MGMT 464
strategic group
The set of companies that pursue a similar strategy within a specific industry. Members: • Firms in the same strategic group tend to follow a similar strategy. Companies in the same strategic group, therefore, are direct competitors.
functional structure, higher
A _______ allows for a _____ degree of specialization and deeper domain expertise than a simple structure
functional structure, flat structure
A _______ allows for an efficient top-down and bottom-up communication chain between the CEO and the functional departments, and this relies on a relatively _______.
rational top-down
A ________ process through which management can program future success; typically concentrates strategic intelligence and decision-making responsibilities in the office of the CEO
organic structures correlates with the following:
a fluid and flexible information flow among employees in both horizontal and vertical directions; faster decision making; and higher employee motivation, retention, satisfaction, and creativity
AFI strategy framework
a model that links three interdependent strategic management tasks- analyze, formulate, and implement- that, together, help managers plan and implement a strategy that can improve performance and result in competitive advantage.
Industry convergence
a process whereby formerly unrelated industries begin to satisfy the same customer need. --is often brought by technological advances
Fragmented industries
low profit potential
Organic structures, flat organizational structure
organizational form characterized by a low degree of specialization and formalization, a flat organizational structure, and decentralized decision-making. --Have a low degree of specialization and formalization, a ____, and decentralized decision making.
simple structures
organizational structure in which the founders tend to make all the important strategic decisions as well as run the day-to-day operations --generally used by small firms with low organizational complexity --the founders tend to make all the important decisions and run the day-to-day operations
Multidivisional structures
organizational structure that consists of several distinct strategic business units (SBUs), each with its own profit-and-loss (P&L) responsibility
Functional structures
organizational structure that groups employees into distinct functional areas based on domain expertise. --use this as sales increase firms generally adopt this structure -- Often correspond to distinct stages in the company value chain such as R&D, engineering and manufacturing, and marketing and sales, as well as supporting areas such as human resources, finance, and accounting.
Functional managers
responsible for decisions and actions within a single functional area
unrealized strategies
unpredictable events
Perfect competition
• A ______ industry is characterized as fragmented and has many small firms, a commodity product, ease of entry, and little or no ability for each individual firm to raise its prices. • Firms in perfect condition have difficulty achieving even a temporary competitive advantage and can achieve only competitive parity. • It is a rare industry structure in its pure form; market for commodities such as natural gas, copper, and iron tend to approach this structure. Modern high-tech industries are also not immune to the perils of it.
fragmented industries (low profit potential)
Characteristics of ___________: these are perfect competition and characteristics include: many small firms, firms are price takers, commodity product, low entry barriers.
Reduces its profit potential because excess capacity still remains.
Effect of high exit barriers in an industry?
industry effects firm effects
Forces and firm performances: determined primarily by two factors:
strategy development
Functional managers are involved in ________ because they are much closer to the final products, services, and customers than corporate or business level managers.They also may initiate strategic initiatives based on autonomous actions that can influence the direction of the company.
goods, services, lower
Gaining competitive advantage in a competitive industry a firm needs to provide either ____ or ______ consumers value more highly than those of its competitors, or goods similar to the competitors at a ______ price.
Philanthropic responsibilities Ethical responsibilities Legal responsibilities Economic responsibilities
Pyramid of corporate responsibility: -____(corporate citizenship) -____(do what is right, and fair) -____(laws and regulations are society's codified ethics. Define minimum acceptable standard) -_____(gain and sustain competitive advantage)
firm's performance, dynamic
Relationship of strategy and structure: -The interdependent relationship between strategy and structure directly impacts a ______ -The relationship is ______, changing overtime in a predictable pattern as firms grown in size and complexity
Strategy-planning activity Analysis stage
Starting scenario planning: -______:activity in which managers envision different what-of scenarios to anticipate plausible futures. - In the _______, managers brainstorm to identify possible future scenarios
cost-leadership strategy differentiation strategy
Two different competitive strategies and putting them together at the same time can cause trouble: _________, focused on low cost, and a __________, focused on delivering unique features and service.
Ethical standards Ethical and Effective Strategic leaders
Value of Organizational Values: • _______ the norms that govern the behavior of individuals within a firm or organization. • Strong ethical values have two important functions: First, they form a solid foundation on which a firm can build its vision and mission, and thus lay the groundwork for long-term success. Second, values serves as the guardrails put in place to keep the company on track when pursuing its vision and mission on its quest for competitive advantage. • Help individuals make choices that are both ________ • Employees tend to follow values practiced by _______.
