Section A: The Environment and Strategy

core competencies

Bundles of skills or knowledge sets that enable a firm to provide the greatest level of value to its customers in a way that is difficult for competitors to emulate and that provides for future growth. Core competencies are embodied in the skills of the workers and in the organization. They are developed through collective learning, communication, and commitment to work across levels and functions in the organization and with the customers and suppliers. These contribute directly to an organization's strategy.

Core Competency

Creating industry-leading proficiency for tasks within the company's value chain activities is a _____ enhancement. - investing in resources that enhance its value chain proficiency with the goal of attaining industry-leading status

Technological Factors

Includes identifying emerging and speculative technology that can have a significant impact on society and commerce. ____ can reinvigorate a declining industry (robotics in automotive) or create entirely new ones (cell phone manufacture). They can also disrupt some businesses like physical retailers which are losing sales to online retailers. Hotels are facing competition from peer to peer networks (Airbnb)

Mission

The overall goals for an organization set within the parameters of the business scope. It sets the boundaries around the type of work the company will pursue and what is out of scope. It sets priorities based around the requirements of targeted customer segments. It provides a company identity, which alerts decision makers to what the company believes about quality, value and pricing.

Engineer to Order

Products whose customer specifications require unique engineering design, significant customization, or new purchased materials. Each customer order results in a unique set of part numbers, bills of materials, and routings.

Shorter Life Cycles

Products with _______ life cycles must generate revenue early. This means that product/process design must be completed quickly, the product/process must be higher in quality at release, and operations processes must achieve maximum efficiencies as soon as possible.

Core process

That unique capability that is central to a company's competitive strategy.

Political, Economic, Sociocultural, Technological, Environment, Legal and regulatory

The Acronym PESTEL includes an analysis of the following macro environment factors:

Trading Partners

The organization's value chain is usually only one part of a larger value chain system that includes the value chains of the organization's _______: Any organization external to the firm that plays an integral role within the supply chain community and whose business fortune depends on the success of the supply chain community. The _____ -- suppliers and channel partners (distributors, dealers, retailers) and the organization work together to provide value to customers.

Key Success Factors

product attributes, org. strengths, and accomplishments with the greatest impact on future success in the marketplace that will create a sustainable competitive advantage.

Assemble to Order

production environment where a good or service can be assembled after receipt of a customer's order. The key components (bulk, semi-finished, intermediate, subassembly, fabricated, purchased, packing, and so on) used in the assembly or finishing process are planned and usually stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful where a large number of end products (based on the selection of options and accessories) can be assembled from common components

Business Plan

1) A statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow (source and application of funds) statement. A ______ is usually stated in terms of dollars and grouped by product family. The business plan is then translated into synchronized tactical functional plans through the production planning process (or the sales and operations planning process). Although frequently stated in different terms (dollars versus units), these tactical plans should agree with each other and with the business plan. See: long-term planning, strategic plan.

1. Profitability Potential 2. Cumulative Competitive Pressure

2 key factors that are considered when determining industry attractiveness:

rare resource

A _____ is something an organization possesses but competitors lack. ex: Patents and organizational learning related to designing electric cars

Benchmarking

A key tool for external environment scanning and comparison is ____ which compares the organization against external or internal organizations or functions or against industry standards.

Make to order

A production environment where a good or service can be made after receipt of a customer's order. The final product is usually a combination of standard items and items custom designed to meet the special needs of the customer.

Make to Stock (MTS)

A production environment where products can be and usually are finished before receipt of a customer order. Customer orders are typically filled from existing stocks, and production orders are used to replenish those stocks.

Value Chain Analysis

An examination of all links a company uses to produce and deliver its products and services, starting from the origination point and continuing through delivery to the final customer. It considers value chain activities in terms of their effect on costs and profit across the supply chain.

Decline Phase

As revenue decreases, businesses decide whether they will leave the market entirely, maintain the product with minimal investment, or introduce a replacement product. Demand is falling at a steady or increasing rate. Products with loyal customers or strong brand awareness may be retained to maintain visibility in the market. Products that are still essential to important customers may be continued. To remain profitable, production typically switches to a less expensive environment like MTO or possibly ATO. There may be an ongoing need for spare parts and services. Production may also be outsourced to free up capacity for new products. Suitable environments: Make to Order and Assemble to Order.

Strategy Hierarchy

As we descend the ____, the scope fo vision for those involved in marking strategy narrows and plans become more specific. There may be four levels within the ___ Corporate, Business, Functional Area, and Operating Strategies

Local Design Principles

Design of the internal activities of the organization - how the organization and its components organize themselves to succeed in its environment, create the capabilities to work well with supply chain partners, and make the most of their core competencies.

