MGT401

sociocultural

A few of the major sociocultural issues currently facing most countries are shown in Exhibit 2.2. Analysis of societal trends is important for a variety of reasons. One reason is that stakeholder groups are also members of society, so some of their values and beliefs are derived from broader societal influences. Closely related to serving stakeholders, firms may also enhance their general reputations and reduce the risk of hurting their reputations by anticipating and adjusting for sociocultural trends.. Ex. Influence of terrorism Immigration policies Increase in environmental awareness and global warming Sensitivity to corruption in business and government Mistrust of capitalism and large corporations Role of government in health care and the economy Declining quality of education in some countries Influence of World Wide Web Importance and role of the military Levels of foreign direct investment Drug and pornography addiction AIDS and other widespread health problems Safety of food and products ...... combining social and cultural factors.

organizational analysis

An organizational analysis, which follows the external analysis, is designed to evaluate the organization's strategic direction, business model, business- and corporate-level strategies, resources, capabilities, and relationships with internal and external stakeholders, and then determine the strengths, weaknesses, vulnerabilities, and sources of competitive advantage exhibited by the firm. These determinations must be made against a background of knowledge about the external environment so that the full range of opportunities and threats can also be identified......is the process of reviewing the development, work environment, personnel and operation of a business or another type of association.

organizational bottom line

depends on ability to satisfy all of our stakeholders...... Bottom line refers to a company's net earnings, net income or earnings per share (EPS). ... Most companies aim to improve their bottom lines through two simultaneous methods: growing revenues (i.e., generate top-line growth) and increasing efficiency (or cutting costs).

strategic direction

direction is an outcome of melding the desires of key organizational stakeholders with environmental realities. direction pertains to the enduring goals and objectives of the organization. It encompasses a definition of the businesses in which a firm operates, the firm's vision for the future, and its purpose. A well-established strategic direction provides guidance to the managers and employees who are largely responsible for carrying it out. ........ is a critical enabler for governance as development projects can trace their requirements all the way to Strategic Goals via Portfolio Requests. ... Aligning portfolio work to strategic goals helps to ensure that the business is doing the right things.

risk taking atmosphere

firms with lots of innovation and entrepreneurship have a strategic direction, culture, and leaders that encourage creativity, learning, and risk taking. Steve Jobs

strategic leadership

have a large impact on the strategies and performance of a firm. 5 For example, Sam Palmisano, CEO, reinvigorated IBM through an emphasis on innovation in fast growing areas such as analytics and supercomputing as well as international growth. One of the most important responsibilities of a strategic leader is to establish direction. ..... is the ability of influencing others to voluntarily make decisions that enhance the prospects for the organisation's long-term success while maintaining long-term financial stability.

business strategy

pertains to domain direction and navigation. In other words, it describes how businesses compete in the areas they have selected. Business strategies are also sometimes referred to as competitive strategies. If an organization is involved in only one area of business, then business strategy decisions tend to be made by the same people. In organizations that have diversified into many areas, the different areas may be represented by different operating divisions or lines of business. In those situations, business strategy decisions are made by division heads or business unit managers....... Business Strategy. ... Business (or Strategic) management is the art, science, and craft of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-term objectives.

economic volatility

plan. Economic volatility has magnified these planning difficulties because of the interconnectedness of national economies. 41 Economic interconnections are especially evident when crises strike. For instance, a huge earthquake that struck Japan in 2011 caused chaos in its industry-leading automobile industry. Months after the earthquake major auto manufacturers Nissan, Toyota, and Honda were still running well below capacity. However, the impact was also felt by companies that buy parts from Japan. Wars, terrorism, and political unrest also influence economic conditions around the globe.......Definition: It is a rate at which the price of a security increases or decreases for a given set of returns. Volatility is measured by calculating the standard deviation of the annualized returns over a given period of time.

