MAN Final study
When should an organization utilize outsourcing?
-A process through which a company depends on another organization to perform activities on its behalf -An organization should use it when it wants to enhance strategic position in the marketplace, or it wants to offload activities in which they do not have special competence and do not contribute to its strategic position
Opportunity Recognition and Value Creation Similarities
-Both of these ideas were cornerstones of the textbook and should be the lens we examine the aspects of the field and how companies are performing. -Opportunity recognition is the critical need to identify and exploit where the market is heading -Creating and maintaining a successful business in the face of ever-changing industry and competitive contexts brings the value creation imperative -Companies must be able to do both imperatives to recognize that as markets change, the process of creating value also changes. They work hand in hand.
When is competitive rivalry highest and lowest in an industry?
-Competitive rivalry is highest when companies are in a stagnant or decreasing industry, the market is widely fragmented, and even in concentrated markets, when switching costs are low and products/services are identical -Competitive rivalry is low when industries with too little capacity to meet the buying desires of customers, in industries where competitors have been able to establish a significant level of differentiation
Compare and contrast normal profit and economic profit.
-Normal profit - The minimum return earned by a company that is necessary to attract and secure the owners' inputs. Generally defined as the cost of equity capital multiplied by the amount of shareholder equity. -Economic profit = The residual income above and beyond normal profit that accrues to owners, deriving from the prowess of management in planning, supervision, and control.
Define parity.
-Parity is achieved through companies competing on cost or some dimensions of differentiation, they must maintain relative equality on other dimensions that are valued in the marketplace. -Without reasonable parity on other valued conditions, the lowest-cost competitor or most-effective differentiator on some dimension may not succeed
Compare and contrast primary and support value chain activities.
-Primary activities are those activities engaged in to t-angible produce the products and services that come to mind when a company's name is mentioned, such as: ---Inputs, operations, distribution, marketing and sales, and services -Support activities include much of the white collar work done in companies such as finance, information systems, human resources, legal work, research and development, and purchasing efforts. -Both activities contribute to the company's product and services
What are the potential risks of a differentiation strategy?
-Product differentiation is not a strategy -Customers do not value benefits derived from differentiation -Differentiation positions can be imitated over time
What are the forms of value creation and briefly define each.
-Provide greater benefits to them for the same price they are accustomed to -Provide the same benefits but at a price below the normal price paid -Broadening access to benefits to a wider audience, without sacrificing benefits delivered to existing customers-
What are activity ratios?
-Ratios that are used by the company in order to determine the efficiency with which the company is able to use its different operating assets present in its balance sheet and convert the same into the sales or cash --AR Turnover --Total Asset Turnover --Net Fixed Asset Turnover
When should an organization use a differentiation strategy?
-Rivalry When diversity and variety exists among customers and their needs, so long as all buyers do not demand common features or benefits -Buyers If buyer concentration does not exist and they have little power -Suppliers Supplier may exert bargaining power, but as long as diversity exists among buyers and no standardization occurs, higher costs from suppliers can be offset by higher prices charged New entrants and substitutes This shields competitors from new competition presented. Unique value chain and resource investments for differentiated value should be difficult to imitate
When should an organization use a low-cost strategy?
-Rivalry When there are few opportunities to differentiate -Buyers and suppliers When they have strong bargaining power and are able to exact economic concessions from competitors, the lowest cost structure fares better If buyers experience low switching costs -New entrants and substitutes Offers flexibility to reduce prices and offset any perceived advantages that other companies may offer
What are stakeholders? Compare and contrast internal and external stakeholders.
-Stakeholders = Individuals or groups who have an interest or influence on the business and operations of a company. ---Internal Stakeholders: employees, managers and officers, board of directors, stockholder ---External: suppliers, unions, creditors, customers, governments, communities, interest groups
What should be reflected in performance measures related to an organization's strategy?
-There are three aspects of performance that are important to consider from a strategy point of view: ---(Summary Performance) First, the types of performance measures we pay the most attention to are those that reflect achievement as a whole ---(Relative to Competition) Second, we pay attention to those that can be compared to other companies. The goal is to produce superior performance ---(Over the Long-Run) Finally, the kind of performance we pay attention to are those that reflect the company's long-term commitment-
How do organizations achieve low-cost positions in an industry?
-This is achieved by creating and maintaining a low cost position requiring the organization to systematically lower its costs through its operations, such that the margins for that business exceed those of the competitors. -Factors that lead to a low cost position include: --Economies of scale ---As unit costs drop while quantities produced each period grow larger --Capacity utilization --Experience curve ---As organizations gain experience in producing, employees learn how to perform quicker, cheaper, and with fewer mistakes --Product/service design ---A simple, easy, and inexpensive design -Process innovation (value chain design) ---A new process to speed up assembly, design, or delivery can yield dramatic cost savings not enjoyed by competitors -Internal value chain coordination ---The ability to reduce costs through interrelationships between value chain activities
What are the steps in a VRIO/VRIST analysis?
