chapter 1
Intended strategy
-That which an organization hopes to execute -Organizational decisions are determined only by analysis. -Intended strategies rarely survive in the original form.
Stakeholders are dependent upon each other for success & well-being. Stakeholders receive mutual benefits.
Symbiosis
What is the essence of strategic management?
To study why some firms outperform others.
Two ways to look at the role of stakeholder management:
Zero sum OR Symbiosis
Sustainability projects can yield substantial benefits even when they are _________ to quantify.
difficult
________ ________ involves careful analysis of the overarching goals of the organization.
strategy analysis
Entrepreneurial strategy and competitive dynamics
•How do we recognize viable opportunities? •How do we formulate effective strategies?
Realized strategy
-That which an organization actually follows -Decisions are determined by both analysis (deliberate) and unforeseen environmental developments, unanticipated resource constraints, and/or changes in managerial preferences (emergent).
Key role of BOD:
Ensure interests & motives of management are aligned with those of the owners: 1. Create an effective and engaged board. 2. Address shareholder activism. 3. Provide proper managerial rewards & incentives. 4. Establish external control mechanisms.
Do you know of any companies that exemplify intended vs realized strategies?
Kodak Facebook
a firm's strategy for recognizing and responding to the interests of all its salient stakeholders is?
Stakeholder management
•Used to operationalize the mission statement •Provide guidance on how to fulfill mission & vision •Measurable, specific, appropriate, realistic & timely •Channel all employees' efforts toward common goals •Can be both financial and nonfinancial •Should be challenging, yet help resolve conflicts •Provide a yardstick for rewards & incentives •BUT too many objectives can result in lack of focus
Strategic objectives
________ ______________ takes action to implement the formulated strategy.
Strategy Implementation
Stakeholders compete for attention & resources (e.g. unions and management) The gain of one is a loss to the other.
Zero Sum
The _____ __ _________ provides detailed procedures for formal evaluation of directors and the firm's top officers.
board of directors (BOD) Elected representatives of the owners Such guidelines serve to ensure that management is acting in the best interests of shareholders.
the ________ ___________ is far from predictable.
business environment
strategic management
consists of the analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.
Strategy Formulation
decisions made by firms regarding investments, commitments, and other aspects of operations that create and sustain competitive advantage
the final realized strategy of any firm is a combination of __________ and ________ ____________
deliberate emergent strategies
The hierarchy of goals has a relationship to two attributes: ________ __ _______ (from vision to objectives), and ____ ________ (long-term to short-term).
general vs specific time horizon
Organizations express priorities best through stated goals & objectives that form a __________ __ ______
hierarchy of goals
The case for sustainability projects needs to be made on the basis of a more ________ and ____________ understanding of all the tangible and intangible benefits, rather than on the possibility for traditional returns. The alternative of not making these investments is often __ _______ ________.
holistic comprehensive no longer feasible.
Operational effectiveness
performing similar activities better than rivals; sustainable competitive advantage is possible only by performing different activities from rivals, or performing similar activities in different ways.
_______ _________ hold little positional power, but have conviction & clarity of ideas
internal networkers
the expectation that businesses or individuals will strive to improve the overall welfare of society.
social responsibility
A ___________ can be defined as an individual or group, inside or outside the company, that has a stake in and can influence an organization's performance.
stakeholder Each stakeholder group makes various claims on the company.
•Firms have multiple ____________ and must go beyond a focus solely on _________ results.
stakeholders financial
Organizational vision (5):
- A "massively inspiring" goal, overarching, long term - A destination driven by & evoking passion - Developed & implemented by leadership - A fundamental statement of an organization's values, aspirations, and goals - Captures both the minds & hearts of employees - BUT can backfire and erode a company's credibility. Visions can fail: Walk doesn't match the talk = idealistic vision can arouse employee enthusiasm but can be quickly dashed if employees find senior management's behavior is not consistent with the vision
3 ongoing processes involved in strategic management
1) Analysis of: -Strategic goals (vision, mission, strategic objectives) -Internal and external environment Decisions - 2. Formulation -What industries should we compete in? -How should we compete in those industries? Actions - 3. Implementationof strategy (the ideas, decisions, and actions that enable a firm to succeed)
Creating a learning organization & an ethical organization includes:
1) Effective leaders - Set a direction. - Design the organization. - Develop an organization committed to excellence & ethical behavior. 2) Create a "learning organization" - Benefit from individual & collective talents
Fostering corporate entrepreneurship includes:
1) Firms must continually improve & grow. 2) Firms must find new ways to renew themselves. 3) Entrepreneurship & innovation provide for new opportunities enhance a firm's innovative capacity.
Strategic control & corporate governance includes:
1) Informational control - Monitor & scan the environment - Respond effectively to threats & opportunities 2) Behavioral control - Proper balance of rewards & incentives - Appropriate cultures & boundaries (or constraints) 3) Effective corporate governance
Leaders are needed throughout. Everyone must be involved in the strategic management process (3):
1) Local line leaders - have profit & loss responsibility 2) Executive leaders - champion & guide ideas 3) Internal networkers - hold little positional power, but have conviction & clarity of ideas
Successful managers must make many trade-offs:
1) Managers need to be ambidextrous. 2) Focus on long-term effectiveness. - Expand product-market scope by proactively exploring new opportunities. 3) At the same time: - Focus on short-term efficiency. - Align resources to take advantage of existing product markets.