corporate strategy

refers primarily to domain definition, or the selection of business areas in which the organization will compete. Although some firms, such as Southwest Airlines, are involved in just one basic business, diversified organizations such as General Electric and Sony are involved in several different businesses and serve a variety of customer groups. Corporate strategy decisions are typically made at the highest levels of the organization by the CEO and/or board of directors, although these individuals receive input from other managers...... Corporate Strategy is concerned with how companies, like Disney, create value across different businesses. It takes as given the RC lessons on competitive strategy, and asks how the corporation can add value over and above that which a business unit creates by itself.

competitive strategies

A strategy is an organizational plan of action that is intended to move an organization toward the achievement of its shorter-term goals and, ultimately, toward the achievement of its fundamental purposes. Strategy formulation is often divided into three levels—corporate, business, and functional, as shown in Exhibit 1.3. Business strategy formulation, discussed in Chapter 5, pertains to domain direction and navigation. In other words, it describes how businesses compete in the areas they have selected. Business strategies are also sometimes referred to as competitive strategies......Porter's Generic Competitive Strategies (ways of competing) ... 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.

strategy formulation

A strategy is an organizational plan of action that is intended to move an organization toward the achievement of its shorter-term goals and, ultimately, toward the achievement of its fundamental purposes. Strategy formulation is often divided into three levels—corporate, business, and functional,. results in a plan of action for the organization and its functions, business units, and divisions...... Strategy formulation is the process by which an organization chooses the most. appropriate courses of action to achieve its defined goals. This process is. essential to an organization's success, because it provides a framework for the.

resource based perspective

An organization is a bundle of resources. The most important management function is to acquire and manage valuable, unique, inimitable, and nonsubstitutable resources such that the organization enjoys sustainable competitive advantage leading to high financial performance.......The resource-based view (RBV) as a basis for the competitive advantage of a firm lies primarily in the application of a bundle of valuable tangible or intangible resources at the firm's disposal (Wernerfelt, 1984, p172; Rumelt, 1984, p557-558; Penrose, 1959).

organization innovation

Because of global interconnectedness, economic turbulence, and hypercompetition, innovation is one of the most important factors driving competition in the 21st century. How do firms move beyond what is tried and proven to find successful new products and services, new ways of creating them, or new ways of doing business?.... Organizational innovations are instances of organizational change that: result from a shift in underlying organizational assumptions, are discontinuous from previous practice, and. provide new pathways to creating public value

entrepreneurship

Broadly speaking, entrepreneurship is the process through which individuals, groups, or firms pursue opportunities to create new value. 46 It involves recognizing or creating an opportunity, assembling the resources necessary to pursue it, and then managing those resources to bring the new venture into being. Entrepreneurship can occur both within firms and independently of them......"Rather than working as an employee, an entrepreneur runs a small business and assumes all the risk and reward of a given business venture, idea, or good or service offered for sale.

broad environment

Consists of domestic and global environmental forces such as sociocultural, technological, political, and economic trends. Forms the context within which the firm and its task environment exist.....The broad environment consists of six components: demographic environment, economic environment, natural environment, technological environment, political-legal environment, and social-cultural environment. The forces of these environments can have a major impact on the actors in the micro environment.

task environment

Consists of external stakeholders.... External environment of an organization which affects its ability to reach business goals. Any business or consumer with direct involvement with an organization may be part of the task environment. Examples of task environment sectors include, competitors, customers, suppliers and labor supply.

business ethics

Ethics are the moral standards by which people judge behavior. Business ethics, then, pertain to the moral obligations of businesses to individuals, groups (such as stakeholders), and society as a whole..... Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.

industrial organization economics

Firm performance is, in part, a function of the industries in which the firms compete. Industry performance is a function of structural characteristics and the behavior of firms in the industry. Managers can increase firm performance by devising strategies in conformance with industry characteristics or by leading their firms to compete in high-performing industries......An industrial organization is a field of economics dealing with the strategic behavior of firms, regulatory policy, antitrust policy and market competition.Industrial organization applies the economic theory regarding model of price to industries.

