Capstone Midterm

T/F Each additional advertisement increases customer Awareness by the same amount of the first

False

T/F Product prices are set on the Marketing Budget Detail spreadsheet

False

T/F The Target Segment selection lets teams move their products from one location on the Perceptual Map to another

False

business plan

First, need an idea (a problem you think you have a solution for) Then, identify some analogs and antilogs to help with your business plan (in and outside your industry) Next, identify your key leaps of faith and then test your hypothesis that you believe hold the answers

2 main frameworks of employing paradigms?

General environment and industry-based factors

Balanced Scorecard BSC: by Kaplan and Norton--

Goals from vision depend on- learning and growth (LT, internal), financial (ST,LT, internal and external), customers (LT, external), internal business processes (ST,LT, internal)

What are the 4 I's of transformational leadership?

Idealized influence, inspirational motivation, intellectual simulation and individual consideration

What do you need in order to execute the strategic plan?

In order to execute you must have clear and specific (to develop metrics/measurements) communication

Products are invented and revised by which department? Marketing Production Research and Development Finance

Research and Development

External environment

factors (mostly beyond the control of the organization) that has an impact on how well the company achieves the desired results, its vision

True or False: Hiring the Needed Complement will always eliminate a Second Shift.

false Hiring the Needed Complement eliminates all Overtime. The Second Shift workers are paid the same as workers on Overtime, however, Second Shift workers are more efficient and do not seek work elsewhere, therefore reducing turnover.

True or False: Worker training is entered by the dollar.

false Hours are entered on the HR Screen. Training costs $20.00 per hour per worker.

True or False: Management should strive to increase Turnover.

false Lowering Turnover reduces Recruitment costs.

Economies of Scale

gives competitive advantage (too expensive to enter a market- steel production or pharmaceuticals)

Strategic map

graphical positioning of your product or service as compared to your competitors' on one or more dimensions Constructed by choosing two important dimansions or key success factors and mapping you and your competitors on these dimensions The size of the circle on the map can be an indicator of market size, market penetration or some other indicator of relative positioning

what are 2 components of the vision statement

guiding philosophy and tangible image (provides a picture of what the company will look like when the vision is achieved)

BCG Matrix Stars

high growth, high-share products which promise a much larger net cash generation in the future

Key words for a charismatic leader:

ideal, inspiration, intellect and individual

5 forces model looks at

immediate competitors, potential new entrants/substitutes and the power of suppliers and customers

What does competitive advantage arise from

imperfection in the market system (production or consumption)

what can competitive advantage be categorized as?

information economics: amount of information the consumer knows (car sale negotiation is easier when the buyer knows more about the sellers scheme) inimitability considerations, hard to imitate product/process; exclusive access to a particular resource; unreplicable sequence of developments; casual ambiguity (strong culture undergirds- Southwest Airlines) preemptive conditions, interfere with free markets; contractual agreements (iphone-ATT); "lock-in situation which makes switching to a competitor costly; government regulations regulatory barriers, market size vs investment cost

Key Success Factors (KSFs)

internal assessment to help executives make decisions on strategic positioning based on activities or factors that are key to achieving competitive advantage (ex. price, quality, customer service, location of our company vs our competitors on 1-10 scale)

Inimitability can result because

it is unclear to competitors how this capability was created (known as "casual ambiguity") or it may be socially complex in a way that is hard to copy like when key personalities or a distinctive corporate culture are in play

Core competencies

the unique combination of capabilities that are central to a firm's main business operations and which allow it to generate new products and service; tend to be narrow and hard to identify

industry factors are evaluated by

their strength and concern with inclusion into the strategic plan (the greater the force the more the company must accommodate the strategy to mitigate the force)

4 key roles

think strategically, think rigorously, proof to convince others you need to move to plan B, flexible tool to address leaps of faith

True or False: Increasing Training Hours tends to both increase and decrease the Needed Complement.

true In the short term, increasing Training Hours will increase the Needed Complement-- Workers are taken off the production line and put in the classroom. However, as time goes on, investing in Training Hours increases worker productivity, and therefore tends to decreases the Needed Complement.

