MNGT 475H

Environmental Forecasting

-Predicts change and plausible projections about -Direction of environmental change -Scope of environmental change -Speed of environmental change -Intensity of environmental change

Resource-Based View of the Firm

1. Internal analysis of phenomena within a company 2. An external analysis of the industry & its competitive environment Resources can lead to a competitive advantage: -If they are valuable, rare, hard to duplicate -Tangible resources, intangible resources, & organizational capabilities are combined

SWOT analysis

A basic technique for analyzing firm and industry conditions -Firm or internal conditions = strengths & weaknesses Environmental or external conditions = opportunities or threats Must consider both internal and external factors simultaneously

Strategy

A company's action plan for outperforming competitors and achieving profitability. (not the same as vision/mission/values)

Organizational capabilities

Competencies or skills that a firm employs to transform inputs into outputs. It is the capacity to combine tangible & intangible resources to attain desired ends. -Outstanding customer service -Excellent product development capabilities -Superb innovation processes & flexibility in. manufacturing processes -Ability to hire, motivate, & retain human capital

General Environment

Composed of factors that are both hard to predict and difficult to control -Demographic -Sociocultural -Political/legal -Technological -Economic -Global *PESTEL

Human Resource Management

Consists of activities involved in recruitment, hiring, training & development, & compensation of all types of personnel.

Competitive environment

Consists of factors in the task or industry environment that are particularly relevant to a firm's strategy -Competitors (existing or potential) -Customers (or buyers) -Suppliers (including those considering forward integration)

Causal ambiguity

Impossible to explain what caused a resource to exist or how to re-create it

Tacit Knowledge

In the minds of employees, based on their experiences and backgrounds Shared only with the consent and participation of the individual

Operations

Include all activities associated with transforming inputs into the final product form -Machining -Packaging & assembly -Testing or quality control -Printing -Facility operations Factors to consider: -Efficient plant operations & layout -Incorporation of appropriate process technology

Outbound logistics

Include collecting, storing, & distributing the product or service to buyers -Finished goods and warehousing -Material handling -Delivery vehicle operation -Order processing, scheduling & distribution Factors to consider: -Effective shipping processes -Minimizing shipping costs by grouping goods into large lot sizes

Service

Includes all actions associated with providing service to enhance or maintain the value of the product -Installation & repair -Training -Parts supply -Product adjustment

Interrelationships

Manager must not ignore the importance of relationships among value-chain activities. Relationship among activities within the firm and with other stakeholders such as customers and suppliers

Corporate governance

The relationship among various participants in determining the direction and performance of corporations. Primary participants: -Shareholders -Management (led by CEO) -The Board of Directors (BOD)

Data analytics

The science of examining raw data with the purpose of drawing conclusions about that information

In the five-forces model, ____________ is the possibility that the profits of established firms in the industry may be eroded by new competitors. A. the threat of new entrantS B. the bargaining power of suppliers C. the threat of substitute products D. the intensity of rivalry among competitors

The threat of new entrants

Perceptual acuity

To sense what is coming -Detecting early warning signals, keeping pace with changes in the external environment can sustain a competitive advantage

Environmental Monitoring

Tracks evolution of environmental trends -Sequences of measurable facts/events -Streams of activities or trends from outside the organization

Tangible Resources: Technological resources

Trade secrets, patents, copyrights, trademarks, innovative production processes

Intangible Resources: Human Resources

Trust, experience & capabilities of employees; managerial skills & effectiveness of work teams, firm specific practice & procedures

Added insight and cultural sensitivity, and heterogeneity in decision making and problem solving are some of the arguments supporting ________ in the workplace. A. role playing B. brainstorming C. diversity D. social network analysis

diversity

(1) Ambidexterity in a strategic context refers to the challenge for a manager to A. balance a personal, natural instinct to think short-term about the long-term sustainability of the firm. B. align resources to take advantage of existing products and explore new opportunities. C. create a synergy between personal and professional goals. D. balance the constraints of low cost with differentiation.

align resources to take advantage of existing products and explore new opportunities

In industries like consulting, advertising, and tax preparation, clients tend to be very loyal to individual professionals employed by a firm, instead of to the firm itself. This enhances employee A. exit costs. B. bargaining power C. replacement costs. D. long-term solvency.

bargaining power

The resource-based view of the firm suggests that the _________of the firm are due to its endowment of strategic resources that are valuable, rare, costly to imitate, and costly to substitute. A. positive SWOT analyses B. outstanding balanced scorecards C. stock prices D. competitive advantages

competitive advantages

Major airlines change hundreds of fares daily in response to competitor tactics, which is an example of using A. scenario analysis. B. switching costs. C. competitive intelligence D. corporate espionage.

competitive intelligence

The management of intellectual property involves all the following except A. patents. B. contracts with confidentiality and noncompete clauses. C. converting coded knowledge to tacit knowledge D. copyrights and trademark.

converting coded knowledge to tacit knowledge.

