Environment and strategic management (Business management)

The general environment analysis is composed of broad societal dimensions influencing the industry or firms within it. The acronym for these dimensions is

PESTEL

________ decides how best to attain a company's mission and vision through the coordinated efforts to achieve specific goals and objectives.

Strategic management

PESTEL

Political, Economical, Social, Technological, Environmental, Legal

In the resource view of strategy, VRIO stands for:

valuable, rare, inimitable, and organized

The VRIO Framework

+ Valuable + Rare + Inimitable + Organized to capture value

A robust competitive analysis will allow you to focus on those companies that will compete for customers

in your target market

The Strategic Management Process

1) Strategic Objectives and Analysis 2) Strategic Formulation 3) Strategic Implementation (strategic execution) 4) Strategic Evaluation and Control

Michael Porter defined classified competitive strategies based on a grid of price strategy and target markets. What is Walmart's strategy in this grid?

overall low cost

When customers perceive the product differentiation as valuable, they will prefer to purchase the business's product over a competitor's products. This is called

a competitive advantage

Tangible assets

physical things such as land, equipment and machines, and real estate. Although they are necessary, they aren't unique and competitors can fairly easily acquire these kinds of assets.

The second step of the strategy process, Strategy Formulation, includes

prioritizing the tactics most important to achieving the objectives

E-commerce

refers specifically to exchanges or transactions that occur electronically

In 1956, Dr. Hubbert accurately predicted U.S. oil production for the next 50 years. U.S. oil production started to decline in1970, causing volatile markets and, for strategists, ________. The development of fracking around 2010 restored the U.S. as a major oil producer.

resource scarcity

The first step in the strategy process includes

to define the vision, mission, and values statements of the organization

industry analysis

a method for a company to assess its market position relative to its competitors

A highly competitive market suggests that the competitors are aggressively trying to take market share from their rivals. One of the simplest ways to do this is to lower prices. This ________ hurts the profitability of the whole industry.

competitive rivalry

Strategic Management

the process of integrating all the functions and activities in an organization into a coherent whole

Identifying the target customer and asking about customer demographics (age, income, location, gender, politics, etc.) is part of

customers analysis

The five components of industry environment are

customers, competitors, suppliers, regulations, and advocacy groups

Warren Buffett, a famous investor, has some guiding rules. One is "Invest within your circle of competence," meaning if you don't understand the business, don't invest. He sold positions in Freddie Mac because he did not understand or like financial derivatives. He called derivatives "weapons of mass destruction." In the context of strategy, financial firms that use derivatives are

complex

Organizational culture

the shared values and beliefs that guide individual behaviors in the organization

SWOT analysis

+ Strengths are the areas where the organization has particular skills and resources that would allow it to pursue goals effectively. For instance, innovative and collaborative organizational cultures are strengths of Apple and Google. + Weaknesses are areas where the organization is lacking resources and would be prevented from pursuing some goals. For example, when consumers demanded smaller, fuel-efficient cars, many American manufacturers lacked the designs and equipment to make these cars. + Opportunities are conditions that are favorable to the organization and would facilitate its efforts to achieve its goals. Building on the earlier example, Japanese automakers saw an opportunity in the American demand for smaller cars to increase their market share. + Threats are conditions that would prevent the organization from achieving its goals. Many businesses, for instance, are concerned about the threat posed by China's competitive growing manufacturing capability.

________ is primarily referring to an organization's industry, and the downstream and upstream markets related to it.

A situational analysis

American Spoon is a small company in Petoskey, Michigan that uses fruit from local farmers to handcraft gourmet fruit preserves and condiments in small batches. Where would you first use this information in the strategic management process?

Strategic objectives and analysis

Companies strive to provide a product or service that is distinct, or ________, in some way from their competitors.

differentiated

Walmart has the highest in-store revenues for any U.S. retailer but it is a distant second to Amazon's online sales. Walmart believes it needs a better ________.

e-commerce strategy

One major role of firms is to manage risk. Consumers do not want to pay for products of unknown quality or where the delivery date is questionable. Managers also worry about unexpected changes in supplies or markets. Strategic management seeks to adapt to and benefit from change. For strategists, this ________ is both a challenge and an opportunity.