True or False: Increasing Capacity tends to reduce the number of workers on Second Shift

true Increasing Capacity tends to reduce the number of workers on the Second Shift. As an example, a production order of 1,200 units on a line with a Capacity of 800 units (numbers in thousands) will require 400 units to be produced by the Second Shift. Increasing Capacity to a total of 1,000 units will result in 1,000 units manufactured by First Shift labor, and only 200 units produced by more expensive Second Shift labor.

RBV VRINE model

(V)aluable, (R)are, (IN)imitable, and/or ( E )xploitable VRINE model: a resource that is valuable and rare may help you to establish a competitive advantage; when that resource is also inimitable and exploitable, it can enable you to sustain that advantage

Kotter's Eight Steps for Leading Change:

1 create a sense of urgency 2 forma guiding coalition 3 create a vision 4 communicate the vision 5 empower others to act on the vision 6 create quick wins 7 build on the change 8 institutionalize the change (sense of urgency, developing a powerful coalition, montoring results, allow ST wins and COMMUNICATE)

3 tests to core competencies

1 provides potential access to a wide variety of markets 2 should make a significant contribution to the perceived customer benefits of the end product 3 should be difficult for competitors to imitate

What is a good process to follow for your business?

1) Define the desired result or vision of the successful state 2) Put vision into context (survey external environment) 3) Understand your starting position (current capabilities, future needs, what is happening around you) 4) Start discussing strategies 5) Weigh options and select strategy 6) Reality check- is this a strategy and will it work 7) Execution- led and worked into place via communication

What are your company's options for raising money? Borrowing Long-term debt Borrowing Short-term debt Issuing Stock A and C only A, B and C

A, B and C

Investing in the same TQM Initiative round after round will create A. ever increasing returns B. diminishing returns C. the same amount of return

B. diminishing returns

Michael Porters 3 generic strategies

3 alternatives: competition on cost, differentiation or competition in a focused market niche

suicide square

3 dimensions of change are product, technology and customer; a project is in the suicide square if all 3 dimensions are changing

In the Promotion Budget Resource, teams can select which of the following media areas A. Print Media and Direct Mail B. Email and Telephone Contact C. Trade and Road Shows D. Web Media and Television

A. Print Media and Direct Mail

If a company with low automation wanted to invest in a single area that exclusively lowers labor costs, they would select: A. QIT (Quality Initiative Training) B. Concurrent Engineering C. Vendor/JIT (Just in Time [Inventory])

A. QIT (Quality Initiative Training)

The TQM report can be accessed from A. The Capstone(r) Courier B. The Decisions menu

A. The Capstone(r) Courier

Suppose workers earn $20.00 in the current contract. There are only two teams, Andrews and Baldwin. Labor demands $22.00. Andrews gives its negotiators a range of $20.20 to $22.20. Baldwin gives its negotiators a range of $23.00 to $25.00. Will Labor strike:

Andrews

Value Chain Analysis

Applies a systemic view to an organization that transcends its boundaries; the key is to consider the organization as a system by which value is added through primary activities that are supported by secondary activities Can be used to identify opportunities for differentiation as well as sources of waste

SWOT Analysis

Assesses positives and negatives from an internal and external perspective Strengths, weaknesses, opportunities and threats Real value is when you consider the strengths and how they might be used to take advantage of opportunities and avoid threats; consider weaknesses and how you need to address them to mitigate threats and possibly pursue opportunities

There are two teams, Andrews and Baldwin. As a result of an earlier labor negotiation, Andrews workers earn $22.00. Baldwin workers earn $24.00. What will Labor demand?

