MGT 499
boards of directors have four obligations
-the company issues accurate financial reports and has adequate controls -critically appraise the companys direction strategy and strategy execution -evaluate the the caliber of senior executives strategic leadership skills -institute a compensation plan for top executives that rewards them for actions and results that serve shareholder interests
core values serve two roles in the culture building process
-they foster a work climate in which employees share common and strongly held convictions about how company business is to be conducted -they provide company personnel with guidance about the manner in which they are to for their jobs
Strategy making/executing process
1. developing a strategic vision, mission and core values 2. setting objective 3. craftinga strategy to achieve the objectives and the company vision 4. executing the strategy 5. monitoring developments, evaluating, performance, and initiating corrective adjustments
strategic group
a cluster of industry rivals that have similar competitive approaches and market positions
distinctive competence
a competitively important activity that a company performs better than its rivals- it thus represents a competitively superior internal strength
low cost provider strategy
a cost based advantage over rivals
value driver
a factor that can have a strong differentiating effect
cost driver
a factor that has a strong influence on a companys costs
best cost provider strategy
a hybrid of low cost provider and differentiation strategies that aim at providing more desirable attributes while beating rivals on price
best practice
a method of performing an activity that consistently delivers superior results compared to other approaches
profit formula
a plan for a cost structure that will enable the company to deliver the customer value proposition profitably
customer value proposition
a plan for satisfying customer wants and needs at a price customers will consider a good value
benchmarking
a potent tool for improving a companys own internal activities that is based on learning how other companies perform them and borrowing their best practices
resource and capability analysis
a powerful tool for sizing up a companys competitive assets and determining whether the assets can support a sustainable competitive advantage over market rivals
strategic group mapping
a technique for displaying the different market or competitive positions that rival firms occupy in the industry
balanced scorecard
a widely used method for combining the use of both strategic and financial objectives, tracking their achievement, and giving management a more complete and balanced view of how well an organization is performing.
strategies work best when
buyers have diverse product preferences and when fewer other rivals are pursuing the same differentiation approach
PESTEL analysis
can be used to assess the strategic relvance of the six principal componenets of the macro environment
successful differentiation allows a firm to
command a premium price increase unit of sales gain buyer loyalty to its branddifferentiation
company's value statement and code of ethics
communicate expectations of how employees should conduct themselves in the workplace
weak cultures
comparatively little influence on company operations
five forces frame work
competition from rival sellers competition from potential new entrants competition from producers of substitute products supplier bargaining power customer bargaining power
resource
competitive asset that is owned or controlled by a company
focused low cost strategy
concentrating on a narrow buyer segment and outcompeting rivals by having lower costs and thus being able to serve niche members at a lower price
focused differentiation strategy
concentrating on a narrow buyer segment and outcompeting rivals by offering buys customized attributes that meet their specilized needs and tastes
deliberate strategy
consists of proactive strategy elements that are planned
emergent strategy
consists of reactive strategy elements that emerge as changing conditions warrant
four levels of strategy for diversified companies
corporate strategy business strategy functional area strategies operating strategies
best cost strategies
create competitive advantage by giving buyers more value for the money
business model contains two crucial elements
customer value proposition and profit formula
focused strategy
delivers competitive advantage either by achieving lower cost than rivals in serving buyers constituting the target market niche
strategic vision
describes where we are going managements aspirations for the company and the course and direction charted to achieve them
companys mission
describesthe scope and purpose of its present business "who we are, what we do, and why we are here"
the strongest of the five forces
determines the extent of he downward pressure on an industrys profitability
macro environment
encompasses the braod environmental context in which a companys industry is situated
corporate strategy
establishes an overall game plan for managing a set of businesses in a diversified, multibusiness company
a company's strategy usually
evolves over time
functional area strategy
ex: marketing, R&D, logistics
two broad types of objectives required
financial and strategic
operating strategy
for key operating units such as manufacturing plants
best cost provider
giving customers more value for their money by satisfying their expectations on key quality features, performance, and service while beating price expectations ex:target
strong cultures
have a big impact on a companies practices and behavioral norms
the fit test
how well foes the strategy fit the companys situation
value chain
identifies the primary activities and related support activities that create customer value
low cost providers
is a basis for competitive advantage is lower overall costs than competitors
resource bundle
is a linked and closely integrated set of competitive assets centered around one or more crossfunctional cpabilities
corporate strategy
is a multibusiness strategy
low cost leaders
is a success for those who have the lowest industry costs, are exceptionally good at finding ways to drive costs out of their businesses and still provide a product or service that buyers find acceptable
business strategy
is primarily concerned with strengthening the companys market position and building competitive advantage in a single business compna or in a single business unit of a diversified multibusiness corporation
Company strategy
is the set of actions that its managers take to outperform the company competitors and achieve superior profitability
competitive advantage test
is the strategy helping the company achieving sustainable competitive advantage?
