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