Mana Test 2

Kurt Lewin's

(unfreezing, change intervention, refreezing)

Competitive advantage

Providing greater value for customers than the competitors can. Ex Amazon provides a better online shopping experience then competitor Ebay

Self-managing teams

She said similar to semi-autonomous so don't need for test

Grand strategy

a broad corporate-level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or sub-units may use. There are three kinds of grand strategies: growth, stability, and retrenchment/ recovery.

Star

a company with a large share of a fast-growing market. Ex Can potentially become cash cows.

Cash Cow

a company with a large share of a slow-growing market. Ex Companies in this situation are often highly profitable, hence the name "cash cow." Some of the profits are used to invest in stars.

Question mark

a company with a small share of a fast growing market. Ex If the corporation invests in these companies, they may eventually become stars, but their relative weakness in the market (small share) makes investing in question marks riskier than investing in stars. Companies analyze question marks to determine if they should invest in them and make them stars.

Dog

a company with a small share of a slow-growing market. Ex because dogs lose money, the corporation should "find them new owners" or "take them to the pound." In other words, dogs should either be sold to other companies or closed down and liquidated for their assets.

Sustainable competitive advantage

a competitive advantage that other companies have tried unsuccessfully to duplicate and have, for the moment, stopped trying to duplicate Ex Wal-Mart with its low prices and loyal customer base is hard for a company to compete with.

Industry-Level Strategy

a corporate strategy that addresses the question, "How should we compete in this industry?"

Portfolio strategy

a corporate-level strategy that minimizes risk by diversifying investment among various businesses or product lines Ex company such as 3M, which makes 55,000 products for five different business groups: Consumer (Post-its, Scotch tape); Electronics and Energy (electronic devices, telecoms equipment, renewable energy solutions); Health Care (medical, surgical, and dental products, health information systems); Industrial (tapes, abrasives, adhesives, specialty materials, filtration systems); and Safety and Graphics (safety and security products, track and trace solutions, graphic solutions).

Design iteration

a cycle of repetition in which a company tests a prototype of a new product or service, improves on that design, and then builds and tests the improved prototype.

Technology Cycle

a cycle that begins with the birth of a new technology and ends when that technology reaches its limits and is replaced by a newer, substantially better technology. Ex For example, technology cycles occurred when air conditioners supplanted fans, when Henry Ford's Model T replaced horse-drawn carriages.

Strategic dissonance

a discrepancy between a company's intended strategy and the strategic actions managers take when implementing that strategy. Ex AirAsia's top management decided to expand service to Nagoya, Japan, three months faster than planned but got the work done in one-third of the planned time! At ANA, that decision would have taken six months and involved fifty people from across the company in multiple discussions.

Product prototype

a fullscale, working model that is being tested for design, function, and reliability.

Traditional work group

a group composed of two or more people who work together to achieve a shared goal. . In these groups, workers are responsible for doing the work or executing the task, but they do not have direct responsibility or control over their work.

Strategic group

a group of companies within an industry against which top managers compare, evaluate, and benchmark strategic threats and opportunities. Ex involves identifying outstanding practices, processes, and standards at other companies and adapting them to your own company.

Semi-autonomous work group

a group that has the authority to make decisions and solve problems related to the major tasks of producing a product or service. not only provide advice and suggestions to management but also have the authority to make decisions and solve problems related to the major tasks required to produce a product or service.

Organizational decline

a large decrease in organizational performance that occurs when companies don't anticipate, recognize, neutralize, or adapt to the internal or external pressures that threaten their survival. There are five stages of organizational decline: blinded, inaction, faulty action, crisis, and dissolution.

Five Industry Forces Threat of New Entrants

a measure of the degree to which barriers to entry make it easy or difficult for new companies to get started in an industry. Ex Altos Research provides real-time statistics and analysis of real estate markets for investors and news services such as Bloomberg Financial. Because its business relies on access to terabytes of market data, it leases computing power and data storage from Amazon Web Services (AWS), the market leader in cloud services. Without any negotiation, AWS cut its costs in half, enough to pay for two new programmers. Altos' CEO Michael Simonsen said, "Nobody ever gives you a 40 percent price break overnight."56 If so, why did AWS—and Microsoft and Google—all cut their prices by a third or more? The threat of new entrants spurred them.

