MGT 499 test 1

Explain the concept of strategic groups. What are the performance implications?

Strategic groups are clusters of firms that share similar strategies. -helps a firm identify barriers to mobility that protects a group from attacks by other groups. -helps a firm identify groups whose competitive position may be marginal. -helps chart the future directions of firms' strategies. - strategic groups are helpful in thinking through the implications of each industry trend for the strategic group as a whole. Classifying an industry into strategic groups involves judgment. If it is useful as an analytical tool, we must exercise caution in deciding what dimensions to use to map these firms

How is strategic management defined, and what are its four key attributes?

Strategic management consists of the analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantage. The four key attributes are. 1. strategic management is directed toward overall organizational goals and objectives. 2. strategic management includes multiple stakeholders in decision making. 3. it requires incorporating both short-term and long-term perspectives. 4. it involves the recognition of trade-offs between effectiveness and efficiency.

How can symbiosis be achieved among a firms stakeholders?

Symbiosis can be achieved among a firm's stakeholders if companies recognize that stakeholders are dependent upon each other for their success and well-being. As long as management recognizes the wants and needs of all of their stakeholders, and treats everyone as a unit, symbiosis can be achieved.

Briefly discuss the three key activities in the strategic management process. Why is it important for managers to recognize the interdependent nature of these activities?

The three key activities in the strategic management process are strategy analysis, strategy formulation, and strategy implementation. Strategy analysis is the study of firms' external and internal environments, and their fit with organizational vision and goals. Strategy formation is when decisions are made by firms regarding investments, commitments, and other aspects of operations that create and sustain competitive advantages. Strategy implementation is taking place by firms that carry out the formulated strategy, including strategic controls, organizational design, and leadership. It is important for managers to recognize the interdependence of these activities because they need to adapt to changing situations and strategy changes all the time. By recognizing this, they learn how to evolve as managers.

Discuss and describe the six elements of the external environment

1. Demographic: Genetic and observable characteristics 2. Sociocultural: Values, beliefs, lifestyles 3. Political/legal: How a society creates and exercises power 4. Technological: Knowledge in applied and pure science, industrial arts, and engineering 5. Economic: Characteristics of the economy, including national income and monetary conditions. 6. Global: Involves influences from foreign countries, including foreign market opportunities.

What is meant by a hierarchy of goals? what are the main components of it, and why must consistency be achieved among them?

A "hierarchy of goals" is a firm's organizational goals, ranging from, at the top, those that are less specific yet able to evoke powerful and compelling mental images, to, at the bottom, those that are more specific and measurable. The hierarchy's main components are a firm's vision, mission, and strategic objectives.

What is corporate governance? What are its three key elements and how can it be improved?

Corporate governance is the relationship among various participants in determining the direction and performance of corporations. The three key elements are the shareholders, the management, and the board of directors. It can be improved by having an effective and engaged board of directors, shareholder activism, and proper managerial rewards and incentives.

Why do firms need to have a greater strategic management process throughout the organization?

Firms need to have a greater strategic management process throughout the organization in order to have the entire organization working together to achieve their goals. If the top management were the only leaders, the firm would crumble because the top managers wouldn't have the support and knowledge from their subordinates.There needs to be integration and multiple lines of leaders throughout the company. To create a strategic management perspective, managers must often make a major effort to effect transformational change. This involves extensive communication, incentives, training, and development. By performing these acts, managers empower their employees to work hard and work together.

Describe how the five forces can be used to determine the average expected profitability of an industry?

1. The threat of new entrants refers to the probability that the profits of established firms in the industry may be eroded by new competitors. 2. Buyers threaten an industry by forcing down prices, bargaining for higher quality or more services, and playing competitors against each other. 3. Suppliers can exert bargaining power by threatening to raise prices or reduce the quality of purchased goods and services. Powerful suppliers can squeeze the profitability of firms so far that they can't recover the costs of raw material inputs. 4. The threat of substitute products and services limit the potential returns of an industry by placing a ceiling on the prices that firms in that industry can profitably charge. 5. Some forms of competition among rival companies, such as price competition, are typically highly destabilizing and are likely to erode the average level of profitability in an industry.

What is gathering and analyzing competitive intelligence and why is it important for firms

Gathering and analyzing competitive intelligence is a form of competitive analysis. It helps firms define and understand their industry and identify rivals' strengths and weaknesses. It is important for firms to engage in competitive intelligence to help the company avoid surprises by anticipating competitors' moves and decreasing response time.

Why must managers be aware of a firms external environment?

In order to recognize and understand threats and opportunities that the organization can face. They must be aware of what is happening outside their company, so that they can evolve with the market. If a company does not keep pace with changes in the external environment, it becomes difficult to sustain competitive advantages and deliver strong financial results

What are some limitations in the five forces analysis?

Managers must not always avoid low profit industries. Some industries can still yield high profits is they pursue sound strategies. Second, five-force analysis implicitly assumes a zero-sum game, determining how a firm can enhance its position relative to the forces. This approach can overlook the benefits of relationships with suppliers and customers. Lastly, the analysis has been criticized for being essentially a static analysis.

Explain the concept of stakeholder management. Why shouldn't managers be solely interested in stakeholder management, that is, maximizing the returns for owners of the firm- its shareholders?

Stakeholder management is a firm's strategy for responding to the interests of all its important stakeholders. Managers who focus solely on the interests of the stakeholders will often make poor decisions that lead to negative, unanticipated outcomes.