firm performance

Firm performance is, in part, a function of the industries in which the firms compete. Industry performance is a function of structural characteristics and the behavior of firms in the industry. Managers can increase firm performance by devising strategies in conformance with industry characteristics or by leading their firms to compete in high-performing industries......Firm performance is a relevant construct in strategic management research and frequently used as a dependent variable. Despite this relevance, there is hardly a consensus about its definition, dimensionality and measurement, what limits advances in research and understanding of the concept.

stakeholder management perspective

Firms manage a value-creating system of stakeholders. The primary role of managers is to foster mutually beneficial relationships with stakeholders, leading to competitive advantage. Firms that treat their stakeholders well create more value, which is also associated with higher financial performance. includes communicating, negotiating, contracting, and managing relationships with stakeholders and motivating them to behave in ways that are beneficial to the organization and its other stakeholders. .....The stakeholder theory is a theory of organizational management and business ethics that addresses morals and values in managing an organization. It was originally detailed by R. Edward Freeman in the book Strategic Management: A Stakeholder Approach.

strategic planning

For a firm engaged in a formal strategic planning process, the activities will likely occur in the order specified in the model. In other situations, the activities may be carried out in some other order or simultaneously. The dotted arrows in Exhibit 1.1 indicate that organizations often cycle back to earlier activities during the strategic management process.External and Internal Analysis.Strategic Direction.Strategy formulation. Strategy Implementation and Control.Strategic Restructuring.......Strategic planning is an organizational management activity that is used to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes/results, and assess and adjust the organization's ...

global interdependencies

Globalization means that there are increasing interdependencies between countries due to the flow of goods and services, knowledge, and financial capital across borders. 40 Global interdependencies make the business environment very complicated, which means it is much harder for managers to plan.......Global interdependence means mutual dependence at an international level. Countries depend on each other for certain commodities. The import and export of various goods and services greatly contribute to global interdependence.

external stakeholders

Groups or individuals outside the organization that are significantly influenced by or have a major impact on the organization. Examples- customers, suppliers, competitors, government agencies and administrators, and a variety of other external groups that have a stake in the organization...... External Stakeholders are individuals or groups outside a business or project, but who can affect or be affected by the business or project. Arguably external stakeholders wield the most influence on the long term success of a business or project, because external stakeholders will often be the end users/customers.

primary stakeholders

High-priority"primary"stakeholders tend to rank high on the fairness criterion and frequently also possess resources the firm needs. They include shareholders, employees, managers, customers, suppliers, communities, and a variety of other individuals and groups that vary in their importance depending on the situation of the firm and its industry. For instance, labor unions are a primary stakeholder in unionized industries......Primary stakeholders in a corporation or a business entity typically refers to investors, customers, suppliers and employees. As primary stakeholders, these groups are directly affected negatively or positively by any actions taken by the business entity.

hypercompetition

Hypercompetition is the term often used to describe intense rivalry among firms. 43 Rapid technological innovation is associated with hypercompetition because it creates a situation in which products and services quickly become outdated. 44 Bill Gates once said that Microsoft is"always two years away from failure,"meaning that at any time a competitor could create an operating system that would make Windows obsolete......Definition of hypercompetition. A situation in which there is a lot of very strong competition between companies, markets are changing very quickly, and it is easy to enter a new market, so that it is not possible for one company to keep a competitive advantage for a long time. [

internal stakeholders

Including managers, employees, and the owners and their representatives (e.g. board of directors) also have a stake in the outcomes of the organization.... Internal stakeholders are entities within a business (e.g., employees, managers, the board of directors, investors). External stakeholders are entities not within a business itself but who care about or are affected by its performance (e.g., consumers, regulators, investors, suppliers).

organizational vision

It is based on a vision of where the organization is attempting to go. This vision is sometimes called strategic intent. 50 Strategic thinking leads to ideas that will help the organization achieve its vision....A Vision statement outlines what the organization wants to be. It concentrates on the future. It is a source of inspiration. It provides clear decision-making criteria. Attention: Many people mistake vision statement for * mission statement.