Five Industry Forces Threat of substitute products or services

a measure of the ease with which customers can find substitutes for an industry's products or services. Ex Uber, a smartphone app that connects people needing rides with drivers who will take them where they want to go. . Uber maintains quality control by using social media to gather feedback on drivers' timeliness, politeness, and service. Drivers with negative feedback lose the chance to drive for Uber. Taxi services, not surprisingly, are not happy about competing with Uber, and its drivers have sued Uber—unsuccessfully—in San Francisco, New York, and Washington, DC, to shield themselves from competition.

Five Industry Forces Bargaining power of Buyers

a measure of the influence that customers have on a firm's prices. Ex If a company sells a popular product or service to multiple buyers, then the company has more power to set prices. By contrast, if a company is dependent on just a few high-volume buyers, those buyers will typically have enough bargaining power to dictate prices.

Five Industry Forces Bargaining power of suppliers

a measure of the influence that suppliers of parts, materials, and services to firms in an industry have on the prices of these inputs. Ex . When companies can buy parts, materials, and services from numerous suppliers, the companies will be able to bargain with the suppliers to keep prices low. On the other hand, if there are few suppliers, or if a company is dependent on a supplier with specialized skills and knowledge, then the suppliers will have the bargaining power to dictate price levels.

Five Industry Forces Character of Rivalry

a measure of the intensity of competitive behavior between companies in an industry. Ex Both industry attractiveness and profitability decrease when rivalry is cutthroat. For example, selling cars is a highly competitive business. Pick up a local newspaper on Friday, Saturday, or Sunday morning, and you'll find dozens of pages of car advertising ("Anniversary SaleA-Bration," "Ford March Savings!" and "$99 Down, You Choose!"). In fact, competition in new-car sales is so intense that if it weren't for used car sales, repair work, and replacement parts, many auto dealers would actually lose money.

Dominant design

a new technological design or process that becomes the accepted market standard. Ex One is critical mass, meaning that a particular technology can become the dominant design simply because most people use it, for example, Blu-ray beating out HD-DVD

S-curve pattern of innovation

a pattern of technological innovation characterized by slow initial progress, then rapid progress, and then slow progress again as a technology matures and reaches its limits. Ex

BCG matrix

a portfolio strategy developed by the Boston Consulting Group that categorizes a corporation's businesses by growth rate and relative market share and helps managers decide how to invest corporate funds. Ex in Exhibit 6.4, separates businesses into four categories based on how fast the market is growing (high growth or low growth) and the size of the business's share of that market (small or large).

Flow

a psychological state of effortlessness, in which you become completely absorbed in what you're doing, and time seems to pass quickly.

Competitive Inertia

a reluctance to change strategies or competitive practices that have been successful in the past. Ex Avon used a direct-selling model in which customers bought beauty products, perfume, and more from their local Avon sales representatives. But since 2011, sales are down 50 percent to $8.9 billion. Direct selling competitors, such as Mary Kay, and store/ Internet competitors, such as Ultra Salon and Sephora, are experiencing strong growth. Despite Avon's steady decline, CEO Sherilyn McCoy is committed to the company's strategy, saying, "We continue to stay the course on our plans to return Avon to sustainable, profitable growth.

Valuable resource

a resource that allows companies to improve efficiency and effectiveness. Ex ipads replaced notebooks due to new technological advancements and portability.

Imperfectly imitable resource

a resource that is impossible or extremely costly or difficult for other firms to duplicate. Ex Apple's app store vs Androids app store. One is private one is public making Apple's app store more secure and efficient.

Rare resource

a resource that is not controlled or possessed by many competing firms. Ex Video game console industry mainly consist of Sony, Microsoft, Nintendo. Hard for competition to enter the field and compete.

Nonsubstitutable resource

a resource that produces value or competitive advantage and has no equivalent substitutes or replacements. Ex In summary, Apple reaped the rewards of a firstmover advantage when it introduced the iPad. The company's history of developing customer-friendly software, the innovative capabilities of the iPad, the uniformity of experience, and the security of the App Store provide customers with a service that has been valuable, rare, relatively nonsubstitutable, and, in the past, imperfectly imitable. Past success is, however, no guarantee of future success: Apple needs to continue developing and improving its products or risk being unseated by a more nimble competitor whose products are more relevant and have higher perceived value for consumers.