Introduction Phase

During the ____ phase, firms invest a large amount of resources (ad costs, costs to establish supply and distribution). They also incur a high degree of risk. If a product fails, revenue will not reach expected levels, and the product may even be withdrawn from the market before going any further in the cycle. The focus is on product positioning. The product is usually produced in smaller quantities Mfg environments: Produced as make to order or engineer to order to avoid producing things until they are demanded. However, if the intention is for the product to be make to stock for most fo the life cycle, this may be pursued from the very start in the expectation of growth - the risk is that the growth may not be realized, so inventory and capacity may start out low.

Valuable, Rare, Inimitable, Non-substitutable

Elements of a VRIN Analysis

Strategy

For an enterprise, _____ identifies how the company will function in its environment. Specifies how to satisfy customers, how to grow the business, how to compete in its environment, how to manage the organization, and develop capabilities within the business, and how to achieve financial objectives. ______ formation includes two major activities: 1. Strategic Planning and 2. Business Planning

Industry Opportunity

Managers must guard against viewing every _____ as a company opportunity. Rarely does a company have the resources to pursue all available opportunities.

Operations Strategy

Plan how the function will perform its work in a manner consistent with the direction and priorities described at the corporate, business, and functional area levels. Developing the ___ is a collaborative activity since the work of the various functions must be aligned to avoid conflicts

Rivalry Among Existing Firms

Represents the intensity with which rivals compete in the industry to gain market share and competitive advantage. AS the rivalry intensifies, the likelihood of making a sustainable profit decreases. competitive actions include: price cutting, marketing tactics (promotions, heavy advertising), providing better customer service, frequent redesign of products to add new options, attractive financing terms, customizable products

Define strategic vision, mission and values. Gather internal and external info. Set strategic objectives Develop Strategy execute strategy monitor evaluate and correct strategy

Steps in the Strategic Planning process 1 2 3 4 5 6

Upward

Strategy also flows ______ from the firm's front lines where operations leaders and managers decide on best tactics for achieving objectives that have been set .

Downward

Strategy flows ______ through an organization. The decisions made by senior leaders define a set of goals. These are translated into functional area goals that are used to develop operations objectives, processes, and policies that shape value creating work.

Network Design Principles

Supply chain design principles, or the level of collaboration the organization chooses to invest in its upstream supplier network and its downstream customer network.

Economic Conditions

The ___ of an area can be read through indicators such as the gdp, employment levels, family or disposable incomes, and interest or currency exchange rates. During a slowdown, consumers may not feel confident enough to build new homes or buy new cars. This could be bad for car manufacturers. However, business that focus on auto parts and repair service may see growth as consumers postpone vehicle replacement.

Maturity

The _____ phase marks peak sales. A product in this phase may be a functional product (low profit margin and predictable demand). This phase is associated with intensifying competition. As more competitors enter the industry and introduce products into the market, the number of still available customers levels off. To remain profitable, operations must become more efficient and/or more innovative. The organization must be able to lower costs of production in order to maintain profit or support lower prices. This may involve reengineering processes, introducing new technologies, or relocating production to areas with cheaper transportation or labor costs. The firm may try to target new customer needs or enter new market areas. During this phase, extensions of existing products or plans for new products may be introduced to create differentiation in a crowded market or reset the life cycle and maintain or increase market share. Suitable environments: Make to Order, Assemble to Order, Make to Stock

The Operations Strategy

The _______ must address key decisions about 1. Capacity (how many facilities, should activities within a facility be specialized or mixed?), 2. The Supply network, 3. The process technology used to convert resources into finished goods or services 4. Organizational Improvement - how does the organization ensure continued success and growth?

PESTEL

The acronym _____ is often used to describe the focus of an analysis of an organization's external, or macro, environment. These factors are the assumptions that a strategy must consider. Not every event in the external environment is relevant. The organization must focus on those environmental factors that are strategically relevant to it. : Macro Environment factors: Political Factors, Economic conditions, Sociocultural forces, Technological factors, Environmental forces, Legal/regulatory factors.

Competitive Advantage

The advantage a company has over its rivals in attracting customers and defending against competitors. Sources of _____ include characteristics that a competitor cannot duplicate without substantial cost and risk, such as a manufacturing technique, brand name, or human skill set

Global Design Principles

The basis of a firm's relationship to society, natural environment, its resources, and the workforce and community. The relationships define how a firm chooses to deal with matters of public interest. Local communities, workforce, sustainability.