managing for stakeholders

Many successful organizations have learned that productive and mutually beneficial relationships with stakeholders can lead to competitive advantages. 27 Some of these advantages, and the value they create, are outlined in Exhibit 1.5. This sort of management is sometimes called"managing for stakeholders."Managing for stakeholders implies that more resources are allocated to satisfy the needs of stakeholders than might be necessary simply to retain their participation in the productive activities of the firm. 28 This sort of management means that firms incur greater costs as, for example, they provide better wages and benefits to their employees, give back to the communities in which they operate, and provide highquality products or outstanding service to customers at prices that are perhaps a little lower than they might otherwise charge. ...... Stakeholder management is a critical component to the successful delivery of any project, programme or activity. A stakeholder is any individual, group or organization that can affect, be affected by, or perceive itself to be affected by a programme.

retrenchment

Popular restructuring tactics include refocusing corporate assets on a more limited set of activities, retrenchment (a turnaround strategy that often includes liquidating assets and layoffs), Chapter.....the reduction of costs or spending in response to economic difficulty.

value creation

Potential for Value Creation Sales growth Efficiency Fewer negative actions Less risk. Unique sources of value • Differentiation: unique features and technologies embedded in assets • Low cost: basic products, services, or assets at a low price • Best cost: high value to cost ratio.... Value creation is the primary aim of any business entity. Creating value for customers helps sell products and services, while creating value for shareholders, in the form of increases in stock price, insures the future availability of investment capital to fund operations.

strategic management process

Process through which organizations analyze and learn from their internal and external environments, establish strategic directions, create strategies that are intended to help achieve established goals, and execute those strategies, all in an effort to satisfy key organizational stakeholders....... The strategic management process is more than just a set of rules to follow. It is a philosophical approach to business. ... The five stages of the process are goal-setting, analysis, strategy formation, strategy implementation and strategy monitoring.

long term oriented

Some managers are so concerned about short-term operating details that they have a hard time focusing on where the firm is going. While it is true that efficiency often requires attention to details, it is also true that sometimes managers need to mentally step away from their day-to-day problems in order to focus on the future...... Long-term orientation is when you are focused on the future. You are willing to delay short-term material or social success or even short-term emotional gratification in order to prepare for the future. If you have this cultural perspective, you value persistence, perseverance, saving and being able to adapt.

intent focused

Some people think of creative processes as purely random and unstructured. However, strategic thinking is not a random process. It is based on a vision of where the organization is attempting to go. This vision is sometimes called strategic intent. 50 Strategic thinking leads to ideas that will help the organization achieve its vision.....Intent focused. Dr. Liedtka says: "Strategic intent provides the focus that allows individuals within an organization to marshal and leverage their energy, to focus attention, to resist distraction, and to concentrate for as long as it takes to achieve a goal."

strategic control

Strategic control, the topic of Chapter 8, refers to the processes that lead to adjustments in the strategic direction, strategies, or the implementation plan when necessary. Managers may collect new information that leads them to reevaluate their assessment of the environment. They may determine that the organizational mission is no longer appropriate or that organizational strategies are not leading to the desired outcomes. On the other hand, the strategic control system may tell managers that the environmental assumptions, mission, and strategies are appropriate, but the strategies have not been well executed. In such an instance, adjustments should be made in the implementation process...... Strategic control is a term used to describe the process used by organizations to control the formation and execution of strategic plans; it is a specialised form of management control, and differs from other forms of management control (in particular from operational control) in respects of its need to handle ...

organizational mission

Strategic direction may be contained, in part, in a mission statement. Unlike shorter-term goals and strategies, the mission is an enduring part of planning processes within the organization. Some missions are short. For example,"Google's mission is to organize the world's information and make it universally accessible and useful."......A Mission statement defines the purpose or broader goal for being in existence or in the business and can remain the same for decades if crafted well. A Vision statement is more specific in terms of both the future state and the time frame. Vision describes what will be achieved if the organization is successful.

strategic flexibility

Strategic flexibility is increased as the firm is presented with a larger number of better business opportunities from which to select. 32.... Strategic flexibility is the organization's. capability to identify major changes in the external environment, quickly commit. resources to new courses of action in response to those changes, and recognize and act. promptly when it is time to halt or reverse existing resource commitments.