Work Teams

a small number of people with complementary skills who hold themselves mutually accountable for pursuing a common purpose, achieving performance goals, and improving interdependent work processes. Ex , computer programmers working on separate projects in the same department of a company would not be considered a team. To be a team, the programmers would have to be interdependent and share responsibility and accountability for the quality and amount of computer code they produced.

Diversification

a strategy for reducing risk by buying a variety of items (stocks or, in the case of a corporation, types of businesses) so that the failure of one stock or one business does not doom the entire portfolio.

Stability Strategy

a strategy that focuses on improving the way in which the company sells the same products or services to the same customers. Ex Today, ABM's 100,000 employees in the U.S. and twenty other countries offer facility services management for electrical and lighting solutions, energy management, building main tenance and repair, janitorial services, landscape and ground maintenance, security, and parking services. In short, for more than 100 years, ABM has reduced costs by keeping businesses' facilities safe, clean, comfortable, and energy efficient. Companies often choose a stability strategy when their external environment doesn't change much or after they have struggled with periods of explosive growth.

Growth strategy

a strategy that focuses on increasing profits, revenues, market share, or the number of places in which the company does business. Ex AT&T is growing slowly at 3 percent per year. DirecTV, a satellite TV service, is growing at less than 1 percent a year. In hopes of accelerating growth for both companies, AT&T agreed to buy DirectTV for $48.5 billion. CBS News business analyst Jill Schlesinger says, "AT&T wants content. DirecTV has content."48 AT&T is also interested in selling phone services to DirecTV's 18 million customers in Latin America.

Retrenchment strategy

a strategy that focuses on turning around very poor company performance by shrinking the size or scope of the business. Ex" Barclays will cut 19,000 employees by 2016, exit commodities trading, sell half of its investment bank, and sell its retail banking operations in France, Spain, and Italy. Rake explained that, "In the future, Barclays will be leaner, stronger, much better balanced and well positioned to deliver lower volatility, higher returns and growth.

Special Kind of Teams Cross-functional team

a team composed of employees from different functional areas of the organization. Because their members have different functional backgrounds, education, and experience, cross-functional teams usually attack problems from multiple perspectives and generate more ideas and alternative solutions, all of which are especially important when trying to innovate or solve problems creatively

Special Kind of Teams Virtual team

a team composed of geographically and/or organizationally dispersed coworkers who use telecommunication and information technologies to accomplish an organizational task. Basically a team that doesn't meet in person

Special Kind of Teams Project Team

a team created to complete specific, one-time projects or tasks within a limited time.

Self-designing team

a team that has the characteristics of self-managing teams but also controls team design, work tasks, and team membership. have all the characteristics of self-managing teams, but they can also control and change the design of the teams themselves, the tasks they do and how and when they do them, and the membership of the teams.

Experiential approach to innovation

an approach to innovation that assumes a highly uncertain environment and uses intuition, flexible options, and hands-on experience to reduce uncertainty and accelerate learning and understanding.The experiential approach to innovation has five aspects: design iterations, testing, milestones, multifunctional teams, and powerful leaders

Compression approach to innovation

an approach to innovation which assumes that incremental innovation can be planned using a series of steps and that compressing those steps can speed innovation. has five aspects: planning, supplier involvement, shortening the time of individual steps, overlapping steps, and multifunctional teams.

Three steps of strategy making process Step 2: Situational Analysis / SWOT Analysis

an assessment of the strengths and weaknesses in an organization's internal environment and the opportunities and threats in its external environment. Ex helps a company determine how to increase internal strengths and minimize internal weaknesses while maximizing external opportunities and minimizing external threats.

Social Loafing

behavior in which team members withhold their efforts and fail to perform their share of the work. Ex Slackers that have to be carried by responsible team members.