-VRIO Framework: Value Rarity Imitability Organization -VRIST Framework: Is it valuable? Is it rare? Is it difficult to imitate? It cannot be substituted for It cannot be traded for
Opportunity Recognition and Value Creation Differences
-Value creation embraces many stakeholders in a company, not just customers. Therefore, many opportunities are presented to create unique value -Opportunity recognition makes companies constantly position themselves to search for, find, and embrace new opportunities that may replace that existing business.-
What is the fundamental choice an organization must make for its competitive approach?
A choice an organization must make for its competitive approach is whether it will be employ one of two basic approaches: low cost or differentiation
What is a competitive strength assessment? How is it conducted?
A company creates a competitive KSF analysis by identifying KSFs that are currently important in the industry to evaluate each primary competitor. It is accomplished by looking at how well each competitor addresses the KSFs that distinguish between success and failure in the industry A comparison of competitors on each KSF dimension highlights that relative positions of strength in the marketplace The goal is to produce a table that lists the KSFs across the top, and the chief competitors in the industry down the side. The analysis should be based on hard facts and data
What is causal ambiguity?
A condition that exists when the link between a business's resources and competitive advantage are poorly understood.
Compare and contrast differentiation and focus strategies.
A focus strategy takes advantage of segmentation in the market or geographical differences that can lead to a differentiation focus.
What is a strategic alliance and when would this be beneficial?
A joint venture or partnership formed with other companies (sometimes competitors) in order to develop a new technology, process, or other type of strategically important resource. Typically they are created to collaborate on R&D projects, where each party has unique knowledge and practice. The risk of failure would be higher if only one company tried alone, and/or did not possess all resources required to move in the path of development
What are the systems of the McKinsey 7-S framework? Briefly define each.
A method for examining the various aspects of the organization in such a way that alignment can be achieved. Elements include strategy, structure, systems, style, skills, staff and superordinate goals (shared values) Hard S's (easy to identify and articulate in a document) Structure The design of the organization. A combination of knowing: What constitutes the core, techno structure, and support staff How activities will be coordinated with strategy What structure you will use Strategy Written statements that constitutes direction of the company Examination of value chain, capabilities, resource-based advantages, and business level strategy of their organization such that it can compete effectively Systems IT systems, quality control, performance review, human resources, and policies/procedures all need to be considered Aligning systems so they support new structure is crucial Changing systems can be traumatic Changing demands a reevaluation of all organization systems. They provide a critical link between strategy that is desired and a structure it is trying to implement Soft S's (difficult to pin down) Style Behavior of an organization starts at the top. It is the way employees treat each other, balance of informal/formal behavior, and approach to work The CEO and top management set the style. It is based in action Staff Examination of means/processes for bringing in new employees as well as processes in getting them productive. New employees take time to provide value Staffing is about shortening that time and aligning the process with the company Skills Dominant skills of the organization and dictate what is most important in creating value for it. There are wide varieties of skill sets depending on goals of a company Shared Values (Superordinate Goals) The overarching goals of the organization Usually manifested in the vision, mission, and principles of the company, representing the focus of the company Aligning vision and mission with strategy would seem to be obvious
What is mutual adjustment?
A method of coordination where every individual knows everything that is happening in the organization and adjusts his or her work pattern for the conditions at hand. This is used easily in small organizations Almost no time is wasted in meetings, status reports, or duplication efforts. It is best used in: Small groups of people When tasks are well-known so everyone is cross-trained, or When the means to success is uncertain and a strong degree of innovation is needed
What are comrmon-sized financial statements? Why are they useful?
A method of financial analysis that facilitates comparisons between different size companies. For income statements set revenue for each company equal to 100 percent, and for balance sheets set each side of the balance sheet to 100 percent.
What is standardization of work output?
A method of managing large numbers of employees based upon a well-developed set of output measures that in combination provides insight into the performance of the employee. For groups who cannot use standardization of work skills and processes, and the group is too large or scattered for mutual adjustment, this is another means Here, employees are coordinated via work output. This deals with output measures. Those that are well crafted allow a manager the ability to track many people who might about jobs using different methods or techniques
What is standardization of work skills?
A method of managing large numbers of employees based upon their skill sets as established by some externally validated means As employees grow, companies look to standardization This is done for groups whose skill sets are well understood in a wider market Generally, like for CPAs, CFAs, cosmetologists, JF, MD, and more. The groups sel-police and require ongoing maintenance In practice, this has been extended by companies including detailed training/certifications The value of standardized skills includes a common nomenclature, a common base knowledge set, and understanding of responsibilities expected Using this, the manager hires only those with qualifications and leans on expectation of certifying organizations to provide a performance baseline Performance beyond it is what is measured/evaluated within individual HR systems
How are divisional structures organized?
