Strategic Management Ch. 4
Pricing
process of determining the best price at which to sell a product
growth ratios
sales net income earning per share dividends per share
Motivating
the process of influencing people to accomplish specific objectives -communication is key
Organization = 3 sequential activities
- breaking down tasks into jobs - combining jobs to form departments - delegating authority
Step 1: develop a full list of IF
- narrow data sets to 20 key internal factors: 10 strengths, 10 weaknesses
The resource-based view emphasizes the importance of ______. A. external resources B. competitive analysis C. internal resources D. external opportunities E. financial performance
C. internal resources
promotion
Communication by marketers that informs, persuades, and reminds potential buyers of a product in order to influence an opinion or elicit a response
Liquidity Ratios
Current ration Quick ratio
production/ operations influence ability of plant to meat its capacity utlization
capacity utilization is the ability's to reach full potential output
Marketing
defining, anticipating, and fulfilling consumer's needs and wants
Target Market Analysis
examination and evaluation of consumer needs and wants
Marketers can best use their strategic toolbox to ensure that their firm's offering delivers value to target customers when there is ______. A. no competition B. no need for marketing research C. no need for the marketing mix D. a broadly defined target market E. a clearly defined target market
E. a clearly defined target market
What is the most widely used method for determining an organization's strengths and weaknesses in the investment, financing, and dividend areas? A. Historical trend analysis B. Profit margin analysis C. Financial ratio analysis D. Inventory turnover analysis E. Capital budgeting
C. Financial ratio analysis
Finance and Accounting
financial condition is often considered the single best measure of a firm's competitive position and overall attractiveness
Profitability Ratios
gross profit margin operating profit margin net profit margin ROA return on stockholders equity ROE earning per share EPS price earning ratio
Human Resource Management (HRM)
includes activities such as recruiting, interviewing, testing, selecting, orienting, training, developing, caring for, evaluating, rewarding, disciplining, promoting, transferring, demoting, and dismissing employees.
Product Planning:
includes devising warranties; packaging; determing product options, features, brand style, and quality; delete old products, provide customer service
activity ratio
inventory turnover fixed assets turnover total assets turnover accounts receivable turnover average collection period
Channel of distribution
is a term that refers to various intermediaries that take a product from a producer to an end costumer
tangible resources
labor capital reputation IP
Functional business areas
management marketing finance accounting MIS - a internal stragtegic management assessment will analyze how strong/wek a firm is in each area
The IFE Matrix is an evaluation of the effectiveness of a firm's current strategies, but it does not take into account ______. A. the functional areas of a business B. the value of strengths and weaknesses C. opportunities and threats D. the overall strength of the firm's internal position E. strengths and weaknesses
C. opportunities and threats
Which two management functions are most important at the strategic-management process stage of strategy implementation? A. motivating and controlling B. planning and organizing C. organizing and motivating D. planning and motivating E. organizing and controlling
C. organizing and motivating
Controlling
Controlling consists of 4 basic steps: - establish performance objective -measure individual and organizational performance - compare actual performance to planned performance -take corrective actions
Financial ration analysis
most widely used method for determining an organization s/w in the investment, financing dicident areas - at one point in time -compare ratios over time for more meaningful statistics
Organizational Culture
pattern of behavior that has been developed by an organization as it learns to cope with its problem of external adaptation and internal integration, and that has worked well enough to be considered valid and to to new members -can be resistant to change -culture can be challenged when two companies merge
Management : 4 basic activities
planning organizing motivating controlling
Step 2: assign weights
ranges from 0.01 (not important) to 1.0 (all important) - sum of all weights will equal 1.0 - weights are industry based, not company based
Distinctive competencies
strengths that cannot be easily matched or imitated by competitors
Investment decision (capital budgeting)
the allocation and reallocation of capital and resources to projects, products, assets, and divisions of an organization
test marketing
the process of testing products among potential users
marketing research
the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization
Step 3: assign ratings to key internal factors
- 1 and 4 to each key internal factor to indicate how effectively or ineffectively strategies are 4- best, 1, poor - respond better to a strength over a weakness - ratings are company based, on industry based
limits of financial ratios
- based on accounting data, which can differ by firms - seasonal factors - conformity does not establish certainty that firm is performing normally; departure not necessarily indicative company is doing badly - not "actionable"
he management function of _______ is particularly important for strategy evaluation. A. organizing B. planning C. leading D. controlling E. HRM
D. controlling
Internal Factor Evaluation (IFE) Matrix
A strategy-formulation tool that summarizes and evaluates a firm's major strengths and weaknesses in the functional areas of a business, and provides a basis for identifying and evaluating relationships among those areas.
Strategists use ______ to provide a firm with proprietary business intelligence. A. business analytics B. risk mining C. intuition D. data diving E. forecasts
A. business analytics
Strengths that cannot be easily matched or imitated by competitors are called _____. A. distinctive competencies B. RBVs C. resources D. empirical indicators E. internal advantages
A. distinctive competencies
What ties all business functions together and provides the basis for all managerial decisions? A. Technology B. Information C. The CIO D. The CEO E. Human resources
B. Information
In conducting a marketing audit, which of the following would NOT be a question to ask? A. Is the organization positioned well among competitors? B. Is the organization's structure appropriate? C. Does the firm have an effective promotional strategy? D. Are markets segmented effectively? E. Is the firm's Internet presence excellent as compared to rivals?
