Strategic Management

Workforce

These decisions involve managing the skilled, unskilled, clerical, and managerial employees by caring for job design, work measurement, job enrichment, work standards, and motivation techniques

social, cultural, demographic, and natural environment forces

U. S. facts=aging population, more diverse, widening gap between rich and poor, 2025(18.5% population>65 years), 2075 (no ethnic or racial majority)

competitive intelligence

a systematic and ethical process for gathering and analyzing info about the competitions activities and general business trends to further an business own goals

staffing

activities centered on personnel or human resource management. Included are wage and salary administration, employee benefits, interviewing, hiring, firing, training, management development, employee safety, affirmative action, equal employment opportunity, union relations, career development, personnel research, discipline policies, grievance procedures, and public relations.

controlling

all those managerial activities directed toward ensuring that actual results are consistent with planned results. Key areas of concern include quality control, financial control, sales control, inventory control, expense control, analysis of variances, rewards, and sanctions.

Competitive forces

an important part of an external audit is identifying rival firms and determining their strengths, weaknesses, capabilities

strategic management(strategic planning)

art and science of formulating implementing and evaluating cross-functional decisions that enable an org to achieve its objectives

potential entry of new competitors

barriers to entry are important bc they affect competitive rivalry. - quality, pricing, and marketing can overcome barriers. (high start-up cost)

assumptions

best present estimates of the impact of major external factors, over which the manager has little if any control, but which may exert a significant impact on performance or the ability to achieve desired results.

Process

choice of technology, facility layout, process flow analysis, facility location, line balancing, process control, and transportation analysis. Distances from raw materials production sites to customers are a major consideration.

formulation

collecting info, developing mission and vision, identify eternal opportunities and threats and internal strengths and weaknesses, long term objectives, generating alternative strategy, choosing particular strategies to pursue.

strategic planning

company game plan. form tough managerial choices among lots of good alternatives, and it signals commitment to specific markets, policies, procedures, and opperations

dividend decision

concern issues such as the percentage of earnings paid to stockholders, the stability of dividends paid over time, and the repurchase or issuance of stock. Determine the amount of funds that are retained in a firm compared to the amount paid out to stockholders.

production/operations functions

consists of all those activities that transforms inputs into goods and services. Prod/opp management deals with inputs, transformations, and outputs that vary across industries and markets. (canvas slide)

planning

consists of all those managerial activities related to preparing for the future. Specific tasks include forecasting, establishing objectives, devising strategies, developing policies, and setting goals

forecasts

educated assumptions about future trends and events. Quantitative and qualitative techniques

non financial benefits of strategic management

enhanced awareness of external threats, understanding of competitor strategy, increased employee productivity, reduced resistance to change, clearer understanding of performance rewards

rivalry among competing firms

focus on competitive advantage of strategies over other firms -high comp rivalry is good if your firm has the best competitive advantage.

Capacity

include forecasting, facilities planning, aggregate planning, scheduling, capacity planning, and queuing analysis. Capacity utilization is a major consideration

Organizing

includes all those managerial activities that result in a structure of task and authority relationships. Specific areas include organizational design, job specialization, job descriptions, job specifications, span of control, unity of command, coordination, job design, and job analysis

communication

key to successful strategic management. through dialogue and participation, managers and employees become committed to supporting the org.

policies

means by which annual objectives will be achieved. Guidelines rules procedures. guides to decision making and address repetitive or recurring situations

strategies

means by which long term objectives will be achieved. EX: geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation

the potential development of substitute of product

pressure increases when: prices of substitutes decrease, consumers switching costs decrease. Lots of subs makes attractiveness go down. Low power over consumers.

value chain analysis

process where a firm determines the costs associated with org activities from purchasing raw materials to manufacturing products to marketing those products. Aims to identify where low cost adv or disad are