A method of organizing a company that divides up the organization into discrete companies (or semiautonomous divisions) within the overall company. These divisions generally contain all the elements of an independent company. They are used as companies develop/acquire completely separate lines of business. As they diversify, it establishes different operating divisions within the overall company It can be structured in a few ways: Each division is a fully functioning entity. In turn, divisions structure their operations using a functional structure Staff at headquarters are responsible for: company policies and initiatives, financial/accounting analysis for divisions, managing flow of resources and information Value creation occurs in part because of the structure itself. This is more easily obtained internally through corporate than external financial markets. Communication between divisions is problematic. An attempted solution is the creation of SBUs that combine the divisions under a single office
How can a resource that is not rare still be valuable?
A resource can create value but be common, it is not extraordinary
What is a scenario analysis and why is it important to firms?
A technique allowing organizations to consider dramatic shifts in their business model. The organization maps out a set of actions that it can start to take if warning signs begin to appear along the path of a particular scenario. Crisis scenarios are part of this planning process, as is consideration of more logically unfolding changes of significance that may transpire. It usually uses a time frame from 10 to 25 years.
What are the styles of tactical competitive responses and when might a company use each?
Acquiesce This is the most passive approach. When an industry/market is known for operating in a certain way, a minimalist response that leverages well-known and appreciated conduct can be followed. Continuing to follow rules/norms of conduct in the industry, imitating how others behave, and doubling down on efforts to comply with the accepted standard might diminish the standing of a competitor trying to shake things up. Compromise The goal is to avoid direct confrontation against an aggressive opponent, but be proactive in some way. The force of the competitor is redirected, or deflected, to not damage the company's position and strength. Placating and accommodating affected stakeholders can be an effective way of dealing with this Another is to step up R&D and put greater weight on new business options, while continuing primary emphasis on the existing business. It might step up external communications to inform stakeholders of intentions to address growing desires Avoid This is used when the competitive move is real and threatens some dimension of the company's position or business, but when it is not worth an expensive fight right away. This conserves resources for another time when the fight may be successful It does not mean to give up, in the meantime the company acts as if it is proceeding as always while deeper down plans may be laid and resources created. Changing short term goals, activities, and field of play may be prudent, until more favorable circumstances develop Defy Some competitive moves can be disregarded. Companies are tactically active when a key segment central to the market position is threatened. Under this, a company may defy the threat It tends to be activities directed at the competitor. The newly offered value, challenge to a patent, test-marketing, a new company, and more may be the target of a company's efforts Manipulate Associated with moves to co-opt, influence, and control other stakeholders and influential constituents in the industry. It seeks to overwhelm the competitor, stakeholders, and the markets They might seek to hire key employees from the competitor, se industry association boards for standards to disfavor them, step up marketing, sales, community, and investor efforts, and attempt to dominate the market and position This would be used when the competitor is newly-emergent, possibly local, and does not have deep resources
How would you describe simple structure?
All (CEO makes all the decisions, few rules, little formation, low specialization)
Which of the following is considered a key to successful implementation?
All (Clear and compelling objectives, resource allocation, a single currency)
Which of the following are questions that we ask when utilizing a business strategy?
All (How do we deliver that value, What unique value do we offer, Where do we compete?
Which of the following is a category of resources that companies may draw upon to develop a competitive advantage?
All (technology, organizational, knowledge)
Which of the following statement is true regarding a mission statement and a vision statement?
All (vision is about the longer term horizon, which is much more encompassing of both the present and the unfolding future, mission is about the here and now, what we see and what we do in our immediate circumstances in order to accomplish our goals, mission statement have a slightly more bounded close-in nature)
Which of the following is a critical question one should ask when generating a compelling vision?
All (what does it mean to work in the organization, what should our company be in ten years, what are the compelling changes and opportunities in the competitive environment that we should be taking advantage of?)
Which of the following are questions that we ask when utilizing a corporate strategy?
All (what resources are not shares, what resources are shared across, how if all do the units work together)
When would an organization want a simple structure?
All areas of a company report to a single person. It can provide the most value in its rapid response, but leans on capability of the single head of the organization Not organized by function, product, or geography. There is no filter to information, coordination is straightforward, and involved person-to-person managerial abilities The structure is easily understood. However, the company is limited by the capability of the person in charge and resource constraints. Increasing complexity makes it difficult to maximize each employees' contribution This is the best in four situations: Single product (or function) Value is created by instant access to a decision maker New organization These start with one person or a small number of people and new people are hired and report to founders Organization trying to maintain an entrepreneurial orientation By flattening it, the company is able to rely on this approach by the founder and their unique skills and insights. Organizations in crisis A crisis may develop that demands attention and focused efforts of everyone Examples include: BP oil spill, Tylenol being tainted
When discussing emergent performance dimensions, we talked about the impact that they can have on companies. What are some of the positive impacts form them?
All provided answers have been positive impacts (increases in revenue and market share, increase productivity and reduced turn over, reduced energy and waste expenses)
What are the steps of the strategic management process and what is involved in each?