Rivalry among sellers, new entrants to the market, substitute products from other industries, bargaining power of suppliers, bargaining power of buyers/customers weak, High, High, Low

The five forces of industry attractiveness: Conditions in general favor an organization's ability to be profitable when internal rivalry among competitors is ___, leverage over both suppliers and buyers is ____, the barriers to new entrants are ___ ,and the threat from substitutions is _________

Environmental Factors

The interest in sustainable practices underscores the importance of this dimension. __ include natural events and trends, such as the depletion of certain resources, changes in weather, severe storms and droughts. This dimension includes reactions to these events (Increasing insurance rates, changes in agricultural practices or energy production methods, the increased popularity of energy-saving equipment among consumers. access to potable water at critical levlel access to quality construction supplies at a critical level

Strategic Plan

The plan for how to marshal and determine actions to support the mission, goals, and objectives of an organization. Generally includes an organization's explicit mission, goals, and objectives and the specific actions needed to achieve those goals and objectives. They are meant to provide direction to the firm's investment in resources over a longer timeframe, more than the annual business planning cycle

Functional Area Strategies

The plan to implement and support corporate and business strategy at a functional level. They elaborate on the roles each of the business's functions play in implementing the business unit strategy. They will interact and support each other in creating value (business's products or services). The ____will align its own performance objectives with the business's strategic goals. The decision fo the prescription medicine business to increase its market share in new fields of therapy directly affects the strategy of its functions (marketing, sales, finance, etc)

Business Strategy

The plan to improve the competitiveness of individual line of business. Describes the way the business will improve its performance and create a competitive advantage. Ex: focus resources on becoming a major market force in therapies for autoimmune cancers.

Corporate Strategy

The plan to improve the competitiveness of the organization as a whole for all business lines. This strategy provides overall direction for improving the performance of the firm as a whole for the entire portfolio of business lines owned by the organization. Addresses key questions about where the firm will compete: in which industries, markets within those industries, and geographical regions.

Environmental Scanning

The process of analyzing and industry is called _____. A process used to expose an organization's potential strengths, weaknesses, opportunities, and threats.

Key Sucess Factors

The product attributes organizational strengths, and accomplishments with the greatest impact on future success in the marketplace that will create a sustainable competitive advantage.

Vision

The shared perception of the organization's future - what the organization will achieve and a supporting philosophy. This shared ___ must be supported by strategic objectives, strategies, and action plans to move it in the desired direction. It communicates to all stakeholders what the business will be in the future. It should be brief, focused, and directional.

Product Life cycle

The stages a new product goes through from beginning to end (i.e., the stages that a product passes through from introduction through growth, maturity, and decline). 2) The time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) The period of time during which a product can be produced and marketed profitably. Innovative products tend to have shorter ______ while staple products tend to have longer ______.

nonsubsitutable capabilities

__________ cannot be countered by entirely different types of resources and capabilities. Highly trained workers may be vulnerable to substitution if a competitor can use robotic systems with proven efficiency and quality.

Sociocultural Forces

This dimension of PESTEL contains data about demographics, values, and preferences. Age and gender distribution in a population, the geographical distribution of the population, education level, birth rate, etc. Values and preferences capture info about a population's behaviors and priorities. This dimension can affect a retailer's decision about expanding into sales of age related products such as children's clothing or furnishings or interest related products such as fitness equipment or services. - globally aging population with median income in higher age groups consumer interest in activities with eduction and environment

Legal and Regulatory Factors

This dimension relates to the actions of the political institutions described above - the laws and regulations that are enacted as a result of political attitudes. example: leaders at the motorcycle factory will be alert to possible changes in regulations that affect engine emissions or engine fuel efficiency. These will directly affect the company's products. The organization may need to comply with new environmental regulations. - potential aggressive health and safety regulations - international laws lawsuits filed against competitors for onboard outbreaks of infection

Business Plan

Used for strategic plan refinement, a statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow (source and application of funds) statement. A business plan is usually stated in terms of dollars and grouped by product family. The business plan is then translated into synchronized tactical functional plans through the production planning process (or the sales and operations planning process). Although frequently stated in different terms (dollars versus units), these tactical plans should agree with each other and with the business plan.

Strategies

Well crafted _____ have 3 traits: 1. They fit their internal and external environments and can identify and respond quickly to changes in those environments. 2. They create significant and sustainable competitive advantage not easily copied by rivals. 3. They result in measurable performance improvements (increase in revenue, market share, returns to investors, customer satisfaction, etc.)

Strategies

Well executed _____ share common characteristics: 1. Leaders are disciplined in pursuing the chosen ____. Resources are provided to execute it and initiatives are allowed time to produce results that can be assessed. 2. The _____ is communicated to all members of the organization. 3. ___ at all levels of the organization are aligned. 4. Managers think in terms of results and measure outcomes against objectives.

