Ch. 2
Emergent strategy:
-Any unplanned strategic initiative -Bubbles up from the bottom of the organization -Can influence and shape a firm's overall strategy
Organizational Core Values have two important functions:
-Form the groundwork for long-term success -Help keep the company on track
Resource-allocation process (RAP)
-How a firm allocates resources based on policy -Helps shape realized strategy
Formulation Stage (of Scenario Planning):
-Identify strategic options. -Develop contingency plans. -Use analytical tools. -Build future options.
Serendipity
-Random events, surprises, coincidences -Has an effect on strategic initiatives
Autonomous actions
-Strategic initiatives undertaken by employees -In response to unexpected external or internal opportunities
Key Aspects of an Effective Vision:
1. Captures an organization's aspiration 2. Identifies what it ultimately wants to accomplish 3. Motivates employees to aim for a target 4. Leaves room for contributions
Two Foundational Ingredients for Competitive Advantage:
1. Inspiring vision & mission statements 2. An effective strategic management process
Which of the following summarizes the difference between a firm's vision and mission?
A vision states what a firm wants to accomplish; a mission states how a firm plans to accomplish this vision.
What are the functions within Each SBU?
Accounting, finance, human resources, product development, operations, manufacturing, marketing, and customer service
Strategic initiatives:
Any activity a firm pursues to explore and develop -New products and processes -New markets -New ventures
What is the strategic management process?
a method put in place by strategic leaders to formulate and implement a strategy.
In the top-down strategic planning approach, all strategic intelligence and decision-making responsibilities rest primarily on the
CEO Top-down strategic planning is a rational, top-down process through which executives attempt to program future success
Realized strategy:
Combination of intended and emergent strategy
Business Strategy:
Cost leadership, differentiation, or integration
Strategic Commitments are actions to achieve the mission that are...
Costly Long-term oriented Difficult to reverse
Why is it better for firms to keep their vision statements customer-oriented rather than product-oriented? Customer-oriented visions tend to be more flexible when adapting to changing environments. Customer-oriented visions tend to be more stable when dealing with changing environments. Customer-oriented visions tend to have a more myopic view of changing environments. Customer-oriented visions tend to have a more short-range view of changing environments.
Customer-oriented visions tend to be more flexible when adapting to changing environments.
Product-Oriented Vision Statements:
Define a business in terms of a good or service provided Ex: Typewriter business or railroads
Customer-Oriented Vision Statements:
Define a business in terms of providing solutions to customer needs Ex: Google: "To organize the world's information and make it universally accessible and useful."
Why is a Vision important?
Employees tend to feel part of something bigger than themselves. Helps employees find meaning in their work Allows employees to experience a greater sense of purpose
Implementation Stage (of Scenario Planning):
Execute dominant strategic plan. •Use the option that best matches the current reality •Modifications made as needed
Mission statements: _________ the vision will be accomplished
HOW
Mission:
HOW do we accomplish our goals?
Corporate Strategy:
Industry, markets, and geography
Shortcomings Top-down Strategic Planning:
May not adapt well to change Formulation separate from implementation Information flows top-down (one-way) The leaders' future vision can be wrong
Upper Echelon's Theory:
Organizational outcomes reflect the values of the top management team and leadership actions reflect Age, education, and career experiences, Personal interpretations of situations, etc..
__________________ ____________ are best described as the ethical standards and norms that govern the behavior of individuals within a firm.
Organizational values
SBU Example: Sam's Club
Rosalind Brewer, CEO of Sam's Club Reports to Walmart's CEO, C. Douglas McMillon Pursues a different strategy than Walmart Offers higher-quality products and brand names
According to the upper-echelons theory, the organizational outcomes of a company primarily reflect the values of the
The CEO
Intended strategy:
The outcome of a rational and structured top-down strategic plan
Strategic Leadership:
The use of power and influence to direct the activities of others and pursue organizational goals
Visions Can Help Create Competitive Advantage if...
The vision is customer-oriented Internal stakeholders help define the vision Organizational structures align with the vision statement
Which of the following statements about product-oriented visions is true? They allow firms to take a need-based approach to their goals. They tend to force managers to take a myopic view of the landscape They define a business in terms of providing solutions to customers. They allow companies to effectively adapt to changing environments.
They tend to force managers to take a myopic view of the landscape Product-oriented vision defines a business in terms of a good or service provided.
Strategy as Planned Emergence:
Top Down AND Bottom Up -Bottom-up strategic initiatives emerge -Evaluated & coordinated by management
Top-down Strategic Planning:
Top management attempts to program future success through detailed analysis of: •Prices •Costs •Margins •Market demand •Head count •Production runs
Vision statements: what an organization __________ to accomplish
WANTS
Vision:
WHAT do we want to accomplish?
Values:
What commitments do we make? What guardrails do we put in place? How can we act legally and ethically in pursuit of the vision and mission?
Strategic Management Process is foundational for sustainable....
competitive advantage
Strategic leadership pertains to the use of power and influence by ______________ ___________________ to direct the activities of others when pursuing an organization's goals.
corporate executives
Mission statements describe what an organization ________
does -The products and services it provides
Functional Strategy:
how to implement a chosen business strategy
Strategy Implementation:
how work gets done
Mission statements also describe the __________ in which it competes
markets
A positive relationship between vision statements and firm performance is more likely to exist when stakeholders are isolated from defining and revising the visions. vision statements are equivalent to listening to the customers. visions are product-oriented. organizational structures are aligned with the firm's vision statement.
organizational structures are aligned with the firm's vision statement.
Values are ______________ to guide behavior and provide employees with a moral compass
principles
Strategy Effectiveness is dependent on...
rate of change firm size
The CEO of Juliet Computers was the child of parents who had difficulty making enough money to support their family. As a result, he and his siblings did not have access to many advantages that children from wealthier families had. This CEO, therefore, emphasized making affordable computers that could be bought by low-income households. Which of the following does this example demonstrate?
upper-echelons theory
Strategy Formulation:
where & how to compete
Strategic Business Units (SBUs)
•Standalone divisions of a larger conglomerate •Has profit-and-loss responsibility •Receive guidelines from corporate headquarters Implement business strategy
What Is Strategic Leadership?
•Successful use of power and influence •Directing the activities of others •Pursuing an organization's goals Enabling organizational competitive advantage
Scenario Planning:
•Uses a top-down approach •Asks "what if" questions -Top management envisions different scenarios. -Then they derive strategic responses. •Consider optimistic and pessimistic futures
