Strategic Management Ch. 4

Pricing

process of determining the best price at which to sell a product

growth ratios

sales net income earning per share dividends per share

Motivating

the process of influencing people to accomplish specific objectives -communication is key

Organization = 3 sequential activities

- breaking down tasks into jobs - combining jobs to form departments - delegating authority

Step 1: develop a full list of IF

- narrow data sets to 20 key internal factors: 10 strengths, 10 weaknesses

The​ resource-based view emphasizes the importance of​ ______. A. external resources B. competitive analysis C. internal resources D. external opportunities E. financial performance

C. internal resources

promotion

Communication by marketers that informs, persuades, and reminds potential buyers of a product in order to influence an opinion or elicit a response

Liquidity Ratios

Current ration Quick ratio

production/ operations influence ability of plant to meat its capacity utlization

capacity utilization is the ability's to reach full potential output

Marketing

defining, anticipating, and fulfilling consumer's needs and wants

Target Market Analysis

examination and evaluation of consumer needs and wants

Marketers can best use their strategic toolbox to ensure that their​ firm's offering delivers value to target customers when there is​ ______. A. no competition B. no need for marketing research C. no need for the marketing mix D. a broadly defined target market E. a clearly defined target market

E. a clearly defined target market

What is the most widely used method for determining an​ organization's strengths and weaknesses in the​ investment, financing, and dividend​ areas? A. Historical trend analysis B. Profit margin analysis C. Financial ratio analysis D. Inventory turnover analysis E. Capital budgeting

C. Financial ratio analysis

Finance and Accounting

financial condition is often considered the single best measure of a firm's competitive position and overall attractiveness

Profitability Ratios

gross profit margin operating profit margin net profit margin ROA return on stockholders equity ROE earning per share EPS price earning ratio

Human Resource Management (HRM)

includes activities such as recruiting, interviewing, testing, selecting, orienting, training, developing, caring for, evaluating, rewarding, disciplining, promoting, transferring, demoting, and dismissing employees.

Product Planning:

includes devising warranties; packaging; determing product options, features, brand style, and quality; delete old products, provide customer service

activity ratio

inventory turnover fixed assets turnover total assets turnover accounts receivable turnover average collection period

Channel of distribution

is a term that refers to various intermediaries that take a product from a producer to an end costumer

tangible resources

labor capital reputation IP

Functional business areas

management marketing finance accounting MIS - a internal stragtegic management assessment will analyze how strong/wek a firm is in each area

The IFE Matrix is an evaluation of the effectiveness of a​ firm's current​ strategies, but it does not take into account​ ______. A. the functional areas of a business B. the value of strengths and weaknesses C. opportunities and threats D. the overall strength of the​ firm's internal position E. strengths and weaknesses

C. opportunities and threats

Which two management functions are most important at the​ strategic-management process stage of strategy​ implementation? A. motivating and controlling B. planning and organizing C. organizing and motivating D. planning and motivating E. organizing and controlling

C. organizing and motivating

Controlling

Controlling consists of 4 basic steps: - establish performance objective -measure individual and organizational performance - compare actual performance to planned performance -take corrective actions

Financial ration analysis

most widely used method for determining an organization s/w in the investment, financing dicident areas - at one point in time -compare ratios over time for more meaningful statistics

Organizational Culture

pattern of behavior that has been developed by an organization as it learns to cope with its problem of external adaptation and internal integration, and that has worked well enough to be considered valid and to to new members -can be resistant to change -culture can be challenged when two companies merge

Management : 4 basic activities

planning organizing motivating controlling

Step 2: assign weights

ranges from 0.01 (not important) to 1.0 (all important) - sum of all weights will equal 1.0 - weights are industry based, not company based

Distinctive competencies

strengths that cannot be easily matched or imitated by competitors

Investment decision (capital budgeting)

the allocation and reallocation of capital and resources to projects, products, assets, and divisions of an organization

test marketing

the process of testing products among potential users

marketing research

the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization

Step 3: assign ratings to key internal factors

- 1 and 4 to each key internal factor to indicate how effectively or ineffectively strategies are 4- best, 1, poor - respond better to a strength over a weakness - ratings are company based, on industry based

limits of financial ratios

- based on accounting data, which can differ by firms - seasonal factors - conformity does not establish certainty that firm is performing normally; departure not necessarily indicative company is doing badly - not "actionable"

he management function of​ _______ is particularly important for strategy evaluation. A. organizing B. planning C. leading D. controlling E. HRM

D. controlling

Internal Factor Evaluation (IFE) Matrix

A strategy-formulation tool that summarizes and evaluates a firm's major strengths and weaknesses in the functional areas of a business, and provides a basis for identifying and evaluating relationships among those areas.

Strategists use​ ______ to provide a firm with proprietary business intelligence. A. business analytics B. risk mining C. intuition D. data diving E. forecasts

A. business analytics

Strengths that cannot be easily matched or imitated by competitors are called​ _____. A. distinctive competencies B. RBVs C. resources D. empirical indicators E. internal advantages

A. distinctive competencies

What ties all business functions together and provides the basis for all managerial​ decisions? A. Technology B. Information C. The CIO D. The CEO E. Human resources

B. Information

In conducting a marketing​ audit, which of the following would NOT be a question to​ ask? A. Is the organization positioned well among​ competitors? B. Is the​ organization's structure​ appropriate? C. Does the firm have an effective promotional​ strategy? D. Are markets segmented​ effectively? E. Is the​ firm's Internet presence excellent as compared to​ rivals?