the performance test
is the strategy producing good company performance?
broad differentiation strategy
is to offer unique product attributes that a wide range of buyers find appealing and worth paying for
strong culture company
it has deeply rooted values and norms of behavior are widely shared and regulate the conduct of the companys business
the competitive advantage is sustainable if
it persists despite the best efforts of competitors to match or surpass this advantage
a company achieves competitive advantage when
it provides buyers with superior value compared to rival sellers or offers the same value at a lower cost to the firm
a company shows strategic intent when
it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective
company's strategic plan
lays out its future direction, business purpose, performance targets, and strategy
company's strategic plan
lays out its future direction, performance targets, and strategy
generic competitive strategies
low cost broad differentiation focused low cost focused differentiation best cost
casual ambiguity
makes it very hard to figure out how a complex resource contributes to competitive advantage and therefore exactly what to imitate
balanced scorecard approach
measures a company's performance by setting both financial and strategic objective
management by walking around
one of the techniques that effective leaders use to stay informed about how well the strategy execution process is progressing
the principal components of the macro environment
political economic social technological environmental legal
strategic vision
portrays a compnays aspirations for its future "where are we going"
a company's strategy emerges from a blend of
proactive deliberate actions on the part of company managers to improve the strategy
a company's strategy emerges from a blend of
reactive emergent responses to unanticipated developments and fresh market conditions
corporate culture
refers to the shared values, ingrained attitudes, core beliefs, and company traditions that determine norms of behavior, accepted work practices, and styles of operating
strategic objectives
relate to target outcomes that indicate a company is strengthening its market standing, competitive position, and future business prospects
financial objectives
relate to the financial performance targets management has established for the organization to achieve
broad differentiation strategy
seeking to differentiate the companys product or service from that of rivals in ways that will appeal to a broad spectrum of buyers
stretch objectives
set performanec targets high enough to stretch an organization to perform at its full potential and deliver the best possible results
business model
sets forth the logic for hows its strategy will create value for customers and at the same time generate revenues sufficient to cover costs and realize a profit
a company's weakness
shortcomings that constitute competitive liabilities
objectives need to
spell out how much of what kind of performance by when
stretch objectives
spur exceptional performance and help build a firewall against contentment with modest gains in organizational performance
the strategic plan for coping with industry conditions outcompeteing rivals, meetings objetives, and making progress toward apirational goals consists of
strategic vision, mission, objectives, and strategy
key success factors
strategy elements, product and service attributes, operational approaches, resources and competitive capabilities that are essential to surviving and thriving in the industry
business strategy
strategy for individual businesses that compete in a single industry
differentiation can be based on
tangible and intangible attributes
capability/competence
the capacity of a firm to perform some internal activity competently
a winning strategy must pass
the competitive advantage test
a winning strategy must pass
the fit test
the higher a company's costs are of those over close rivals
the more competitively vulnerable the company becomes
a winning strategy must pass
the performance test
in large diversified companies..
the strategy hierarchy consists of four levels
monitoring developments, evaluating performance, and initiating corrective adjustments
this stage of the strategy management process is the trigger point for deciding whether to continue or change the companys vision and mission
social complexity and casual ambiguity
two factors that inhibit the ability of rivals to imitate a firms most valuable resources and capabilities
a company exhibits strategic intent
when it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective
competence
an activity that a company has learned to perform with proficiency or capability
core competence
an activity that a company performs proficiently and that is also central to its strategy and competitive success
strategy making is
an inclusive collaborative activity involving not only senior company executives but also the heads of major business divisions, functional area managers, and operating managers on the frontlines
dynamic capability
an ongoing capacity of a company to modify its existing resources and capabilities or create new ones
objectives
are an organizations performance targets- the specific results management wants to achieve
competitive assets
are determinants of its competitveness and ability to succeed in the marketplace
capabilities
are developed and enabled through the deployment of a company's resources
company's values
are the beliefs, traits, and behavioral norms that company personnel are expected to display in conducting the companies business and pursuing its strategic vision and mission
driving forces
are the major underlying causes of change in industry and competitive conditions
complementors
are the producers of complementary products which are products that enhance the value of the focal firms products when they are used together
VRIN tests for sustainable competitive advantage
ask whether a resource is valuable, rare, inimitable, and nonsubstitutable