uncertainty

A company wishes to convince customers that its product or service provides more value to them than a competitor's product or service. That is, it offers a

value proposition

The advertisements for the Apple MacBook show an edge-on image of a MacBook with the caption "MacBook: Light. Years ahead." This refers to the lightweight design and the advanced tech inside. This is Apple's

value proposition

A value proposition

A statement that a company uses to convince customers that its product or service provides more value to them than a competitor's product or service

Bharti Airtel is the largest cellular provider in India, with more than 300 million customers as of 2014. It also supplies broadband and telephone services, as well as many other telecommunications services to both domestic and corporate customers. Bharti Airtel and Vodafone have an on/off relationship. Vodafone owned a 5.6% stake in the Airtel business, until it sold it back to Airtel and invested in Airtel's rival, Hutchison Essar. Knowledge and technology previously available to Airtel moved into the hands of one of its competitors. In a SWOT analysis, this point represents ________.

a threat

Bharti Airtel is the largest cellular provider in India, with more than 300 million customers as of 2014. It also supplies broadband and telephone services, as well as many other telecommunications services to both domestic and corporate customers. Bharti Airtel is considering a customized version of the Google search engine, which will enhance broadband services to customers. The tie-up with Google will bolster the Airtel brand and also provide advertising opportunities in India for Google. A SWOT analysis was done. This partnership represents ________.

an opportunity

Intangible assets

anything an organization can own that is not physical. Examples include brand names, intellectual property, and the organization's reputation and goodwill. These kinds of assets are not easily acquired and usually contribute heavily toward a sustained competitive advantage

The threat of new entrants in Porter's Five Forces analysis is often the most important force affecting an industry. In the food truck industry, for example, it is easy for new firms to enter and compete. The food truck industry would benefit if there were ________, such as required and restricted licenses.

barrier to entry

In the summer of 1998, Dr. Rumelt, a professor and consultant, got an opportunity to talk with Steve Jobs about strategy. Rumelt argued that everything we know about the PC business says that Apple cannot really push beyond a small niche position. The network effects are just too strong to upset the PC standard. He then asked for Jobs' strategy. Jobs said, "I am going to wait for the next big thing." Nearly twenty years later, Apple is the most valuable publicly traded company in the world. This story shows that in the context of strategy, the tech market is ________.

dynamic

Domestic U.S. companies conducting a PESTEL analysis consider national growth, employment, inflation, and interest rates. These are aspects of which macro term?

economic

Michael Porter defined classified competitive strategies based on a grid of price strategy and target markets. Tesla manufactures electric cars. What is Tesla's strategy in this grid?

focused differentiation

American Spoon is a small company in Petoskey, Michigan that uses fruit from local farmers to handcraft gourmet fruit preserves and condiments in small batches since 1982. The company has expanded slowly and now has six stores in towns along Lake Michigan and a catalogue. It has grown and maintained its customers by continuing to make its products in small batches to ensure freshness and flavor, and to make seasonal and unique product offers possible. In the Strategic Evaluation and Control stage of the strategy process, American Spoon should

set up routine checks of the freshness of its inventory

In order to understand the competitive structure of an industry, analysts use Michael Porter's Five Forces model. Porter's model includes all of the following EXCEPT:

strategic partnerships, research and development

SWOT analysis stands for:

strengths, weaknesses, opportunities, threats

Businesses can achieve competitive advantage in a number of different ways. For example, their product may provide

superior performance

Amazon relies on FedEx, UPS, the USPS, and others to deliver packages to consumers. These delivery companies are Amazon's

supply chain

E-business

takes place over digital processes using a computer network rather than in a physical location ("brick and mortar")

Michael Porter's Five Forces analysis looks at the forces driving an industry's profitability. An analyst might use it to compare the relative merits of

the cellphone industry and the internet service industry

If a manager is listing resources that can be used for a competitive advantage, which item would NOT be on the list?

the intellectual property

competitive advantage

The business outperforms its rivals in the market because customers prefer its products or services.

Strategic management

considers the entire organization and how the pieces fit together

Michael Porter defined classified competitive strategies based on a grid of price strategy and target markets. Microsoft's Windows Operating System competes with Apple's MAC OS X and Linux. Linux is free. What is Microsoft's strategy in this grid?

overall differentiation

The general environment analysis considers broad societal dimensions influencing the industry or firms within it. The general environment areas include

political, economic, social, technological, environmental, and legal