Social network analysis

depicts the pattern of interactions among individuals and helps to diagnose effective and ineffective patterns. Social ties can link individuals so they can •Convey needed resources. •Exchange information & support .•Treat each other in positive ways. •Develop trusting relationships to improve the groups' effectiveness.

Because ________ often make it possible for young firms to provide services that are equivalent or superior to an incumbent, a new entrant may be able to serve a market more effectively, with more personalized services and greater attention to product details. A. backward and forward integration B. entry barriers C. digital technologies D. strategic groups

digital technologies

Strategy Formulation

the process of choosing among different strategies and altering them to best fit the organization's needs Business-level strategy- how to compete in a given business to attain competitive advantages Corporate-level strategy- what businesses to compete in; how businesses can be managed to achieve synergy International Strategy-what strategies are needed as the business ventures beyond its national boundaries Entrepreneurial initiative-how can businesses create new value

At what level in the organization should the strategic management perspective be emphasized? A. at the top of the organization B. at the middle of the organization C. from the bottom up in an organization D. throughout the organization

throughout the organization

(1) The three components of the __________ approach to corporate accounting include financial, environmental, and social performance measures. A.triple bottom line B. stakeholder C. triple dimension D. triple efficiency

triple bottom line

Resource-based view of the firm

useful in determining when firms will create competitive advantages and enjoy high levels of profitability Four factors help explain the extent to which employees and managers might be able to obtain a proportionately high level of the profits that they generate 1.Employee bargaining power 2.Employee replacement cost 3.Employee exit costs 4.Manager bargaining power

knowledge economy

wealth is increasingly created by effective management of knowledge workers instead of by the efficient control of physical & financial assets.

When is the bargaining power of the buyer greater than that of the supplier? A. when the threat of backward integration by buyers is low B. when the buyer's profit margin is low C. when cost savings from the supplier's product are minimal D. when the volume of purchase is low

when the buyer's profit margin is low

Under which conditions, according to the Porter five-forces model, can a supplier group gain power? A. when there is low differentiation by the supplier B. when there is a lack of importance of the buyer to the supplier group C. when there is not a dominance by a few suppliers D. when the supplier group does not pose a threat of forward integration

when there is a lack of importance of the buyer to the supplier group

Intellectual property rights

more difficult to define and protect than property rights for physical assets. Unlike physical assets, intellectual property can be stolen. If intellectual property rights are not reliably protected by the state, there will be no incentive to develop new products and services.

Social capital

The network of relationships that individuals have throughout the organization.

Strategic Management

Analysis -Strategic goals (vision, mission, strategic objectives) -Internal and external environment Decisions-Formulation -What industries should we compete in -How should we compete in those industries Actions-Implementation of strategy -Allocate necessary resources -Design the organization to bring intended strategies to reality

Explicit Knowledge

Codified document, easily reproduced, and widely distributed. Can be reused many times at low cost

Strategic objectives

- Used to operationalize the mission statement - Provide guidance on how to fulfill mission & vision - Are measurable, specific, appropriate, realistic & timely - Can be short-term "action plans" - Can be both financial and nonfinancial - Should be challenging, yet help resolve conflicts - Provide a yardstick for rewards & incentives

Competitive Intelligence

Helps firm define and understand their industry Identifies rivals' strengths & weaknesses -Collect data on competitors -Interpret intelligence data Helps firm avoid surprises -Anticipate competitors' moves -Decrease response time Potential for unethical behavior while gathering intelligence

Intended Strategy

-organizational decisions are determined only by analysis -intended strategies rarely survive in the original form

Strategy Analysis

- Starting point in the strategic management process - Precedes effective formulation and implementation of strategies - Involves careful analysis of the overarching goals of the organization - Requires a thorough analysis of the organization's external and internal environment

Firm Resources and Sustainable Competitive Advantages: Strategic resources have 4 attributes:

1. Valuable- in formulating & implementing strategies to improve efficiency or effectiveness 2. Rare or uncommon; difficult to exploit 3. Difficult to imitate or copy due to physical uniqueness, path dependency, causal ambiguity, or social complexity 4. Difficult to substitute with strategically equivalent resources or capabilities

Industry

A group of companies that are related based on their primary business activities

Romantic view

A leader is the key force in the organization's success (ex: Steve Jobs)

Balanced Scorecard Analysis

A meaningful integration of many issues that come into evaluating performance Four key perspectives: 1.How do customers see us? (customer perspective) 2.What must we excel at? (internal perspective) 3.Can we continue to improve and create value? (innovation & learning perspective) 4.How do we look to shareholders? (financial perspective)

Intellectual capital

A measure of the value of a firm's intangible assets-the difference between a firm's market value & book value. -Reputation -Employee loyalty & commitment -Customer relationships -Company values -Brand names -Experience & skills of employees

Porter's Five Forces Model

A model for analyzing the competitive forces within the environment in which a company operates, to assess the potential for profitability in an industry.