B. Andrews $26.40. Baldwin $26.40.

In the Sales Budget Resource, the outside sales force meets with customers face-to-face. The cost of each salesperson includes which of the following? A. Salary and Wardrobe B. Commission and Support C. Travel and Brochures

B. Commission and Support

Distributors are A. support staff for the outside sales force B. a separate Sales channel C. Original Equipment Manufacturers

B. a separate Sales channel

According to the S-Shaped curve, diminishing returns for a single year budget become noticeable at A. $1,000,000 B. $1,500,000 C. $2,000,000

C. $2,000,000

The Marketing Budget Detail asks teams to determine budgets by A. Product B. Segment C. Both

C. Both

The exact outcome of TQM efforts appear on the TQM Report, and as bar charts on the TQM spreadsheet. These results are for A. the previous round only B. the upcoming round only C. cumulative for the previous and all remaining rounds (assuming no additional investment is made)

C. cumulative for the previous and all remaining rounds (assuming no additional investment is made)

Each market segment responds to different types of media (e.g. print, direct mail, etc.) to a varying degree. It follows then that each product must be identified with its target segment. Product target segments are identified by A. their placement on the Perceptual Map B. entering their status on the Pricing and Forecasting spreadsheet C. entering the target segment on the Marketing Budget Detail

C. entering the target segment on the Marketing Budget Detail

What is the industry newsletter called? Capstone Courier Capstone Quarterly Capstone Messenger

Capstone Courier

BCG Matrix (Boston Consulting Group) [product portfolio analysis, 2D]

Categorizes products by their potential for growth and their relative market share You want to balance the categories and factor in trends and competitive positions

What was found to be as equally important as directing the task of work and distinguished an effective leader?

Consideration for followers

Types of Projects

Derivative projects: cost-reduced versions of existing projects to enhancements to an existing production process (LOW change) Breakthrough: establish core products and processes that differ fundamentally from previous generations (HIGH change) Platform projects: the middle ground; an addition to a product family or a significant change to an existing process (MEDIUM change) Other: R&D (precursor to commercial development) and alliances and partnerships (commercial or basic research)

4 D's of strategic management

Dynamic, Data Driven process, Determined leaders

In the current contract, the workers wage rate is $20.00. Which of the following negotiation ranges would be outside the rules? A. $15.60 to $16.80 B. $18.00 to $18.00 C. $30.00 to $32.00 D. $30.20 to $32.20 E. Both A and D would be outside the rules.

E. Both A and D would be outside the rules.

stages of life cycle

Early stage: slow growth, low customization, propensity to change in response to market feedback Next stage/growth stage: possible investment in customized technology (ex. Automation) Maturity phase: FOCUS on extending this phase for as long as possible; enter new markets or develop minor modifications Decline stage: extremely difficult to recover

What needs to take place before considering your strategic options?

Establish your vision (including your governance practices and stakeholder relationships), survey the external environment, conduct an internal assessment

Generally speaking, a team with high levels of automation would be inclined to:

Make a generous offer to the unions to avoid a strike and impose higher labor costs on competitors.

Prices are established by the: Finance Department Marketing Department Production Department R&D Department

Marketing

meaningful vs bad vision

Meaningful vision: clear, compelling and concise; guide decision-making and operational activities, to the point; address the social responsibility of the organization to its stakeholders and the environment; communicated frequently in a variety of media to all levels; cannot be vague or subject to interpretation; aspirational and attainable; ways to gauge progress toward the vision; concise Bad: no matter/importance, don'nt compel,trite, vague, poorly written, overly wordy, flowery, uninspiring, overwhelming

What are measurement systems?

Measurement systems help the employees understand a vision concretely, and help management determine progression toward the vision

What can cause paradigms to change over time?

Political, legal, technological, economic or social trends; may also vary across cultures

Every business model needs to quantitatively address 5 key elements

Revenue model: Who? How often and soon? Acquisition cost? Money received each purchase? How often will they send you another check? Gross margin model: How much revenue will be left after you pay your direct costs of what you have sold? Operating model: what else do you spend money on to keep the lights on? Working capital model: How early can you encourage your customers to pay? Do you have time to tie up money in lots of inventory waiting for customers to buy? Can you pay your suppliers later, after the customer has paid? Investment model: How much cash must you spend up front before enough customers give you enough business to cover your costs?