Competitive Analysis

Who the major competitors are, how they compete (on price or quality), where and how aggressively they compete, and how they have responded to prior competitive challenges can be learned through a _______ - the analysis of a competitor that includes its strategies, capabilities, prices, and costs.

Opportunities

__- are conditoins in the external environment that could convey a competitive advantage to the organization - if the firm has the resources and capabilities to act on it. They could be newly discovered and unmet customer needs in the market that could deliver new revenue with little competion, new technology that can lower costs, or increases in market share due to the exit of a powerful competitor from the market. It could also be the option to sell a division that is no longer aligned with the strategy.

strategic plan

____: The plan for how to marshal and determine actions to support the mission, goals, and objectives of an organization. Generally includes an organization's explicit mission, goals, and objectives and the specific actions needed to achieve those goals and objectives. The ____ are meant to provide direction to the company's investment of its resources over a longer time frame, more than the usual annual business planning cycle.

Business Planning

____: provides a bridge from strategic planning to tactical planning described in operational strategies. It translates the strategic plan into objectives, financial and non-financial, and allocates organizational resources to support strategic activity in all of the organization's parts.

Threats

_____ can be environmental factors that will damage the firm's current competitiveness or profitability. They may be risks that can limit the success of a planned strategic action. The firm becomes more vulnerable to external _____ when it does not build its core competencies, correct its weakness, and commit to regular scanning of its internal and external environments.

Strategic Design

_____ involves layers of decisions that can be categorized as global, network, and local.

Weaknesses

______ are competitive liabilities. They are things a firm does poorly or cannot do at all. They could be insufficient resources (tangible things like production capacity, or intangible things such as a divisive or unethical organizational culture). Uncorrected ___ increase a firm's vulnerability to external threats. Ex: poor employee relations.

Strengths

______ include the resources and capabilities identified in the resource and capability analysis. A firm's core process and competencies. They allow a firm to act on opportunities quickly.

Buyers/Customers Greater Bargaining Power

_______ have (greater/weaker) bargaining power when their demand is weak, but supply is high, goods tend to be commodities, it is easy and inexpensive for buyers/customers to switch to other producers, there are few and powerful buyers/customers and many relatively small producers, they can create the product themselves at a reasonable time, cost, and quality, they have information about producer's costs and competitors offerings. They can shop for better deals. They can delay purchases, while the producers incur inventory costs. They are price sensitive; they cannot absorb price increases and seek alternatives when prices exceed a certain level

Suppliers Greater Bargaining Power

___________ have (greater/weaker) bargaining power when demand for their products is high and supply is low, they add some value to its products that is attractive to producers and thereby makes the product less of a commodity, the costs of switching is high, there are only a few and they can dominate their market, their customer cannot make the product themselves, there are few acceptable substitutes, the customer represents only a small portion of their sales. They can afford to lose the customer

Rivalry Among Competitive Sellers is Stronger

______________ is stronger/weaker when: Demand is growing slowly or declining, brand switching is not costly, competitor's products are not distinct from each other, there is excess supply or unused capacity, there are more competitors of equivalent size, rivals have diverse strategies including globalization, it is harder to leave the industry because there are barriers to exit that may be lega, contractual or emotional

Porter's Five Forces Model

a methodology for analyzing competitive pressures in a market and assessing the strength and importance of each of those pressures. The model is based on the assumption that an industry is the composite of competitive pressures operating in five areas of the overall market : Level of Competitive Rivalry among sellers , New Entrants to the market, Substitute Products from other industries, Bargaining power of Suppliers, Bargaining power of buyers/customers

valuable resource

a resource that allows companies to improve efficiency and effectiveness. A resource or capability directly related to the strategy being pursued. Ex: an organization looking to expand globally and its experience in entering other markets.

VRIN Test

a test for sustainable competitive advantage, asks if a resource is Valuable, Rare, Inimitable, and Non-substitutable.

Inimitable resource/capability

an ________- is difficult for a competitor to copy. Those that competitors find difficult and costly to imitate or obtain or substitute this provides an organization with a period of uncontested superiority. Ex: in a market characterized by direct to customer distribution, an existing manufacturer can use its existing retail and online distribution network to reach consumers.