SWOT analysis

Strengths, weaknesses, opportunities, and threats. The general idea is that strategies should be formulated to take advantage of internal strengths and opportunities arising from the external environment, to overcome internal weaknesses, or to neutralize threats found in the external environment... a study undertaken by an organization to identify its internal strengths and weaknesses, as well as its external opportunities and threats.

systems perspective

The organization sits at the center of a network of constituencies called stakeholders. Furthermore, the organizational network exists in the context of the sociocultural, economic, technological, and political/legal environment. Strategic thinking entails envisioning the whole system and how the actions a firm is taking or might take are being influenced by or influence that system. This approach helps in the generation of strategic alternatives, in their thoughtful evaluation, and in anticipating the reactions of external stakeholders such as customers, competitors, or government regulators to the actions a firm intends to take.....Concepts: System Perspective. Taking into account all of the behaviors of a system as a whole in the context of its environment is the systems perspective. ... Instead, one is obligated to describe the system as a whole.

global environment

The world's markets are becoming increasingly globalized. Globalization means that there are increasing interdependencies between countries due to the flow of goods and services, knowledge, and financial capital across borders. 40 Global interdependencies make the business environment very complicated, which means it is much harder for managers to plan. Economic volatility has magnified these planning difficulties because of the interconnectedness of national economies.Economic interconnections are especially evident when crises strike. For instance, a huge earthquake that struck Japan in 2011 caused chaos in its industry-leading automobile industry. Months after the earthquake major auto manufacturers Nissan, Toyota, and Honda were still running well below capacity. ....The definition of global business environment is multiple sovereign nations outside of the organization's home environment influencing how the organization makes decisions for how to use its resources. The company's operating situation depends on both external and internal factors.

scientific approach

This may also be called"hypothesis testing."A firm should generate ideas through a creative process and then test them to see if they will work. Testing can occur through analysis, as the firm establishes criteria that are important and then weighs ideas against those criteria and an evaluation of the external environment and firm resources. Ultimately, firms have to be willing to"pull the trigger"on ideas that make it through the analysis stage and actually try them. Often with new product introductions markets are tested in a limited geography. Also, new technologies may be applied only in particular areas of the firm. The firm then collects data to assess the success of the idea. If an idea is successful, it can be more broadly applied......The scientific method is a body of techniques for investigating phenomena, acquiring new knowledge, or correcting and integrating previous knowledge. To be termed scientific, a method of inquiry is commonly based on empirical or measurable evidence subject to specific principles of reasoning.

hypothesis testing

This may also be called"hypothesis testing."A firm should generate ideas through a creative process and then test them to see if they will work. Testing can occur through analysis, as the firm establishes criteria that are important and then weighs ideas against those criteria and an evaluation of the external environment and firm resources. Ultimately, firms have to be willing to"pull the trigger"on ideas that make it through the analysis stage and actually try them. Often with new product introductions markets are tested in a limited geography. Also, new technologies may be applied only in particular areas of the firm. The firm then collects data to assess the success of the idea. If an idea is successful, it can be more broadly applied......the theory, methods, and practice of testing a hypothesis by comparing it with the null hypothesis. The null hypothesis is only rejected if its probability falls below a predetermined significance level, in which case the hypothesis being tested is said to have that level of significance.

turbulent environment

Turbulent global competitive environments and multibusiness organizations make the top management task far more complex than it used to be.....Environmental turbulence refers to the amount of change and complexity in the environment of a company.

functional strategy

contains the details of how the functional areas such as marketing, operations, finance, and research and development should work together to achieve the business-level strategy. Thus, functional strategy is most closely associated with strategy implementation,Functional decisions are made by functional managers, who represent organizational areas such as operations, finance, personnel, accounting, research and development, or information systems. ..... Organizational plan for human resources, marketing, research and development and other functionalareas. The functional strategy of a company is customized to a specific industry and is used to back up other corporate and business strategies.

