Principles of Management - Environment and Strategic Management

Porter's Five Forces

(5 critical external factors that affect strategies being developed by organizations in any industry.Managers use the tool to examine opportunities and threats and to facilitate decision making in the context of their company's external environment. It measures the competitiveness of an industry and thus its attractiveness or potential profitability. An unattractive industry is one in which the combination of these five forces acts to drive down overall profitability.)

Value Proposition

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

Competitive Analysis

A competitive analysis looks at competitors and tries to answer such questions as these in the following categories: General Background, financial, products, customers, advertising and sales, personnel

Strategy

A comprehensive plan to achieve its goals in the face of these conditions

Environmental Scanning

A high-level, broad-based process of gathering, analyzing, and dispensing information for purpose of developing strategies or tactics.

Industry Analysis

A method for a company to assess its market position relative to its competitors. An industry analysis is meant to help a company review various market and financial factors in its industry that affect the business, including evaluating the competition.

In your target market

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

Amazon is not organized to realize the value of partnering with Porsche because Porsche must sell through local dealers

Amazon has hired a strategic consultant to consider a partnership with Porsche. Amazon would sell Porsche's cars. As part of a VRIO analysis, the consultant would realize that

E-commerce

Amazon initially stole business from Best Buy. Customers would visit Best Buy to see the products and then look for the lowest prices online, often finding them at Amazon.com. Best Buy gradually found a way to compete. First, they committed to match prices with Amazon. Best Buy's salespeople are knowledgeable and helpful, something Amazon cannot offer. And they learned to showcase and ship, using their stores as warehouses for quick delivery to the local area. Best Buy's strategy mixed "brick-and-mortar" and

Set up routine checks of the freshness of its inventory

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

Environmental Scanning

Amir goes to industry conferences twice a year. The prepared speeches contain few surprises, but the side conversations give him a read on what other firms are doing and perhaps the trade-offs that they see in the industry. Amir is engaged in

Focused and low cost

Cavanagh Altar Breads makes communion wafers or crackers for Catholic services. Historically, the wafers were made by local nuns or sisters, but automation and mass production lowered costs significantly. The sisters buy the wafers wholesale and resell them to local churches. From the perspective of the bakery industry, Cavanagh's strategy is

High bargaining power of suppliers

DeBeers controls many of the world's most productive diamond mines, selling more than one-third of the world's rough diamond production. When analyzing the fine jewelry industry according to Porter's Five Forces, DeBeers' control over diamond supplies reveals ________within the industry.

Customers, competitors, and suppliers (Correct. An industry environment analysis includes customers, competitors, suppliers, regulations, and advocacy groups)

Dominion Electric in Virginia has proposed a 600-mile gas pipeline running through the George Washington National Forest. The forest attracts tourists and tourist spending to West Virginia and Virginia. Environmental groups have demonstrated against the proposed pipeline. Regulators are investigating the risks. Politicians have taken positions for and against it. Who else should be included in an industry environment analysis?

Competitors

Firms that provide similar products or services and try to attract the same customers.

Valuable, rare, inimitable, organized

In the resource view of strategy, VIRO stands for:

Many of the strategies needed to succeed in e-commerce are very different from competing in a non-digital environment

Macy's online store differs from the in-store experience. The online store offers free delivery on larger purchases, free returns, extensive information about the products, and reviews from other customers. Why might Macy's do business this way?

Overall low cost

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

Porter's competitive strategy

Overall differentiation, overall low cost, focused differentiation, focused low cost - integration

PESTEL

Political, economical, social, technological, environmental, legal - an organizing framework that allows decision makers to understand and make connections with a mass of information.

Identify the target customer. Understand the specific customer needs. Show if and how your product or service meets those needs.

Some of the things a customer analysis should do

Strategic objectives and analysis, strategic formulation, strategic implementation, strategic evaluation and control

Strategic Management process

Organized to capture value

The O in VRIO refers to ________ , meaning a company's capacity to use its resources with purposeful integration to achieve a particular result.

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

Customers, competitors, suppliers, regulations, and advocacy groups

The five components of industry environment are

Political, economical, societal, technological, environmental, and legal

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

Sustainable Competitive Advantage

The goal of companies is to create competitive advantage in ways that are difficult or costly for competitors to copy.

Porter's Five Forces

The threat of new entrants (or barriers to entry). The threat of substitute products of services, competitive rivalry within the industry, the bargaining power of buyers, The bargaining power of suppliers

Competitive Advantage

When customers perceive the distinction as being valuable, they will prefer to purchase the business's product over a competitor's products.

Competitive Advantage

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

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.

Business Strategy

how will the company produce distinction and value to its customers?

Operational Culture

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