Electronic Teams (E-Teams)

Accelerate product development •Advantages: few geographic constraints; access to multiple social contacts •Challenges: failure to identify team members with the most appropriate knowledge and resources; low cohesion, low trust, lack of shared understanding creates "process loss"

Tangible Resources

Assets that are relatively easy to identify

Physical uniqueness

Assets that physically unique, therefore impossible to duplicate

Intangible Resources: Reputation resources

Brand names, reputation for fairness with suppliers, non-zero sum relationships; reputation for reliability & product quality with customers

Bargaining Power of Buyers

Buyers have bargaining power Buyers can force down prices, bargain for higher quality or more service, or play competitors against each other Buyer groups are powerful -Purchasing standard products are in large quantities -Profits are low & switching costs are few -Backward integration is possible -Buyer's product quality is not affected by industry product.

Tangible Resources: Financial assets

Cash & cash equivalents, borrowing capacity, capacity to raise equity

Strategic Groups

Cluster of firms that share similar strategies -Breadth of product & geographic scope -Price/quality -Degree of vertical integration -Type of distribution EX: Toyota, Ford, GM, Chrysler, Honda, Nissan

Primary activities

Contribute to the physical creation of the product or service; the sale & transfer to the buyer; and after the sale. -Inbound logistics -Operations -Outbound logistics -Marketing & sales -Service

Realized Strategy

Decisions are determined by both analysis (deliberate) and unforeseen environmental developments, unanticipated resource constraints, and/or changes in managerial preferences (emergent).

General Environment: Technological

Developments lead to new products and services. -Genetic engineering -3D printing -Wireless communications -Big data/data analysis

Intangible Resources

Difficult for competitors to account for or imitate. They are embedded in unique routines & practices.

Tangible Resources: Organizational resources

Effective planning processes, evaluation & control systems

General Administration

Effective planning systems to attain overall goals and objectives Excellent relations with diverse stakeholder groups Effective information technology to coordinate & integrate value-creating activities across the value chain Ability of top management to anticipate & act on key environmental trends & events, create strong values, culture & reputation

Support activities

Either add value or themselves or add value through important relationships with both primary activities & other support activities -Procurement -Technology development -Human Resource management -General administration

________ teams complete tasks primarily through email communication. A. Email B. Online C. Networked D. Electronic

Electronic

External control perspective

External forces determine the organization's success

Financial Ratio Analysis

Five types of financial ratios: 1.Short-term solvency or liquidity 2.Long-term solvency measures 3.Asset management or turnover 4.Profitability 5.Market value Meaningful ratio analysis must include: •Analysis of how ratios change over time •Comparison with industry norms •Comparison with key competitors (Ex: Balance sheet, Income statement)

Mission Statement

Focuses on "who we are, what we do, and why we are here." Describes the firm's present business: -Products or service -Buyer needs being served -Customer groups it sells to -Scope of operations and technologies

Strategic Vision

Focuses on a firm's strategic course-"the direction we are headed." Describes the firm's intended future business makeup: customers, markets, technologies

General Environment: Environmental

Focuses on the natural environment -Decline of raw materials -Pollution and green house gas -Natural disasters -Climate and weather

General Environment: Economic

Forces affect all industries -Interest rates -Unemployment -Consumer Price Index -Trends in GDP & net disposable income -Changes in stock market valuations

General Environment: Sociocultural

Forces influence the values, beliefs, and lifestyles of a society -More women in the workforce -Greater concern for the environment -Greater concern for healthy diets and physical fitness (increasing obesity)

General Environment: Global

Forces offer both opportunities & risks -Increasing global trade -Currency exchange rates -Trade agreements among (NAFTA, EU, ASEAN) -Creation of the WTO -Increased risks associated with terrorism

Environmental __________ involves developing plausible projections about the direction, scope, and speed of environmental change. A. prediction B. modeling C. forecastingCorrect D. projection

Forecasting

Path dependency

Hard to duplicate because of all that has happened along the path followed in the development and/or accumulation of resources

