -Developing human capital -Retaining huuman capital
Hierarchy of goals
Vision- evokes powerful & compelling mental images of a shared future Mission-encompasses the organization's current purpose, basis of competition, & competitive advantage Strategic objective-operationalize the mission statement with specific yardsticks
Stakeholder Management
Zero sum-stakeholders are competing for the companies resources. gain of one stakeholder results in the loss of another. Symbiosis-organizations achieving mutual benefit; shareholders are dependent upon each other for success and well-being.
________ include the ability to seize new opportunities, generate new knowledge, and reconfigure existing assets and capabilities. A. Social network analyses B. Bridging relationships C. Groupthink rewards D. Dynamic capabilities
dynamic capabilities
Which of the following is not an explanation for the existence of exit barriers? A. specialized assets with no alternative use B. governmental and social pressures C. strategic interrelationships with other business units within the same company D. excessive local profits
excessive local profits
(1) The four key attributes of strategic management do not include: A. directing the organization toward overall goals and objectives. B. having multiple stakeholders in decision making. C. excluding consideration of the trade-offs between efficiency and -effectiveness. D. needing to incorporate short-term and long-term perspectives.
excluding consideration of the trade-offs between efficiency and -effectiveness.
Engineering drawings, software code, and patents are examples of A. socially complex processes. B. tacit knowledge. C. explicit knowledge D. diversification processes.
explicit knowledge.
Ratio analysis can be made more meaningful in all the following ways EXCEPT by A. analyzing how ratios change over time. B. focusing more on long-term solvency than on short-term solvency. C. recognizing how the ratios are interrelated. D. comparing results with key competitors.
focusing more on long-term solvency than on short-term solvency.
Which of the following is not an important element of the political/legal segment of the general environment? A. tort reform B. genetic engineering C. Americans with Disabilities Act (ADA) D. deregulation of utilities and other industries
genetic engineering
In order to fully leverage the talents of the best and brightest employees, a firm should be concerned with A. hiring, retention, and training. B. hiring, firing, and redistribution. C. rewards, training, and customer support. D. benefits, engagement, and popularity.
hiring, retention, and training.
Just-in-time systems are considered part of which primary activity in the value chain? A. service B. inbound logisticsCorrect C. operations D. outbound logistics
inbound logistics
Advantages of effective social networks for career success include all the following except A. access to private information. B. increased redundancy in knowledge sources. C. access to diverse skill sets. D. greater power.
increased redundancy in knowledge sources.
Numerous equally balanced competitors selling products that lack differentiation in a slow growth industry are most likely to experience high A.bargaining power of suppliers. B. threat of new entrants. C. threat of substitute products. D. intensity of rivalry among competitors.
intensity of rivalry among competitors.
In the balanced scorecard, cycle time, employee skills, and productivity are part of the ______ perspective. A. customer B. internal C. innovation and learning D. financial
internal
Scenario Analysis
involves detailed assessments of the ways trends may affect an issue & development of alternative futures based on these assessments
All activities associated with transforming inputs into the final product form are known as ______ in the value chain. A.just-in-time inventory management B. outbound logistics C. inbound logistics D. operations
operations
Gerber Products Company brands its baby food and is an example of a resource that is potentially inimitable, making it difficult for competitors to copy. What characteristic of sustainable competitive advantage is involved? A. path dependency B. causal ambiguity C. exit barriers D. a balanced scorecard
path dependency
Human capital does not include the ______________ of an individual. A. capabilities B. knowledge C. skills D. physical attributes
physical attributes
Pfizer pharmaceutical patents provide what important characteristic that supports inimitability? A. causal ambiguity B. path dependency C. physical uniqueness D. social complexity
physical uniqueness
Which of these is not an example of socially complex organizational phenomena? A. firm culture B. interpersonal relations among firm managers C. firm reputation with its suppliers D. poor reputation with customers
poor reputation with customers
Microsoft has improved the ________ part of its value chain by providing formal reviews of its suppliers, which has helped to clarify expectations for them. A. general administration B. procurement C. human resource management D. technology development
procurement
Social complexity
resources that result from social engineering such as interpersonal relations, culture.
An individual who uses the contacts they develop to pursue their own interests and agendas that may be inconsistent with the organization objectives is one potential downside of A. electronic teams. B. social network analysis. C. social capital D. mentoring.
social capital
(1) Competitive advantages that are unique, valuable, and difficult for rivals to copy are likely to make these advantages. A. Targeted B. focused C. popular D. sustainable
sustainable
Which of the following is not one of the recommended criteria for strategic objectives? A.sustainable B. measurable C. appropriate D. realistic
sustainable
Social Capital: Potential Downside
•Groupthink •Dysfunctional human resource practices •Expensive socialization processes (orientation, training) •Distortion or selective use of information to favor preferred courses of action
Limitations of the Balanced Scorecard
•Not a "quick fix" - needs proper execution •Needs a commitment to learning •Needs employee involvement in continuous process improvement •Needs cultural change •Needs a focus on nonfinancial rather than financial measures •Needs data on actual performance