Resource

anything that adds value to a good or service in its creation, production, or delivery. A firm's __ include tangible and intangible assets. Tangible ______ : Physical (land, structures, equipment), Financial (cash), Technological (patents and copyrights, processes) Organizational (IT and communication systems). Intangible _____: Human asses and intellectual capital, brands and reputation (trademarks, customer and supplier goodwill, public reputation, Relationships (alliances and joint ventures, networks of suppliers and distributors, Company Culture - motivated workforce, integrity

Growth Phase

during the _______ phase, the amount of revenue the product produces increases quickly. Product design stabilizes. As demand increases, unit cost decreases, and profit increases. At this point, competitors may try to introduce product imitations or they may engage in strong competitive behaviors, like price cutting. Quality or delivery service levels could suffer while trying to keep up with demand. investment in increased capacity typically occurs during this stage. In this phase, brand identities are emerging and the basis for brand loyalty is built. Quality or compliance with specifications and ability to meet demand reliably and dependably may be primary concerns. Depending on the rate of adoption by the market, operations may add Assemble to order or Make to Stock environments. Make to stock also works in this stage.

Strategy

identifies how the firm will function in its environment. It specifies how to satisfy customer, grow business, compete in its environment, manage the organization, and develop capabilities within the business and how to achieve financial objectives. ___ formation has 2 major activities: 1. Strategic Planning and 2. Business Planning

Substitute Products from other industries

identifying this category of competitors requires that you think outside the box and expand your sense of who your competitors are. Your competitors are not just the firms that offer similar products or services. Your competitors are every organization that meets the same customer need. Ex: Eyeglasses, now produced by the precision manufacturing industry, but which can be replaced by corrective surgery, using tools produced in the medical devices industry. These products are attractive if they are easily available and offer comparable or better quality and if there are few barriers to ___. Warning signs that indicate possible dangers from _____ 1.) Stronger increases in sales compared to the sales in the industry being analyzed 2. Signs that capacity is being increased by producers of these _____ goods 3. Increased profits among makers of these ____ goods

Political Factors

refer to the economy's political, governmental, or institutional environment. It could include attitudes toward certain topics that may present themselves in public policies. It could describe the govt.'s level of willingness to get involved in an issue like ending a labor strike. - increased interest in countries in marine safety issues changing tax structures that could affect facility and headquarters locations -rumors of new taxes targeting cruise ships docking at local ports

Macro Environment

the environment external to a business including technological, economic, natural, and regulatory forces that marketing efforts cannot control.

Resource and capability analysis

the first internal analysis is called a ___ which identifies all of an organization's resources and capabilities and determines if they offer a sustainable competitive advantage.

Value Chain

the functions within a company that add values to the goods or services that the organization sells to customers and for which it receives payment. The ____ consists of primary and support activities. Primary activities: create value and will vary in different organizations (inbound logistics, operations, outbound logistics, sales and marketing, service). Support Activities: make the primary activities possible. IT, human resources, accounting, procurement

Product Positioning

the marketing effort involved in placing a product in a market to serve a particular niche or function

Corporate Culture/ core values

the set of important assumptions that members of the company share. It is a system of shared values about what is important and beliefs about how the company works. These common assumptions influence the ways the company operates. _______ serve as business and ethical principles for all members in the business, but they function only when they are mirrored in the behavior of leaders and managers. _____ may be directly aligned with the mission and others may touch on issues often associated with sustainability: a commitment to ethics and transparency that makes relationships with customers, suppliers, and employees possible, a pledge to respect the cultures of the communities in which it works

Potential New Entrants (Threat of Entry) Stronger - first scenario Weaker second scenario

this usually triggers costly competitive actions as the existing competitors struggle to maintain their positions. The _______ is (stronger/weaker) when an industry is growing and a new entrant could recoup investments in the entry process over time. Regulations are lax. New technologies emerge that can overcome the advantages of the incumbents. Products are not strongly distinguished from each other. There is little customer loyalty to specific brands. The ________ is (stronger/weaker) when incumbents have resources to respond aggressively to new entrants, incumbents hold patents for technologies that give competitive advantage and respond aggressively when intellectual property rights are violated. Entrants face significant barriers to entry (required capital investment is high, incumbents have locked up the best locations, distributors, sources of supply), incumbents have developed scale economies. Loyalty to incumbents and their brands is high.

Business Planning

translates the strategic plan into objectives (financial and non financial) and allocates organizational resources to sppt. strategic activity

SWOT analysis

used to assess an organization's ability to implement a strategy and defend itself against competition. An analysis of the strengths, weaknesses, opportunities, and threats of and to an organization. Strengths and weaknesses reflect internal conditions while opportunities and threats reflect external conditions that impact the organization It can focus firms on opportunities that take advantage of competitive strengths, it can advise on resources that will require further development or steer the firm away from situations where it is at a competitive disadvantage. It can point out negative outcomes that the organization must be able to withstand, avoid, or prepare for.