Analysis- External and Internal Formulation- Vision, Mission, Goals, Strategic Approach Implementation- Resource allocation, structure, and motivation Evaluation-Consistency among departments
When would an organization want a functional structure?
As an organization grows, functions become large and scatter. One means is to form the organization into function This divides it in departments or functional areas of expertise such as procurement, accounting/finance, marketing, production, and IT This is advantageous when applying various coordination methods It is effective in three situations: Growing business activity or volume Public or governmental organizations Large, mass-production organizations
What is the critical outcome measure of strategy?
Beating competitors
What are the characteristics of a benign industry environment?
Benign environments are usually characterized by conditions such as: 1) market demand exceeds market supply; 2) high gross profit margins; 3) low competitive intensity, meaning no one competitor controls a high proportion of the market; 4) strong customer loyalty; and 5) customer tolerance of occasional management miscues.
What is centralization? Why is it used?
Centralization occurs when the company needs to establish if important decisions are made centrally by head office or by others in the newly formed specialized departments
Your textbook discusses insights from detailed financial analysis about three chains. Which chain has large stores with basic display furnishing and must advertise in order to compete with other retailers and online shoppers?
Chain A - Department Store
What type of ethical investment matches this description: investing done solely based on geography to help raise the economic level of the area.
Community investing
What are the dominant problems in each stage of the organizational life cycle?
Conception Issues with putting the right people with the right knowledge in the right place. Completion requires specialized technical knowledge Commercialization Commercialization-stage companies face what to do with production and market start-up issues Growth The resource problem facing companies at this stage is how to coordinate what has become complex quickly Challenged because they need to activate many types of strategic resources, even if constrained by financial resources. Maturity The company must find ways to maintain previous growth momentum and market position Growth in profitability will depend upon greater efficiencies and cost reduction Internal control becomes important and accounting/finance functions become more central to managing
Strategy involves the type of decisions made and direction created for a company that operates multiple lines of business.
Corporate
In the balance scorecard, "How do customers see us?" is a question asked in
Customers
What is considered to be a potential drawback of SWOT?
Definitions may vary
What are the potential drawbacks of value chain analysis?
Depends on information systems to provide useful data. More focus internally, less focused on market
A company in which 70-95 percent of revenues comes from a single business is known as
Dominant business
What is critical for business-level strategy?
Each strategy is subject to three critical conditions: parity conditions on other dimensions valued in the marketplace, the evolution of customer expectations, and the evolution of competition itself
Opportunity recognition is an
Emergent strategy
What is strategic leadership focused on?
Establish vision, mission, goals Espouse principles and a code of ethics for behavior and decision making Establish a match between culture and personal leadership style Build management team Establish management team process that challenges assumptions, surfaces alternatives Establish structure for communication, coordination, and control Install a strategy implementation progress evaluation system Evaluate, decide, act Rational decision making Motivate through incentives and rewards aligned with goals Establish a leadership development program
What are the core responsibilities of strategic leadership? Briefly describe each.
Establish vision, mission, goals Leadership is about guiding the business forward that has potential to be extraordinary. Designing an appropriate visions and mission is at the heart of the effort Espouse principles and a code of ethics for behavior and decision making Establishing this moral framework and continuing to emphasize it brings it alive through the organization Establish a match between culture and personal leadership style A culture that matches the value of a leader and is in harmony with the leader's actions will prove to be a powerful driving force for the organization. Build management team Identifying, recruiting, and hiring the best people to lead a particular company at a particular point in time is crucial. Hiring for transformation also is. The imperative of opportunity recognition iis in practice through innovation efforts that proactively seek out and embrace new ideas, encourage experimentation, and precipitate learning Establish management team process that challenges assumptions, surfaces alternatives The visibility of this process sends an important signal to the organization about desirable behavior Establish structure for communication, coordination, and control Install a strategy implementation progress evaluation system Evaluate, decide, act Rational decision making Motivate through incentives and rewards aligned with goals Establish a leadership development program
Customers are often not willing to switch their established patterns of behavior unless there is a compelling reason to do so. What type of resource can create exceptional value and become the source of that motivation to change?
Extraordinary resource
A functional structure groups people together by their abilities as measured by aptitude.
F
The 7-S model incorporates four different levels of any organization, which are connected to the cause-and-effect fashion
F
___ of companies and competitors is a tool that should be used in parallel to the forthcoming strategy frameworks you will read about in the textbook
Financial analysis
What is formalization? Why is it used?
Formalization occurs when companies rely upon departments/divisions, the more formalization of rules/procedures take the place of informal "seat of the pants" methods
What are the major historical milestones of modern strategy and briefly describe each.
Frederick Winslow Taylor • Scientific Management • Taylorism • Time and Motion Studies • Henry Ford • Moving Assembly Line • Mass Production • Fordism • Alfred Chandler • Business owners removed from day-to-day • First use of the term "strategy" • Long Range Planning • Annual budget process • Extrapolation of the past • Led to rise of global firms in the US economy • The 1973 Arab Oil Embargo • American vs. International Automobiles The Birth of Strategy ¬ Michael Porter's Competitive Strategy ¬ Strategy: "positioning a business to maximize the value of the capabilities that distinguish it from its competitors"
Which of the following is not one of the three factors that determine how strong the threat of substitutes will be for an industry?