external environment analysis

involves evaluation of the broad and task environments to determine trends, threats, and opportunities and to provide a foundation for strategic direction...... is a strategic tool. It is a process to identify all the external and internal elements, which can affect the organization's performance. The analysis entails assessing the level of threat or opportunity the factors might present.

sustainable competitive advantage

is an advantage that is difficult to imitate by competitors and thus leads to higher-than-average organizational performance over a long time period. 21 For example, Toyota has been able to create and maintain a highperformance knowledge-sharing network with its suppliers and other stakeholders that has led to very high levels of efficiency and innovation.....A sustainable competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors. These attributes can include access to natural resources or access to highly trained and skilled personnel human resources.

strategic thinking

is the term used to describe the innovative aspects of strategic management. 47 A rigid strategic planning process can drive out strategic thinking. There is no consensus on the meaning of strategic thinking or exactly what it entails. However, certain characteristics are associated with the kind of thinking that is needed to stimulate innovation in the strategic planning process. 48 These characteristics are a focus on strategic intent, a long-term perspective, consideration of the past and the present, a systems perspective, the ability to seize unanticipated opportunities, and a scientific approach. 49.....Strategic thinking is a process that defines the manner in which people think about, assess, view, and create the future for themselves and others. Strategic thinking is an extremely effective and valuable tool. One can apply strategic thinking to arrive at decisions that can be related to your work or personal life.

strategy implementation

represents a pattern of decisions and actions that are intended to carry out the plan. involves creating the functional strategies, systems, structures, and processes needed by the organization to achieve strategic ends. ..... Strategic implementation is critical to a company's success, addressing the who, where, when, and how of reaching the desired goals and objectives. It focuses on the entire organization. Implementation occurs after environmental scans, SWOT analyses, and identifying strategic issues and goals.

environmental determinism

suggests that good management is associated with determining which strategy will best fit environmental, technical, and human forces at a particular point in time, and then working to carry it out. 12 From a deterministic perspective, the most successful organization will be the one that best adapts to existing forces...... Environmental determinism (also known as climatic determinism or geographical determinism) is the study of how the physical environment predisposes societies and states towards particular development trajectories.

strategic thinking

thinking is the term used to describe the innovative aspects of strategic management. 47 A rigid strategic planning process can drive out strategic thinking. For example, some firms require their managers to establish and follow very detailed plans that do not allow for deviations. Other firms harshly penalize their managers for failure, so they are afraid to try new ideas. Effective strategic planning processes incorporate creative aspects associated with strategic thinking. There is no consensus on the meaning of strategic thinking or exactly what it entails. However, certain characteristics are associated with the kind of thinking that is needed to stimulate innovation in the strategic planning process. 48 These characteristics are a focus on strategic intent, a long-term perspective, consideration of the past and the present, a systems perspective, the ability to seize unanticipated opportunities, and a scientific approach. 49....Strategic thinking is a process that defines the manner in which people think about, assess, view, and create the future for themselves and others. Strategic thinking is an extremely effective and valuable tool. One can apply strategic thinking to arrive at decisions that can be related to your work or personal life.

strategic restructuring

typically involves a renewed emphasis on the things an organization does well, combined with a variety of tactics to revitalize the organization and strengthen its competitive position. Popular restructuring tactics include refocusing corporate assets on a more limited set of activities, retrenchment (a turnaround strategy that often includes liquidating assets and layoffs), Chapter XI reorganization, leveraged buyouts, and changes to the organizational structure. Chapter 8 also includes a section on dealing with economic cycles......Strategic restructuring is a term increasingly used to refer to a broad continuum of options for organizational partnerships, including but not limited to mergers, asset transfers, joint ventures, administrative or back office consolidations, joint programs, parent-subsidiary structures, and fiscal sponsorships.