Implementation

requires a firm to establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed. ACTION STAGE

annual objectives

short term, milestone and achieve long term objective. should be measurable, quantitative, challenging, realistic, consistent. Should be established at corporate level divisional, and functional levels in large orgs

vision statement

should answer the basic question what do we want to become? -how is the world different when we succeed? -EX: Microsoft= "a personal computer in every home running Microsoft software" -EX Google- "To provide access to the worlds information in one click -Ex Honda- "we will destroy Yamaha"

organizational culture

significantly affects business decisions and thus must be evaluated during an internal strategic-management audit. -if strategies can capitalize on cultural strengths, such as a strong work ethic or highly ethical beliefs, the management often can swiftly and easily implement changes. (evaluated during internal audit)

objectives

specific results that an org seeks to achieve in pursuing its basic mission. long term (>one year)

investment decision

the allocation and reallocation of capital and resources to projects, products, assets, and divisions of an organization

customer analysis

the examination and evaluation of consumer needs, desires, and wants. -involves administering customer surveys, analyzing consumer information, evaluating market positioning strategies, developing customer profiles, and determining optimal market segmentation strategies -essential in developing an effective mission statement.

american labor unions

the extent that a state is unionized can be a significant political factor in strategic planning decisions as related to manufacturing plant location and other operational matters. -the size of American labor unions has fallen sharply in the last decade due in large part to erosion of the us manufacturing base.

resource similarity

the extent to which the type and amount of a firms internal resources are comparable to a rival

management

the functions of management consist of 5 basic activities: planning, organizing, motivating, staffing, and controlling. (posted on canvas)

political governmental and legal forces

the increasing global interdependence among economies, markets, governments, and organizations makes it imperative that firms consider the possible impact of political variables on the formulation and implementation of competitive strategies.

marketing

the process of defining, anticipating, creating, and fulfilling customers' needs and wants for products and services. -Functions of marketing: customer analysis, selling products/services, product and service planning, pricing/distribution, marketing research

economic forces

they should be -important to achieving long term and annual objectives -measurable -applicable to all competing fimrs -hierarchial in the sense that some will pertain to the overall company and other will be more narrowly focused -EXS: availability of credit, level of disposable income, inflation rates, consumption patterns

Industrial Org Approach

to competitive advantage advocates that ext industry factors are more important that internal factors in a firm for achieving competitive advantage.

external opportunities or threats

uncontrollable by a single org but can potentially have a significant impact on an organization

financial benefits of strategic management

using this shows significant improvement in sales, profitability, productivity, compared to not having it. high performance firms seem to make more informed decisions with good anticipation of both short and long term

market commonality

• - the number and significance of markets that a firm competes with its rivals

distinctive competencies

- a firm's strengths that cannot be easily matched or imitated by competitors. Building competitive advantages involves taking advantage of distinctive competencies.

benchmarking

- analytical tool used to determine whether a firm's value chain activities are competitive compared to rivals and thus conductive to winning in the marketplace. Measuring costs across an industry to determine "best practices"

financing decision

- determines the best capital structure for the firm and includes examining various methods by which the firm can raise capital

external audit

- focuses on identifying and evaluating trends and events beyond the control of a single firm. -reveals key opportunities an threats confronting an organization so that managers can formulate strategies to take advantage of the opportunities to avoid • The external audit is aimed at identifying key variables that offer actionable responses. • Firms should be able to respond either offensively or defensively to the factors by formulating strategies that take advantage of ext opps or that minimize the impact of potential threats

stakeholders

- include, employees, managers, stockholders, board of directors, customers, suppliers, distributors ect. Mission should appeal to them.

the internal audit

- involves identifying the firm's distinctive competencies and incompetence's within each division and function. Provides more opportunity for participants to understand how their jobs fit into the whole org.