________ capital can be defined as the difference between the market value and book value of a firm, or a measure of its intangible assets. A. Human B. Intellectual C. Social D. Personal

Intellectual

Marketing and sales activities

Involve purchases of products & services by end users and includes how to induce buyers to make those purchases. -Advertising and promotion -Sales force management -Pricing & price quoting -Channel selection & channel relations

Dynamic capabilities

Involve the capacity to build and protect a competitive advantage. •Requires knowledge, assets, competencies, and complementary assets & technologies •Requires the ability to sense & seize new opportunities, generate new knowledge, and reconfigure existing assets & capabilities •Include internal processes & routines that enable product development, strategic decision making, alliances, or acquisitions

Procurement

Involves how the firm purchases inputs used in its value chain Procurement of raw material inputs -optimizing quality & speed -minimizing associated costs Development of collaborative win-win relationships with suppliers Analysis & selection of alternative sources of inputs to minimize dependence on one supplier.

Environmental Scanning

Involves the surveillance of a firm's external environment -Predicts environmental changes to come -Detects changes already under way -Allows firm to be proactive

Which of the following is not a reason that a manager should be familiar with the Porter Five-Forces model? A. It clarifies whether your firm should remain in or exit an industry. B. It helps justify changes in resource allocation. C. It suggests methods for discouraging new rivals from competing against your firm. D. It identifies which demographic trends will be most important in the short term.

It identifies which demographic trends will be most important in the short term.

Substitute Products & Services

Limit the potential returns of an industry -Substitute come from another industry -They can perform the same function as the industry's offerings -Substitutes place a ceiling on prices that firms in an industry can profitably charge -The more attractive the price/performance ratio, the more the substitute erodes industry profits *Substitution of soft drink industry: coffee, water,

Value-Chain Analysis

Looks at the sequential process of value creating activities

General Environment: Demographic segment

Observable characteristics of a population, including the levels and growth of age, density, sex, race, ethnicity, education, geographic region, and income

Tangible Resources: Physical assets

Plant & facilities, location, machinery & equipment

Threat of new entrant

Possibility that the profits of established firms in the industry may be eroded by new competitors Depending on existing barriers to entry: -Economies of scale -Product differentiation -Capital requirements -Switching costs -Access to distribution channels -Cost disadvantages independent of scale

Inbound logistics

Primarily associated with receiving storing & distributing input to the product -Material handling -Warehousing -Inventory control -Vehicle scheduling -Returns to suppliers Factors to consider: -Location of distribution facilities -Warehouse layout

General Environment: Political/Legal

Processes & legislation influence environmental regulations which industries must comply -Tort reform -Taxation -Increase in minimum wages

Triple Bottom Line

Recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth *firms can measure by assessing financial, social, and environmental performance

Technology development

Related to a wide range of activities -Effective R&D activities for process & product initiatives -Collaborative relationship between R&D and other departments -State-of-the-art facilities & equipment -Excellent professional qualifications of personnel -Use of data analytics

Bridging Relationships

Relationships in a social network that connect otherwise disconnected people

Bargaining Power of Suppliers

Supplier can exert bargaining power by threatening to raise prices or reduce the quality of purchased goods and services Supplier groups are powerful: -Only a few firms dominate the industry -There is no competition from substitute products -Suppliers sell to several industries -Buyer quality is affected by industry product -Products are differentiated & have switching costs -Forward integration is possible

Rivalry

Tactics include price competition, advertising battles, new product introductions, increased customer service or warranties. Interacting factors lead to intense rivalry -Numerous or equally balanced competitors -Slow industry growth -High fixed or shortage costs -Lack of differentiation or switching costs -Capacity augmented in large increments -High exit barriers

Intangible Resources: Innovation Resources

Technical & scientific expertise & ideas; innovation capabilities

Closure relationship

The degree to which all members of the social network have relationships with other group members

Social Responsibility

The expectation that businesses or individuals will strive to improve the overall welfare of society.

Social capital

The friendships and working relationships among talented individuals - helps tie knowledge workers to a given firm. Interaction, sharing, and collaboration will help develop firm-specific ties, with a higher probability of retaining key knowledge workers.

Human Capital

The individual capabilities, knowledge, skills, and experience of the company's employees and managers. -Attracting human capital -Developing human capital -Retaining huuman capital

Hierarchy of goals

Vision- evokes powerful & compelling mental images of a shared future Mission-encompasses the organization's current purpose, basis of competition, & competitive advantage Strategic objective-operationalize the mission statement with specific yardsticks

Stakeholder Management

Zero sum-stakeholders are competing for the companies resources. gain of one stakeholder results in the loss of another. Symbiosis-organizations achieving mutual benefit; shareholders are dependent upon each other for success and well-being.