Generally, __________ will be incurred when production levels decrease and / or Automation levels increase.

Separation costs The Needed Complement is determined by a combination of: a) the number of units ordered into production; and b) the Automation level of the assembly lines. Decreasing the number of units produced from one year to the next will decrease the Needed Complement. Similarly, increases in Automation will decrease the Needed Complement. If teams adjust the This Year cell to match the Needed Complement, Separation Costs will be incurred.

The new contract that you negotiate with Labor will take affect:

Starting January 1st of the year after the negotiation.

Who is it important for the organization to hold itself accountable to?

Stockholders and stakeholders

What makes the difference in achieving the desired results?

The culture and visionary tone that strategic leadership sets

Leadership was defined by transformational and is distinguishable from transactional leadership; whats the difference?

Transformational leaders are the visionaries who see the potential in the future, are looking to upset the status quo and to engage others in a purposeful direction; Charismatic and ethically directed in his or her visionary quest Transactional leaders (managers) role is to guarantee a steady state and to make sure that operations meet the stated goals

T/F Each inside salesperson costs $50,000.

True

T/F The Proformas are dynamic financial statements that recalculate based on your decisions.

True

True or False. Labor sees all of the opening offers from all of the teams at once.

True

True or False. The maximum length of a strike is 12 weeks.

True

Which of these investments is not a function of the Production department? Increasing Automation Wage Increases Creating new production lines

Wage Increases

When are paradigms most useful?

When you are trying to anticipate the future. Identifying a paradigm shift can PROVIDE YOU a profound market opportunity that others may not see until later.

Paradigm

a mental model; a lens through which we interpret what our senses perceive

strategy

a plan that creates or sustains a a competitive advantage

Trust in a leader is critical, involving 3 broad factors:

ability/credibility (build credibility by being transparent)c, benevolence (inclination to want to do what is in the best interest of the trustor) and integrity (ethics, words and actions match)

In order to create and sustain a competitive advantage...

an organization needs to define a future state that describes its ideal competitive position

Balance Scorecard translates...

an organization's mission and strategies into a comprehensive set of performance measures that provides the framework for a strategy measurement and management system

Competitive rivalry within an industry effected by

bargaining power of suppliers and customers, threat of new entrants and substitute products

Teams _______________ Recruiting Costs if they wish

can eliminate all but the $1,000 base cost per new employee Teams can choose to enter 0 in the Recruiting Spend cell on the Human Resources screen, however that number is in addition to a base Recruiting Cost of $1,000 per worker. A Recruiting Spend entry facilitates recruiting a better quality of worker.

Ecological Factors

climate, weather, protected habitats, endangered species, local regulations, environmental and ecological sustainability

product portfolio evaluation

collection viewed as a whole; "big picture" from individual components

Aggregate project plan (Wheelright and Clark

consider the amount of process change and amount of product change being undertaken

What are the 2 main ways a company can compete?

cost leadership and differentiation

Strategic Leadership

crafts the vision, provides the resources and mobilizes the workforce toward the common purpose of the strategy

Assuming the Productivity Index is greater than 100%, adding Overtime will ____________ the Productivity Index.

decrease While the Productivity Index can never fall below 100%, it is possible for teams to increase the Index by investing in a higher quality of worker (Recruiting Spend) and in education (Training Hours). However, scheduling Overtime will decrease the Index because workers will become tired and disgruntled.