Greater availability generally leads to buyers to compare products and look for bargains
You are the manager in charge of setting the strategy for a new frozen yogurt company. Which of the following questions would be appropriate for you to ask during the analysis phase of the AFI strategy framework?
How have consumer preferences in frozen yogurt changed in the last five years?
What are the steps in the value-driver-action model? Briefly discuss each.
Identify key value drivers They arise out of a combination of current industry demands, current company activities and capabilities, and future company aspirations Outlining the position the company wants to occupy from the perspective of how customers, suppliers, employees, and other stakeholders experience the company Within each driver, there are statements the company aspires to hear from its stakeholders. This indicates the company met its goals They are a reflection of the way we believe we can create value Translating desired stakeholder experience to business/market position Each statement must be translated to a particular business or market position Part of the benefit of translating is examining what can be done immediately and what will require long-term investment Creating a list of actions to be taken Implementation is driven by the most pressing/immediate stakeholder values. This consists of distilling desired stakeholder goals into specific sets of actions Starting with each statement in the experience section, there are two time frames: Actions to immediately address experience with existing resources Actions to build new resources to address long-term aspiration and value Developing metrics that measure progress toward the accomplishment of each value driver Each should tie to the stakeholder statement made for that value driver. It needs to be consolidated to make it consistent, properly targeted, and understandable.
Why do companies tend to lose culture as they grow quickly? How can they counteract this?
If companies experience volume and pace pick up, it is not uncommon to experience a loss of culture because employees lose sight of what it was that bound them together in the first place To counteract it, companies need to ensure consistency with original strategy, vision, an admission Refocusing on the business-level strategy is also needed Coordination cross the value
When would an organization want to pursue an acquisition over internal development?
If they would like to enter industries outside of where they operate
Which of the following is not considered to be one of the criteria for implementing metrics?
Includes subjective measures
Outlined by Henry Minzberg some years ago, there are five relatively common and effective methods for coordinating work. Which of the following is NOT considered one of the methods?
Indirect Power
What happens in each stage of the industry life cycle?
Introduction Stage -There are a small number of companies dipping into the type of business that has never been tried before. Sometimes there is only one entrant, the first mover -First-mover advantage is the SCA achieved by being the first to enter. These companies have the widest latitude for strategic choice. -Innovation results in a wide variety of things offered, because they are determining which bundle of characteristics/approaches create the greatest value for the customer. They are not only figuring out if offerings will be bought and who will buy, but which suppliers have the best opportunity for success Growth Stage -The value created creates broader customer demand. Still experiencing new companies entering, there will also begin to experience some corporate exiting by companies unable to successfully adapt -As demand increases, competitors focus on achieving larger scale to more efficiently serve customers or markets while delivering what they value reliability. There is still opportunity for innovation and an effective differentiation approach -Standardization leaves the door open for low-cost leadership approach Maturity Stage -Industries mature when demand slows down. It is experienced when a high level of customer saturation is reached, there are few new customers to bring into the industry -Commoditization occurs when customers no longer value innovation and new things but expect a standard set of features that incorporate the best of market-tested capabilities. -Less opportunity for differentiation, more intense cost competition Decline Stage: -An industry may decline because other substitute industries provide more compelling combinations of price and value -Ordinarily occurs because innovation in another sector has made obsolete the value proposition the industry had historically created. -Competitors seek overcapacity companies shed assets and engage in cost-cutting. Renewal Stage: -The alternative to decline, where innovation in the mature industry leads to opportunity once again. It depends on reconfiguring the industry value chain in a few ways: -Redefine industry boundaries -Broaden the definition of their boundaries to conceive new opportunities by developing new sets of value-adding activities -Disaggregate blocks of industry activity -Redefine value -Shift to compliments
How is value creation achieved in each stage of the industry life cycle?
Introduction Stage: Often occurs internally through product design and externally in relationship-building upstream and downstream Growth Stage: Value is created internally through process as well as externally by developing broad downstream customer relationships Maturity Stage: Focused internally on cost efficiency Decline Stage: Focused on internal operations to achieve cost control
Why is the balanced scorecard valuable for strategic management?
It allows top management to monitor progress toward objectives and to identify areas that are not meeting expectations.
What is a driving forces analysis? Why would a firm conduct one?
It is important to recognize that every industry is surrounded by an array of outside forces in the general environment that can impact the growth of the industry and the nature of competition. These driving forces are conditions and trends in the general environment that no company can change, but that every company must incorporate into its planning.
What is needed for a generic business-level strategy to be effective?
It must represent a philosophy of competition that should translate to mutually supportive activities in every cell of the value chain, producing a consistent approach to the market across the company.