Stakeholder, company
_______ have power over a _______ when it can get the company to do something that it would not otherwise do.
Complementor
a company that provides a good or service that leads customers to value your firm's offering more when the two are combined. • Firms may choose to provide the complements themselves or work with another company to accomplish this.
steps in stakeholder impact analysis
a decision tool with which managers can recognize, assess, and address the needs of different stakeholders, allowing the firm to achieve competitive advantage while acting as a good corporate citizen. Steps: -power -legitimacy -urgency
Groupthink
a situation in which opinions coalesce around a leader without individuals critically evaluating and challenging that leader's opinions and assumptions.
Identify strategic business units
a standalone division of a larger conglomerate, with its own profit-and-loss responsibility.
Effects of formalization
an element of organizational structure that describes the degree to which a task is divided into separate jobs (i.e., the division of labor). • Are characterized by detailed written rules and policies of what to do in specific situations. These are often codified in specific situations. • It is not necessarily negative; often it is necessary to achieve consistent and predictable results. • A high degree of formalization can slow decision-making, reduce creativity and innovation, and hinder customer service.
Effects of specialization
an element of organizational structure that describes the degree to which a task is divided into separate jobs (i.e., the division of labor.) • Larger firms, such as Fortune 100 companies, tend to have a high degree of specialization; smaller entrepreneurial ventures tend t have a low degree of specialization. • Requires a trade-off between breadth and depth of knowledge. • While a high degree of the division of labor increases productivity, it can also have unintended side effects such as reduced employee job satisfaction due to repetition of tasks.
centralization
an element of organizational structure that refers to the degree to which degree decision-making is concentrated at the top of the organization. -- Often correlates with slow response time and reduced customer satisfaction
stakeholder strategy
an integrative approach to managing a diverse set of stakeholder's effectively in order to gain and sustain competitive advantage. Concerned with how the firm exchanges with various stakeholders to create and trade value.
strategic initiative
any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures. • Can come from anywhere, they could be the result of a response to external trends or come from internal sources. • Can be the result of top-down planning by executives, or they can also emerge through a bottom-up process. Can also bubble up from deep within a firm through: Autonomous actions by lower-level employees, Serendipity (random events, pleasant surprises, accidental happenstances) and the resource allocation process (RAP).
Firm effects
attribute firm performance to the actions managers takes. The key point that managers actions tend to be more important in determining firm performance than the forces exerted on the firm by its external environment.
Identify business level strategies
concerns of how to compete (cost leadership, differentiation and integration) Competitive and cooperative strategies that emphasize improvement of the competitive position of a corporations products or services in a specific industry or market segment.
Identify corporate strategy
concerns questions relating to where to compete (industry, markets and geography). A strategy that states a company's overall direction in terms of its general attitude toward growth and the management of its various business and product lines.
Co-opetition
cooperation by competitors to achieve a strategic objective.
Industry effects
describes the underlying economic structure of the industry. They attribute firm performance to the industry in which the firm competes.
Consolidated industries
high profit potential
When is supplier power high?
i. The suppliers industry is more concentrated than the industry it sells to ii. Suppliers do not depend heavily on the industry for a large portion of their revenues iii. Incumbent firms face significant switching costs when changing suppliers iv. Suppliers offer products that are differentiated v. There are no readily available substitutes for the products or services that the suppliers offer vi. Suppliers can credibly threaten to forward integrate into the industry.
Black Swan events
incidents that describe highly improbable but high-impact events.
Mobility barriers
industry-specific factors that separate one strategic group from another
Organizational culture
the collectively shared values and norms of an organization's members; a key building block of organizational design.
Monopolistic competition
• A ______ industry is characterized by many firms, a differentiated product, some obstacles to entry, and the ability to raise prices for a relatively unique product while retaining customers. • Understanding this structure offer products or services with unique features. Computer hardware industry is an example of it. • Firms frequently communicate the degree of product differentiation through advertising.
Oligopoly
• The term _____ comes from the Greeks and means "few sellers." An oligopolistic industry is consolidated with few (large) firms, differentiated products, high barriers to entry, and some degree of pricing power. • A key feature of it is that the competing firms are interdependent. • This type of industry structure is often analyzed using game theory, which attempts to predict strategic behaviors by assuming that the moves and reactions of competitors. Examples of them include the soft drink industry. • Companies in a oligopoly tend to have some pricing power if they are able to differentiate their product or service offerings from those of their competitors.