B. Is the organization's structure appropriate?
Financial ratio analysis should be conducted on three separate fronts, which include ______. A. change over time, comparison to other countries, and comparison to future goals B. comparison to industry norms, comparison to key competitors, and comparison to other industries C. ratios for non-profits, ratios for service firms, and ratios for manufacturers D. change over time, future forecasts, and current situation E. change over time, comparison to industry norms, and comparison to key competitors
E. change over time, comparison to industry norms, and comparison to key competitors
The strategy-formulation tool that summarizes and evaluates the major strengths and weaknesses in the functional areas of a business is ______. A. Porter's Five Forces Model B. the Competitive Profile Matrix C. the External Factor Evaluation Matrix D. external environmental scanning E. the Internal Factor Evaluation Matrix
E. the Internal Factor Evaluation Matrix
Organizing
Organizing includes all managerial activities that result in a structure of task and authority relationships, such as organizational design, job specialization, job description, span of control, job design, and job analysis
Planning
Planning consists of all managerial activities related to preparing for the future, such as establishing objectives, devising strategies, and developing policies -bridge to future -strategy formulation
Empirical indicators
Refers to three characteristics of resources (rare, hard to imitate, not easily substitutable) that enable a firm to gain and sustain competitive advantage.
Step 4: obtain weighted score
alogn each row in a IFE matrix, multiply the factor's weight by rating to determine a weighted score for each
Resource-based view (RBV)
approach to competitive advantage contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage - basic premise is that the mix, type, amount and nature of internal resources should be considered first and foremost -resource must be developed, exploited, m- basic premise is that the mix, type, amount and nature of internal resources should be considered first and foremost -resource must be developed, exploited, maintained and strengthened
Organizing strengths and weaknesses
- how well the firm structure matches divisions and strategy of firm - degree to which a clear chain of command is displayed w/ titles - extent of job overlap
When and how dividends are paid out
- no set formula - may pay out even if: 1) firm has incurred negative income 2) has to obtain outside sources of capital to pay 3) even when funds were needed to reinvest
Internal Forces and firms resources
- proponent of RBV content performance determined by internal resources that enable a firm to exploit opp and neutralize threat
Step 5: obtain total weighted score
-range from a low of 1 to a high of 4.0 -average is a 2.5
Steps of developing an IFE
1) Develop full and narrow list of key internal factors 2) Assign weights to internal factors 3) Assign rating to internal factors 4) obtain weighted score 5) obtain total weighted score
Management Audit Checklist
1) Does the firm use strategic-management concepts? 2) Are company objectives and goals measurable and well communicated? 3) do managers at all levels plan effectively? 4) Do managers delegate authority? 5) is the organizations structure appropriate? 6) are job descriptions clear? 7) employee morale high? 8) employee turnover and absenteeism low? 9) organizational reward and control mechanisms effective?
ways HRM can provide competitive advantage
1) analyze turnover rate 2) measure and monitor employee engagement and morale 3) determine going market rates for talent 4) design employee development and training path 5) provide guidance on legal issues 6) track employee data
strengths/weakness of product
1) brand 2) assortment or cannibalisms of firms existing product 3) features compared to what is available on market
Why companies pay dividends even in negative situations
1) customary; failing to pay is a stigma 2) represent a sales-point for investment bankers 3) shareholders demand dividends 4) myth of paying dividends will result in a higher stock price
With planning a firm can
1) focus on critical factors 2) ensure preparedness 3) gather resources and carry out tasks efficiently 4) conserve resources 5) asses effort, cost, implications are warranted by affect 6) be proactive 7) develop synergy= pull together as a team; 2+2 = 5
3 fronts to conduct financial ratio analysis
1) how has each changed overtime? 2) how does it compare to industry norms? 3) how does it compare to key competitors?
5 production areas
1) process: robotics, layout, process flow, line balancing 2) capacity: forecasting, facilities planning, aggregate planning, scheduling 3) inventory: level of raw materials, work- in process, finished goods 4) workforce: managing skilled, unskilled, clerical, and managerial 5) quality: quality control, sampling, testing, quality assurance, cost control
5 basic activities of marketing
1) research and target market analysis 2) product planning 3) pricing products 4) promoting products 5) pacing or distributing products
Marketing Audit Checklis
1) segmented effectively? 2) positioned well among competitors? 3) present channels of distr effective and reliable? 4) conducting and using market reserch effectively? 5) product quality and customer services good? 6) priced appropriately? 7) effective promotional strategy? 8) internet presence excellent?
strengths and weakness of promotion
1) website/social media 2) spokespeople 3) advertising/brand slogan
Finance/Auditing Checklis
1) where is firm financially strong/weak as indicated by ratios? 2) can it raise short term capital? 3) should re
Dividend decisions
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. -earning per share -dividends per share -price earnings
intangible resources
culture knowledge brand equity reputation IP -more important to competitive adv?
leverage ratios
debt-to total assets debt to equity long term debt to equity times-interest-earned
Financing Decision
determines the best capital structure for the firm and includes examining various methods by which the firm can raise capital -short term and long term needs -debt to equity ratio and debt to total assets ratio