How are key value drivers identified?
Key value drivers. The first and most critical element is the identification of the key value drivers for the organization. These can be identified from four sources: · The list of key success factors (KSFs) identified through industry analysis (Chapter 4) · Analysis and diagram of company's value chain (Chapter 5) · The resource-based analysis that pinpoints extraordinary resources (Chapter 6) · The vision and mission statements (Chapter 3)
The early form of strategy that failed to include the impact of competitive forces was known as
Long range planning
What is the riskiest business-level strategy and why?
Low-cost because there can really be only one low cost leader in a market, whereas differentiation strategies allow for unlimited variations in approach.
What are capabilities?
May be thought of as sets of tightly integrated activities, organizational skills, and internally developed routines that rely on extraordinary resources and that allow the company to create value in a fashion superior to other companies
What are metrics and what are they used for?
Metrics - Qualitative and quantitative measures that allow the firm to measure the effectiveness of its business strategy. *The assessment of strategic effectiveness involves a measure or set of measles that compare how well a company did relative to competitors
What is a mission statement? What is the purpose? What are the elements? What is the process for creating it?
Mission statements are a brief statement that summarizes how and where the firm will compete in the present.
During your lecture, we utilized a boat manufacturing company to further explain/review the concept of SWOT. Which of the following components of SWOT did the automotive market fall under.
Opportunities
_ is the critical need to identify and exploit where the market is heading whereas ____ proactively searches out new opportunities, brings them to the table, and embraces experimentation on brand new products or services
Opportunity recognition, entrepreneurial orientation
Compare and contrast ordinary and extraordinary resources.
Ordinary resources: Those resources or capabilities that are necessary to operate in an industry. Extraordinary resources: Those resources or capabilities that simultaneously exhibit the characteristics of [valuable, rare, durable, relatively non-substitutable, and non-tradable].
Whose interests should be taken into account when assessing company performance?
Performance (both quantitative and qualitative) is the key outcome of interest for those studying and managing strategy.
What are executional drivers?
Performance and cost dimensions of activities that are derived from the execution of the business activities - involving people, systems, routines, culture, and coordination - and usually have an important learning dimension to them.
What are structural drivers?
Performance and cost dimensions of activities that are derived from the strategic choices made about the underlying economic logic and structure of the business - such as the scale and scope of its operations, the complexity of its products or services, and its use of technology
Value chains include two activities. What are the two activities?
Primary and support
Compare and contrast the different types of innovation.
Product Commercialization of new value in the form of a new product or service offering Usually from new design or application of new technology Driven by escalating customer desires or requirements, outdated design, technology advancement, or new developments upstream at suppliers More prevalent in early stages of organizational life cycle Process Commercialization of new value that results from new activities within a company, or from the development of new capabilities Designed to either reduce cost through efficiency, enhance materials utilization, increase reliability and improve quality, or shorten production time. It can involve changes in the equipment in manufacturing, the technology, modifications in supply chain and delivery. New methods for accounting and customer service, or new organization of teams Usually in the later stages of the organizational life cycle
How do we classify organizations as prospectors, defenders, analyzers, or reactors?
Prospector - A company that tends to view the industry from their own perspective and that of the customer rather, and less concerned with the actions of competition. They are usually leaders of change in the industry They are leaders of change in the industry with little concern for the effects or impacts of other organizations They are willing to cannibalize their own market position with something new They are relatively inefficient because it views control and cost-cutting efforts as counter to its objectives of organic growth and opportunity to change the industry Apple is a good example of this Defender - A company that is intensive rather than extensive. That is, they usually focus on a limited number of key criteria, analyze their costs, and rigorously defend their competitive position against all competitors. They are intensive. They focus on a limited number of key criteria, analyze costs, and defend their position against all competitors They are geared toward protecting its position and maximizing market share. They spend little on new product/service development, are highly efficiency, and structure on policies and procedures. Cereal companies like Kellogg's and General Mills are examples of this. They protect the franchise, shelf position and presence in supermarkets, and market share Analyzer - A company that combines both Prospector and Defender behaviors. Parts of the company behave like a defender and parts behave like a prospector. In between those two forms of organizations. They behave like a defender in some ways and prospectors in others. Usually an artifact of the way the organization formed and grew, the two-part stance is difficult to manage and maintain. One part performs customer analysis and develops new things, the other is examining competitors and milking every dollar from its current product and service portfolio The risk is becoming stuck in the middle from a business-level strategy. It is difficult to predict how they respond to market changes Reactor - A company that reacts (often slowly) to conditions in the competitive environment. This is an unstable form of organization These perform by reacting (often slowly) to emerging conditions in the competitive environment. It is usually an unstable form of organization and not destined to last long because it is buffeted by the forces in the environment rather than making proactive moves. It then has a choice to: adapt and move to another one of the three models, or collapse as an independent entity A good example is Blokbuster
When reading the mission statement from New Shipbuilding and Dry Dock Company's mission statement, what concept was conveyed the most?