Creating effective organizational designs includes:
1) Organizational structures must be consistent with strategy. 2) Organizational boundaries must be flexible & permeable. 3) Strategic alliances must capitalize on capabilities of other organizations.
The 4 Key Attributes of Strategic Management (S.M):
1) S.M is directed toward overall organizational goals and objectives 2) S.M includes multiple stakeholders in decision making 3) S.M requires incorporating both short-term and long-term perspectives, i.e. creative tension 4) S.M involves the recognition of trade-offs between effectiveness (doing the right thing) and efficiency (doing things right).
primary participants in corporate governance (3):
1) shareholders 2) management (CEO) and 3) board of directors (elected reps of shareholders charged with aligning management and owner interests).
the hierarchy of goals (3):
1) vision 2) mission 3) strategic objectives
managers in organizations focus on 2 fundamental questions:
1. How should we compete in order to create a competitive advantage in the marketplace? 2. How can we create competitive advantages in the marketplace that are unique, valuable, and difficult for rivals to copy or substitute? (i.e. sustainable and not temporary)
Formulating corporate-level strategy
Addresses a firm's portfolio (or group) of businesses: 1. What business or businesses should we compete in? 2. How can we manage this portfolio of businesses to create synergies?
__________ _____________ is the relationship among various participants in determining the direction and performance of corporations.
Corporate Governance
_________ _______ are champion & guide ideas
Executive leaders
_____ __________ sees the business environment as far from predictable, thus limiting our ability for analysis
Henry Mintzberg
strategy formulation is developed at several levels:
I. Business-level strategy : how to compete in a given business to attain competitive advantage II.Corporate-level strategy : what businesses to compete in; how businesses can be managed to achieve synergy III.International strategy : what strategies are needed as the business ventures beyond its national boundaries IV.Entrepreneurial initiatives : how can businesses create new value
____ ________have profit & loss responsibility
Line leaders
Most business enterprises are organized as corporations - whose overall purpose is to ________ shareholder value/wealth.
Maximize But who is really responsible for fulfilling this purpose?
_______ __________ is a set of organizational goals that identifies the purpose of the organization, its basis of competition, and competitive advantage
Mission statement
•Encompasses both the purpose of the company and the basis of competition and competitive advantage •More specific than the vision •Focuses on the means by which the firm will compete •Incorporates stakeholder management •Communicates why an organization is special & different •Can & should change when competitive conditions change
Mission statement
operational effectiveness is ___ enough to sustain a competitive advantage
NOT
_________ __________ requires an integrative view of the organization.
Strategic management
________ ________ is the starting point in the strategic management process. It is the study of a firm's external and internal environments, and their fit with organizational vision and goals.
Strategy analysis
Competitive advantage
a firm's resources and capabilities that enable it to overcome the competitive forces in its industry(ies).
________ __________ allocates necessary resources, and designs the organization to bring intended strategies to reality
strategic management
_________ ________ establishes a hierarchy of goals: - Vision - Mission - Strategic Objectives
strategy analysis
_______ ________ involves assessing the internal environment of the firm.
strategy analysis 1. Analyze strengths & relationships among activities that constitute a firm's value chain. 2. Analysis can uncover potential sources of competitive advantage
________ __________ requires an assessment of a firm's intellectual assets.
strategy analysis 1. Knowledge workers & other intellectual assets drive competitive advantage & wealth creation. 2. Networks & relationships plus technology enhance collaboration, accumulates & stores knowledge.
_______ ________ requires a thorough analysis of the organization's external and internal environment.
strategy analysis •Environmental scanning and analysis of competitors 1. General environment 2. Industry environment
Ambidexterity
the challenge managers face of both aligning resources to take advantage of existing product markets and proactively exploring new opportunities (exploration vs exploitation)
An organization can't succeed if only the ___ ________ in the organization take an integrative, strategic perspective of issues facing the firm and everyone else "_____ ___ __________" in their independent, isolated functional areas ALL functional areas & activities must fit together to achieve goals & objectives.
top managers "fends for themselves"
•Firms can measure a ______ ______ ____ assessing financial, social, AND environmental performance- accounting for the environmental and social costs of doing business.
triple bottom line
strategy implementation actions:
•Ensure proper strategic control systems. •Establish an appropriate organizational design, coordinating & integrating activities within the firm. •Coordinate activities with suppliers, customers, alliance partners. •Leadership ensures organizational commitment to excellence & ethical behavior. •Promote learning & continuous improvement. •Act entrepreneurially in creating new opportunities
Formulating business-level strategy
•Successful firms develop bases for sustainable competitive advantage through: 1. Cost leadership and/or 2. Differentiation, as well as 3. Focusing on a narrow or industrywide market segment.
Formulating international strategy
•What is the appropriate entry strategy? •How do we go about attaining competitive advantage in international markets?
Strategy Implementation
•actions made by firms that carry out the formulated strategy, including strategic controls, organizational design, and leadership.