B. Is the​ organization's structure​ appropriate?

Financial ratio analysis should be conducted on three separate​ fronts, which include​ ______. A. change over​ time, comparison to other​ countries, and comparison to future goals B. comparison to industry​ norms, comparison to key​ competitors, and comparison to other industries C. ratios for​ non-profits, ratios for service​ firms, and ratios for manufacturers D. change over​ time, future​ forecasts, and current situation E. change over​ time, comparison to industry​ norms, and comparison to key competitors

E. change over​ time, comparison to industry​ norms, and comparison to key competitors

The​ strategy-formulation tool that summarizes and evaluates the major strengths and weaknesses in the functional areas of a business is​ ______. A. ​Porter's Five Forces Model B. the Competitive Profile Matrix C. the External Factor Evaluation Matrix D. external environmental scanning E. the Internal Factor Evaluation Matrix

E. the Internal Factor Evaluation Matrix

Organizing

Organizing includes all managerial activities that result in a structure of task and authority relationships, such as organizational design, job specialization, job description, span of control, job design, and job analysis

Planning

Planning consists of all managerial activities related to preparing for the future, such as establishing objectives, devising strategies, and developing policies -bridge to future -strategy formulation

Empirical indicators

Refers to three characteristics of resources (rare, hard to imitate, not easily substitutable) that enable a firm to gain and sustain competitive advantage.

Step 4: obtain weighted score

alogn each row in a IFE matrix, multiply the factor's weight by rating to determine a weighted score for each

Resource-based view (RBV)

approach to competitive advantage contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage - basic premise is that the mix, type, amount and nature of internal resources should be considered first and foremost -resource must be developed, exploited, m- basic premise is that the mix, type, amount and nature of internal resources should be considered first and foremost -resource must be developed, exploited, maintained and strengthened

Organizing strengths and weaknesses

- how well the firm structure matches divisions and strategy of firm - degree to which a clear chain of command is displayed w/ titles - extent of job overlap

When and how dividends are paid out

- no set formula - may pay out even if: 1) firm has incurred negative income 2) has to obtain outside sources of capital to pay 3) even when funds were needed to reinvest

Internal Forces and firms resources

- proponent of RBV content performance determined by internal resources that enable a firm to exploit opp and neutralize threat

Step 5: obtain total weighted score

-range from a low of 1 to a high of 4.0 -average is a 2.5

Steps of developing an IFE

1) Develop full and narrow list of key internal factors 2) Assign weights to internal factors 3) Assign rating to internal factors 4) obtain weighted score 5) obtain total weighted score

Management Audit Checklist

1) Does the firm use strategic-management concepts? 2) Are company objectives and goals measurable and well communicated? 3) do managers at all levels plan effectively? 4) Do managers delegate authority? 5) is the organizations structure appropriate? 6) are job descriptions clear? 7) employee morale high? 8) employee turnover and absenteeism low? 9) organizational reward and control mechanisms effective?

ways HRM can provide competitive advantage

1) analyze turnover rate 2) measure and monitor employee engagement and morale 3) determine going market rates for talent 4) design employee development and training path 5) provide guidance on legal issues 6) track employee data

strengths/weakness of product

1) brand 2) assortment or cannibalisms of firms existing product 3) features compared to what is available on market

Why companies pay dividends even in negative situations

1) customary; failing to pay is a stigma 2) represent a sales-point for investment bankers 3) shareholders demand dividends 4) myth of paying dividends will result in a higher stock price

With planning a firm can

1) focus on critical factors 2) ensure preparedness 3) gather resources and carry out tasks efficiently 4) conserve resources 5) asses effort, cost, implications are warranted by affect 6) be proactive 7) develop synergy= pull together as a team; 2+2 = 5

3 fronts to conduct financial ratio analysis

1) how has each changed overtime? 2) how does it compare to industry norms? 3) how does it compare to key competitors?

5 production areas

1) process: robotics, layout, process flow, line balancing 2) capacity: forecasting, facilities planning, aggregate planning, scheduling 3) inventory: level of raw materials, work- in process, finished goods 4) workforce: managing skilled, unskilled, clerical, and managerial 5) quality: quality control, sampling, testing, quality assurance, cost control

5 basic activities of marketing

1) research and target market analysis 2) product planning 3) pricing products 4) promoting products 5) pacing or distributing products

Marketing Audit Checklis

1) segmented effectively? 2) positioned well among competitors? 3) present channels of distr effective and reliable? 4) conducting and using market reserch effectively? 5) product quality and customer services good? 6) priced appropriately? 7) effective promotional strategy? 8) internet presence excellent?

strengths and weakness of promotion

1) website/social media 2) spokespeople 3) advertising/brand slogan

Finance/Auditing Checklis

1) where is firm financially strong/weak as indicated by ratios? 2) can it raise short term capital? 3) should re

Dividend decisions

concern issues such as the percentage of earnings paid to stockholders, the stability of dividends paid over time and the repurchase or issuance of stock. -earning per share -dividends per share -price earnings

intangible resources

culture knowledge brand equity reputation IP -more important to competitive adv?

leverage ratios

debt-to total assets debt to equity long term debt to equity times-interest-earned

Financing Decision

determines the best capital structure for the firm and includes examining various methods by which the firm can raise capital -short term and long term needs -debt to equity ratio and debt to total assets ratio