Generational change

change based on incremental improvements to a dominant technological design such that the improved technology is fully backward compatible with the older technology. Ex Most computers, for instance, have USB (universal serial bus) input slots to connect and power USB thumb drives, monitors, or external hard drives used for backup storage. USB 3.1, the latest USB standard, can transfer more than 10 Gbps (gigabytes per second), compared to USB 3.0 devices, which operate at 5 Gbps, or USB 2.0 devices, which operate at roughly 1/2 Gbps.43 What happens if you buy a new computer with USB 3.1 slots, but still own a USB 3.0 external hard drive and a USB 2.0 thumb drive?

Defenders

companies using an adaptive strategy aimed at defending strategic positions by seeking moderate, steady growth and by offering a limited range of high-quality products and services to a well-defined set of customers. Ex Not surprisingly, ultra-premium carmakers, such as Ferrari and Aston-Martin, are not as interested in growth as they are in retaining the luxury brand image. That's because higher sales volume leads to ubiquity, which makes it harder to charge premium pricing. The retail price of a new Ferrari California is roughly $200,000, but a new LaFerrari model has an MSRP of $1.4 million. To retain is exclusivity, Ferrari has a self-imposed production cap of 7,000 vehicles a year.

Prospectors

companies using an adaptive strategy that seeks fast growth by searching for new market opportunities, encouraging risk taking, and being the first to bring innovative new products to market. Ex 3M has long been known for its innovative products, particularly in the area of adhesives. Since 1904, it has invented sandpaper; masking, cellophane, electrical, and Scotch tapes; the first commercially available audiotapes and videotapes; and its most famous invention, Post-it notes.

Analyzers

companies using an adaptive strategy that seeks to minimize risk and maximize profits by following or imitating the proven successes of prospectors. Ex Analyzers are rarely first to market with new products or services. Instead, they try to simultaneously minimize risk and maximize profits by following or imitating the proven successes of prospectors. Netflix has achieved growth not only through its mail-order DVD service but also through its video streaming service, which allows users to watch a variety of movies and TV shows almost instantly. In fact, the streaming service has been so successful that Netflix has nearly two times more streaming customers than DVD customers. Motivated by Netflix's success, Redbox (with Verizon) and Amazon now offer similar streaming services. Redbox, the DVD rental kiosk operator, and Verizon, the wireless carrier, teamed up to offer Redbox Instant.

Design competition

competition between old and new technologies to establish a new technological standard or dominant design. Ex telegraph was so widely used as a means of communication in the late 1800s that at first almost no one understood why telephones would be a better way to communicate. It's hard to envision today, with everyone constantly checking cell phones for email, texts, tweets, and voice mail.

Unrelated diversification

creating or acquiring companies in completely unrelated businesses. Ex General Electric, which was founded in part by Thomas Edison, is the largest conglomerate in the world and has a presence in a wide range of businesses. Its appliances division produces refrigerators, ovens, and dishwashers for household and business use, and its consumer electronics division makes digital cameras. Its lighting division, of course, sells lightbulbs, as well as traffic signals and specialty lighting. Its aviation division, meanwhile, is one of the world leaders in making jet engines.

Related diversification

creating or acquiring companies that share similar products, manufacturing, marketing, technology, or cultures. Ex 3M and its 55,000 products sold in five different business groups. While seemingly different, most of 3M's product divisions are based in some fashion on its distinctive competencies in adhesives and tape (for example wet or dry sandpaper, Post-it notes, Scotchgard fabric protector, transdermal skin patches, and reflective material used in traffic signs).

Change Forces

forces that produce differences in the form, quality, or condition of an organization over time

Resistance forces

forces that support the existing conditions in organizations. Ex caused by self-interest, misunderstanding and distrust, and a general intolerance for change.52 People resist change out of self-interest because they fear that change will cost or deprive them of something they value. Resistance might stem from a fear that the changes will result in a loss of pay, power, responsibility, or even perhaps one's job.

Milestones

formal project review points used to assess progress and performance. Ex , a company that has put itself on a twelve-month schedule to complete a project might schedule milestones at the three-month, six-month, and nine-month points on the schedule.

Unfreezing

getting the people affected by change to believe that change is needed

Norms

informally agreed-on standards that regulate team behavior.Norms are valuable because they let team members know what is expected of them.