Quality
What are the components of return on equity (ROE)?
ROE down into its component parts: profitability, asset productivity, and financial leverage
What are the types of diversification? Briefly define each.
Related Diversification There is a dimension of similarity between the corporation and the company it is seeking to acquire. It can be divided into three categories: Horizontal This occurs when a company enters another business in the same industry and employs the same exact value chain as its used in its core business This extends influence further into an industry which it is already operating This type of acquisition tends to draw attention of regulatory authorities Vertical This is when companies enter new businesses in the same industry but which occupy different positions up or down the value chain These occur when a company wants to continue operating in its own industry, but wants to exert greater control over some part of the industry value chain This occurs when companies seek to gain greater control over sources of supply in the value chain Cross-Sector When a company enters a completely new industry but utilizes a value chain similar to the one in their core business
What is market saturation?
Relatively few new customers can be brought into the industry The cell phone market is experiencing this now
What are the difficulties associated with a matrix structure?
Resource allocations and annual budget between lines of business can become a politicized process, with negotiated solutions developed through ongoing meetings. The reality of reporting to two bosses proves problematic for many people
What is social complexity?
Resources that may result from a socially complex phenomenon, something that cannot be systematically managed or influenced.
What are the results of a strategically focused organization?
Results include tight coordination and internal consisency across the company.
What is meant by a "single company currency"?
Rewarding the most amount of employees within a company with the same incentives (bonuses, merit pay, stock options...)
What are key success factors?
Rules of thumb for doing business in an industry that reflect the structural conditions of the industry. Identify key success factors by answering two pivotal questions: 1) how is value created for customers; and 2) how must we compete in order to succeed?
Briefly define each of the driving forces.
S- Social T- Technologcal E- Economic E- Environmental P- Political G- Global
Compare and contrast SWOT analysis and value chain analysis.
SWOT provides a snapshot of what a company is, while the value chain provides perspective on what a company does.
Upper management at Softstep Inc., a manufacturer of insoles for shoes, wants to work on improving the product lines it already has without taking on other challenges at this time. Which of the following vision statements reflects that goal?
Softstep Inc. wants to be the best manufacturer of insoles in the industry
When further explaining the 7-S framework, we utilized YouTube sensation PewDiePie Match the element to the following description: single person with 10 years' experience.
Staff
What are organizational resources?
Strategic resources are the foundation of the development of its sustainable competitive advantage.
How are differences in performance among firms explained?
Strategy research demonstrates that industry structure/conditions can only explain a portion of variance in performance 20-40% can be explained using tools of industry analysis More of the performance differences can be understood by looking inside companies to examine what they do, what they fail to do, and how they operate Through internal analysis you can gain insight into competitive advantages that enable companies to occupy leading (or lagging) positions, and to understand what paths they follow based on activities/resources
MainShop is an online retail store that has seen a significant decrease in sales to its competitor Julia's Closet. The management team hired a respected consulting firm to guide the company. The expert from the consulting firm pointed our that the company has poor customer service, sluggish response times to customer questions, and vague return policies which is the primary reason why MainShip lost our on its competitive advantage. These ineffective policies and procedures led to many dissatisfied customers and a steady movement to other customer friendly retailers. Mainshop can best resolve its problem by working on its:
Support activities
What are switching costs?
Switching costs. Customer resistance to new entrants may also arise due to the costs to switch to the new competitor's product or service (both real and perceived). The costs involved in changing buying habits include the real costs of time, price, new buying patterns, inventory turnover, and customer service
The greatest value gained by identifying the SWOT components is that the process provides a really good starting point for in-depth discussion and analysis of company strategy and competitive position
T
Compare and contrast tangible and intangible resources.
Tangible assets: Physical assets like equipment, buildings, land, and furniture Intangible assets: Not physical in nature but often more critical to the success of a business. This includes knowledge, skills, patents, and trademarks
Which of the following will NOT take place prior to your lecture on Mondays?
Tarot card reading
Which of the following is considered to be a none-core function?
Techno
What firm as utilized as an example when explaining that your actually can have no competitors
Tesla
Which of the following is an advantage of the triple-bottom-line approach?
The approach takes an integrative and holistic view in assessing a company's performance
What are the issues associated with the balanced scorecard?
The balanced scorecard requires management to think in four perspectives: financial, customer, internal process, and learning and growth. They may not resemble how most organizations are structured, or the ways managers think about value chain activities
Lu runs a company that manufactures satellites for commercial and government use. It has few rivals. At the moment, the power of buyers, the power of suppliers, and the threat of substitutes are all low. Based on this information, what can Lu conclude?
The company is likely to be very profitable as long as the threat to entry is low
How does a conglomerate benefit from the following an unrelated diversification strategy?
The conglomerate can overcome institutional weakness, such as lack of capital in emerging economies.
The beginning of chapter 5 discusses the phone industry, and more specifically the company Apple. Which apple franchise is considered o be the core of the company, representing 55% of its total revenue?