technological forces

- the internet has changed the very nature of opportunities and threats by: -altering the life cycles of products -inc the speed of distribution -creating new products and services -erasing limitations of traditional geographic markets -lowering entry barriers

management information systems

- to improve the performance of an enterprise by improving the quality of managerial decisions. -collects, codes, stores, synthesizes, and presents information in such a manner that it answers important operating and strategic questions

technological advancements can

-create new markets -result in a proliferation of new and improved products -change the relative competitive cost positions in an industry -render existing products and services obsolete (volatile vs. non-volatile industries)

how formulation is used

-deciding what new business to enter, what businesses to abandon, how to allocate resources, to expand operations or diversify

five forces model of competition

-potential development of substitute products -bargaining power of consumers -potential entry of new competitors -bargaining power of suppliers =build to rivalry of comp firms

Strategic management questions

-where are we now? -where do we want to go? -how do we get there?

Mission statement

A declaration of an orgs "reason for being". Answers "what is our business?". Reveals what an org wants to be and whom it wants to serve, helps resolve disputes about the firm's future

characteristics of a good mission statement

1. Broad in scope but less than 250 words. Inspirational and memorable, should no include numbers, figures, or ratios 2. Should appeal to the firm's diverse stakeholders. Should be reconciliatory, if possible 3. Identifies the UTILITY of the firm's products. Specifies how this is related to their competitive advantage. Ex: att should focus on communication (this is the utility). Exxon should focus on the energy they create(utility) not oil and gas. Utility vs actual product.

finance and accounting

1. Investment decision 2. Financing decision 3. Dividend decision

characteristics of most competitive companies

1. Market share matters 2. Use the vision/mission as a guide for all decision 3. Whether its broken or not, fix it-make it better 4. People make a difference 5. Strive to stay cost competitive on a global basis

competitive intelligence programs

1. To provide a general understanding of an industry and its competitors 2. To identify areas in which comp are vulnerable and to assess the impact strategic actions would have on comp 3. To identify potential moves that competitor might make

pricing

5 major stakeholders affects pricing; consumer, governments, suppliers, distributors, and competitors. -sometimes and org will pursue a forward integration strategy primarily to gain better control over prices charged to consumers.

barriers to entry

= need to gain economies of scale quickly, strong brand preferences, large capital

the resource based view approach

contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage. Resources can be grouped into three all-encompassing categories: physical resources, human resources, and org resources. -for a resource to be valuable, it must be either 1. Rare 2. Hard to imitate, or 3. Not easily substitutable. -these three characteristics of resources enable a firm to implement strategies that improve its efficiency and effectiveness and lead to a sustainable competitive advantage

internal strengths and weaknesses

controllable activities performed well or poorly, determined in relation to competitors. Consider things as resources(people, property, plant ect)

shared vision

creates a commonality of interests that inspires workers and managers

bargaining power of consumers

customers being concentrated or buying in volume affects intensity of competition -consumer power is higher where products are standard or undifferentiated. (lots of consumers drives down consumer buying power) (one or a few have a lot of power and makes attractiveness of industry go down) Peruse forward integration (sell straight to consumer)

Quality

decisions are aimed at ensuring that high-quality goods and services are produced by caring for quality control, sampling, testing, quality assurance, and cost control

clear mission

directs managers and worker's efforts toward what is most important

product and service planning

includes test marketing, product and brand positioning, devising warranties, packaging, determining product option, features, style, and quality: deleting old products;

distribution

includes warehousing, distribution channels, distribution coverage, retail site locations, sales territories, inventory levels and location, transportation carriers, wholesaling, and retailing, -important when firm is trying to develop integration strategy.

Inventory

involve managing the level of raw materials, work-in-process, and finished goods, especially considering what to order, when to order, how much to order, and materials handling

motivating

involves efforts directed toward shaping human behavior. Specific topics include leadership, communication, work groups, behavior modification, delegation of authority, job enrichment, job satisfaction, needs fulfillment, organizational change, employee morale, and managerial morale.

backward integration

is gaining control or ownership of suppliers. (envelope them) (supply yourself)

bargaining power of suppliers

is increased when there are: o -few substitutes o Costs of switching raw material is high