________ include the ability to seize new opportunities, generate new knowledge, and reconfigure existing assets and capabilities. A. Social network analyses B. Bridging relationships C. Groupthink rewards D. Dynamic capabilities

dynamic capabilities

Which of the following is not an explanation for the existence of exit barriers? A. specialized assets with no alternative use B. governmental and social pressures C. strategic interrelationships with other business units within the same company D. excessive local profits

excessive local profits

(1) The four key attributes of strategic management do not include: A. directing the organization toward overall goals and objectives. B. having multiple stakeholders in decision making. C. excluding consideration of the trade-offs between efficiency and -effectiveness. D. needing to incorporate short-term and long-term perspectives.

excluding consideration of the trade-offs between efficiency and -effectiveness.

Engineering drawings, software code, and patents are examples of A. socially complex processes. B. tacit knowledge. C. explicit knowledge D. diversification processes.

explicit knowledge.

Ratio analysis can be made more meaningful in all the following ways EXCEPT by A. analyzing how ratios change over time. B. focusing more on long-term solvency than on short-term solvency. C. recognizing how the ratios are interrelated. D. comparing results with key competitors.

focusing more on long-term solvency than on short-term solvency.

Which of the following is not an important element of the political/legal segment of the general environment? A. tort reform B. genetic engineering C. Americans with Disabilities Act (ADA) D. deregulation of utilities and other industries

genetic engineering

In order to fully leverage the talents of the best and brightest employees, a firm should be concerned with A. hiring, retention, and training. B. hiring, firing, and redistribution. C. rewards, training, and customer support. D. benefits, engagement, and popularity.

hiring, retention, and training.

Just-in-time systems are considered part of which primary activity in the value chain? A. service B. inbound logisticsCorrect C. operations D. outbound logistics

inbound logistics

Advantages of effective social networks for career success include all the following except A. access to private information. B. increased redundancy in knowledge sources. C. access to diverse skill sets. D. greater power.

increased redundancy in knowledge sources.

Numerous equally balanced competitors selling products that lack differentiation in a slow growth industry are most likely to experience high A.bargaining power of suppliers. B. threat of new entrants. C. threat of substitute products. D. intensity of rivalry among competitors.

intensity of rivalry among competitors.

In the balanced scorecard, cycle time, employee skills, and productivity are part of the ______ perspective. A. customer B. internal C. innovation and learning D. financial

internal

Scenario Analysis

involves detailed assessments of the ways trends may affect an issue & development of alternative futures based on these assessments

All activities associated with transforming inputs into the final product form are known as ______ in the value chain. A.just-in-time inventory management B. outbound logistics C. inbound logistics D. operations

operations

Gerber Products Company brands its baby food and is an example of a resource that is potentially inimitable, making it difficult for competitors to copy. What characteristic of sustainable competitive advantage is involved? A. path dependency B. causal ambiguity C. exit barriers D. a balanced scorecard

path dependency

Human capital does not include the ______________ of an individual. A. capabilities B. knowledge C. skills D. physical attributes

physical attributes

Pfizer pharmaceutical patents provide what important characteristic that supports inimitability? A. causal ambiguity B. path dependency C. physical uniqueness D. social complexity

physical uniqueness

Which of these is not an example of socially complex organizational phenomena? A. firm culture B. interpersonal relations among firm managers C. firm reputation with its suppliers D. poor reputation with customers

poor reputation with customers

Microsoft has improved the ________ part of its value chain by providing formal reviews of its suppliers, which has helped to clarify expectations for them. A. general administration B. procurement C. human resource management D. technology development

procurement

Social complexity

resources that result from social engineering such as interpersonal relations, culture.

An individual who uses the contacts they develop to pursue their own interests and agendas that may be inconsistent with the organization objectives is one potential downside of A. electronic teams. B. social network analysis. C. social capital D. mentoring.

social capital

(1) Competitive advantages that are unique, valuable, and difficult for rivals to copy are likely to make these advantages. A. Targeted B. focused C. popular D. sustainable

sustainable

Which of the following is not one of the recommended criteria for strategic objectives? A.sustainable B. measurable C. appropriate D. realistic

sustainable

Social Capital: Potential Downside

•Groupthink •Dysfunctional human resource practices •Expensive socialization processes (orientation, training) •Distortion or selective use of information to favor preferred courses of action

Limitations of the Balanced Scorecard

•Not a "quick fix" - needs proper execution •Needs a commitment to learning •Needs employee involvement in continuous process improvement •Needs cultural change •Needs a focus on nonfinancial rather than financial measures •Needs data on actual performance