The iPhone
Strategy
The overall concept for how a company organizes itself and all its activities in order to conduct business successfully, outperform competitors, and deliver superior returns to its shareholder
The management of a company is assessing the value of all the tangible resources the company owns. Which of the following will be included in this assessment?
The punch presses that produce the parts
What are the reasons for companies to diversify? Compare and contrast.
There are four primary motivations to diversify a company: Better external opportunities Management may not see growth rates, have exciting new products, or have saturated distribution. Companies will search for external opportunities to fuel growth, and will consider acquiring another business Acquire new capabilities Expansion into new things may require new capabilities and resources that the company does not possess. Yet the acquisition of another business and capabilities allows the parent company to own/control the new resources/capabilities and prevent access to the, from competitors Oracle saw their industry was maturing. They acquired companies in business software, financial services, and more. They maintained growth rates and got skills/capabilities to enter software categories they could not Response to intensifying competition As competitors become larger, companies are prompted to acquire another business to maintain a competitive position. It can generate benefits of size, reduce dependence on limited array of product/service, and reduce dependence on specific geographic markets/customer segments Whole Foods acquiring another organic grocer to compete against Kroger and Walmart due to saved overhead costs Avoiding decline and takeover As internally generated growth slows, management needs to continue to return. The slowing growth can occur for many reasons; market is maturing, competitors are increasingly effective, or complexity makes it difficult to manage If the problem of growth is not resolved, the business is ripe for a takeover (company buys the business and replaces management team) Benefits to management and employees Employees and senior management derive benefits from working in larger organizations. There are more opportunities for advancement in position while compensation is higher. Managerial capitalism The last two ideas suggest something other than economics and industry can affect whether and how managers pursue growth--they may pursue it based on own needs, interests, and aspirations Market Entry Companies seek to enter industries outside of where they operate. They accomplish this through acquisitions Overcoming barriers to entry Avoiding internal development costs Increasing speed to market Opportunity cost--imitating others Seeking Market Power Gains in pricing authority Increasing bargaining power Forbearance--keep competitors at bay Spreading Risk
Match the element of MTP to its correct explanation - Purpose
There's a clear 'why' to the work being done. Something that unities and inspires action.
How can firms broaden their competitive scope?
They can do this through internal development or acquisition
When would an organization want to conduct an analysis of the external environment?
To assess if other organizations can imitate or perform the activity at a lower cost or higher-value added
What are the motives for expanding internationally?
Traditional Motivations New geographic revenue opportunity Leveraging existing value chain and resources Spreading risk Overcoming trade barriers Achieving location advantages Emerging Motivations Financial pressure for global integration Technology facilitates achieving greater scale Competitive counter-response
According to the excerpt at the beginning of chapter 4, How many times did staples and Office Depot attempt to merge, but couldn't due to the FTC disapproving?
Twice
Which of the following is a crucial first step to structuring?
Understanding the elements of an organization
How can companies focus on opportunity recognition?
Using opportunity recognition with the value chain using sets of activities such as: -Through internal coordination within the company value chain -Through external relations downstream with customers and upstream with suppliers -Through other external relations and "boundary-spanning" activities that enhance the company's ability to anticipate emerging trends and industry/competitive dynamics
How is value best captured in an organization?
Value capture occurs when a company creates value by acting in ways that its competitors cannot. Usually this means they have created barriers to imitation. Portions of a company's value chain activities can be difficult or impossible to imitate
The two lenses through which you should look at all elements of strategy are
Value creation and opportunity recognition
What is a vision statement? What is the purpose? What are the elements? What is the process for creating it? How far out is the time horizon?
Vision 7-10 years statements present a compelling image of the organization in the future. This motivates employees and sets a common reference point. ¬ Assemble a Small Team 5-7 people ¬ How Many People? 5-7 ¬ Consider Important Questions -good at? Do better? Customers? opportunity? ¬ Like? ¬ Establish an Event Horizon - 10 years ¬ How long? - 10 years ¬ Gain Buy-In from the Entire Organization
During your lecture, we utilized the same boat manufacturing company but now they are entering the automobile industry to further explain/review the concept of TOWS. Which of the following components of TOWS did loyalty programs fall under?
Weaknesses and Threats
Value creation
When some other party appreciates something that is done for them and is willing to execute a profitable transaction as a result
Which of the following statements is true in regard to analysis and formulation?
business-level strategic approaches to the marketplace and competition are considered
Strategy
deals with types of decisions that rise above specific functional concerns, and that have unique character to them
What are the potential drawbacks of SWOT analysis?
results in a laundry list, oversimplification, definitions may vary, relevant?, static view
Opportunity recognition
the critical need in business to identify and exploit where the market is heading.
What are methods for sharing vision and mission statements with the employees of an organization?
¬ Create Narratives ¬ Act as Role Model ¬ Establish Specific Short-Term Objectives ¬ Personalize ¬ Create Objects that Display Statement