John Kotter

knowing what not to do is just as important as knowing what to do when it comes to achieving successful organizational change. Managers commonly make certain errors when they lead change. The first two errors occur during the unfreezing phase, when managers try to get the people affected by change to believe that change is really needed. The first and potentially most serious error is not establishing a great enough sense of urgency.In fact, Kotter estimates that more than half of all change efforts fail because the people affected are not convinced that change is necessary. People will feel a greater sense of urgency if a leader in the company makes a public, candid assessment of the company's problems and weaknesses.

Innovation streams

patterns of innovation over time that can create sustainable competitive advantage. Ex Recall that a technology cycle begins with a new technology and ends when that technology is replaced by a newer, substantially better technology. The innovation stream in Exhibit 7.2 shows three such technology cycles.

Refreezing

supporting and reinforcing new changes so that they stick

Employee involvement team

team that provides advice or makes suggestions to management concerning specific issues. which have somewhat more autonomy, meet on company time on a weekly or monthly basis to provide advice or make suggestions to management concerning specific issues such as plant safety, customer relations, or product quality. Though they offer advice and suggestions, they do not have the authority to make decisions.

Resources

the assets, capabilities, processes, employee time, information, and knowledge that an organization uses to improve its effectiveness and efficiency and create and sustain competitive advantage

Core Firms

the central companies in a strategic group. Ex Home Depot analyzes Lowes its biggest competitor in the home improvement industry.

Cohesiveness

the extent to which team members are attracted to a team and motivated to remain in it.

Secondary Firms

the firms in a strategic group that follow strategies related to but somewhat different from those of the core firms. Ex Lumber has roughly 250 stores in thirty states, but even though its stores are open to the public, the company focuses on supplying professional contractors, to whom it sells 85 percent of its products. Without the wide variety of products on the shelves or assistance available to the average consumer, people without expertise in building or remodeling probably don't find 84 Lumber stores very accessible.

Forming

the first stage of team development, in which team members meet each other, form initial impressions, and begin to establish team norms.

Performing

the fourth and final stage of team development, in which performance improves because the team has matured into an effective, fully functioning team

Technological lockout

the inability of a company to competitively sell its products because it relies on old technology or a nondominant design. Ex while 85 percent of U.S. movie theatres use digital technology, 1,000 small theaters may go out of business because they can't afford the $60,000 cost to buy digital projectors. "When you have a business and technology that has always worked for you, it's hard to imagine it going away. Some [theatres] are looking at the money they have to lay out. Some are scrambling to try to raise funds.

Core Capabilities

the internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into output. Ex For years, large retail stores such as Walmart and Target have been trying to open stores in New York City only to be met with protests. Aldi, however, recently opened two stores in the city, not only with no protests but even with some politicians in attendance. The reason that Aldi faces little opposition as it opens stores in dense, urban settings is that it is able to make money in small, high-rent stores that are dictated by location.

Corporate-level strategy

the overall organizational strategy that addresses the question "What business or businesses are we in or should we be in?"

Discontinuous change

the phase of a technology cycle characterized by technological substitution and design competition

Incremental change

the phase of a technology cycle in which companies innovate by lowering costs and improving the functioning and performance of the dominant technological design. Ex manufacturing efficiencies enable Intel to cut the cost of its chips by one-half to two-thirds during a technology cycle, while doubling or tripling their speed. This focus on improving the dominant design continues until the next technological discontinuity occurs.

Technological discontinuity

the phase of an innovation stream in which a scientific advance or unique combination of existing technologies creates a significant breakthrough in performance or function. Ex maker of the Multi elevator, hopes to solve that problem by replacing the steel safety cable and pulleys used to move elevators with magnetic levitation (similar to that used on high-speed trains) that allows elevators cars to "float" to their destinations. This not only reduces the space needed for elevators by half, but without cables, multiple cars can use the same shaft, just like a subway line, and they can even move horizontally, from one side of a building to another.

Cost leadership

the positioning strategy of producing a product or service of acceptable quality at consistently lower production costs than competitors can, so that the firm can offer the product or service at the lowest price in the industry. Ex Idaho-based WinCo, which brands itself as "The Supermarket Low Price Leader," "may be the best retailer in the western U.S. WinCo is really unstoppable at this point."61 Jon Springer, with Super Market News,' says, "While many supermarkets strive to keep within a few percentage points of Walmart Stores' prices, WinCo Foods often undersells the massive discount chain."62 How? With minimalist stores, having customers bag their groceries, not accepting credit cards (which saves 3 percent per transaction), limiting selection within product categories, and by buying directly from farms and factories, WinCo cuts out food distributors who mark up prices and sell more expensive brands.