Internal assessment:

deliberate analytical process that is fundamental to strategic planning; internal communication and development is so valuable to help create a common view to eliminate difficulty in understanding the priorities, strategic options and/or next steps

social factors

demographic trends, cultural considerations, literacy levels, social infastructure, consumer confidence and religious beliefs

mission statement

describes the organization's current state; describes the scope and purpose of the organization should distinguish the firm and how it makes a fundamental difference in the lives of others

Good leaders

enable good ideas to be implemented by providing the commitment of energy and resources to drive the effort

General environment factors

examine PESTEL political, economic, social, technological, ecological and legal

economic factors

exchange rates, monetary policy, taxation systems Ex. Regional trade agreements (macro); per capita income, unemployment rates, wage, salary, compensation levels (micro)\

RBV Capability

is hard to imitate because its path dependent (accumulated over time)

3 ways to analyze a portfolio

life cycle, project risk, future potential

What is the challenge of BCG Matrix?

maintain cash cows while funding the stars and figure out why the question marks are not producing the expected results, while divesting the dogs

Value Chain

model that separates the overall business system into a series of value-generating activities that develop competitive advantage Distinguishes between primary activities (inbound/outbound logistics, operations, marketing and sales and service) secondary/support activities (administration, HR management, tech development, procurement) Interdependence of activities yet transcends organizational boundaries

Resource Based View RBV

more straight-forward and useful; starts with an inventory of key tangible and intangible assets and capabilities (resources); helps identify opportunities and prioritize investments in strategic resources

what are the limits to differentiation

not valuable to the customer and can be imitated

what strategy leads to easy imitation

only low costs

Antilogs

predecessor companies compared to which you explicitly choose to do things differently, probably because what they did was unsuccessful

Analogs

predecessor companies that are worth mimicking in some way

internal assessment might point to:

product capability that could be improved, underutilized asset that could be leveraged, a particular technology that could be acquired or a vulnerability that should be mitigated

BCG Matrix Cash Cow

products that characteristically generates large amounts of cash-far more than they can profitably reinvest-and typically have high market share and low growth

BCG Matrix Question Marks

products with high growth but low share that require large amounts of cash to maintain market share, and still larger amounts to gain share

BCG Matrix Dogs

products with low market and slow growth; aka cash traps

_________ are incurred when production runs increase and teams match hiring to Needed Complement.

recruiting costs Increasing production and then matching the Needed Complement will result in new hires, and therefore increase Recruiting Costs.

Legal Factors

regulations, property rights and liability concerns; legal mistakes are very costly

Characteristics of emotionally intelligent individuals have great implications for leadership

self-awareness, self-regulation, motivation, social skill, empathy

Process

sequence of activities intended to produce a desired result

Porter's Five Forces Model

supplier forces, customer forces, new entrants, substitutes, rivalry among competing firms

what is the power of leadership

the ability to influence or get people to do what you want them to do when you want them to do it

Technological Factors

the amount of business transacted electronically is staggering; pace of tech change is accelerating, as is the volume of information available

political factors

the government structure, stability and foreign policies that could effect the organization Ex. Social unrest, political strife, opposing groups, gov policy toward foreign firm investment

strategic management

the overall process whereby the plan is developed, executed, adjusted and evaluated

Dashboard

tool to point the way and track your progress; drives an evidence-based process to plan, guide and track the results of what you learn from hypothesis testing

balanced score card enables companies to

track financial results while simultaneously monitoring progress in building the capabilities and acquiring the intangible assets they need for future growth.

True or False: Production runs can be scheduled in one or two shifts.

true Up to twice the production line's First Shift Capacity can be scheduled for each individual product. Production runs that exceed the First Shift Capacity result in either Overtime and/or a Second Shift, depending on the Worker Complement.

Important material to master when scanning

understand paradigms and how to leverage them, employ a variety of paradigms to examine the external environment, identify those environmental factors that have the most impact on an organization's strategy, analyze trends to identify potential opportunities and threats

vision statement

unifying concept for employees, managers and executives to understand the strategic direction of the organization a desired future state; describes its competitive position at some time in the future

life cycle

where each product is in its life cycle, typically an s-curve of concept creation then concept development then market development then business optimization and harvesting