Differentiation

the positioning strategy of providing a product or service that is sufficiently different from competitors' offerings that customers are willing to pay a premium price for it. ExNorway-based Norwex makes premium-priced cleaning products that clean your house with water and no chemicals or cleaning agents. For instance, a Norwex Microfiber cloth contains microfibers that are 1/200th the thickness of a human hair. The microfibers capture and can hold seven times their weight, which means that they capture dirt, grease, and moisture. Does it work? Microbiologist Kristen Gibson says, "A damp microfiber cloth is a really good tool for removing microorganisms, including viruses and bacteria." Her research, funded by the U.S. Department of Agriculture, found that microfibers removed viruses, unlike typical cloth towels that simply spread viruses from one surface to another.

Focus strategy

the positioning strategy of using cost leadership or differentiation to produce a specialized product or service for a limited, specially targeted group of customers in a particular geographic region or market segment. Ex Trader Joe's in Bellingham, Washington, where he buys $6,000 of Trader Joe's merchandise. Hallatt marks up his purchases by an average of $2 and sells them at Pirate Joe's, his Vancouver grocery store that is an unapologetic knockoff of Trader Joe's. Hallett says Pirate Joe's is, "an unaffiliated unauthorized re-seller of Trader Joe's products (we were sued, they lost, now they are appealing)." Because Trader Joe's has no plans to enter Canada, Hallatt is able to focus on Canadians—in Vancouver and afar

Change intervention

the process used to get workers and managers to change their behaviors and work practices

Acquisition

the purchase of a company by another company. Ex can either develop new businesses internally or look for acquisitions, that is, other companies to buy. Either way, the goal is to add legs to the stool.

Technological Substitution

the purchase of new technologies to replace older ones. Ex Hard wire phones getting replaced with cell phones.

Storming

the second stage of development, characterized by conflict and disagreement, in which team members disagree over what the team should do and how it should do it

Recovery

the strategic actions taken after retrenchment to return to a growth strategy. Ex the cuts are made as part of a recovery strategy intended to allow companies to eventually return to a successful growth strategy. When company performance drops significantly, a strategy of retrenchment and recovery may help the company return to a successful growth strategy.

Strategic Reference Points

the strategic targets managers use to measure whether a firm has developed the core competencies it needs to achieve a sustainable competitive advantage Ex If a hotel chain decides to compete by providing superior quality and service, then top management will track the success of this strategy through customer surveys or published hotel ratings. If hotel chain decides to compete on price, it will regularly conduct market surveys to check the prices of other hotels.

Organizational Innovation

the successful implementation of creative ideas in organizations.

Testing

the systematic comparison of different product designs or design iterations.

Norming

the third stage of team development, in which team members begin to settle into their roles, group cohesion grows, and positive team norms develop

Coercion

the use of formal power and authority to force others to change

Cross-Training

training team members to do all or most of the jobs performed by the other team members

Distinctive Competence

what a company can make, do, or perform better than its competitors. Ex Consumer Reports magazine consistently ranks Honda and Subaru cars as tops in quality and reliability. Similarly, PC Magazine readers ranked Apple's desktop and laptop computers best in terms of service and reliability.

Multifunctional teams

work teams composed of people from different departments. Ex Multifunctional teams accelerate learning and understanding by mixing and integrating technical, marketing, and manufacturing activities. By involving all key departments in development from the start, multifunctional teams speed innovation through early identification of new ideas or problems that would typically not have been generated or addressed until much later.

Creative work environments

workplace cultures in which workers perceive that new ideas are welcomed, valued, and encouraged. Ex Exhibit 7.3 shows, creative work environments have six components that encourage creativity: challenging work, organizational encouragement, supervisory encouragement, work group encouragement, freedom, and a lack of organizational impediments.

Three steps of strategy making process Step 3: Choosing Strategic Alternatives

After determining the need for strategic change and conducting a situational analysis, the last step in the strategy-making process is to choose strategic alternatives that will help the company create or maintain a sustainable competitive advantage